>> welcome to daybreak australia. i'm paul allen. >> i'm shery ahn. we are counting down to the major market open. >> here are the top stories we are covering. moving markets, steven mnuchin says ultralong bonds are a possibility. there are no plans to intervene on the dollar. the brexit drama turns a new page. orris johnson will suspend parliament next month and limits

the debate on a new deal divorce. surged --ning we'll discuss the outlook. >> let's get started with a check of the markets close. u.s. stocks finished near session highs. the s&p 500 was up 7/10 of 1%. every sector on the s&p was in the green except for utilities. we have energy shares leading the gains. stocky they u.s. crude declined more than expected. the caveat volumes were low about 15% lower than average. the dollar at the moment holding steady after steven mnuchin said the u.s. has no intention to intervene in the markets at the moment. downfutures under pressure 2/10 of 1%. let's see how we are setting up in asia. >> as you can see on the board,

asia looks for a mixed open. things are more muted than previous days. it looks like some gains may be reversing as it is open down. markets are still waiting for the latest on the trade headlines and the unpredictable twists and turns. it looks that they are waiting for the september 1 deadline for the first round of staggered tariffs. to lookg boards i want at cryptocurrencies. yesterday, we saw cryptocurrencies plunge. it now trading at about 9727 level. just below the 10,000 level since -- in the first time since july. the caveat is that trading volumes were very thin and it's taking very little to move the markets right now. now switching one more time to look at what's on tap today, we

have a whole slew of economic data coming out. the new zealand business confidence index as well as australia's private capital expenditures. acre -- economists expect that to have risen .4%. if that data comes out strong, it could support it to hold the benchmark at the current levels. also looking toward vietnam cpi trade and retail sales data. they're expecting inflation to slow slightly and we will be looking toward japan's consumer confidence index. >> thank you. let's check in on first word news. >> argentina is again banking on the imf to save off defaults. the fund is in what has our race to decide on a new package of more than $5 billion adding to a record bailout last year. argentina commented more than $10 billion in the last month

has policymakers try to shore up the peso after a stunning political defeat for the market on the government. the italian prime minister has been given a mandate to form a new government. after days of talks between the democratic party and the buster movement, his earlier coalition collapsed when the into immigrant the withdrew its support. markets welcomed the news but the democrats remain unhappy at plans to reinstall the deputy premier. target ofific was the the latest protest in hong kong. demonstrators demanded the rehiring of workers who were fired for supporting calls for democracy. crowds gathered near the headquarters of their largest shareholder to push back at the commercial and political pressure china is putting on hong kong. cafe has fired staff since the protest began. >> my colleagues are terrified.

sorry because i am normal -- no longer in a position to protect them. you are in a position to stand behind them to back up all of my colleagues. >> the second biggest volcano has come back to life. etna at the home of mount and it is sending ash and smoke into the sky. it is one of the most active volcanoes in the world. this comes almost two months after another blast killed a hiker. 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. this is bloomberg. >> thank you. let's get to the top story, steven mnuchin's told bloomberg

that ultralong bonds is under very serious consideration. in an interview, he said he anticipates taking advantage of favorable conditions to borrow long-term. his comment moved the bond markets for the spread between the five and 30 year treasury's widening. it white house editor is in d.c.. joining us. we have seen the yield on the 30 year below 2%. steve mnuchin says that's just a coincidence. it may be. what the trump administration is most interested in here is taking advantage of a great borrowing environment for governments around the world. germany is getting negative rates on some of the bonds. trying to sell a 0% coupon last week but that didn't do well. investors are willing to pay the bills from advanced economies right now.

the u.s. which is facing a trillion dollar budget deficit this year and probably in the future is looking for innovative ways to pay for that and ultralong bonds might be one way to do it if there is interest. so far it looks like wall street has a -- for these long-term treasuries. >> we have seen this come up here and there from time to time. wasn't the last time in 2017? it didn't really go anywhere. >> steve mnuchin himself look at it in 2017 and tabled it. it has been an idea that has been going around since 2009. there is a group of market consultants that advised treasury on bond sales. we have consistently said that there is very little upside on wall street to buy these kinds of 50 or 100 year bills. treasury secretary somebody wants to give it a try anyway. >> what about the strength of the dollar? we have heard the president complaining about this.

where the treasury secretary made some news as well. he said they are not looking at an intervention as of now. on thatportant to focus time element. he said at this time. this could change at any moment. at the president is frustrated by the strength of the u.s. dollar. they have had discussions at the white house about conducting an sellingtion basically the dollar in order to weaken it. that we know they have had conversations about that of the treasury. the treasury secretary himself elaborated on the idea. he said he doesn't get would be a good idea to pursue it without partnering with the federal reserve and u.s. allies in order to maximize the impact of an intervention. >> thank you. steven mnuchin. our other top story, the latest act in a brexit drama. boris weeks restricting debate on a no deal split in the eu and prompting

widespread protests. our correspondent joins us to discuss what is happening and what it means for the u.k. and the markets. is,ink the key question does it raise the chances of a no deal brexit because we saw the pound collapse then pare back some of those gains against the dollar. veryam personally surprised by the lack of a greater reaction in the pound. i would've expected it to be considerably weaker. when it comes to the central question, does the strength the chance of no deal? plainly, it does. it means that any discussion and any alternative to a no deal --not even start until after

the deal that has already seen that went through parliament for months without a decision being made. i think it more let's renders it impossible to do anything rather than a no deal or some kind of parliamentary revolt that leads to another delay. by extension does it also raise the possibility of some sort of deal? if boris johnson comes to parliament with very little time left on the clock and present a horrible alternative and a less horrible alternative, which one is probably going to go for? you could try to make that argument but it's difficult to see where that slightly less horrible option is going to come from the present. much anger in the british bullet -- body politic

that the eu side of the equation is not prepared to reno open -- over thegotiations irish backstop which ultimately means that britain safe subject to a large number of eu provisions while an attempt is made to thrash out the need to maintain an open border between northern ireland and the republic of ireland. there is thatoint it was a british proposal in the first place to put that backstop into place three at think the europeans cite reasonably that this is what you asked for and you are now saying you don't want it. tells us it be you who what you want to do instead? not -- i cannot see a problem with that

attitude. lamely, we are at this provoke a point is to response which can be sold as saying it is their fault not ours that we have not got a deal. >> we are already seeing those responses. one polished -- politician said this a sinister. there are different versions of what democracy is or should be. britain has long had representative democracy. the idea of brexit in many ways was to reinforce and recover the sovereignty of parliament. this does require and has hinged on the power of the sovereign who we all know is hereditary. it's not democratically elected.

-- when youarch have a new session or legislation that is not already there isils and nothing the mps can do about it. this is a very unusual stent. plainly there is a majority within parliament that doesn't want a new deal. there is a majority in parliament that doesn't want a no deal. you could say this is a prime market --etting the monarch to shut down parliament when parliament is against it which is terrifying. speaking more as a british citizen and a journalist. i find that very alarming. let's play devil's advocate. parliament has had three years of debate on this. there has been a referendum, and election, there does come a

point when a leader has to lead. a decision has to be made. a pointhere does come when a leader needs to lead. one would generally hope that the leadership wouldn't involve just hiding behind an unelected monarch to shut up the opposition without giving themselves a chance to make their point heard. ultimately, this is about very big issues of the nature of democracy and of the nature of the british constitution. we don't have a written constitution but we do have a constitution that is built by a series of presidents very at this point, we are in very dangerous murky territory in my opinion. yes, we have seen the limits of

elementary -- as parliament has not been able to agree on something very and we have also seen a limited direct democracy that is far too complicated a question to be boiled down to just one yes no referendum being put to the election. thank you very much for your contribution on a very complicated story. even get more on boris johnson's move to suspend the u.k. parliament on bloomberg daybreak. mobile.o available on this is bloomberg. ♪

>> taking a look at iron ore, benchmark iron ore has slumped since hitting a five-year high last month. sunk. have that's the white line right there.

we have seen macro sentiment worsening on the trade war. steel mill profitability in china weakening. >> that's right. let's bring in someone too familiar with these issues. our guest is the world's fourth-largest exporter -- us exclusively today in sydney. an outstanding set of results but really propelled by the big run-up we saw. i want to bring this up on the terminal which shows that maybe sincere has been oversold the midst of the trade war tension. where do you see the price heading? >> it was a very strong result. we had a record net profit which is the tripling result on the previous year. we outperformed the benchmark index. while the iron ore price

increased significantly, we outperformed as we introduced a new product. we're very strategic about that so were able to outperform the inch mark index. in terms of the current market and whether that is oversold, we are seeing very strong demand for iron ore. is up production in china this year. there's a very strong market for iron ore and steel which is driven by the infrastructure. it could be oversold. there is very strong demand. we still see the fundamental is very robust. >> they are a very low cost producer as well. how about the supply side of the equation? you have development in western australia. do you see a risk of oversupply? it is largely replacement investment. there is an investment program

underway to replace the -- depleting mines. they have indicated it may take two to three years or longer to bring back the full amount that was lost as of the tragic event earlier this year. >> or by other markets? >> we have been investing in ecuador. we are drilling at the moment on perspective for copper. we have drilled since april. but weery early stages know there are great ways to grow and unlock our potential is through exploration. both tenements our perspective for copper and we also have tenements in argentina and the san juan province that are perspective for copper and we expect to drill those later this year. >> how much of this is driven by the fact we can see more volatility because of the u.s. it china trade tensions?

that you need to diversify away from your sales based in china? >> is not about diversity away from china. mining company. we think exploration is a great way to unlock potential growth. we think copper will be in demand globally. amountse depleting around the world. we can participate in that growth. iron ore is absolutely fundamental to us and we are investing three -- almost $4 billion in two projects. we have a significant investment program underway in australia in iron ore and we are very confident in the outlook for iron ore. click the cover story is interesting. wasmany years, your company criticized for just being iron ore. how far away you think you are before we see copper added to the portfolio? >> 2020 at some point.

it is probably a medium-term objective even the we are doing this in a measured exploration manner. we have to undertake the drilling programs to determine if there is something that we want to develop then from there, get the relevant approval. it is some way away. in the meantime, the next three to four years we will be andding out the projects commissioning the projects. we have a lot on our plate. greatnk explanation is a opportunity for us as well. >> to the earlier when, china is by far your biggest customer. you're looking about not only diversifying products but customers as well. >> china is the biggest producer of steel globally. 200 18, they produced million tons of crude steel. the next biggest was japan. terms ofdominant in commodity more generally and certainly with iron ore. they will remain our key market.

we have strong relationships with china that are multifaceted. shareholderargest is a chinese steel mill. we have relationships with our customers and it is an important market for us. we are constantly looking at other opportunities and we see steel mills being built in japan and indonesia. >> in terms of cost, how are you preparing for the new rules when it comes to lowering the sulfur limit and marine fuels that starts in 2020? >> for shipping, there are the new rules around 2020 if it starts in january. we are preparing for that. the indications are that the refineries will have some -- low sulfur fuel available. we are well prepared for the introduction of that in 2020. >> hydrogen, that's something you're interested in. tell us more about it.

>> we think hydrogen is a great opportunity. we entered into an exclusive partnership with a company here in australia. they have invented technology that allows the transportation and storage of hydrogen through ammonia. plant they have developed and we will work with them to see if they can be commercialized to a larger scale. we see hydrogen as an opportunity not only as an energy source in our own are a big because we consumer of energy and looking at hydrogen as a potential source but we think australia has a potential to be a user of hydrogen in the future. you japan and korea are looking at hydrogen technology and they will be a big demand for green hydrogen. thehink australia has potential to be a part of that. >> we have another big guest coming up later on. the san francisco fed president joins our team at 1:00 sydney time.

that 11:00 p.m. on wednesday new york. this is bloomberg. ♪

apple is under increasing pressure with widening restrictions on the macbook pro. qantas is the latest carrier to ban them project in luggage amid concerns the batteries could catch fire. the airline says the 15 inch version of the computer must be carried in the cabin and be switched off. have banned all apple laptops from the hold. >> amazon is said to be in talks with an indonesian ride hailer to expand its businesses. -- sources say one scenario could see amazon make a meaningful payment for a stake in the start of. we have thatlia,

income $2.69 billion. 57% dividend. more to come, this is bloomberg. ♪ ♪

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>> it's thursday morning here in sydney, australia. futures currently pointing a little lower. with full-yearut results. the net income $2.69 billion. that's up 56% on year. dividend of $.56 or share. sees headwinds from a challenge consumer environment. no final dividend from linus. you are watching daybreak australia. let's get first word news. >> the brexit drama has turned

another page. boris johnson securing the queens permission to suspend -- he willahead of shut down parliament for a month. from beingtop them able to debate a new deal brexit. it would be a big hit to the economy. >> is profoundly undemocratic at a time of national crisis. parliament must be able to meet to represent our constituents to the electorate up and down the country. it is profoundly undemocratic to shut parliament down and stop it from doing its job at a time of national crisis like this. >> google is purported to be -- google hasion begun converting an old factory in northern vietnam and plans to start production there before the end of the year. it's also eventually moving

productions of most u.s. hardware outside of china. google has not yet commented. cap and the number of shoppers and its first outlet in china after chaos cannot on launch day. the store will allow only 2000 in per day after staff were run in in a fight for discounted products. says the numbers will be limited to better serve customers. the stock is climbed 44% this year. 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. this is bloomberg. >> thank you. let's get a check of the futures in the asia-pacific. after a more positive day on the u.s. equities market as i mentioned, we have the asx

futures looking weaker there. same story in japan basically flat since similar story as well. new zealand has been trading for 30 minutes currently higher by a fifth of 1%. we saw in volumes in the u.s.. with the lack of visibility on trade, investors sitting tight , thingsolatile month just keep getting darker don't they? >> that's right. andave to more trading days the index looks like ended the month about 4% lower at this stage. it would make it the worst august since 2015. traditionally, august has been -- the benchmark has declined an average of 2%. september 10 to improve of

course we are in such a different environment right now. i don't think that we can count on much improving in september. we have this unpredictability of tweets that is just making investors so nervous and making it very difficult to trade these markets. you have the ongoing protest in hong kong. uncertainty of brexit overnight. unstoppable bond rally that indicates how nervous the markets are. we have the three year yield tumbling to an all-time low last night. also record low in fields in germany and italy. we are ending august with a decisively risk off mood that is probably going to continue well into september. >> we have a high-profile koreanr, small-cap stocks tell us about that. he came to fame by betting

against mortgage securities before the 2008 crisis. now he has disclosed major stakes in a handful of south korean companies. he believes that passive investing that has seen funds flow into etf's is in a bubble and in fact what it has done is some ofestors ignore these undervalued stocks. that is where he is looking at these overlooked stocks. in korea, his firm has increased and is also looking at a conglomerate group. he says korean stocks have a lot of potential. they're always cheap he's blaming management for that. that's why he will probably take an active role. he is probably right the south korean market has been one of the most honorable insensitive to this tradewinds leaving

valuations there. a lot cheaper than in the u.s.. thank you for joining us. you can check out our gtv library for the charts we have been talking about. bloombergn the terminal. following breaking headlines from steve mnuchin earlier saying he's considering the longer-term bonds. we saw the spread between the five-year and 30 year widening to 59 basis points. his comments drove the 30 year bond yield up to 1.97%. that is reversing some that had driven it to a record low of 19% earlier in the day. this is after two weeks ago we heard the treasury department -- that they were issuing thinking about issuing 50 and 100 year bonds.

locking in historically low rates for a long. of time. watching stocks in australia, virgin australia was cut to underperform at credit suisse. it was trading down 6%. that's after announcing 650 job cuts in a wide-ranging review after reporting the seventh consecutive annual loss. another was upgraded to overweight. another was upgraded to do troll at credit suisse. earningsat is on tap wise in asia, a whole slew of earnings in terms of banks and energy. a lot to watch later in the hour. earnings mentioned, rolling on for china's big banks as well. numbers for china construction bank were a miss.

the second-biggest lender by assets posted a net income of $21.5 billion read while 300 --lion -- 300 million before below forecasts. not a great way to start the earnings season. >> you are right. income risinget 4.9%. estimates were for $21.8 billion. marginsee net interest narrowing seven basis points to 2.27%. with a provision for bad loans increasing to the fact that -- if you take a look at 4337 the second quarter earnings was a 5.5% rise in net income in the second order with a return on equity rising slightly. the world'sd to biggest lender by assets and

that is i cbc. they're going to be posted results later today. according to bloomberg data, these are the estimates were looking for for this bank. looking ahead bloomberg intelligence says it may struggle to break out of low single-digit growth in terms of profit growth. it may need to increase its debt provisions as well. if we look at the share price on the topic of loans, this is what happened to the share price in july. happenedally what after the bank took more of a 10% stake in a smaller struggling bank. investors are concerned that it may be called upon to continue helping out the smaller banks struggling with their loans. you will see the impact of that in the third-quarter results that the s&p global ratings said yesterday that risks are servicing and china small banks. investors are concerned that more of this is expected to happen by actions taken by i

cbc. tesla ceo elon musk joins china's internet leaders at a major ai summit in shanghai. the event will be a showcase of the country's achievements and ai. even as they draw u.s. scrutiny. china's correspondent joins us now with more. as is quite a big moment for elon musk to be had lighting -- headlining in china. to bet a moment for him in china. to be in shanghai at this conference. he is one of the most high-profile american business leaders. this comes days after president trump said and tweeted that he wanted to see u.s. companies pulling out of china. not only is elon musk here in shanghai, he will also be talking about our special intelligence. headlining the ai conference that is kicking off in shanghai.

he will take stage in the next few hours. ai is an arrieta that has drawn a lot of scrutiny in the u.s. particularly china's advances there. the field is open to the u.s. and china in terms of leadership. when you're talking about leadership in military technology industry, whoever wins this race is going to have a serious head start in some of the sectors. it has led to a lot of politicians focusing on what advances china has been making. elon musk will be there. alibaba and tencent will be there also. they will be investing in companies who have also drawn scrutiny -- scrutiny from those in the u.s.. will be watching to see what elon musk says. -- bunche for a reason of other reasons as well. tesla gets a lot of revenues of from china.

beterms of what china will unveiling over the next few days in terms of advances and a sector in which it wants to dominate, that will be very much in focus. >> thank you so much for that. up, we look at the state of the trade war with csi s senior fellow. she is a former codirector of the office at the u.s. treasury department. this is bloomberg. ♪

>> i'm paul allen in sydney. 'm shery ahn in new york. you're watching daybreak australia. or is no end in sight for the u.s. china trade war. let's get insights from our guest. she has served at the u.s. department of the treasury. we just heard from secretary mnuchin that at least the u.s.

at the moment is not going to intervene in a currency market. that is after labeling china a currency manipulator. is this a positive sign? think the statement by the treasury secretary is largely in the sensected that after the label of currency manipulator was declared, there were some questions about the timing and the rationale behind that labeling. there were also questions about the effectiveness of any one-sided intervention by the united states. by the fact that passed interventions have been coordinated reflecting the fact that acting unilaterally and currency markets is largely ineffective. >> as we continue to see the trade tensions rachel, we have now seen a response coming from the business sector.

a coalition of more than 150 trade associations preening the president to stop the tariffs. that are going to get implemented on sunday. when we look at the economic impact so far, when can we expect these to ripple through the u.s. economy? >> i think in some respects, we have already seen some of the impacts of these tariffs and the escalation. on the other side, you have had a large part of the u.s. economy principally consumption that remains very strong. some of the negative effects have been masked. i think the concern now is we go into another round of tariffs and more of the tariffs ring placed on consumer goods that the cost of those tariffs are going to be passed through to consumers. at the same time you are going to start realizing some of the drag coming through from lower investment that is linked to the trade war and the uncertainty

that it has produced. uncertainty,ic of even by its recent standards for the past week has really outdone itself. we had president trump: china the enemy then on another saying exert great. as we head into the talks scheduled for september, what would china be thinking? is trump to material to make a deal with? >> i think your question is the right one right now. there is a real risk that the united states and is specifically president trump has just frustrated, confused and frustrated the chinese so much that there is a lack of credibility and trust going into this next round of negotiations. i think that basically undermines the goal of getting to a reasonable solution. that is something that the

united states in particular needs to be wary of the fact that the continued flip-flopping is raising questions about what the ultimate objective of the united states is. >> in terms of the ultimate objective, it helps to look at it through the lens of the upcoming 28 elections. president trump has tremendous track record and it comes to using scapegoats. he has an ideal one in the form of china. as even want a deal before the election? interpretedt can be one of two ways. as you point out, he has china as a scapegoat and can blame china for trading the u.s. -- treating the u.s. unfairly. for that being a reason for a downturn in the economy. the further hand, escalation of this trade war will weigh on markets and investment and consumer

sentiment and that itself could put the economy into a difficult situation. that would not work to his advantage. many people recognize that the strong economy is really the key to his reelection prospects. trump and his advisers are keenly aware of that. the former newm york fed president yesterday saying that the fed should not encourage president trump's trade war. is there a risk that cutting rates could embolden the event to take more dramatic measures when it comes to the trade tensions? >> that was precisely the argument that he was making. the message was lost in the debate about the risks to politicizing the central bank and that that is in nobody's interest. the point he was trying to make was lost in that.

and that other debate but i think it is true that the federal reserve is basically responding to conditions as it so any negative external condition including escalation of the trade war it's proving willing to respond with additional rate cuts. thank you very much for joining us this morning. you can watch us live and see our past interviews on our directv function. any of also dive into the functions we talk about plus become part of the come -- conversation. check it out at tv . this is bloomberg. ♪

>> i'm shery ahn in new york. allen in sydney.

you're watching daybreak australia. a group is scouring the middle east for new partners as rivals raise to sign up with the region's oil producers. then exclusive interview, president and ceo told us what he is looking for in a potential deal. >> we look at the middle east countries but it is still talk. i can't tell you. [laughter] we need crude and we need exploration and some countries. surprise --ome supplies to thailand or the asian market. >> has to do you expect to announce this possible partnership? >> possibly in one or two years or you it's now under study.

>> a lot of talk and numbers out there. can you shed some light which is more definitive? to expand our business to mainland china and asia. we have more than 1800 stations. we try to expand this one to asian countries like what we have in malaysia and singapore. we want to expand in china and japan, oman and asian countries. that is why we are listed in the stock market.

we passed one big step. we have a similar company already and we have a financial statement already react we have removed the next step in the filing. we need time to do because of our regulation. i cannot tell you now [laughter] because of regulation. >> three months or six months? >> next year. in the next 12 months. >> our exclusive president with the president of ptt. caesars is dropping its pursuit of alliances for a casino in japan saying it will now focus on the current business plan which includes a merger with eldorado resorts.

mgm once a resort and a soccer. -- a soccer. >> tiffany's jumped as profits smashed expectations. concerns about spending by foreign tourists threaten to darken the outlook. profits the forecast. the famous store sales around the world l3 percent. that is twice as bad as analysts have projected. tiffany said sales in hong kong have fallen since the street artists began in june. >> there are more signs of a slowdown in china's robbery sector. first half profits slumped the ont in a decade rolling 45% $4 billion. there will be no dividend that the brand says it is still

confident of meeting its annual target for sales contracts. the company expects to invest more in the second half. >> forever 21 is not feeling so young. it is preparing for a potential bankruptcy filing. the company has been in talks for additional financing and is working with a team of advisers to help restructure its debt but negotiations have stalled. the chain was founded in 1984 and operates more than a hundred stores around the world. nextndsey moore in the hour. we will be joined -- that is it from daybreak australia. we will have all the action in daybreak asia next. the day's top headlines and a check of the markets as well. stay with us. this is bloomberg. ♪ from the couldn't be prouders

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paul: good morning. under an hour away from the market open in australia, japan, and south korea. >> good evening, i am shery ahn. >> and i'm selina wang in beijing. asia." to "daybreak our top stories this thursday, moving markets. steven mnuchin tells bloomberg ultralong bonds are a possibility but there are no plans to intervene on the dollar.