>> very good morning from sydney where us trillion markets have just opened from trade. >> good evening from bloomberg's global headquarters in new york. asia." me to "daybreak: >> our top stories this thursday -- >> the additional tightening of -- ncial conditions

>> invested -- investors flooded in the treasuries and facebook fell the most since july after was that more personal data exposed than previously disclosed. >> the wing day session in the u.s., what a day for markets. a huge reversal as the stocks were higher for most of the session, but then, we saw the fed rate decision and they took a dive with the s&p 500 falling to a 15-month low. the dow also down one point 5%. we had at one point seen the s&p 500 in the green after the fed said they would reduce rate hike expectations for next year to

two instead of three as they had previously projected, but that swiftly reversed as we had chairman powell talking about market turmoil recently as just a little bit of volatility. the nasdaq falling more than 2%, and you can see the pressure continue as s&p futures are down .1%. let's see what treasuries did. we saw investors stocking in a treasuries, the 10-year yield breaking through that key resistance level, and we also .aw the yield curve flattening we are seeing the dollar under a little bit of pressure, but this after it jumped from the fed's rate decision. we had a lot of weakness leading into the decision. markets pricing in a very dovish rate hike, really not getting everything that they wanted, so a bit of disappointment being felt throughout the u.s.

session. let's see how we are setting up for asia. >> it looks like asian investors may be similarly unimpressed by the fed's stance. we are waiting for reactions from the boj and bank indonesia. both expected to hold. jgb futures have reached after the boj refrain from changing its bond purchases. are set toe shares decline after the nikkei fell to a nine-month low, and as he shares are looking to extend declines for a third straight day. taking a look at the aussie dollar, trading near a november 1 low, this is a rate on that volatile jobs report. the jobless rate expected to say at 5% -- stay at 5%.

in onquickly check sydney. lumina on the radar in the expectation that the price of the raw material to make aluminum will fall as the u.s. prepares to lift sanctions after a russian billionaire agreed to ownership stake below 50%. the treasury secretary underscore that the billionaire and not the company was the intended target, and this move by the u.s. could take effect in 30 days unless congress blocks the action, and democrats have said the decision raises key questions. we are seeing shares under pressure this morning. >> just some lines crossing the according to the

mexico finance ministers, bondholders are set to accept a buyback offer, the second sweetened offer that was made just a few days ago. the mexican government has been negotiating a $1.8 million for the $13he bond billion airport to be built in mexico city. we did see those bonds jumping on wednesday. we are news that bondholders have accepted that offer. it is capped at $1.8 billion of the $6 billion amount that remains outstanding and includes buyback. there is also payment for investors who into the deal before december 19. creditors claiming to hold more than half the notes initially rejected the first deal, but then came back to the table for what was said to be the final sweetened deal, which has been

accepted. >> the european commission confirming it is working on a contingency plan for a no deal brexit. they say the insurgency around the deal make a crucial to turn an abrupt exit and to a softer landing. brussels says it is working on areas where a no deal scenario could cause major disruptions. also says it is preparing for a possible crash out of the eu. >> the risks of a disorderly brexit are obvious. it will be an absolute disaster. this is why the commission is making an effort along with eu maybe states to prevent a disorderly exit. >> china is moving to support the economy with a low profile rate cut. the pboc will supply lower cost liquidity for three years for elect a smaller company creating a new targeted version of the medium-term lending facility which funds at a rate lower than other options, but the pboc refrain from cutting costs across the board.

saudi arabia says it is certain opec and its allies will extend output cuts next year. producers will begin in april and keep the program going to lift prices. oil is trading there is lowest prices in 15 months as fears about slow global growth compound amid an increase in supply. >> i can tell you with a high degree of confidence that we will achieve balance between supply and demand in 2019. make no mistake about it. we are united within the kingdom, and we will be united with our partners within opec. auto industry facing his first sustained fall

in production since the crisis. industry facing his first sustained fall in production since theit wouldt back-to-back industrywide drop since 2009, though analysts see the decline easing in the next 12 months. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. >> thank you. the federal reserve not dovish enough or were markets just hoping for more than how all and his team could deliver? kathleen hays is here with a look. run us through what the fed did and what it said. it looked like a dovish hike, and yet the markets are not happy. kathleen: just not dovish enough, that's for sure. markets have just sold off, we could be in a terrible arc it, how could the fed possibly be hiking rates? not seem to bother the markets so much because it was expected, 25 basis points, and they did cut the consensus view formed from what everybody says,

you distill it down. where do most people see the number of rate hikes next year -- two, not three. that was a significant change. if i met the fed tonight, i'm thinking why did everybody not put more emphasis on that? but it's true. powell said a couple of different ways the fed still has a strong forecast generally, pretty upbeat on the economy. he also said with the volatility you just referenced that it does not leave an economic mark, not just yet. powell's knowledge, inflation came in lower than they expected this year than they thought it would. i want to jump into the chart and show you what he had been talking about. you have this headline number which started to come off a bit because of lower energy prices, but just over the 2% target and the core pulling back, but the givesews is he says this

a chance to go slowly. let's listen. >> inflation has still remained just a touch below 2%, so i do think that gives the committee the ability to be patient and moving forward. as i mentioned, there is significant uncertainty about the path and ultimate destination of any further rate increases. >> also important, many people say the average forecast now, the median for the neutral rate is two point 75%. that is the rate where you do or slowdown down the economy. in the press conference, he said we are now at the bottom of the ranges of what the neutral rate is. we are on the threshold. isn't that a little bit dovish, or at least or slowdown down the economy. in the press not hawkish? -- policy isgain not on a predetermined course.

us tohleen, stay with continue the conversation. we are joined by the dean of columbia business school and also former chairman of the council of economic advisers under president george w. bush. on with us.e you as kathleen said, it was a dovish hike, what we were looking for. markets did not think that was enough. struckthink jay powell the right balance in articulating the risk going into next year but maintaining optimism as to where economic growth is actually tracking? >> i think he tried very much too. the fed arced up slightly its estimate for long-term growth while taking down its estimate of the neutral funds rate. that is a fairly dovish signal. part of the concern markets have or the turmoil from the stock market itself, from trade policy and concerns over long-term growth and the fed really has

not been clear about the balance sheet. in fact, it was the balance sheet question that hit the markets. he was asked what if you are raising rates and the balance sheet is getting whittled down even faster, it is restrictive also. is there a chance you would revise that plan for balance sheet reduction -- no, it's doing fine, sort of automatic pilot, no concern -- boom, stocks fell sharply. how should he answer that? how would you answer it? of allink the fed first has to become clearer to the markets and the public about where the balance sheets should be. the second is to acknowledge to moreare shifting quantitative tightening regime and try to give a sense of what the net tightening is between the fund rate changes. i think it is a communication issue to the fed, but i did not anticipate -- i did not take the

statement today is nearly as hawkish as markets seem to have. >> let me ask you about another technical adjustment. for the second time in six months, we have seen the fed lift the interest on excess reserves. i just wonder how difficult it has become for the fed to keep its fed funds rate well within the policy range. >> it is always a technical challenge, but i think it is one that it is doing fairly well. i do not think that is the top problem for the fed. i think the problem is making market participants and the public more clearly aware of the past going forward. the fed actually seemed quite bullish on growth but became a little more dovish at the same time. that, to me, is a pivot the market missed. >> a lot of economists are saying, not just stop market traders and investors who lost money recently, they are saying global markets fell off, signs

the global economy is slowing down, the trade war continues. why keep hiking rates? why have you not done enough in an environment like that? >> it's a good question and the fed may well pause after this. the fed has a sort of data dependent view of the world, but a look at next year for the u.s. and see we could have a very good tax refund season and consumption if there is a china trade deal. that has been hanging as uncertainty over business investment, so i am, frankly, a little more word about the china situation and the uncertainty about global growth than i am the current stock market. >> there are plenty of economists and china watchers who say this will be a protracted, longer-term trade resolution is

going to come in dribs and drabs rather than some magical agreement that comes before march next year, right? that theondo you get the sense situation is worse than what markets are bracing for? >> i think it's hard. what is easy for china is a fix to the bilateral trade deficit, but it's not actually the real problem. i think the longer-term problems require some patience, and this will weigh on business people in investment. there's not a business leader i talked to who is not focused on this and very worried about it. that, i think is a cause of concern. >> the markets really did not upbeat assessment on the economy either, but we have seen pretty strong data. we have seen wage growth, a welcome increase on that front as well. our fears of secular stagnation right now misplaced? >> i think they have been misplaced. i think the fed's right to be near-term optimistic on the economy. the fed actually marked up a little bit its estimate of

long-term growth. at the same time it was marking down the neutral funds rate, which, to me, is a bit of a shift in dovish miss or the reaction function, but growth really remains the question. >> i want to ask you about the tax cuts in particular. the fed seems to think it is one of the reasons you will not have growth this year but it will be solid next year. you were one of the architects of the early 1990's tax cuts. do you agree with the fed? do you agree with the white house that they have created an environment where we will see momentum and just kind of permanently stronger growth, or do you think some of that hope is misplaced? >> i think the tax changes were by and large a good idea. i think they did provide a cyclical boost to the economy. the bigger deal with the corporate rate reductions and their effect on investment. there was an initial boom and then more of an attenuation.

is a fear in there a lot of business people's minds about how quickly to move, so i think it's a china situation were settled, you would see more but push from tax policy, who knows about china? >> big question indeed. what is the fed going to do in 2019? how is the economy looking to you given all the things we just talked about? >> i think the economy is in reasonably good shape the 2019. i think the probability of a recession outside of some unforeseen event is not terribly high. at the same time, the fed is looking at the china situation and, of course, market volatility itself. stock market the but more on credit spreads, but that could spell a slightly slower path of increases. >> the dean of columbia business school.

thank you for joining us. still ahead, facebook under new pressure after reports in allowed companies to access more user data than previously disclosed. marketng up next, the reacted to a fed decision less the dovish reaction that had been hoped for. going to continue to unpack that decision. this is bloomberg. ♪

asia." is "daybreak: >> let's take a closer look at the u.s. market close. the fed came out a little bit more hawkish than expected, or at least not as dovish as expected. su keenan joining us now. what happens if the markets have priced in much more dovishness that the fed really cannot satisfy? this is exactly what happened today. >> exactly. you had a bet out that it would

be more dovish than it was. they actually trimmed the amount threeure rate hikes from to two, but the market was expecting one. you have the s&p 500 dropped an immediate 1.5%, and the russell 2000 down the most, you get some of the reaction that was taking place. stocks fell, and commodities, you took a big dip in crude, which was actually moving higher. let's look at some of the big movers. what we have is a sharp drop. fedex, what happened after the bell yesterday, remember how they trimmed the profit outlook saying what they had going on was a trade concern, and that fueled a lot of the concern about trade going forward. byebook actually dropping the most since july on intensifying concerns about privacy coming out of

washington. i don't know if we have the bloomberg that we can bring up. we actually have the dollar positioned new the most bullish level in a year, so that is how the money on the street was positioning, even though we saw the dollar surprise, or at least a lot of people repositioning. let's go to after hours on this because we do have some interesting moves. stocks in the green. we also saw another company added to the s&p 500, which tends to make it go up, replacing express scripts, which was removed. >> we talked about this revolt we saw in stocks on the fed decision that really centered on the balance sheet rolloff. what are the issues market participants have? >> we had the fed chair say he would keep on pace with a plan

to reduce the balance sheet and some looking at that as rigidity, perhaps not enough >> ability, given the sharp drop stocks.en in again, there is a lot of concern about the plaques the fed was in because some believe they did need to be a bit more dovish, but then they were concerned it would look like they were bowing to trump, who has been critical of the fed. there were different reactions throughout the market, but it is generally believed perhaps this was a policy mistake. let's look at how oil reacted .ecause it also gave back gains as soon as the decision came back, you can see we did get the worst gain in three days, but look at the far end of the latest session. it dropped right opt with the and. oil is actually down 40% from that october high.

>> just remember, bloomberg can interact with the chart shown using tv . this is bloomberg. ♪

> this is "daybreak: asia." >> the criminal investigation into alleged money-laundering at danske bank has seen a series of arrests. 10 former employees have been taken into custody accused of accepting or paying bribes. say in time, it's likely more people will be apprehended in connection with the inquiry. >> the trump administration is readying to lift sanctions on a

russian billionaire after reaching a deal on a significant of his ownership. we are told the move will happen in the next 30 days unless congress blocks the plan. of budweiser has of alcoholranks veterans looking at the cannabis industry. they are conducting a search into nonalcoholic cannabis infused drinks. each will invest up to $50 million in the project. decisions about commercialization will be made will as marijuana edibles not be legal in canada until next year. that is really a summary of 2018 for you. >> that's true. more consolidation in the sector. next, facebook tumbled after news is shared more data than users thought. they spoke falling within 7% in the last session.

we will assess all coming up next. this is bloomberg. ♪ ♪ there's no place like home ♪

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

>> it is 10:30 a.m. in sydney, markets trading for about 30 minutes. limited gainsa across the utilities, consumer staples, but the rest of the market dragging down the broader market by about .5%. we see energy and financial as laggards. >> and it is 6:30 p.m. in new york. worstoming after the correction since 2011 for the benchmark index. it was about as low as they have been the last five years. ahn in new york.

--di: and i'm heidi stressed and i'm heidi strasburg in sydney. sophie: the fed turns less dovish than hoped. the s&p 500 tumbled into a 15 month low and investors flooded into treasuries after jerome powell signaled the policymakers to little threat from the recent turmoil in financial markets. the fed a just a guidance saying further rate hikes will be needed. inflation has still remained just a touch below 2%. so i do think that that gives the committee the ability to be patient moving forward. as i mentioned, there is significant uncertainty about destination of further rate increases. >> southeast asia's two biggest economies are diverging.

bank of thailand raised the one-day bond repurchase rate for the first time since 2011. 27.5% basis point rise to was in line with forecasts. indonesia is set to keep the key rate at 6% after 175 basis point hikes. m&a related loans in china set and 2018 lower for the second year running. prospects as the trade war curbs appetite for overseas deals. the foreign currency is down 44% this year to $17 billion. that compares almost 31 billion in 2016. standard chartered says the environment will remain challenging. bank of america says the u.s. must make progress on relations but admits negotiations will be difficult. secretary mnuchin signaled talks

next month after a series of phone conversations between washington and beijing. brian moynihan that some of the issues will be hard to overcome. >> we have to make progress in china. but it is hard. the non-terrorist fares, the intellectual property -- the fares, the intellectual property. equating certain types of transfer pricing, things like that. theoes to the heart of competitiveness of both countries and what they are up to. it will take a little longer, but it needs to be resolved. and onal news on air tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. shery: we have the fed out of the way, but we are still headed into policy decisions from the bank of japan and the bank of indonesia.

let's see how we are setting up. sophie: that ever volatile jobs report from australia is what we are waiting on. stocks in sydney falling for a third straight session. financials lead the decline. lowunding from a seven-week and holding steady this morning. australian bonds are tracking 10 yearly sitting the yield to the lowest level since june of 20 17. and i want to highlight the kiwi bond yields have fallen to a two-year low. that may see money markets shift expectations. now taking a look at stocks here, we're seeing gold miners fall in sydney, losing almost 4%. and oil search extending losses for a third day. that company has said drilling operations in alaska are to

start in january. rate pricing here, the company sees more info than the $1.8 billion bid. they look to increase the proposal by as much as two aussie dollars a share. snapping a three-day decline morgan stanley. we are waiting on a jobs report. the pace of jobs has slowed from 2017. but hiring does remain strong and the jobless rate is expected to stay at 5% after falling to that level last month. for an impact on trade tensions, the final read on japanese machine orders for november will likely reinforce this year's struggle and orders have collapsed. the initial read was for 16.8%. bojcentral banks and standing pat with little motivation to shift anytime soon. the focus will be how on categorizes risk

on domestic consumption. and the bank of indonesia steady after aggressive tightening this year ahead of elections in 2019. shery: let's take a look at facebook shares, losing more than 7% after the latest pressure on the social network. sarah fry covers the social media. being sued over the cambridge analytica scandal. what are the claims? the d.c. attorney general says facebook misled its consumers. people who are using this app were not given the full picture of how their data could be used by third parties, by developers, or others connected to it. the company has repeatedly had that they havers full control over their data. it they have been trying to establish trust after a lot of reaches and scams.

this lawsuit shows it is not working for them. lawmakers are not convinced and they think there is something to pursue. it could have financial ramifications, legal ramifications. they spoke could have to pay fines. this is an interesting development. shery: what is the reaction other than what we saw in the stock price? lawmakershave seen beyond the one bringing the suit, lawmakers in congress responding to not just the suit, but other allegations that facebook has used to people's data beyond what their permissions have directly expressly permitted. lawmakers are calling for the ftc to look into this more closely. has been probing facebook this year, but facebook -- been under

really beentc holding them accountable to the level that they should have? that is one question. europe, the commissioner has said that they have launched several investigations with facebook concerning recent breaches. there is more regulatory pressure and pressure on the legal side come. shery: we have seen the naacp boycotting facebook. and we have seen other civil rights groups applying pressure, asking for the leadership to change in this company. have we seen any response to that? the company does realize it needs to focus more deeply on civil rights. sheryl sandberg said that she will make it a priority next year. little, too late. there was a report out earlier this week from researchers saying that the black community was targeted most intensely by

the russian internet research agency on facebook's platform to action ahead of the u.s. presidential election. the fact that that happened. the have also been other .nstances of racist advertising a recent employee departure where he said there were instances of racism working at facebook. there is a lot to chew on for the company in the coming year. haidi: what a challenging year it has already been. facebook.ring as has come to expect, the hong kong monetary authority raising its base rate should 2.7 5% from 2.5%. we know that this happens the -- hongafter the fed kong currency is tied to the u.s. dollar so it tracks the u.s. rate. it moves closely. usually 50 basis

points above the u.s. fed fund target rate. take a look at the commodity sector. as the mining industry shows slower growth in china, it has weakening or prices and rising production costs. there are ideas to help spur business in 2019. -- energy andtor commodity reporter joins us from melbourne. what do you think that miners can do? drink the numbers, it seems. seems.ngthen numbers, it >> they came out with 10 or so ideas that were plausible, but maybe on the fringes of executive demand. some pretty interesting strategies as well for bhp. the world's biggest miner. said they might do a spinoff company. remember in 2015, they had a cluster of assets.

this time, it might be focused on the mp sector and the battery storage market. they could throw in the nickel west unit in australia. also oil and gas assets in the country. and look to get rid of a couple of thermal coal mines. they are thinking through the implications of the trade war. if tensions between u.s. and china ease, it could boost purchases of fertilizer. that could be a catalyst for the in canada.ect we reported that bhp is gearing up for a decision on what would be a 5 billion first stage of that development. a couple of ideas they have thrown around. shery: what about ideas for rio tinto? what are the opportunities that company can find? david: they continue to be a

seller of assets, selling $11 billion worth since 2016. it could get 3 billion if it hires a canadian iron ore unit next year. but this would be a big change in the market. it suggests rio should also be a buyer of big assets. to target some really big rivals. anglo american, maybe freeport, maybe first quantum. rio is seen as short on copper and a big megadeal potentially with private equity that could really fix that problem. ceo has been frequently on bloomberg tv the last couple of months saying that he is watching for m&a opportunities, and he wants more copper. they are encouraging him to pull the trigger in 2019. despite these headwinds from the trade war and global financial slowdowns, the mood

has been pretty positive, right? chinay on expectations of supporting prices going into 2019. is that still the case as we and the year? -- end the year? david: absolutely. there are still a couple of questions. the extent the chinese health some markets and not others. it can help they smell and copper. things tied into manufacturing rather than steal -- steel. that would be a change from previous rounds of stimulus. separately on the positive side, bloomberg intelligence is among those that say that a peaking could be a catalyst for commodity prices. and if we see that scenario play out, that means things like gold, copper, some of the other base metals are very well positioned. shery: thank you very much, our

senior editor -- energy and commodities reporter. canyon resources is bullish with some conditions. we will discuss why, next. this is bloomberg. ♪

haidi:i(amikea#. --amikeasierra. --amike -- this is daybreak asia. fall: we have seen metals along with a price for copper.

what would be the conditions, as you say for yourself, to be bullish on commodities? i look at the demand side, which is obviously being impacted by demand coming from interest rates and speculators impacting on the federal fed fund rate. it is that aspect and also from a supply side, from what we are seeing, i can talk more specifically about think markets. the stockpiling is going and refining it, having an impact on the stockpiles. they are not producing it because there is way too much -- there is not enough profit sitting where they can produce it. issue forasically an these funds. that production is going to come through for the smelters and be

profitable at these prices. shery: how much investment has there been in the mining sector so far? from what aspect are you looking at? in terms of expiration, there has probably been limited expiration over the last four or five years. the smaller cap companies effectively trying to catch up with demand. so there is this serious underinvestment. change in duell course but we need higher metal prices for that to occur. i know that with resources and graphite producers, your area of expertise is really the battery. in you give me an idea of demand? and whether the lack of policy coherence that we have when it comes to this area is really an impediment to that level of investment in activity in the

sector? i started about seven years ago, building the world's largest graphite mine. my reason that we did this, view is that the electric vehicle battery market hasn't really started yet. it effectively takes five or six years to build. with a capacity of about 350,000 tons which is a bit more than the market would've required. knowing that it takes time to build these projects, we are expecting the market to grow into it. and the analyst predictions in -- you can't adequately predict it. it hasn't even started yet. , and it willws become exponential, the biggest producers is to

make sure the supply chain is going to be adequate. which is one of the reasons why i built that particular mine at capacity. i expect incremental and exponential growth. in the 2019 and early 2020, it is expected to have a significant impact. we expect that growth will have a huge amount of demand on the metals market. that shot weook at had earlier. prices have been falling 85% since 2010. tolga, think of for coming on with us. -- thank you for coming on with us. fed,reaction to the dovish

seoul getting underway today. sophie: investors similarly unimpressed with losses. we could see a loss of 1.2% which fits in the benchmark below 21,000 points. ,.s. futures are edging higher and there might be some room for optimism. but not just yet. bojthe yen ahead of the decision, little change after rising for four days straight. markets will be in focus on wednesday. it has become increasingly volatile as jgb yields track below zero. let's check in on jgb bond futures. high,urged to a july 2018 then retraced after an emergency

call was triggered after the boj decision to refrain from cutting bond purchases. and this morning, jgb futures are recovering a touch. continue tothey stay strong, 10 year yields will eventually be dragged to zero. they are looking quite cheap. let's take a look at some of the stories trending across the bloomberg universe. and cautiouse hike 2019 outlook still the top story for terminal subscribers. bloomberg.com has a story about how china's small brokerages are facing a grim outlook for next year. and on tictoc, check out china's plan to reduce its reliance on the u.s. gps satellite system by spending $99 billion on its own. check out those stories trending on bloomberg online or on the terminal. this is bloomberg. ♪

shery: this is daybreak asia. i'm shery ahn in new york. haidi: let's get your check of his this flash headlines. a court in guangzhou ordered the confiscation of the singapore unit after accusations of smuggling. after someonees was jailed for years after allegedly invading -- evading chinese oil terrace. -- tariffs. and hisor an ipo in's april, the latest and companies going public. underwriters may be selected next month with the aim of achieving valuation of $12 billion. in september, pinterest surpassed 250 million monthly active users. generating revenue in excess of

$700 million this year. some are backing a spin off of the google parent company out for that -- company alphabet. investors are developing a system that uses molten salt and coolant to store electricity generated from solar and wind. take a look at the state of trading when it comes to asian markets at the moment. we get the reaction to a dovish or perhaps not dovish enough fed. we have seen major markets trading in the red so far this year. looking ahead to the start of trading in tokyo, the nikkei and the topix looking to extend

losses. closing at the lowest since may of 2017. shery, it is also looking lackluster as well. shery: could we potentially be headed for higher stock markets in asia? we are seeing u.s. futures also reversing and rising .3%. the biggest estimate right now, the broad assessment as we talked to more and more analysts is that markets may have vishreacted to this un-do hike. be a bit ofy overreaction. and maybe it is just the time of year we are looking at as well. liquidity and a trading action is pretty low as well. just a few trading days before christmas break. not surprising we are not seeing a great deal of momentum or positive momentum in the markets at the moment. shery: but the news flow has been crazy. i am just waiting for it to slow down. coming up on

daybreak: asia. we will continue the discussion of the fed rate hikes with dennis lockhart. and the tokyo and korea open is next. this is bloomberg. ♪

haidi: a very good morning. asia's major markets have just opened for trade. shery: good evening from new york. sophie: in hong kong, welcome to daybreak: asia. haidi: our top stories this thursday, stocks slide as the fed terms less dovish than hope. jay powell says some further rate hikes will be warranted next year. the s&p 500 tumbles to a 15-month low. trading in asia-pacific markets

is expected to fall. ofry: the highs and lows japan's biggest ipo. an underwhelming debut for softbank but a big win for -- [indiscernible] investors have to digest the fed rate hike decision but at the same time, they are looking forward to the policy decisions out of the bank of japan and bake of indonesia -- bank of indonesia. we will see how we are setting up for trading in asia. sophie: the post-fed struggle is looking real for asian markets. investors unimpressed by powell's stance. the nikkei 225 losing .8%, falling further below 21,000 points. trading at nine-month lows for that benchmark. and we see losses for the cost be as well, .7% lower. raising the red flag around trading as well as fed normalization. we are seeing some optimism when

it comes to shares in sydney, the asx 200 looking for change after a decline. to check onitch it bonds. jgb markets will be in focus. this as the doj -- boj refrained as the 10 year yield has moved. at 2.77%s trading after falling to an eight-month low overnight. we aretralian bonds, seeing them pick up sending the 10 year yield to the lowest level since june of 2017 alling below 2.4% this week. below 2.4 percent this week. this after third-quarter gdp growth came in disappointing. let's get you to first word news with selina wang and san francisco. the european commission

is working on a contingency plan for the no deal brexit. brexit. no deal brussels says it is working on 14 areas where a no deal scenario would cause major disruption for people and business. mais government says they are preparing for a possible crash out of the you -- of the eu. of a disorderly brexit are obvious. it would be a disaster. that is why we are making an effort to prevent the disorderly exit from the european union. is moving to support the economy with a low-profile rate cut. they will supply lower cost liquidity to banks willing to lend to smaller companies. this creates a new targeting version of the lending facility. it has rates lower than other options. refrained from cutting costs across the board which would put pressure on the u.n. it will extendys

output cuts next year to balance the market. the minister told us that producers will meet again in april and will keep the program going to drain the glut and lift prices. oil is trading near its lowest price in 15 months as fears of slowing global growth compound fears of increasing oversupply. a highn tell you with degree of confidence that we will achieve balance between supply and demand in 2019. in a -- make no mistake about it. opec and our with side. selina: the global auto industry is facing its first sustained fall in production since the financial crisis. output fell 2.9% in the third quarter and will probably decline about 4% in the current period. the firste

back-to-back industrywide drop since 2009. analysts see the decline in evening out in the next few months. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists in more than 120 countries. jerome powell suggested he will be more cautious about raising rates next year after defying president trump boosting them for the fourth time in 2018 . how did the markets selloff in surprise and disappointment? kathleen hays is here. is the fed sending mixed messages here? to a certain extent. but remember the taper tantrum? it does feel like a stock market tantrum? shery: i was thinking that. kathleen: this kid is expecting a great christmas present, a fancy bike.

and it's a game of monopoly. the latest story out of the bloomberg team in washington puts a great perspective on what happened. it is true the fed wasn't dovish enough for the markets, but maybe they were dovish enough for what they see in the economy. donald trump said don't do it. they did because they think it's the right thing to do. and they trimmed the 2019 forecast. from two to three. i probably might think that would buoy the stock market, but it did not. there were global stock market declines as well. led theglobal growth fed to trigger the forecast. 2.5 percent,of leading powell to characterize it as solid and strong. some things maybe the market did not hear when he said there was a high degree of uncertainty next year.

: we are alert to these issues and we are watching them carefully. we do not see the balance sheet runoff as creating significant problems. he's talking when about the balance sheet reduction. but he also said in regards to the outlook and this high degree of uncertainty that the economy in 2018 grew quickly and inflation went up to target. next year, he says it may not be as kind. anyway, the fed stressed the policy is not on a predetermined course. we'll see that as important. the market was hoping and expecting a pullback from, what? any rate hikes at all? and if there is more trouble ahead, will it cause some more consternation inside the fed meeting walls? the pboc heading the

opposite direction of the fed, stepping into to provide cheaper lending to small companies. trying to give more of an injection of support into the economy. this is the low-key easing that they have gotten so good at. that part of the economy with the financial system, you can do something specific and get the impact you want. you can make it cheaper and easier. it you can get the money in their at a time when the trade wars with so many japanese manufacturers and exporters -- one of the reasons they are looking at this. let's look at this new lending facility. what they are doing as they set up targeted stimulus. is a more targeted version of the medium term lending that is already in place. again, something that will target smaller firms. you have to be ready, willing, and able to not just get money from the pboc, but lend it out.

lend tobanks that will small businesses. often a driver of big economies. of funds will be at a rate 3.15%, lower than the rate available otherwise. if you look at it in the bigger context, customer reserve aquirements and cuts have broader brush and a bigger push to the economy. they are concerned not only about the trade war but the clampdown on shadow banking. will this hit growth at a time when china is already having a tough time keeping growth? the concern is, if anything, it could get weaker. more ratehave two decisions from the bank of japan and bank of indonesia. kathleen: there is no policy report at this meeting, they only do that for times year.

anything governor kuroda says at the press conference will be listened to. consumption tax hike is coming in 2019. caution at the boj is what we expect to hear today. bank of indonesia is always more interesting. inflation ticked up just a little and the account deficit is getting bigger. they might provide some rate hike action in asia for us. shery: thank you so much. kathleen with the latest on what we can expect today. trading in tokyo. softbank in tokyo right now down 7% at the open. this is after falling 50% in the last session. in the last session. they priced the ipo at ¥1500 and currently at 1183. this is not a great time to come to the market. we see the topix also falling

.5%. the broader market under pressure after the fed's rate hike decision. haidi: our coverage of the fed rate hike, the aftermath continues in just a moment. the fedbe joined by president getting his take on it jay powell and friends struck the right tone and what 2019 holds. economy,ty for the trade, and domestic slowdown happening in china. dennis lockhart will be joining us imminently. this is bloomberg. ♪

haidi: this is daybreak asia. shery: let's get more on the rate hike now with former atlanta fed president dennis lockhart. and policyeconomics editor kathleen hays joining us for this conversation. from thee statement

fomc, expecting a further .radual increase of rates how much flexibility does this provide the fed going into very uncertain 2019 -- a very uncertain 2019? dennis: a little bit more flexibility. a couple of words changed, as you know. we judge instead of we expect. some further. fomc think that gives the just a little bit more flexibility for next year. did you detect, though, not just thee -- fomc policy statement, but some of the things jay powell chose to say? he characterized the economy as still solid in 2019. but that statement he had about the high degree of uncertainty , do youate hike path

get the sense that he is maybe just a little more dovish than people realize? out a: i think he carved position in which, as he said over and over again, they can be data dependent. they can basically let the data speak to them next year. they can make their decisions meeting by meeting. there is no preset course. he repeated that a couple of times. take into consideration what seems to be affecting the broader economy in the united states. what is important in these particular cases to understand, the fomc is focused on the real economy. the broad, main street economy. that is what really matters. the financial

economy is important only to the extent that there is a risk that it spills over into the broader economy. that point seems to be lost on the markets. certainly, he tried to downplay that part. in reference to global economic uncertainties like the trade war and brexit, but also the fact that we see structural slowdowns in a number of emerging markets as well. forecast revised down as we get to next year. how much of that plays into the fed's thinking? how much of that tracks through to the u.s. economy to the extent they would need to take that account -- into account for policymaking? dennis: they are clearly watching developments in the economy. watching brexit. watching what is going on in emerging markets.

experience aty least, the global economy spilled back into the u.s. economy less than other major economies in the world. to u.s. economy i don't want say is insulated from the rest of the world, but the u.s. economy motors on from its own fuel of consumer activity and domestic investment. it is not so heavily influenced by what is going on globally. the kind of repeat the point i made a moment ago, they will be watching for spillover. if they do not see spillover, what is going on globally will just be part of the background that they have to pay attention to. shery: what the market did not like today was not just the rate hike, but the balance sheet rundown being on autopilot. the fed seeming pretty proactive here. is this a good approach to next year when the uncertainties are

so high? does the fed need the extra ammunition going into next year? i think that requires a little bit of a new wants to answer.- of a nuanced toating a cushion to react downturn is not a reason to raise rates. clearly, they would not be thinking that we want to raise the policy rates just in order to be able to reduce it. a downturn, sooner or later, will materialize. in my opinion, it is a background concern and ought to be for the people on the committee. it to be able to have enough ammunition to be able to deal with a downturn when it does develop. dennis: you have been watching -- kathleen: you have been

watching markets for many years and you have been there. a global banker. chartcould, i pulled up a for our team from the bloomberg lighty that shows green financial conditions may have topped even as the fed keeps raising rates. but that hat on as a banker. should this be a big red light to the said that financial commissions really are tightening? they were referring to the exchange rate. the u.s. dollar exchange rate having moved higher in recent months. there have been periods in which longer-term interest rates have risen. today, the long-term interest rates really plummeted. lending conditions, i think, remain reasonably supportive of the economy. so i think that as chairman

theyl's comment was -- were aware of some tightening of financial conditions in recent weeks. to not enough to sway them let those conditions, having tightened, really sway them to not raise the policy rate. and the conditions themselves have a tendency to wax and wane. that there is a strong reaction, necessarily, to the movement of financial conditions. chair powell acknowledge that we are probably at the low end of the neutral rates. there is debate of where neutral sits. but if we are at neutral now and we assume that the running off of the balance sheet happens, another 25 basis points in

effect. there still seems to be a number of people on the committee that are looking at three hikes next year. is there risk of overshooting in that case? interesting to me that there is a reasonably widespread spectrum of opinion on how many hikes in 2019 are appropriate. remains threember hikes. slightly fewer people have two. some one, and one or two at zero. it is not a tight consensus as to how many will be appropriate. that theved enough median came down from three to two. i think that is showing that they are leaning toward fewer hikes than previously had been committee.the

risk that they will overshoot? the keyword is data dependent. the keyword is "no preset course." veryd to emphasize strongly that these are projections from today. they are not a commitment and it is not a consensus decision of the committee. kathleen: if you were there now, what would your leaning be? where would your dots be for next year? that you could see two or three? where would you be? days ago, i a few had a long conversation with a market practitioner. and i got that question. i said i would probably have gone in with two hikes for next year which would have been a

pulling back from being in the camp that supported three hikes. yes. , i would haveood gotten to be a little bit more dovish about the future by moving my. from three to two -- my dot from three to two. you and caf au lait for joining our conversation. you can get a roundup of the -- and kathleen for joining the conversation. of the get a roundup information on our terminal and you can customize your settings as well. this is bloomberg. ♪

haidi: this is daybreak asia. shery: we have an all or crossing the bloomberg right

now. we are hearing that response management has reduced most of its macro wages. this is the strategy that may george soros a billionaire. made george soros a billionaire. the chief investment officer since 2017 has been cutting the strategy over the last year citing fewer opportunities. she withdrew money and cut locations to the internal team. bloomberg learning this trump people familiar with these changes. although the spokesman from the soros fund management declined to comment. we hear the soros fund management of george soros has now cut most of its macro wages. suffering its biggest fall since july after being sued by the district of columbia for breach of right to see. .- breach of privacy

the company allowed more than 150 firms to access more personal user data than had previously disk posed. -- previously disclosed. --t was about haidi: an investigation has seen their first arrest. a have taken 10 employees into custody saying they are expected -- suspected of paying bribes and washing vast sums of cash. it is likely more people will be apprehended in connection to the inquiry. shery: the trump administration is ready to lift sanctions on a -- henaire after reaching personally will remain under restriction. the treasury department plans to lift sanctions. we are told the move will happen in the next ready days unless

congress blocks the plan. -- next 30 days unless congress blocks the plan. haidi: the latest jobs numbers are due out shortly. will it be another wild ride for november? we will have the latest figures coming next. next.est figures, ♪

haidi: we are waiting in the next few minutes the australian labor market report and jobs numbers for november. in the meantime, sydney markets trading pretty much flat. we are getting numbers out now. employment change for november, 37,000 jobs added to the australian economy, a beat from expectations of 20,000. this is a notoriously volatile figure. also extending gains of 32.8 thousand in the previous month of october. unemployment rate ticking up a little bit, 5.1%, against expectations of 5%.

5% had been equally matched lowest rate we had seen in six years. full-time employment, a detraction of just about 6.5 thousand jobs being removed from that number. part-time employment, 43.4 thousand added. that is going to weigh in on the underutilization rate, which does look like the number of people who are not working but would like to work more. the economy participation rate holding steady, ticking up 65.7%. underutilization as well as participation, that gives you an idea of labor market slack. shery: talk about volatile numbers. that was a huge beat in the employment change. let's get the first word news with selina wang now. selina: u.s. stocks slumped as the fed turned less dovish than hoped at the last policy meeting of the year.

the s&p 500 tumbled to a 15 month low when investors flooded into treasuries after jerome powell signaled policymakers see little threat from the recent turmoil in financial markets. the fed adjusted guidance to say some further rate hike will be needed, noting the strong economy and labor market. >> inflation still remains a touch below 2%, so i think that gives the committee the ability to be patient in moving forward. as i mentioned, there is significant uncertainty about the path and destination of any further rate increases. selina: southeast asia's two biggest economies are diverging. thailand starting a hiking cycle while indonesia nears the end. the bank of thailand raised its one-day bond repurchase rate. 1.75% basis point rise to was in line with forecasts. indonesia is said to keep its rate on hold at 6% after 175

basis points of hikes since may to stem a route of the rupiah. m&a related loans in china look set to end 2018 lower for the second year with prospects dimming as the trade war curbs appetite for overseas deals. bloomberg data shows event driven loans made by chinese firms were down 44% this year to $17 billion. that compares to almost $31 billion in 2016. they say the environment will remain challenging. president trump has declared victory over the so-called islamic state and ordered the withdrawal of u.s. troops. his sharp reversal appears to have taken the pentagon by surprise, triggered criticism from friends and foes, and left america's kurdish allies alone. details such as a timetable and whether airstrikes will continue. pres. trump: we have been fighting for a long time in syria.

i have been president from almost two years and we have really stepped it up, and we have won against isis. we have been them badly. themve -- we have beaten badly and taken back the land, and it is time for our troops to come back home. selina: 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. wang.lina this is bloomberg. haidi: let's take a look at asian markets so far in the fed aftermath day. sophie is in hong kong. little enthusiasm in asian markets. aussie shares, some punctuation for the benchmark, higher by .1% as utility and real estate sectors are offsetting declines in resource stocks. the cost the -- the kospi falling as much as 1.3% this morning. the nikkei falling further below 21,000 points while the yen is holding onto a four day advance.

the kiwi dollar making some moves, recovering after its slide on the back of the disappointing third-quarter gdp data. we did see the kiwi dollar fall, but now recovering somewhat. when you check on what is going on with the bond space, we are seeing kiwi bond yields sliding this morning, falling to a two-year low. australian bonds continuing to rally with the 10 year yield falling to a june 2017 low. a slight pickup in treasury yields. the 10 year rate up by about two basis points after falling to an eight month low overnight. let's check on stock movers in the region. softbank corp. still not getting a vote of confidence from investors, with shares extending the post-ipo slump after plunging nearly 15% on its debut. byey farm falling in seoul as much as 10% after a long cancer drug did not get breakthrough status from the u.s. fda. in sydni, movers of note.

myob sinking the most on record after kkr cut its price by 9.8%. on the losing ground potential listing -- lifting of u.s. sanctions. there is talk the trump administration's steel and aluminum tariff exclusion process will be reviewed next year. republican senator pat toomey said the process is broken with the tariffs hurting american consumers. we are seeing bluescope steel off by over 4% this morning. shery: markets in the u.s. revolted against the fed's dovish town because it was not dovish enough. mark cranfield joins us for some analysis of the response. kathleeniscussing with how we get reminded of the temper tantrum back a few years. are the markets right now really spoiled from all the easy money? or was this reaction justified? mark: quite possibly.

people have gotten so used to central banks bailing them out every time the equity markets look a little soft. along comes the central bank to help them and get back on their feet. i think the equity market in particular is especially disappointed. they were looking for a much clearer message from jerome powell that the fed was on the verge or is about to do a cause in its monetary policy. the fact the dot plot still shows two potential hikes next 2020, i even a hike in think that came as a negative surprise to equity markets in particular. the risk is that -- you can see the way the bond market has fund so much, down to 11 basis points. already negative on that u.s. five. clearly the bond market thinks there is a serious chance of a policy error coming from the fed , and that could lead to a recession in america.

you have the bond market going one way, the equity market going another. a pretty uncomfortable picture. no question investors were disappointed with what they heard. haidi: it was a kind of lethal combination of chair powell saying we have reached the lower end of neutral, but the autopilot running off the balance sheet was going to continue. there are still committee members who are looking at three rate hikes next year. what are the chances we get two or even three? mark: it is very interesting. in the press conference, you heard jerome powell say there is a high degree of uncertainty about the direction of rates from here. yet there are still people who want to have three hikes. i think some of the indicators they are considering are not unreasonable, but they are backward looking. the employment situation in america is still very strong, but the equity market is one of the forward leading indicators, and that has changed significantly in the last two months. it could very quickly lead to weaker consumer confidence.

some of the forward-looking indicators could change very fast, and it could really undermine what some of the fed people are looking at. the potential for changes over the next couple of months is high. by the time we come to the next fed meeting, they could be looking at the world very differently from the way they looked at it yesterday. shery: we saw the dollar rising on the decision, but already the strength is fading. what would be the takeaway for asian fx? mark: asian fx will be looking at the yield curve. the fact that there is a pretty decent chance that dollar yields have peaked, regardless of what the fed is telling us. if you look at the treasury yield curve, it is clearly indicating it does not see interest rates going higher. that is generally good for asian currencies. once asian investors can be fairly confident that u.s. rates are not going up anymore, that takes away a big headwind

against asian currencies, so people start to get more confident. we have seen this week, the indonesian rupiah and indian rupee having a very strong week, even in advance of the fed meeting. also helped by lower oil prices. things are beginning to build in favor of asian emerging markets, and we could see a decent performance in the next few months from most asian currencies. haidi: mliv strategist mark cranfield in hong kong. you can see more on this story in today's trading action, the reaction to the not dovish enough fed decision on the markets live blog on l.a. the go. you can get a rundown in one click and fresh commentary and analysis from bloomberg expert editors. find out exactly what is affecting your investments. softbank corp. has opened lower in tokyo, extending a poor start to the second biggest ipo in history. it now stands out as one of japan's most of the pointing --

most disappointing market debuts in a decade. seeing declines of 17.8%. bloomberg technology reporter p avel joins us from tokyo. softbank president gave a briefing after the close of trading yesterday. what did he have to say and what kind of tone was struck? >> the very first thing the president and his cto did were deeply andre bow apologize profusely for the network outage two weeks ago. as for the share dropped, his answer was basically a shrug. he said they are at the starting line. to be fair, he did drive home a message to say investors came to this ipo for the yield and the dividends, about 85% payoff ratio. they gave an outlook for the net income for the coming year and

tried to reassure investors that if you are here long-term, you will get what you came here for. sory: still there have been many concerns about the future outlook for the company, especially with the government demanding from telecom companies to lower their mobile fees. what lies ahead first south bancorp and their shareholders -- lies ahead for southbank -- softbank corp. and their shareholders? pavel: this is unprecedented from many viewpoints. from the investor going of view, it has been grossly overvalued, especially if you compare to what the main rivals are trading at. from the individual investor point of view, the people to which it was marketed most heavily, the 85% dividend payoff ratio would be a 5% yield, which is fairly unheard of in japan, especially for businesses relatively as stable as telecommunications. the questions going forward are at what point do retail

investors, who are clearly spooked by the global sharemarket rout as well as the network outage at an unfortunate timing, when will they come back for that yield, if at all? and when will institutional investors decide this is the right price and they need to buy? it is pretty much unavoidable that softbank will eventually become part of an index and an index fund will have to take a look at it. luckily not happening just yet. shery: bloomberg tech reporter in tokyo, thank you. our next guest sees value for investors in asia next year as trade tensions with china use. the view from dbs bank is next. this is bloomberg. ♪

shery: this is "bloomberg daybreak: asia." i am shery ahn in new york. haidi: i am haidi stroud-watts

in sydney. the fed raise rates, trimmed its forecast for rate hikes in 2019 to two down from three. let's take a look at what that means for asia. taimur baig joins us now. i want to start off with how emerging-market developing currencies and stocks reacted overnight in the wake of that balanced, dovish hike fed announcement. we did see declines across em assets and seeing declines across stock markets in asia as well. it was what we expected, but markets expected something even more dovish. guest: i think the market was deluding itself. i have been watching your segments and earlier speakers through the course of the morning. the notion that the u.s. economy is going to slow after a sugar rush high of an unfunded tax cut is not shatteringly new. the fact that the fed, which was fairly hawkish earlier in the

year, might have to take a look at its forecast and its forecast horizon as far as interest rate increases are not a particularly shocking revelation. the market is nervous for a variety of reasons, but most of it is related to noise as opposed to fundamentals. fundamentals have not surprise on the downside. we knew we would have strong numbers succeeded by soft numbers. we are heading to this off-season. markets are upset about that. but this is not a shocking development or that there is a big gulf between what the markets are seeing and what the fed is seeing. this is where i take issue with what mark was saying, the fed's views are backward and the market is forward. we are looking at the same set of data. the fed is consisting of human beings like us who are analysts, and we all look at the same data. we are seeing the u.s. or global economy which had a decent 2018, which may slow gradually on the back of a gradual slowdown in china and ebbing of the sugar rush in the u.s..

overall, we are not looking at a major downturn, forget about a recession. haidi: this combination -- chair powell saying we have hit neutral, the lower end of neutral, then saying the balance sheet runoff will continue on autopilot, resulting in greater tightening. then you have participants at the fed who still see two, maybe three hikes next year. are the risks more weighing in terms of an overshoot rather than undershoot for next year? first and foremost, that famous statement from last month that the feds rates are close to the neutral rate, which neutral rate are we talking about? on the dot plot there is more than 100 basis rates of what the expectation of the neutral rate is. i don't know what jerome powell's neutral rate notion is. maybe it is higher than the lowest point in the dot plot. we know many more doves than him inside the fed. secondly, the idea that there is

a lack of consistency between expecting some rate hikes and thinking they are pretty close to the end of the cycle, i would think is the correct one. you would have various governors with various notions of the neutral rate, but most importantly, the fact that the pcerevised down the core may be interpreted as a major dovish signal, consistent with the fact they are expecting two hikes next year as opposed to three or four. beyond that, the fed does not react to inflation. it would be too late if it was. it has to look at forward-looking indicators that determine inflation down the road. one of them is the output gap. the other is what is happening in the labor market. these are not necessarily as lagging indicators as some analysts would like to say. the forecast equation of any fed governor would have these things on the right-hand side. they are suggesting 3% wage growth. we could have inflation on the upside as soon as the oil

related downside goes away. shery: we are expecting two policy decisions out of asia this morning, the bank of japan and bank of indonesia. this gtv chart showing we have seen successive rate hikes from b.i., but really as the rupiah kept getting weaker and weaker. what are your expectations for these two central banks? guest: let's start with the easy one, boj. they will probably not do anything next year or the year after. as far as bank of indonesia, they are undergoing a much-needed period of respite. the last two months have been for indonesia. oil has gone down, but more importantly, indonesia has found buyers for its debt securities. the option for the debt a couple weeks ago was exceptionally successful. the government is pre-funded for 2019, so i think the pressure is off. you can see that in market

participants' view on indonesian assets. the exchange rate has been one of the stronger over the last few months. i think b.i. will breathe a sigh of relief, do nothing this week, and move on, see what january holds. i think they have been proactive, tried their best under difficult circumstances to be proactive with monetary policy tightening. the fact that indonesia has fairly low fiscal debt at the sovereign level makes indonesia a distinguishing characteristic as far as emerging market banks are concerned. i am broadly optimistic for indonesia's rupee and rates outlook for 2819 -- for 2019. shery: thank you so much for your time, dbs bank chief economist. is saidire george soros to have reduced most of his macro wagers. the hedge fund manager is moving away from the strategy that made him a fortune and inspired a

generation of traders. , who reported on the news, joins us on the phone. kathy, it seems the environment is getting tougher and tougher, not only for george soros. >> we should be cleared that mr. soros himself is not involved in the managing of the money anymore. it has now gone to a woman named cio of thetrick, a soros fund management group. shery: as i mentioned, this environment has been pretty tough. not just this fund, but we have heard recently about stan making money in this current environment. kathy: that's true. people have complained it is a lot harder to make money. stan said miller: --

earlier this week he used to make 30% for 30 years and now is nowhere near that. we have seen a few micromanagers who suffered for the past several years, and now finally some of them are beginning to make a little bit of money. some people might say that this soros fund management is pulling money out of macro at perhaps the wrong time. time will tell. haidi: kathy, thank you so much for joining us. we will try to get more on that story as details become available. the bank of america chairman says a dispute between the u.s. and china will take time. speaking exclusively to bloomberg, he said some of the issues dividing the sides will be hard to resolve. >> it really depends on the client. some client, it has already disrupted. they could not wait to find out what would happen, so they started reorganizing the supply chain.

if they could, they started moving the production of goods out of china to places that would not carry the tariffs. they believe they can't pass their price. that has caused some money without any real benefit to them, because you are going to sell clothing for $20, you cannot really raise the price, so you have to move it to keep it from going up in price from a tariff. the uncertainty that this could cause economies to slow down is disruptive in people's minds. in my view, some of these things have to fall in place. mexico and canada fall in place. now we have to get the deal approved. there is an eu outline. that has to work its way through the system. my believe is we have to make progress on china, but it is hard. that is what people forget. barriers, intellectual property, those are much harder issues than the question of the tariffs and equating certain

types of transfer pricing and things like that. why it is so hard is because they go the hardest with competitiveness between countries. i think this will take longer, but it needs to get resolved to reduce uncertainty. >> talking about china, how much is trade tengion and how much is the chinese economy? how vulnerable is the chinese economy? >> in china, it is slowing down. they are talking about doing stimulus. they have the need to continue for societal purposes, to continue to bring people from agrarian to urban working production and services. trying to internalize the economy. that has been their goal, no mystery about this. it slowed down a little bit, and i think that affects europe more than the united states because of the linkage. you see it affect economies around the world, asian economies. traditionally they have moved fairly quickly, and we will see this week they are doing a lot of the work. they have moved fairly quickly to move things along. you see them making those

movements. but it has slowed down. >> what is the risk that global growth will slow down because of china? it has generated such a disproportionate amount of global growth. if it slows down even a percent or two, it takes a lot out of global growth. how could that reflect on the united states? >> china is big enough to make a difference, a 1213 -- a $12 trillion economy. people are concerned over the growth and the linkage to other people's growth. the track record has been to keep growing around 6%. percent and six and a half percent will not make a world of difference. europe is more tied to it than the united states, and that is why people are talking about being worried about that. the core production for most people, the average blue-chip economist, is for worldwide growth to slow down a little. that has been in the predictions, so there is no surprise. by the way, the u.s. is going to slow down. shery: we will have more from

this exclusivity of you throughout the day. that is it from daybreak: asia. we look continues as ahead to the start of the day in hong kong and shenzhen. very interesting we find ourselves in this environment when the fed is hiking rates but the pboc is going the opposite direction, announcing they will supply lower cost liquidity. haidi: some of that loki easing or stealth easing, interesting to see whether that will give an injection of positivity for chinese markets. of course, the open is coming up right ahead, given we are seeing a languishing situation with the rest of asian markets trading on this fed reaction dead. this is bloomberg. ♪ place, the xfinity xfi gateway.

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rishaad: 9:00 a.m. in hong kong. fedne: stocks slide as the turned less dovish than hope. jay powell says rate hikes will be needed next year. pboc delivering what some are calling a low-profile rate cut. yvonne: bank of america says washington and beijing need time to sort out their differences. our exclusive interview, coming up. yvonne: