paul: welcome to daybreak australia. i am paul allen in sydney. shery: i'm shery ahn in new york. selina: i'm selina wang in beijing. we are counting down to made -- asia's major market open. ♪ paul: here are the top stories we are covering in the next hour. the u.k. heads for a brexit election as boris johnson loses control of the parliamentary process. the vote denies the prime minister the right to negotiate the split from the european union.

he says and hands power back to brussels. to braceg warns china for a long struggle. president trump says a trade deal will be far tougher if he is reelected. shery: a quick check of how markets closed in the u.s. after being back from a long holiday weekend. started firmly in the red. we had brexit concerns and trade tensions as well. the dow and nasdaq lost more than 1%. tech and industrials leading the declines. the s&p 500 showing its first loss in four sessions. we continue to see these concerns, not to mention that u.s. factory numbers that we got during the morning session, we also saw the worst contraction in about three years. treasury yields were under pressure. u.s. futures at the moment not doing much but we have plenty of data coming out on asia as well. let see how things are shaping up there. selina: that contraction in the u.s. factory is a reminder of

how fragile markets are amid the trade war. the futures market pointing to a mixed and muted market. dataso saw some weak coming out of china with weak inflation out of south korea. the economists are downgrading their forecast for gdp growth in china to below 6%. giving you a quick preview of the economic data untapped. we have japan's bank pmi composite. singapore pmi. that is expected to be secant -- weakening. australian second-quarter gdp expected to be little changed from the previous reading. the pmi composite from japan. given you a quick look at the singapore dollar which earlier slipped to its weakest level in more than two years, at that 1.3 903 level. still at a very weak level. this is ahead of singapore's manufacturing pmi for august

which is expected to fall slightly to 49.7 to 49.8 in july. this is against the backdrop of a very broad strength of the u.s. dollar paul: thanks. the u.k. may be hitting for a snap a brexit election after boris johnson was defeated in the house of commons. the labour opposition won support from conservative rebels and denied the prime minister's right to negotiate a split from the european union. >> the consequences of this tonight means parliament is on the brink of wrecking any deal we might be able to have -- [shouting] >> hand control of the negotiations to the eu and that would mean more delay and more confusion. paul: let's get the very latest on the drama now. joining us on the line from london is senior government editor, tim.

run us through the events of the last few hours. day today,e had boris johnson lost his voting majority in parliament when one of his own politicians defected in protest of his brexit plans and joined the rival party. that meant he had no majority. and then came the crucial vote this evening in which he again lost. parliament has taken a key first step towards blocking johnson and his attempts to take britain out of the eu with no deal. johnson has then responded to this defeat by saying fine, if you want to stop me with my plans, i'm going to try to trigger a general election. we will see if i will go to brussels to negotiate or jeremy corbyn does. that is the choice facing the country now. shery: we saw johnson's attempt to scare conservatives into submission backfiring. can a general election also backfire on him?

tim: it certainly could. you don't have to look too far back in britain's past. a snapo years to see how general election can go wrong. theresa may called the pole in 2017. she was miles ahead in the opinion surveys at that point over labour. instead of winning a slide -- landslide, she lost the majority she started with. that shocking defeat in 2017 for theresa may really started the process we are in now and unleashed the two-year period of chaos in which she failed to deliver a deal and boris johnson does not find it any easier. opposition leader jeremy corbyn says he will support boris johnson's vote to have a general election. you need two thirds majority to call that but jeremy corbyn would only support that once the no deal is off the table.

that kind of nullifies the whole reason for boris johnson to want to go to the polls in the first place, doesn't it? tim: it does. it is a tricky one. some people, including in corbyn's labour party, suggest that johnson is trying to pull a trick here and offer an election which would simply be a rude ps, ploy to get around this notion to stop his brexit plan. we'll have to see how it pans out, but so far corbyn, along the rebels of the conservative party and other opposition politicians idea that the numbee priority is to stop a no-deal brexit and get this law through the house of commons tomorrow that would ban johnson from taking the -- u.k. out of the eu with no deal and imposes further brexit.

that is what johnson is trying to stop. we will see how it goes in 24 hours. shery: we saw some pretty strong reactions when prime minister johnson brexit. tried to suspend parliament. how is the european union going to take the latest development? tim: the eu is increasingly concerned and we are reporting tonight there is concern johnson will that propose anything meaningful. that they could deal with the negotiations. if they feel that johnson is actually coming up with proposals, it is hard for the eu meaningfulwith a counter offer or engage in any particularly substantive way. of course, the argument from the johnson side is he feels he has to show he is serious about walking away. he has to show he is prepared to leave without a deal in order to really push the eu to move at all, because theresa may tried a different approach. she was much more softly trying to negotiate alongside the eu.

that didn't work. the new u.k. government is trying a harder line. shery: tim ross, thank you for that update. our government editor joining us from london. joining us now is the chairman and cio of cumberland advisors, david. dissecting the latest developments on brexit and much more on the global markets. great to have you with us. let's start with brexit because we have seen the pound seesawing. slightly higher right now, but would you at all consider getting into the u.k. at the moment when we have no clarity on what is next? david: there is no clarity, you are right about that. the coverage from bloomberg, i have been watching it in the green room, it is remarkable. winston churchill's grandson sat in that parliament just now. shery: and voted against johnson. david: i recall a quote of 947, rightin 1

after world war ii. winston churchill rose in the parliament and said it has been said that democracy is the worst system of government except for all the others. and we are seeing that tested here, remarkably so. it's impossible to forecast anything here. we have not been able to do it for three years. i would not touch it now. i would stay away and watch with great, great anticipation for the next chapter in this theater. shery: can you at least depend on valuations relative to peers? the chart on the bloomberg showing u.k. equities compared to other european peers seem to be pretty cheap. david: one would think so but how do you know the valuation system in such a fluid environment? what happens if it is a messy brexit? no rules. what happens to capital flight,

we have already seen some of that. we have already seen impacts in the financial sector in london. we have already seen -- that is a big piece of the u.k. we have already seen financial firms relocate pieces of their enterprise to frankfurt or paris or elsewhere, or new york. too many moving parts for me. i like the u.s., i like the u.s. markets. we have a messy democracy too. paul: david, i'm wondering from an investor's perspective, what would be worse in terms of the u.k.? a messy no deal exit, but at least you know what is happening on october 31, or what we are potentially looking at now which is months, possibly years more with no result? david: i think you are right. i think we will have more. it looks like it. how would you construct an arrangement now with the rest of the european union under this

circumstance? there are so many elements. this was messy from the first vote which was a surprise. an interesting question is if they could ever get to a second referendumreferendum, with the h the voter in the u.k. still vote for brexit? and probably, there is a debate about that and we don't know. we may get that. the answer might be no. the pain is yet to be really felt because there is no completion of a process. kotok, stay with us. we have plenty more to discuss. for now, let's get the first word news with jessica summers. jessica: president trump has said china should do a deal soon or face much tougher terms should he win next year's election. he tweeted that the u.s. is doing well in negotiations, adding he is certain that

beijing would prefer to talk to a different administration in washington. he warned china that things would be far harder should he win a second term next year. china'sts are lowering growth forecast to below the februaryevel since 2021. bloomberg economics and narrow ledge cut gdp productions next year to below 6% due to the escalating threat from the trade war. bank of america also says china's current stimulus is insufficient. president xi jinping from the communist party says must prepare for what he calls a long-term struggle amid take slowing domestic economy and increasingly confrontational united states. officials must display a spirit of struggle to overcome the challenge of facing china which will likely continue all the way through 2049. the 100th anniversary of the

people's republic. and, china has softened its tone on hong kong, saying peaceful demonstrations are permitted where the violence will be punished. support carrie lam and dismissed protester demands for true universal suffrage. a democracy activist visited taiwan to urge support for hong kong, calling for mass demonstrations in support of the protest movement. global news 24 hours a day, on air and on tictoc on twitter. powered by more than 2700 journalists and analysts. i am jessica summers, this is bloomberg. paul: thanks. still to come, david stays with us to weigh up what he calls the strange and mixed picture of the u.s. economy. shery: next, a deep dive down under as we look ahead to australia's second-quarter gdp in a few hours. this is bloomberg.

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shery: jumping back into the u.s. market action, a one-two punch of new tariffs and weak manufacturing data helped kick off the week on a bearish note. su keenan joins us more -- with more. a rocky start for the month. su: august was not that great to begin with. we see between friday and now is the fact we have tariffs in and the weak manufacturing data. that shows the trade war taking effect. utilities among the strongest performers. it has a lot to do with the hurricane that is menacing the northeastern -- the eastern coast of the u.s. take a look at the bloomberg because we take a look at the manufacturing data. it shows for the first time that manufacturing has contracted. we have not seen that in a while. let's take a look at the big

movers. industrials were among the big decliners. boeing led the losses. part of the issue. caterpillar among the industrial weakness of that we saw in the s&p. willrt just up a tad as it suspend sales of some ammunition. very strong with a multiyear high for nextera. paul: let's talk about oil. it continues to suffer some downside and crush that under the weight of president trump's twitter feed. -- checkl feeds into out the five-day chart for oil. issues andade war the weaker economic data putting pressure. notice the big picture for oil and you will notice that august was one of the worst months for the bulls. quickly to copper which is like

the canary in the coal mine for the economy, 14% from the year's high in mid april on the back of that manufacturing weakness. goin, it is continuing to near a two-year low. paul: su, thanks very much. still with us, we have david kotok. says they arergan trying to buy u.s. stocks and you tend to agree but it will be quite selective, right? david: last week, we had three days in which we saw sentiment some negative in the markets that they triggered buy signals and we deployed money into the market last week. today, that trade has gone against us. but our view of the u.s. stock market is it is now becoming cheap. there are a lot of forces

thatway that suggest to us the market will clear this high nowtility shock period and go higher. we use etf's. we have broad-based ones. we are into the tech sector again. we are into the health care sector and others. we're becoming more bullish on the u.s. stock market, not others in the world, but here. a votesn't that in a way of confidence in the policies of president trump? david: no. it is the result of policies which are in play which have caused a slowdown in economic terms evidenced in the manufacturing sector. i don't -- it is an interesting question. as a professional investment advisor, i have to be agnostic to the policy and take what it gives me. then, apply it.

look at the policy. expansioning a fiscal reaching $1 trillion in the u.s. federal deficit. we have monetary policy no which is clearly -- now which is clearly stable or lower interest rates. no perspective, no forecast of a hike in the visible future. we have the entire array of interest rates in the federal structure below 2%, let's say between 1.5% and 2%. the rate of inflation in the united states is above 1.5%, which means the real interest rate is zero. money is free in real terms. when money is free, and fiscal is expensive and monetary policy is easy, you don't get recessions. you get higher stock prices. shery: i got to point out that was a firm no to paul's question

about supporting president trump's policies. david: i don't like trump's policy. i think his early policy of tax reform, repatriation was good for the u.s., but now he has filed the whole thing up with the trade war. shery: i understand what you say about the long-term perspective with the budget deficit in the u.s. as an investor, do you believe in president trump saying that trump cut because he is so concerned about the stock market levels right now? at least for now, it could be a market positive. david: i don't have confidence i've neverp -- played golf with them so i don't know about the trump putt. is he do know about trump has listened to peter navarro. he has created a trade war. he is repeating a history which we learned about in the depression era.

but the other part of that is if we are redefining the world from globalization and integration, which i have devoted my professional life to for decades, and the result of it has been a peaceful world. this president is on doing it -- undoing it. that is awful but it does not mean from a stock market investment point of view, i should not advise clients to act in their best interest. shery: especially if you consider the fact the markets are taking into account potentially a fed cut. what happens if they don't move this month. david: the futures market says they are going to move. the forecast for the fed imply lower fed policy rates. the one thing we know for sure is they are not going to raise. before the end of the year, there is likely to be some cut. frankly, i wish they wouldn't

but the pressure on them is fierce enough to do it. you have cheap money. fiscal stimulus. and money is essentially free. 160 million americans earning legitimate, legal job income, all-time high. you don't get a full-blown recession and the stock market is cheap. paul: david, just quickly, i want to draw attention to one of your calls that you say volatility should be considered an asset. i have a chart on the bloomberg that illustrates volatility. stronger than fx and bonds, the two lines. how do you trade that? david: you use volatility to trade under things unless you will directly trade something like the vix. we don't trade the vix but we do a lot of work on volatility as an indicator to do other things in the markets. that volatility work is saying buy stocks here.

it also says barbell bonds and watch your bond portfolio. that is in effect of the very low interest rates which essentially raises volatility. definition, they length the and raise volatility. paul: david stays with us. you can get a roundup of the stories in the meantime that you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go to their terminals. it is also available on mobile on the bloomberg anywhere app. you can customize your settings so you only get news on the industries and assets you care about. this is bloomberg. ♪

shery: let's get a quick check of the latest is this flash headlines. saudi aramco is expected to finalize what could be the

biggest ipo in history. global investment banks are finishing their pitches for offering and aramco plans to make a decision in the coming days. the company is excited to name four or five banks to be the ipo as joint global coordinators, while others will have junior roles. zara is denying spec elation on chinese social media that staff report of the hong kong protest on monday led to disruption. they said they will not comment on the unrest but it supports one country, two systems policy. the business is under increasing pressure from country. shery: samsung preparing to launch a second device in the next year. it is working on a phone with a 6.7 inch display that slims down to a smaller square when folded like a clamshell. samsung is aiming to make the

gadget slimmer and more affordable. sources say the plan may hinge on how well the galaxy fold performs. theng up next, thinking unthinkable. we discussed china's economic growth. this is bloomberg. ♪

paul: 8:30 a.m. in sydney. the market open 90 minutes away this wednesday morning. futures pointing lower by almost two thirds of 1% following u.s. equities markets lower returning from the long weekend. i'm paul allen. shery: i'm shery ahn in new york where it is 6:30 p.m. let's get the first word news. jessica: the u.k. is heading for a snap brexit election after boris johnson was defeated in the house of commons. the labor opposition got support from conservative rebels and denied the prime minister the right to negotiate they split from the european union. johnson says the result hands

the brexit initiative back to brussels. he has threatened to sack tories from the conservative party. >> the consequences of this book tonight means that parliament is on the brink of wrecking any deal we might be able to have. tomorrow's bill would hand control of the negotiations to the eu. that would mean more delay and more confusion. jessica: growing fears india may have entered quasi-recession as expansion is faltering. it is tightening concern it may be tough for policymakers to reverse the slowdown. auto sales have plunged the most in two decades and consumer goods maker unilever has warned the products are recession resistant but not resistant proof -- recession proof. the storm that flattened and slumped the bahamas is edging

north towards the eastern seaboard of the u.s., leaving devastation in its wake. dorian is a category two storm, leaving the island 70% underwater with ports and airfield out of action as rescue missions get underway. five people are known to have died for the government says the figure is expected to rise. and the iranian tanker stopped by the u.s. has disappeared from satellite tracking off syria, prompting speculation the ship is preparing to transfer cargo to another vessel. the last signal on the ship came on monday, according to tracking data compiled by bloomberg. the ship is not to be carrying 2 million barrels of oil and was briefly seen on gibraltar on suspicion of smuggling. global news 20 for hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts. i'm jessica summers. this is bloomberg. shery: futures across asia

looking at little bit mixed. for what to watch this morning, here is selina. selina: for some stocks i am watching include bhp. the australian billionaire private investment vehicle is among backers of a new demand for bhp to cut ties with industry groups that they say efforts to combat global climate change. also watching frontera. may see some movement when markets open after comments they said they are keeping their 2019-2020 mill price forecast in line. they say that the global milk market is largely in balance but not without some risks including the trade war. they said the weakening of the yen could be hurting demand from chinese consumers who have less purchasing power for usd priced milk. too.ng at nick scali taking a quick look at currencies. we have the yen weakening --

slightly to the level. weaker from the session lows we saw earlier. the aussie dollar earlier led gains with .7% climb to the .670 level. we can slightly now see the new zealand dollar we can slightly -- weaken slightly. paul, shery. paul: thanks very much. let's get more on what we should be watching as trading gets underway in asia. adam haigh is with us. it seems like there is an impasse in trade negotiations but some of the market saying maybe it is time to start thinking about betting on getting a trade deal. adam: obviously, the market is taking the view at the moment that negotiations are still stalling somewhat. you have had a continued bid and treasuries at the start of the week. we don't have a huge amount from the u.s. markets overnight. it is looking like a cautious start in asia but there is a

view out there by folks at bank of america that president trump going into the 2020 election next year does not want to cause a recession and he will do everything he can and get a negotiation on the table to prevent that. his he is betting on there's a bit of a turnaround on some of these things on the chart. when you get of it of a rebound. it is a bold call it the moment but not one we should probably ignore because the markets position for this trade fallout to continue. plenty of people including john hoeven that we heard from in the u.s. covert earlier talking about the fact and negotiation probably is not going to happen until after the election, a deal won't happen until after the election. there is this big impasse and that is the overarching thing.

pmi in u.s.weak manufacturing, global manufacturing now continuing to be under pressure. shery: if you look under the hood, you realize the decline seems more pronounced. if you look at the performance of some of the world's biggest companies, what are you seeing? adam: you saw the august declines were pretty pronounced. but loss on the s&p 500 that loss comes closer to about 4% if you take out some of the mega caps. if you look at the equal weighted index of the s&p 500, that is the chart. that basically gets to the biggest weakness in terms of the margin relative to the s&p 500 going back to 2011. clearly, if you take out some of those big companies, the losses for equities in the last few weeks have been a lot more pronounced. there are people who would make a suggestion that that does not bode well for signs about

companies more closely linked to the economy. more fragile as things deteriorate in the u.s. paul: adam ahhaigh, thanks for joining us. you can check out the gtd library for some of the charts we have been talking about. you can find that on the bloomberg terminal. shery: chinese president xi jinping is telling the communist party to brace for a long-term struggle against the growing variety of threats as a latest in the series of warnings amid a slow economy and a more confrontational u.s. our china correspondent tom mackenzie joins us from beijing. what exactly is xi jinping saying? tom: this was a speech on tuesday in beijing. president xi told them to repair for a long, drawnout set of struggles. particularly, he noted economic risk, economic struggles but as well as security challenges facing china.

he also names hong kong and taiwan. he says he things the struggles could continue until 2049. so, three decades from now, which is when the communist party will be celebrating its 100th anniversary. some strong words from the president, effectively telling the communist party to prepare themselves for long-term challenges. china is facing unprecedented challenge from the u.s. in terms of the trade front but also the security front as well. paul: a slowdown in china is leading economists, some of them to revise down their growth or cast. what are the expectations there? tom: yes, so now you have the likes of merrill lynch, ubs downgrading their forecast for 2020. ubs now expecting growth to slow to 5.5% in 2020. bank of america merrill lynch has it around 5.7%. bank of america says

policymakers are behind the curve when it comes to the need for stimulus. we have seen a package of measures to support consumption, outlined in the last few weeks. we have had tax cuts, we have had changes and the interest rate mechanism. bank of america, merrill lynch and others say more is needed given the pressures on the economy. if you are not getting 6% growth in 2020, that poses a challenge for president xi's goal of by 2020, doubling growth of 2010 levels to create a moderately prosperous society. that is another key challenge. the forecast being downgraded and economists say more needs to be done to shore up growth. shery: tom mackenzie, thank you. still with us is cumberland advisors chairman and cio david kotok. you were just listening to tom talking about some analysts saying that perhaps china is

behind the curve. the pboc has a lot of firepower left. could they start acting more strongly if we see the tensions continue with the u.s.? david: i think a good assumption is they will be continuing tension with the u.s. the pboc has to. now they have to deal with it in a different context. the context is their internal credit and banking system. we don't know that much about it. we know what we observe and what we can glean from analysts. that is an issue for china internally for resolved. it goes to the very serious question. when we spent decades in a world of globalization and integration , and we have a decline in tariffs and protectionism, and we have a pretty much peaceful world. hotspots but a peaceful world.

we now reverse this whole package. how does the package look like tomorrow? it looks like geographical regions. north america becomes mexico, the u.s. and canada. centric focala point in asia. europe, another one. maybe south america gets its own version. we have these geographical spheres. our whole notion of globalization and integration changes. we're going into that transition now. the transition is weakness economically in markets and shocks, followed by the exit from that. i believe we already in that transition right now. shery: it seems to be a global phenomenon. it seems to be the negative rates environment. whether in europe, japan. people started to talk about treasuries going into the red. we're in the just passed our,

chile cutting their benchmark rate to a nine year low. we are seeing negative rates. is this a risk when markets need to change the assumption that they made for decades about how the economy operates? david: my gosh, it is a huge risk. if you take europe, 17 trillion of negative rate debt. trillion with a "t." when you use negative interest rates for pricing models of assets, the result is infinity. we know every asset cannot go up forever. so, all of our pricing models failed. all of our discount models, we want to value real estate, we want to value stocks, bonds, collectibles. you name it. they all failed. so, the construction changes. there are no textbooks you can

point to that talk to how to deal and finance with negative interest rates. they don't exist. they will exist 20 years from now but they don't exist now. we are in a 100 year flood. when you are in a 100 year flood, you decide you are going to take the boat a different direction. it is not just business as usual. paul: if i could just return to the theme of china and this notion that economists are seeing sub 6% growth. is it reasonable to expect more stimulus there? what would you expect to see? david: i would expect china will use more stimulus, whether it is credit, monetary or rules. changes that we may not understand fully here, but they will be applied by chinese policymakers. the thing is when they

stimulate, the effects of stimulus elsewhere with geographical walls is not felt as strongly here and vice versa. we took the weights up in small caps and mid-caps, just had an excellent discussion about the difference between cap weighted. equal weighted in the performance. the reason we did that is because we are saying we are looking inward. when you look inward, you want to apply your investment resources to the companies which are within this sphere. small and mid-cap companies more so than very large international companies. that is the changing environment. we are not used to it but that is where we are now and that is where we are probably heading more and more deeply. shery: we are living history basically. thank you so much for joining us. david kotok, thank you.

cumberland advisors chairman and cio. coming up later, we speak to the eu trade commissioner alive from the annual meetings in brussels. we will get her thoughts on a range of issues, especially the slow down in europe and the trade war impacts worsen. don't miss the occlusive interview on bloomberg tv. -- exclusive interview on bloomberg tv. paul: next, we are counting down to the latest gdp numbers from australia's. . a warning of weakness. this is bloomberg. ♪

shery: i am shery ahn in new york. paul: i am paul allen in sydney and you are watching daybreak australia. we are due to get australia's second-quarter gdp numbers in a few hours. policymakers have repeatedly been sounding the alarm on growth. joining us now is jp morgan senior analyst ben jarman.

some of the remarks from the prime minister scott morrison over the past 48 hours. you get the feeling we are being softened up for a pretty nasty number today. he is cautioning against knee-jerk reactions. does not sound like the second quarter numbers will be too great. ben: we have been going towards a weak number for a couple of days now. capital spending numbers that will clear on construction very soft. the volumes were pretty weak as well. net trade which we got a positive reading on yesterday which is holding us up in our forecast at .4% which is still pretty soft and gives you a sense of a lot of work to be done for the back half of the year. paul: it is a backward looking number. the prime minister saying this is not include cuts from the rba to get us down to 1%. it not include the tax cuts either. even if it is negative, do you

think we are looking at quarter on quarter negative? see fromill be hard to the trade numbers we got yesterday. officials have been talking about the prospects of a gentle turning point post the rba rep cuate cut. it will not take a lot to generate an incremental movement. if you are really open from the rbs perspective try to shoot for the inflation target and get unemployment down, there is a lot of work to be done in terms of the current pace of growth. it will not tighten up the labor markets. shery: we saw some improvement in the property market. the chart on the bloomberg showing the second panel where you see the mortgage rate falling. we have seen back to back monthly rebound in home prices. is this sustainable or is it because of the rate cuts? ben: the rate cuts have no doubt helped. we also have an election outcome that was a bit surprising and

that took away some of the downside risk for the housing market but we get a sense on the cap. as far as we can tell, regulators are quite cautious in terms of keeping place the rules they put in around higher risk. that is naturally going to show the extent of how housing can recover in the second half. shery: how much has a weaker aussie dollar which has fallen almost 5% since the rate cuts begun, how much has that helped with the export numbers and competitiveness over all when it comes to the aussie exports? ben: it has been very helpful. not just since the rate cuts over the last 12 or 13 months because now it is positioned ironically we are in the middle of a global trade war, yet australia is seeing the strongest trade numbers we have ever seen. we have the benefit of a weaker currency.

also, commodity prices for the most part have held in and that is phenomenal exports. paul:also, commodity just to thn yesterday, no surprise we are at 1% but the expectations shall we are getting down to half of 1%. even the rb's own forecast are based on a cash rate of .5%. what kind of unconventional measures the uc? 0-- do you see? ben: we think the conventional levers will be used first. there has been a lot of conjecture that they might think about unconventional options that in a world where they have . lot of control now we think the most obvious thing is to cut the cash rate as needed. that is 50 basis points further in the first half of next year. if that does not prove sufficient, we think the cash rate could go to near zero. only when we get there will they consider options. been the rba governor has

prodding the government -- since he has been in charge to do more on the fiscal side. should the government do more on the fiscal side and forget about getting the budget on surface for a little while? ben: that has been the case for a number years that fiscal policy could do more. stonewallingind of of objectives around achieving the budget surplus. it is very much front of mind for the government. that makes life tough for central bankers. you pretty much have to take fiscal policy at their word. you can understand why the governor is pleading for more, but it does not seem like there is much of a desire of the moment to do more in the near term. paul: all right, jp morgan senior economist ben jarman, thank you for joining us. you can watch us live. you can see our past interviews on our interactive tv function

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shery: i am shery ahn in new york. paul: i'm paul allen in sydney. let's get a quick check of the latest headlines. two-way government support for reconciliation. the economy ministers of japan and france held talks on boosting the partnership. it was destabilized following the arrest of carlos ghosn. both companies have been arguing for greater in the relationship with renault wanting nissan support and nissan calling for more equal voting rights. shery: global electric car sales

battery charge after falling for the first time ever in july as china scaled back subsidies. monthly sales fell 14% to one under 28,000. -- 128,000. china is the biggest producer and customer base for ev's. the government scaled-back funding support in june to push carmakers to innovate. paul: the founder of fashion chain says he would prefer his successor at ceo be a woman. he says the role is better suited for a female executive because women are persevering, pay attention to detail and have better sense of aesthetics. he is frequently asked about the future. he built the company into a global brand. shery: south korea has stopped saying -- to japanese beer. imports fell amid a backlash

among japanese products in relation between seoul in tokyo. the largest intake since 2010 with sale surging by sixfold last year to nearly $80 million. plenty more in the next hour. we will have the latest on brexit with reaction and analysis from a professor from the university of new south wales business school. later on bloomberg, don't miss a q&a with the next president of the european central bank. christine lagarde will be in front of lawmakers later. we will bring you that live from 9:30 a.m. london time. paul: that is almost a for daybreak australia this morning. trading in new zealand is underway and we are one hour away from the opening in australia. futures in australia currently weaker by almost two thirds of 1%. new zealand is off as well,

trading for almost one hour. we have seen some weakness in the kiwi dollar as well. that is it for daybreak australia. all the action in daybreak asia next. this is bloomberg. ♪

>> good morning. we are under an hour away from the open in australia, japan, and south korea. >> welcome to daybreak asia. paul: the u.k. faces a brexit election as boris johnson loses control of the parliamentary process.