paul: i'm paul allen in sydney. we are under an hour away from the australian market open. shery: good evening from bloombergs world headquarters in new york, i'm shery ahn. welcome to "daybreak: asia." paul: our top stories this monday, trade talks get back on track this week but there is little hope of a breakthrough in shanghai. neither side seems ready to compromise. teargas and arrest in hong kong's eight -- eighth weekend of protest. an official response. markets prepare for the first

fed rate cuts and a decade. a busy week also brings policy decisions from tokyo and london. shery: let's get you started with a check of the markets closed. the session in the u.s., the s&p 500 and the nasdaq closed at record highs. the biggest jump in three weeks for the s&p 500. the biggest in five for the nasdaq. we have twitter and alphabet leading a tech rally on positive results. gains coming from stronger than expected second-quarter gdp numbers. we will see a rate cut by the fed this week. a very busy week for earnings in the u.s. we are expecting more than 160 companies to report. u.s. futures unchanged. let's see how we are setting up for asia. after a bright start, we have seen new zealand grinding steadily lower, looking kind of flat. nikkei futures, kospi futures also flat. busy week of earnings out of

japan particularly. 157 companies reporting this week. twoy we will hear from among others. 1/5 other kospi will report this week. in australia, the future is looking bright. better than one quarter of 1%. bear in mind, those numbers will reset to 10 minutes before the open. let's check in on the first word news with su keenan. su: thank you. we start with the u.k., reports from london say the u.k. is stepping up preparations for a no deal brexit. this at the end of october with a senior advisor saying it will unless the european union reopens negotiations. the adviser said the government still hopes brussels will change its view on new talks, but is operating on the assumption nothing will change. boris johnson has formed a six person panel to oversee the brexit process. >> i do not wanting no deal brexit. that is not where we are aiming. but we have to face the fact that the moment, we are being

told for the last three years that the deal is fixed and cannot be changed. i doubt that. confidence and friendship to our european partners, we are going to continue with discussions and we are going to get ready to come out on the terms that are necessary. e.u., australia and singapore among five countries that may lose some market access to the european union. the financial times says brussels is targeting countries that it says do not regulate credit rating agencies as rigorously as the eu. the other three on its head slit -- hit list is brazil, argentina, and canada. any move would be the first time the european market access rights have been withdrawn. now, the company has successfully completed its 18th resupply mission to the international space station. installing the dragon cargo capsule over the weekend. -- it docked carrying

more than 2000 kilos of supplies for the crew. the experiments include a 3d organ printer which will create nerve cells and let scientists see how they hold their shape in zero gravity. gloomybeen a gluey -- summer for japanese retailers, the worst weather in tokyo and over a century. temperatures have dropped, they have been 20% cooler than normal. the number of daylight hours recorded in the city is the lowest on record. that has been hurting a parade reportingrs, all crumbling sales. 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 su keenan. this is bloomberg. paul: thanks very much. the united states and china do head back to the tray tail will this week -- traded table for

the first time in three months. there is little expectation on either side about a breakthrough. looming over the talks and shanghai, a new geopolitical issues and no sign that beijing or washington will budge on key demands. let's cross to beijing and our china correspondent, tom mackenzie. sounds like tuesday's talks could be a little fraud. tom: absolutely. both sides have been jockeying ahead of these two days of talks. we are expecting officials to be en route from some point on monday, arriving and starting the stock -- the talks in shanghai on tuesday. running through until wednesday. jockeying and positioning from the chinese and u.s. is ahead of the stocks. on the chinese side, they have made moves to encourage their companies to start and look at buying agricultural products, soybeans from the u.s. on the other site, they have accused the u.s. of being "the black hand behind the hong kong protest." continued ano

investigation into fedex over some redirected packages from huawei. they have outlined and reiterated what they want to see in terms of getting a deal. they want an immediate removal of tariffs, a balance due beal, and less onerous demands in terms of what the u.s. asks them to do in terms of purchases of those agricultural's. on the u.s. side, trump suggesting that maybe he will ease the restrictions around huawei which is a major sticking point in these discussions. also, from the u.s. side, they have launched something of an investigation into china's status as a developing nation. will --s in the u.s. have said they want "a proper deal." structural reform and changes to china's economy, intellectual property strengthening and other issues around trade and having a balance trading relationship. many commentators saying there is a big gap between these two sides.

a china expert says it may come down to the u.s. excepting either a practical limited deal, or ramping up those tensions and adding additional tariffs on u.s. goods, and resuming the escalation. shery: one of those issues is agricultural purchases from china that president trump really wants to see. what do we know? sideas i say, the chinese have looked at asking their companies to restart purchases of u.s. soybeans and removing the tariffs for those companies. what we have seen in terms of the actual hard data for the first half of 2019 is that china has about the fewest number of soybeans since 2004. for the month of june alone, they purchased about 600,000 tons of u.s. soybeans. it may sound a lot, but compare that to the purchases from brazil, 5.5 million tons in the month of june from brazil soybeans. there has been a sharp drop-off,

they switch in terms of where china is getting it soybeans. not from the u.s. but countries like brazil. it will be hard to see china switching up even if there are some of its companies to buy normal amounts of soybeans. the pressure will remain on those u.s. farmers. a more data out over the weekend pointing to the pressure that china's economy is under. what are these industrial profit numbers telling us? tom: the industrial profits came out on saturday. for the month of june, they were down 3.1%. industrial profits fell 3.1% from the year earlier. year on year is a number. as you say, additional pressure in terms of the factory sectary, the industrial sector. we know the tariffs are in place. that is a pressure point. there is a global demand picture as well. just the fact that you are getting to a point where we are closing in on deflationary numbers for factory prices, that is putting pressure on profits.

again, additional concerns about whether or not we enter into deflationary cycle. the pressure continues. in terms of the manufacturing, we are already in contraction and we are expecting fresh data out to show that contraction continues for china's manufacturing sector, and for the second quarter gpd, 6.6 percent. softest number since 1992. china's economy remains under pressure. the u.s. will be hoping that factors into these trade conversations taking part -- place and shanghai. maybe it will change how the chinese side are looking at this. shery: tom mackenzie invasion, thank you so much. still ahead, we have seen disappointing earnings so far in japan, including nissan motor and fuji electric. could a big tech names deliver more upbeat results? paul: up next, from tray trot ashtray talks to the u.s. job numbers. investors and policy makers as we enter what may be the busiest

week for the world economies this year. this is bloomberg. ♪

paul: this is "daybreak: asia." i'm paul allen in sydney. shery: i'm shery ahn in new york. we are heading into the busiest week for the global economy in 2019 so far, with policy decisions from the fed, the boj, and the bank of england. our policy editor kathleen hays ins in tokyo this week. let's get started with a fed. markets seem to think the fed rate cut is baked in, despite the fact that we have stronger than expected second-quarter gdp numbers. kathleen: this is so interesting because i think the fed will have a debate because some numbers have been coming in stronger than forecasted. jobs growing. wages rising. the fed wants insurance in case the global forces, the trade war, slow the u.s. economy down. gdp on friday, stronger than

forecasted. let's look at a chart. 2.1% annualized. it was supposed to come at 1.8. that is down in the first quarter. a slowdown was expected. what was unexpected, not the turquoise bar, it slow down, but the white line is a surprise. consumer spending going from 0.9%. that is weak. to 4.3%. that is strong. maybe you would say to the fed, are you still going to cut that rate? another chart, consumer spending. yes, very strong. what is weak? the business investment key to keeping the economy going. now you can see on this chart, the turquoise line is business investment. it is -- has turned negative by one of its major measures. when we look at the fed meeting, what markets will watch is the policy statement is at hawkish, suggesting the fed wants to keep the expansion going, but maybe it will wait and see. or is it dovish? suggesting more rates are

coming. what does -- many economists are saying that cut is certainly going to happen this week. maybe the fed will not signal the beginning of a steady march toward lower rates, the beginning of an easy cycle as a habit had in the past -- have had in the past. shery: what can we expect from the boj when they have to decide before the fed? kathleen: yes, that makes it tough. if governor kuroda knew today how dovish the fed would or would not be, he may have a sense of how the -- how it will react. many people are thinking maybe the boj will want to take its own insurance out and have a dovish tilt. tokyo saysl from people may be looking for that outside of japan, but within, people do not see the urgency. let's listen. >> here in japan, it is interesting. ofis a much more period calm. people are looking at the exchange rate. if the yen were to spike, the bank of japan will move.

if the end does hold current levels, i do not think there is any sense of urgency for the boj to do some -- do something. tom: that was jesper speaking to bloomberg friday. chancesays there is a they would extend control. also to the 15 year note yield. bloomberg economic saying in tokyo the boj will stay on pat. no change in their framework until 2021 because gdp is growing. exports are weaker because of the trade war and asia demand is weaker but we still see the economy moving ahead. in the latest news survey of economists, nine of 47 do see some kind of tweak, saying stimulus will last longer than spring of next year. bloomberg news team also reporting, bank of japan members are saying that we do not see any big gain from extending that pledge at this point. they could even backfire.

we will see what happens next. paul: kathleen, we have the bank of england meeting on thursday. they probably wish they had japan's problems. what is the increasing threat of a brexit for their decision? probably themeans bank of england is going to keep its policy on hold. they have upward inflation pressures, they have wages rising. the threat of a hard brexit, the willingness of the new prime minister -- he says he will renegotiate the brexit to deal that theresa may put together with the european union, it is just not enough to convince the bank of england. particularly after the u.s. said there is no room to renegotiate. we came to a deal. we see mark carney sitting down at a different gathering. when he sits down with the rest of his board members this week, there may be some saying that maybe we should at least continue to signal there could be a hike. most people saying if anything, they are looking at the possibility now that a hard brexit which was the small odds,

small chance of happening becomes more likely. that they too, has markets will be talking about what do we do in the event that we are moving in that direction, in which case people say they would look for a cut. we have to see what happens with boris johnson the european union first. paul: global economics and policy editor kathleen hays, thank you for joining us. let's bring in our next guest, sian fenner, senior asia economists. she joins us from singapore. thank you for joining us. i want to start on the fed. you probably heard kathleen breaking it down for us there. in terms of the data. for data dependent fed, take away inflation and a few concerns over business investment numbers, we have the market expecting a 25 basis point cut. like i said, the fed will be data-dependent. why on earth are they considering an insurance cut? things do not look that bad. well, inflation still is

not anywhere near its 2% target, nor do we think it will reach that part that -- that target. there are risks facing the u.s. economy. business investment has softened significantly. given the uncertainty over the u.s.-china trade talk. that is likely to continue to remain on sentiment and business investment. we see a 25 basis point insurance cut. but moreover as we go further had with the u.s. economy. we are looking for an additional 25 basis point cut over the next nine months. paul: the global for -- picture is very much front of mine for the fed. the trade talks this week will be a partake -- of particular interest. the last time we spoke, you were not optimistic of a breakthrough. has your opinion changed? sian: no, unfortunately not. positively, the resumption of trade talks means the risk a

flareup in escalation intentions has named for now. the prospect of a trade deal being reached at these talks is very low. there are a lot of sticking points for both sides. both in terms of trade, but also those around intellectual property, industrial policy, huawei. we think it will be difficult for an agreement to be reached that both find acceptable. shery: china's profits, declining. without any resolution on trade. is it reasonable to expect that the government will come back again and offer more support for the economy? sian: absolutely. they are doing piecemeal support for the economy in terms of infrastructure spending, trying to boost the infrastructure investment, liquidity injections, rrr cuts. they will likely continue to do this. we are not thinking of big bazooka. we do not think they want to do this, given the financial risk associated with such a policy. it is getting difficult for the chinese economy.

they do need to continue to provide support. shery: what are you expecting from the boj? are we going to see some sort of insurance move against a jump in the yen as well? sian: at this stage, we do not think so. we could see that they extend their for guidance, maintaining that 0% on 10 year government bond yields, beyond a set of next year. there will also -- they will be revising the gdp inflation. we think they will revise their inflation outlook as well. no significant changes in terms of their policy. are we seeing a race to the bottom going on right now with central banks? we have a number of southeast banks alsocentral are we seeing looking at the next move being a cut. what are your expectations there? sian: the fact that we do have the u.s. cutting into straits and we have subdued inflation around the region does mean we are looking for further easing. we are looking for indonesian,

philippines to cut interest rates one more time. we are looking banks also looking at the next move being a for singapore, the monetary authority appreciation buys. and malaysia to also put another rate cut in over the next six months. however, we do not think this will be an aggressive easing in monetary policy. turn to international philippines, the reason they raised rates so much last year was because of their current account deficit. we think the current account deficit is unlikely to narrow anytime soon. that means they do remain quite vulnerable to a risk off scenario. an stronger u.s. dollar. there is also leveraging concerns across the region which is likely to keep central banks a little dry unless things deteriorate significantly globally. shery: we are also expecting second-quarter gdp numbers out of hong kong this week. we already saw the violent protest over the weekend. the economy was slowing down before the protest. when are we expecting these demonstrations to filter through an to be reflected in the numbers?

likely going to see that in the q2 figures. we are looking for gdp to slow to 0.3% on the quarter. that is down from the first quarter. within terms of the protest and how that is impacting retail sales, property sentiment, but also in the background is the impact of this u.s.-china trade, softer demand, which has meant we have seen the hong kong trade figure exports to the u.s. and china are down. that will be weighing on the hong kong gdp growth. given these protests are continuing, it will probably continue to dampen growth. shery: it has not helped hong kong, the chinese yuan has been depreciating. that has been eating into chinese tourists coming into hong kong's purchasing power. what are we expecting in terms of the chinese yuan? is going tonk it remain fairly stable. we do not think it will break

the seven number which is a psychological number. there are a number of reasons. one, we do not think the chinese want to risk the u.s. ir over depreciation. but also domestically, it is important that they do not have a significant depreciation. they do not want to be encouraging capital outflows. we also think on those domestic factors, we will likely see them limited and push to make sure it does not reach that 7%. shery: sian fenner, thank you so much for your time. oxford economics senior asia economist. you can get a roundup of the stories that you need to know to get your day going in today's edition of daybreak. bloombergs upright -- subscribers, go to dayb , also available on mobile on the bloomberg anywhere app. you can customize your settings so you only get the news on the industry and assets you care about. this is bloomberg. ♪ is bloomberg. ♪

shery: this is "daybreak: asia." i'm shery ahn in new york. paul: i'm paul allen in sydney. let's get a check of the latest business flash headlines. london stock exchange is in talks to buy the financial trading platform resented if any deal expected to be worth the equivalent of $27 billion. they said they will issue shares as part of a transaction with holders receiving just over one third. the sale will be a quick flip for the blackstone consortium that bought a majority stake in refitted it last year. shery: saudi arabia technicals cut a -- had a tough second-quarter, plunging the most in a decade. net income tumbled at 70% as demands for plastic dried up, hit by a downturn in the global auto industry. they are set to receive support from saudi aramco which is in the process of buying a $59

billion majority stake in the company from the kingdom of southern wealth fund. -- sovereign wealth fund. paul: bank of dando has won government support. the icbc is buying a 10% stake in the bank with the best in the china's great wall also taking smaller stakes. weekollar bonds fell last after a report that regulators are seeking to resolve its liquidity problems, as hong kong listed shares have been suspended since april. next, hong kong has seen another weekend of unrest and it seems china is preparing an unprecedented official response. this is bloomberg. ♪

asia.is is daybreak i have su keenan. we start in france are the countries pushing -- country is pushing ahead with a tax on big tech, despite donald threatening them. he slammed the foolishness of the levy from the french, but the french government says it will be implemented anyway. the finance minister insists it is not deliberately targeting american countries as says this is of universal interest. should not understand the decision taken by france to have its own -- activities as any

willingness of targeting american companies. that is not the case. we are not willing to target the american companies. su: u.s. trade negotiators go to china later monday as talks resume after a pause. they will travel to shanghai with little expectation of a breakthrough. there have been mixed signals from both sides with neither showing much inclination to compromise. china indicated readiness to buy more u.s. farm products, but its purchases of soybeans have fallen to the lowest in decades. at least eight people were killed in a series of earthquakes in the northern philippines. the tremors struck a province with scion -- seismologist reporting 200 aftershocks. the government promised three quarters of $1 million of aid with the president describing the area as one of the most treasured destinations in the

country. china's top hong kong policy office will give its verse response monday to the continued escalation of protests in the city. the weekend saw more mass demonstrations in multiple locations including violent clashes with police that continued late into the night both saturday and sunday. 49 people were arrested and what marks an eighth straight weekend of protest activity. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. keenan. this is bloomberg. thank you. we are a half hour oh -- away from the open in tokyo. let's bring in the asian equities reporter. busy week for earnings, central-bank decisions, trade talks, what are you watching today? reporter: good morning. it is actually a relatively

quiet day in asia for asian assets today but for the rest of the week it is really jampacked in terms of central bank actions, trade and earnings. in terms of central bank funds we have boj, bank of england and the fed. all eyes are on the fed while a 25 basis point cut has been baked in. people are looking really for proof of the next rate cut by the year-end. in terms of earnings we have this week will be one of the busiest in asia for asian results. in japan alone we will have more than 1000 companies reporting earnings including nomura and toyota. we are watching out for that. in terms of trade talks, we have the trade negotiation crew coming to shanghai this week but the sides have downplayed significant breakthrough on the negotiation so far. paul: we also have australia

earnings kicking off later this week. what are you watching their? -- there? lianting: australian markets is going to report earnings later this week with rio tinto kicking off the earnings season. the markets this year have been one of the best in asia, up 20% there yet for the rest of the year, goldman sachs has downgraded the earnings, the market overall because of high valuation. what to watch out for? investors because of rba keeps lowering rates, investors watching out for or in favor of high dividend paying stocks like australian rates. and on the commodities front it is a key sector down under. with the commodity prices surging including prices in iron taste -- ay take a special dividend next week and

the likes of rio tinto likely benefit from the rise in commodities prices as well. another sector i wanted to highlight is the health-care care sector in australia. it is expected to have one of the best earnings growth in australia among the sectors there. watch out for that one. editor thereuities in singapore, thank you. -- hongtop hong kong kong policy of his will give its response to two months of increasingly chaotic unrest. the weekend saw clashes between riot police and investors with multiple locations -- david tweed joins us now. authorities seem to be struggling to contain the protests as tactics have got quite unpredictable. they were in multiple locations yesterday and last night when the police dispersed them with tear gas. i am in this province.

we were here last week. last week and last night, there --e attempts to threaten target of chinese liaison office. this is the main representational office of beijing in hong kong so it has become a target of the protesters who are worried the bureaucrats inside the office are the ones who are trying to impinge on the one country, two systems framework under which hong kong is governed. i would also like to show you i am outside the western police station. you see there are these large barriers filled with water, almost impossible to breach, difficult to climb over. it gives you an idea of the alert the police are on. residential last night after the .ear gas was sprayed and thrown many residents can report they

actually felt the tear gas themselves. in thishat happen province saturday. this is the third day of protests. you can see there is a mixed residential business street yesterday full of protesters. it is the third straight day of protest we saw in hong kong friday. they are at the airport trying to get their message to incoming passengers. on saturday they were out again here. they were protesting against the violent -- people have been arrested. it gives a good idea that for the authorities it is becoming more difficult to actually contain the protests and contain particularly as it is happening in multiple locations. it seems to be a new strategy adopted by the protesters. yvonne: something we did not -- shery: something we did not see

in 2014 we are hearing reports of the hong kong and macau affairs office will give its views today. that would be the first such public comments since the 1997 handover? what are we expecting? david: it is an unprecedented council's hongte kong and macau affairs office. there will be any questions at the press conference or who will be allowed to ask questions. also what will they say? we have seen the ministry of foreign affairs condemning the violence, also the interference of outside forces. talking about that, they are talking about their allegations the u.s. is behind the protests which are taking place. we could get once again condemnation of the protests, complaints the protests are undermining the one country, two

systems, complaints protesters are hurting the feelings of the chinese people -- the feelings of the chinese people. it is interesting what the office can do in terms of trying to resolve the situation because legislation to say against extradition law is being withdrawn completely, that bnp hinging on the one country, two systems framework. it is hard to the big prayer -- at a press conference is going to take place around 3:00 p.m. this afternoon. shery: our senior reporter there from hong kong. coming up next, japan's earnings season kicks off in earnest this week with nintendo and sony leading the way. a jeffries reporter tells us what to expect. this is bloomberg. ♪ is bloomberg. ♪

shery: we are counting down to asia's first major market open, korean futures unchanged after the kospi lost for three consecutive sessions and finished at the lowest level in two weeks. we have also seen weakness for the korean won which has been underperforming with the gloomy trade outlook, not to mention geopolitics. we had consumer confidence in korea falling again in the month of july. this is daybreak asia. i am shery ahn in new york. paul: i am paul allen. is one of the world's biggest chipmakers -- they beat second-quarter despite disruptions. the ceo told about optimism for 5g growth and outlook for the slowdown in china. china is a big market for us pray we have been operating in the country for over 30 years and have important customer relationships, a global supply chain. we have a real strong employee

base. it is a big and important market for us. what we have seen the last several quarters is two things. as our demand has slowed customers have digested fairly ,ignificant purchases last year then secondly we saw a bit of an acceleration of demand into the second half, in the second , theer because the fears potential of additional tariffs imposed. those combination of factors have china which is an important market for us being a little bit slower than we had anticipated at the beginning of the year. reporter: good morning. judging by the analyst notes i have read, the concern seems to gross. be will put your margin under pressure. what is your answer? >> we have a great lineup of products as we go into the second half of the year area for

our dater -- data center business we launched a product we called cascade lake which performance wise is a real differentiator in the market. secondly for our pc business, we inteled a 10th generation core processor that will have systems on the shelf in the holiday season. we look at the lineup of products and feel very good as we go through the second half of .he year and in terms of 2020 as we build high-performance products, and with that high-performance we have been able to get a premium price in the market. we have a great lineup. we know we have real competitive dynamics and that is a challenge you have in the market you are going after is extremely large. you have competition that enters the fray, and we feel good about our lineup of products and relationships with our customers. you are saying with a

high degree of certainty you will not witness any gross margin erosion? we indicated yesterday our gross margins for this year were roughly 60% in the first half and 60% and 60% in the second half. those dynamics are a little higher in the third quarter and a little bit lower, expectations in the fourth quarter as we ramp our new products. that is consistent with our business model works. we launched a new technology process. in the early days yields are low and it results in a degradation of gross margin. as we ramp up the volume of products, expectations are yields improve and margins get better. it is very consistent with what we laid out a couple of days ago and we will have some degradation.

for us it is a good thing. it means we have migrated to the next technology that allows us to deliver differentiated performance or our customers. huawei was 80% of that market and it was a big customer for you. it obviously takes a lot of your chips. how do you model going forward what happens with huawei and whether restrictions from the u.s. come off, allowing you to shift, or get further imposed? during the course of the second quarter when the entity list came out, we stopped a shipment to huawei. until we can get a better understanding of the liftcations of the entity and the export control on our business. after the interpretation we concluded there was some cases we could chip and some we could not. arechallenges always

serving our customers but also abiding by the laws in the countries in which we operate. we felt as we went through the course of the quarter, we were able to ship some product. our second quarter results were the entity list order. as we go into the second half of the year, we have applied for commerce instructions applications for licenses to ship products that are of general purpose computer nature and should have no bearing on what the entity list is trying to accomplish. that is our expectation in the second half of the year. -- wesly we will talk will watch the dynamics that happen in washington and we will adjust and adapt, but we are going to continue to serve customers as best we can and abide by the laws in which, the countries in which we operate.

intel ceot was the bob swan. tv is your function to watch more. catch up on past interviews and watch us live and dive into securities or bloomberg auctions we talk about. become part of the conversation i sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪ ♪

breaking news out of japan, getting japan retail sales numbers year on year growing half a percent, beating estimates it will grow only by .2%. it is a significant deceleration from the gains of more than a percent in the previous month. for june growth fell half a percent year on year. month on month, still better than the expected contraction of .3%. deceleration month-to-month from

the previous month. you are seeing the japanese yen not reacting much after falling to the weakest level in two weeks, staying at the 108 161 level. -- 108 point -- 108.61 shery: everything -- paul: everything in japan is tepid. 26 companies reporting on the nikkei 225. seeing sales and earnings growth disappoint. nintendo and sony are the next big names to report and our guest says these two companies face very different situations. joining us on the line from singapore is jeffries equity research managing director -- thank you for joining us. here? are you expecting picture, you have been writing and communicating most of the companies under our coverage would see earnings

decline, not just for this quarter but the next two years. most of them at best we see 2% to 3% compounded profit growth for the next two or three years, except for nintendo, on which we can confidently say that the products that they have lined up , their sales and new products, the new optionality is likely to drive more than 20% compounded growth for the next three years for them. that is one exception. everything else -- but the game companies, a lot of them are likely to see earnings decline. nintendo is an exception. paul: when you talk about nintendo and new products, you are referring to the switch light great how important is that lower-priced model for nintendo? it is important because it

targets a market which is currently using or had used a product called 3ds. million sales for that product in the last seven years. most of them haven't bought a switch. this which is priced at $300. year.tinues to sell each it is important but the software lineup is what is important. games drive the hardware sales. are beingames launched as well as new hardware options being launched. and then you have partnerships in china with tencent, the mobile game launchers, a lot of things happening. we are expecting numbers out of sony, they have asian game consoles including spending for the ads. what are we expecting?

last year sony had a good operating profit number for the first quarter around ¥194 billion. we have been worried about no growth for now six months. there is no earnings growth for the company given games, at the end of the lifecycle, the other segments which don't contribute much to the growth now. 175 at 10% decline in sony's first quarter earnings is what we would think is a fair estimate now. we will see how it grows but we are not expecting growth in sony for another 1.5 years until the next generation ps five takes hold. that would be a big driver as well as -- they are a big supplier of this. big customer for huawei. stalled,ly chain get

or does it continue, would have impact on sony as well. shery: what are we expecting from the film unit? the reboot of men in black was not well received. atul: can you repeat? shery: what are we expecting in ? e film unit men in black was not too popular. disappointment for them. spiderman movie was launched on second july. after that quarter had ended, just before that they would have spent on marketing and all that stuff. the tricky part for the movie business, particularly, is that if you see a major moving doing very well in a given quarter, it doesn't necessarily mean they will do well in the profit side. the profit is staggered. in the beginning we barely discovered the costs. when there is major launches, in

those quarters you expect weaker earnings. the impact on earnings comes to late. the first quarter movie will also not look too good. we are looking forward to music business only that will gripe -- will drive growth this quarter. paul: thank you very much for joining us. let's get a quick check of the latest business flash headlines. second quarter profit at dbs beat analyst expectations as lending rose. net income climbed 20% to $1.2 billion u.s., sparing expectations for the smaller rivals which will report on friday. the dbs chief executive said he is still evident about achieving amid single-digit loan growth despite the global economic slowdown. reports from paris say air france is going to order 50 and 70 new planes from airbus.

they say the deal will be announced wednesday with the new ceo reporting first-half results. air france wants a new single aisle eight 220's created part of airbus acquisition of lombardi are. -- bombardier. shery: not seeing that much movement when it comes to the this after the nikkei fell in the last session and the japanese yen also now knew the weakest levels in more than two weeks. the kospi futures unchanged, not very much movement. investors setting up the scene has we get central-bank decisions this week including the fed and more trade decisions and a big week for earnings. the asx 200 up .2%. we know the rba has set the stage for further monetary easing.

thank you very much. still to come on the next hour of daybreak asia, we continue markets discussion with the ecb head of asia strategy. this is bloomberg. ♪ we're the slowskys.

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paul: i am paul allen in sydney. asia's major markets are about to [shery: good evening from bloomberg school headquarters in new york, i am shery ahn. to "daybreak: asia." ♪ paul: our top stories. trade talks get back on track this week. there is little hope of a breakthrough in shanghai. neither side seems ready to compromise. marcus prepare for the first fed rate cut in a decade. the week brings policy decisions from tokyo and london. tear gas in hong kong's

eighth weekend of protests. anna is preparing unprecedented official response. if you started with a check of the asian markets. we are seeing japan's nikkei under per pressure -- under pressure, down point 2%. -- .2%. the yencoming after fell on friday and despite the fact wall street closed at record highs. the cost be down .4%. to thed take the kospi lowest level in two weeks and losses for a fourth consecutive session. we have seen the korean won underperforming. we have a gloomy outlook with geopolitics. south korea acknowledging that the -- both missiles from north korea flew more than 600 kilometers. the asx 200 is unchanged at the moment.

let's get the first word news with su keenan. su: we start with china. the top hong kong policy office will give its first response later monday to continued escalation of protests in the city. the weekend saw more master restrictions in multiple locations, including violent clashes with police that continued into the night saturday and sunday. arrested and what works in a straight weekend. reports from london say the u.k. is stepping up preparations for a new deal brexit at the end of october. senior advisers are saying it will happen unless the european union reopens negotiations. the advisor says the government still helps brussels will change its view, but it is operating on the assumption nothing will change. boris johnson has formed a six person panel to oversee the

brexit process. >> i don't want a no deal brexit. that's not what our a miss. we have to face the facts that toldoment, we are being the deal is fixed and cannot be changed. i doubt that. in our european partners, we will continue with those discussions and will get ready to come out on the terms that are necessary. francis pushing ahead with a tax on big tech. the foolishness of a levy, but the french government said it will be implanted. the finance minister says it is not targeting american companies and says a fair taxation of digital activity is of universal interest. our american friends should not understand this action taken

by france to have its own national taxation of these activities as any willingness of targeting the american companies. that is not the case. we are not willing to target the american companies. su: 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. >> asian markets are poised for a muted start to a momentous week. readings and a flood of earnings have a potential to move markets. mark cranfield joins us from singapore. let's start with the fed. what are markets watching ahead of wednesday's decision? it's really what the fed says versus what they do. i don't think they are expecting

anything more than 25 basis points on a rate cut. morgan stanley have said they want 50 basis points. they are an outlier. the majority of people are looking for the 25 basis cut, but that is what -- and that is probably what will happen. what's important is how the fed steered people's views will they give word that endorse the view that 100 basis point rate cuts are the right place. that is what the futures markets have been indicating. whether the fed endorses that are not is important. the fed doesn't seem to be worried about inflation rising. they are willing to take the risk. cut won't tip the balance on inflation. that will stay busy and not threaten to break out. even though the inflation light is low by historical same -- standards, the interested that they can do a rate cut" in fact

-- affect the inflation rate. they can do more to help low income workers. it's about how they put this into phrasing that will push the ball forward with rate cuts in september and maybe one at the end of this year and another one next year. paul: a big risk factor we heard a few -- a little while ago on the news, the possibility of a new deal brexit seems to be growing. what does that mean? makr: it's probably not fully priced in just yet. traders, a lot of people find the u.k. situation confusing. this brexit thing has been dragging on. investors who don't play in the pound anymore, you have seen a lot of activity being reduced. for the people that need to make a decision as to whether to be involved in u.k. markets, they are probably seeing this

hardening of position by boris johnson as something negative. aroundad people play with the idea of a no deal brexit. now it seems it must be taken very seriously. johnson has formed a group of advisers who are ready to take the u.k. out of the union and come what may on october the 31st. u.k.'s putting a hard line on here. they need to make a move. extra billiont an pounds of funding to get themselves prepared for no deal. it looks as though their position has hardened. traders will need to adjust to that. the possibilities are the pound is not going to like this. this is something they have been trying to avoid. there is probably still the chance for some downside once people take this seriously. it will be interesting to see what the eu has to say. whether they have possibility. the sounds from the io have not been that they want to compromise. it looks like we are coming to a

head on collision between the u.k. and the euro zone. it's not something investors want to see. they: let's talk about dollar. it just had its best weekend two months. we know the president does not like a strong dollar. we are getting conflicting signals, especially with larry kudlow talking about this. what do we know? final word will come from donald trump. he is not a man who goes by convention. even though it is very unusual for the u.s. to act on its own in foreign exchange markets, that is something we have to deal with is a possibility. give the instructions the u.s. treasury and the fed that they need to interview and sell the u.s. dollar. they normally wait until central banks are unified. there are a few central banks together, particularly the major central banks the world, but certainly something we have to prepare for. the dollary decide

should enter the market with the fed. intervention from a single central bank is usually not that effective. it's something the u.s. has to take into account. they may be wasting quite a bit of money here. if they decide to go into the market, it won't necessarily be a success. --. -- success. whether they get followthroughs doubtful. they need central banks on their side. else hasno sign anyone any appetite for the foreign exchange market. shery: thank you for those insights. others follow mark and on this story and more on markets live blog on the bloomberg at mliv . is also commentary, analysis from bloomberg expert editors, so you can find out what is affecting your investments right now.

the u.s. and china head back to the trade table this week for the first time in three months. with little expectation on either side about a breakthrough. new geopolitical issues in no sign that beijing or washington will budge on key demands. let's go to tom mackenzie. from all sides, people seem to be downplaying what we could expect out of the talks. what can we realistically see you would imagine these talks will be fairly tenset even of -- given the geopolitical issues on issues like north korea, hong kong and the south china sea and trade. these two sides are so far apart on the trade issue. you have had some jockeying between the u.s. and china to gain leverage out of these talks , that they will start in shanghai. you've had the chinese side on

one hand saying to some companies, you can look to start buying agricultural products in the u.s.. on the other side of the break used the u.s. of being a black and behind the antigovernment protests in hong kong. investigation in into fedex for rerouting of packages for huawei. they've continued tough commentary leading up to these meetings. they say they continue to take -- to stick their three demands. a removal of tariffs, a two-sided the meal -- deal and less onerous demands on agricultural purchases. you have had overtures from trump about easing the restrictions on huawei. on the other side, he is opened up a new front on these broader tensions with china about the wto and china's labeling -- the labeling of china as being a developing nation. trump is pushing back on that. that's another front in the tensions between the two sides. you have also heard a commentary

from the u.s. side saying, don't expect any major movement from these trade talks. we want a proper deal. that was wilbur ross saying that, a proper deal going back to may, when they thought the u.s. was 90% toward a deal. the u.s. want to go back to that. china is saying it is the three points at once resolved. the gulf between the two sides is anonymous. -- enormous. bestest places the -- the chance is that it takes place in shanghai then the chinese get invited to d.c. to finish it. chinasuggesting --paul: suggesting it will start buying u.s. soybeans. it is marginally positive. we haven't had the purchases yet. all we have is china saying to five or six companies, you can look to buy u.s. soybeans tariff free.

the pure data for 2019, the purchases by china of u.s. soybeans has fallen off a cliff compared to previous years. it's the biggest drop in chinese purchases since 2004. if you compare how much china is buying from a country like the u.s. versus brazil, they bought about 600,000 tons from the u.s. in the month of june. that, compared to 5.5 million tons from brazil. looking to south america. the demand here in china is falling for soybeans. they have a reduction in the numbers of port. -- pork. i am moving my voice. voice.ng my the margins are positive, but there's a long way to go for any of that pain is relieved. s there is so much to talk about when it comes to china and the u.s.. to ask you again about

the chinese economy and how it is performing. this factor could be determining who wins in this trade war. the chinese economy does not look too good right now. absolutely right. this is a point of leverage that trump thinks he has over the chinese. we had industrial profits out over the weekend. from the year before. the industrial sector is under pressure. some of the pressure on those tariffs, it has been put in place, including the slowdown in global growth. of course, what we are seeing with factory prices. that is pushing down profits. atria are factors impacting the industrial sector. the pmi numbers, the most recent ones have been in retraction every territory. there is a worry if the slowdown

continues, the gdp number coming at 6.2%. most think the pressure will remain. not just because of tariffs, but domestic demand and global demand as well. you will say that will calculate in their most recent calculus and for the negotiations in shanghai. paul: still to come, more on this major week for global central banks, starting with the bank of japan. they are weighing prolonged negative rates and low inflation. shery: we will look at what matters to asian markets with fed chairman -- when jay powell takes the podium on wednesday. we are joined with a commentator next. this is bloomberg. ♪ is bloomberg. ♪ paul: i am paul allen in

sydney. shery: i'm shery ahn in new

york. all focus on the fed later this week. that includes our next guest who says that asian markets will be taking their cues from the u.s. central bank. seb head of asian strategy, eugenia fabon victorino joins us from singapore. how big of a cut are the asian equity community making in at the moment, and what is the risk? eugenia: the market has fully baked in a 25 basis point cut. market pricing is slightly above 25 basis. i will see the risk of a higher-than-expected cut of up to 50 basis points. i guess is it will be 25 basis point cut, especially because his only source to be an

insurance -- it's only supposed shery: in insurance cuts. we have seen several central banks preempting the move and cutting rates. can they keep going and what will this mean for volatility in the fx markets? eugenia: we definitely see a lot of other central banks cutting. at the forefront, we would be expecting the bank of indonesia, the bank of the philippines and the r.b.i. in india. we are seeing some risk for further cuts in the bank of korea. we do not expect any move from the bank of thailand, considering they are still focused on the financial rest -- risk. even so, there are a lot of risks ongoing, both domestic and external risk. as shery mentioned, the impact of this cutting on the currency markets, i want to get

your thoughts on that. our central banks to seeing how low they can go? eugenia: the fx, at least the emerging asian market currencies are in a crossfire. global central banks giving some support at the regional fx. the region is also very much exposed to the u.s.-china trade war. is ag said that, august particularly seasonably week month for currencies against the greenback. how about other asset bubbles? building inroblems the system due to these ultralow rates? eugenia: not necessarily. that are some economies

would be more aggressive in terms of their cutting. these are also the countries that have been very aggressive in their tightening in 2018. the countries that would be less eager would be korea, even though the domestic demand is faltering, considering the employment conditions are sluggish. would not be expecting them to go all out. the bond market in korea has priced in a continued slowdown. the long dated bonds in korea to fall further, having the curve been inverted. how much of -- have asian markets been trading on the hope that we could see a breakthrough in the u.s.-china trade talks? eugenia: i would say the markets pricing in a

contracted negotiation. u.s. representatives are on their way to shanghai this week. bigon't expect a breakthrough. they would probably be some token deliverables. at the end of the day, the chinese side has become more hard-line in their stance and they have been very focused on their three conditions. aus, i don't expect significant breakthrough in the coming months. you can also see that in the currency. has remained cny range brown -- raise bound -- range bound. paul: seb head of asian strategy, eugenia fabon victorino thanks for joining us. but emoticon. this is bloomberg. ♪

paul: the hong kong policy office will give its first response monday to two months of unrest in the city. daschleend clashes with saw clashes with police. they are struggling to contain the protesters with unpredictable character -- tactics. david was on the scene on sunday. what happened? david: there were demonstrations here and in multiple locations. that's what is becoming difficult. here, i am new the liaison office. you can see last night, when they tried to block the lord -- the road. this is the main representational office of the chinese government in hong kong. it was one of the targets of

these demonstrators yesterday. down this alley, you can see they are trying to clear away the barricades they used to block the streets last night to stop the police from getting at the demonstrators. they did not. they had to disperse those demonstrators with tear gas. it was right up there any residential parts. shery: today we have the hong kong and macau affairs office giving their views. this is the story. what are we expecting? david: it is. it's the first time since the handover that they have held a press conference. what's ironic is the standard newspaper is reporting carrie lam herself was attending a pla summer camp for young people over the weekend. she hasn't spoken since last week. the affairs office is going to

speak -- it's -- that they're going to speak is unusual. will they limit their comments to condemning the protests and say it is undermining one country, two systems. will they come up with some solution? we will find out. shery: thank you so much for that. let's get a quick check of the latest business flash headlines. the london stock exchange is in talks to buy the financial trading platform preventative in a deal expected to be worth $27 billion. they say it will issue shares as with a the transaction, third going to the company. stakeought a majority last year. andi arabia's chemicals steel giant had a tough second-quarter with profits pledging the most in a decade. net income tumbled 70% as demand

for plastic dried up, hit by a downturn in the global auto industry. dbs beats estimates. we will look at what this means for other singaporean banks. this is bloomberg. ♪ su: i am su keenan with the

first word headlines. we serve with u.s. trade negotiators flying to china on monday. the stoxx resume after a two-month pause. -- the talks resume after a two-month pause. recent days have seen mixed signals from both sides, with neither showing much inclination of compromise. china has indicated a readiness to buy more u.s. farm products. it's purchases of soybeans have fallen to the lowest in a decade. to japan. it has been a gloomy summer for japanese retailers, with some of the worst weather in tokyo in over a century. the temperature 720% cooler than

normal this month. then there is the daylight. the number of daylight hours is the lowest on record get -- on record. it has been raining on the , reportingetailers tumbling sales. at least eight people were killed in a series of earthquakes in the northern section of the philippines. the tremors struck a key promise -- province, with over 200 aftershocks. president rodrigo duterte described the area as "one of the most treasured destinations in the country. australia and singapore are among five countries that could lose market access to european union. the financial times says brussels is targeting countries it says do not regulate trading -- credit agencies as rigorously

as the eu. those on the hit list are brazil, argentina and canada. it would be the first time the european market access rights have been withdrawn. spacex has successfully completed its 18th resupply mission to the international space station. and installed the dragon cargo castle -- cargo capsule over the weekend. the experiments include a 3d organ printer, which will create nerve cells and lead scientist see how they hold their shape and zero gravity. global news 24 hour --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. i'm su keenan. this is bloomberg. ♪ paul: thanks. the central banks, the next most important item on this week is earnings.

we have someone joining us to talk about how much data is coming our way. what are we looking for? have a look at the broader picture. it is monday. membersalking about 300 . 1200 stocks. that is about .25 of the index. the cost about half of index and gets busier this week. here's what we are seeing in japan. we were talking with caterpillar this week. we talked about nissan last week. toyota is your apples to apples. what we are careful to see is assumptions here on dollar-yen. that will determine how much they can play with as far as earnings are concerned. then we move into this -- deeper into the fiscal year.

have a look at south korea. this is ground zero. the third line you see is ground zero for earnings. everything that is happening from the trade wars in korea and japan to the chip cycle and tech cycle. -30% is the current estimate for growth in south korea. it is looking very expensive. india, halfway through the season. yield not in play when it comes to india. gross -- growth estimates for india. it's asia's most of spence of market compared to others. 33%. it's busy in india. southeast asia, were talking about dbs. it's heavy on the banks. 3.2%. southeast asia is your dividend

yield. it's where you can get a lot of growth. shery: david, thank you for that. we will continue discussing dbs, which is beating expectations for the quarter, a 20% drop -- jump in profit. others are well for following suit this week. let's go to singapore. echodrove the numbers yet -- numbers? >> it's a pretty solid set of numbers. 20% growth. sequentially.ints the cost focus, and keeping the asset quality stable, and treasury market success, and they did not work well for dbs.

it's a pretty solid set of numbers, including the macro picture we have been facing. paul: there was a feeling dbs may be the only singaporean bank that could post a profit. does it change for the others reporting this week? think the consensus, i wrote a new piece that says people expect the other two banks to lag behind. i think that may not be the case. it means much for the second half, but the second-quarter numbers should be pretty strong. , they look at the margins have been rising upwards. help to some marginal gains. sector has property quite a bit of loan growth in the second quarter.

the banks may see some margins growing from that. margins, property sector. those will be driving the market -- margins. talking about the big picture in singapore. there has been that 17% slump in exports. with the banks people to keep going? banks are a reflection of the economy. --t's why we think this is the second half looks worrisome. loan growth, if you see, has been up across the board. i don't think it can go on much further. there are headwinds coming up. there is a very exposed economy. don'tcond-quarter numbers reflect what we expect for the

second half. paul: exactly. especially given the trade tensions, such a -- and exposed economy. could this be the best it gets for the year? >> yeah. this could be the best they will see for the year. i would still like to point out that they could hold on here. it doesn't mean it is all doom and gloom. if you look at the ability of singapore banks to find distant revenue drivers, you could still see some profit growth. the wealth management business is really doing well. anecdotally, money is flying from hong kong to singapore. cut starts the rate to show a the margins, they will be over. this year, they could manage to squeeze in margin increases for these banks. paul: thank you for joining us.

still to come, the pog -- boj's rate -- rate decision could be a highlight for what is one of the busiest weeks for the world economy. we are joined after the break to figure out what to expect. this is bloomberg. ♪ paul: let's get a quick check

of the latest business flash headlines. reports from germany say deutsche bank is investigating whether confidential customer data was compromised after it failed to deactivate the accounts of five staff following the closure of its global equities business. they say about 50 traders in london and new york were able to access emails and information for weeks after layoffs. said one could send messages remotely after. shery: report say air france is

about to order 50-70 new planes from airbus. they say the deal will be announced on wednesday. when the new ceo reports for -- first half results. the paper says air france wants the new single aisle a220. airbus shares have risen more than 50% this year. godzilla main have a new investor. colony capital is considering buying a minority stake in the franchise owner. it was taken over for $3.5 billion. we have until the colony investment is likely to value the company significantly lower than that. don't forget our interactive tv function tv . there you can watch live and catch up on past interviews and dive into any of the securities

or functions we talk about. you can become part of the conversation by sending us instant messages as well. this is for bloomberg subscribers only. check it out. tv . this is bloomberg.

shery: i am shery ahn in new york. paul: i am paul allen in sydney.

one year after a spring of tough headlines, uninspiring results had balls moving to the sidelines. told bloomberg's kevin weston there is still beat out of china. i am soarket in china, bullish on it for the long term. it is a large and growing addressable market. primarily already drinking customer where we are introducing coffee two. we will be able to accelerate and build new stores for a long time in china. paul: that was starbucks ceo kevin johnson. the bank of japan is likely to keep policy unchanged this week and sources say some boj officials see little to be gained from strengthening the banks rate pledge that would

limit -- highlight their limited firepower, especially with them expected to cut rates the following day. let's go over to kathleen hays. kathleen? >> thanks very much. i am joined by mitsubishi senior market economist naomi muguruma here in tokyo. i want to ask you. your recent pace, you talk about central banks signaling their easing. not know what the fed will do tomorrow. how devilish will their signal be? -- a dovish weather signal be? do they have to stay in step without dovish the other banks are? naomi: i don't think so. the market has already priced in the 25 basis point cut by the fed. i think there is no need for the to accelerate monetary

easing policies. kathleen: with they change any of their forecasts -- will they change any of their forecasts? will that send any signal that influences the bond market? naomi: there is a chance the boj will extend guidance. i don't think that is necessary at this moment. nobody expects the boj would start hiking rates next spring. there is no need for the boj to change the wording. will iteratekuroda that if necessary, the boj will consider additional easing. kathleen: on june 10, i had the opportunity to sit down with governor kuroda. he said, if needed, we can use all of our tools and all kinds of combinations. tools,ese unconventional will they make a difference?

naomi: i believe monetary policy in japan has reached full employment. phones jgb's. it is less than 1%. its effectiveness will be question. market seems bond to be -- to look like it is functioning reasonably well the outside. we know a flat yield curve makes it tougher for japanese banks to be -- to make profit, but they are still lending. how pressing and how real is for the jgbm," market if the boj continues on this path, which they will? naomi: we are concerned about

the lower liquidity in the jgb market. it looks like it is functioning. it's difficult for traders to offer with less jgb's in the market. how toed to figure out improve market functioning at the same time accommodating monetary policy. of then: the head european central bank shows they are starting to look. they are looking at their target, just below 2%. when i asked governor kuroda about the 2% target, if any u.s. the -- even if you asked the fed, there still a 2% target. wooded it be better if these top three central bank said, we don't need to have that target anymore? naomi: i think that's a reasonable question. so far, it is difficult for central banks to officially

reduce targets. fit negatively in their monetary policy trust. widespreadre is a recommendation that central banks need to be 20% figure. i don't think it is necessary to stick to a certain number of inflation. kathleen: you, like me, have been covering the bond market. yields, iee negative think are bloomberg calculations were 13 billion bauds when the world have negative yields. what is that signal? if you are invested in bonds, what do do? -- what do you do? naomi: i believe it shows the limitation of monetary policy in raising inflation.

if we continue to have this negative yield, it will be very difficult for financial intermediaries to do business. say financials instability increases and intermediaries have a hard time doing their job, does it hurt individual economies or the global economy, then give bonds a reason to keep rallying, or is it bad for the bond market? naomi: if yields start to spy, i think the central bank can control them. the problem is, they don't know what a yield curve would be. i think it's better to have a positive yield, at least on a low curve.

a lot of companies have space to invest and pay to their end customers. the bank ofuld japan stay with its 2% target, at the very least widen the range and make it clear this is a longer-term target, as some boj investors have said. maybe we can start backing away from yield curve control and negative rates? naomi: i think that's possible. recently, the boj released a report that says they believe the target is 2%, plus a modest 1% range is acceptable. that would not have a negative impact on the economy. if the global economy starts to pick up, if we have such a high inflation in japan, most likely, the boj will stop considering exit watch cpi reaches 1%. -- once cpi reaches 1%. reserve, the federal

you are saying, keeping these rates low, cutting them when there is still growth is ultimately not going to make a difference to the economy. people are reaching for yield around the world. the more yields go negative, the more you will buy anything with positive yield. do you see that risk globally and what you see for japan -- what do you see for japan? naomi: japan case shows that reduced yield, it reduces its affliction -- effectiveness at raising inflation expectation. pleasure --ward pressure. people need to earn certain yields to save. because there is no place to earn yields, people tried to's save more rather than -- try to save more. kathleen: what about the tax hikes which the boj ensures as

is engineered not to have a negative impact to the japanese economy. naomi: i'm concerned about the negative impact on private consumption after the reduction tax rate hike. risk for the yen to depreciate. time, if the tax rate is hike, people will probably stop spending. that will delay the ultimate exit for the boj. kathleen:kathleen: so nice to talk to today. thank you for joining me. i'm getting ready to cover the boj meeting. we will cover that all day tomorrow. going to send it back to you shery: now. shery:thank you so much for that. we will look for that coverage of the boj. one of china's banks is getting . helping hand

many companies have agreed to buy stinks the bank. -- stakes in the bank. what i regulators working at -- looking at? had been in talks with some financial institutions and the bank's home province last week. we saw their divergent -- dollar-denominated debt dropped over time. this is a set of support for that bank, at least a solution for some of their liquidity problems. paul: let's talk about those entities taking those stakes. the we know about them -- what do we know about them? stakecbc has acquired a just under 11%. for as much as 3 billion yuan. hasnow unit of china cinda

acquired a 6.5%. we don't have financials for that. we know that china great wall asset management has taken up a stake. we don't have any further detail on that front. some still need regulatory approvals. there seems to be a state solution, so i don't imagine there will be many difficulties there. paul: is there a bigger picture to consider? is this a contagion from the bank situation? eric: we are still seeing fallout from that situation back in may. jinzhou is a regional, smaller letter. there has been increased scrutiny and concern about the smaller lenders in china. this does appear to be a part of that. thank you very much for joining us. before we head over to the next show, let's look at how things stand. nikkei off bys .5%. big week for earnings in japan.

by more than 1%. the asx is up .4% after almost an hour of trade. shery: let's look at futures. u.s. futures under pressure, down .1% after wall street closed at a record high with the s&p 500 seeing the biggest jump in more than three weeks. your expect in taiwan stocks to come back, down .3%. this is after the taiwan dollar kept the biggest weekly drop since early july. we have strong u.s. dollar at the moment. putting more to come on "-- on bloomberg. this is bloomberg. ♪

>> 9:00 a.m. in beijing and singapore. welcome to the china open. i'm tom mackenzie. yvonne: i'm yvonne man. counting down to the open of trade. david: i'm david ingles. trade talks back on track this week. but there's little hope of a breakthrough in shanghai. neither side seems ready to compromise. yvonne: markets anticipate the first fed rate cut in a decade. policy decisions from tokyo and london. tom: teargas and arrests. china is preparing an unprecedented official response. ♪