paul: welcome to "daybreak: australia." i'm paul allen in sydney. shery: i'm shery ahn in new york. sophie: i'm sophie kamaruddin in hong kong. we are counting down to asia's major market open. paul: here are the top stories we are covering in the next hour. talking trade. beijing confirms the team will fly to washington next week for the first negotiations since may. the widening array of global threats is keeping haven bowls happening -- happy.

kong reels from a violent day of protest. police fire water cannon, tear gas, and rubber bullets as china's national day approaches. shery: let's get you started with how mark -- how markets are trading. u.s. futures higher by .5%. ons coming after the s&p 500 one point on friday fell below the 50 day moving average. bounced back. still ended the session down .5%. we had some traded concerns with a bloomberg report that the u.s. might be considering restricting those portfolio flows into china. trade sensitive sectors were hit. the nasdaq. lost more than 1% we also have oil moving, or seeing its biggest weekly loss since july. now we are seeing wti starts higher at -- by a tens of 1%. $56 a barrel. let's see how we are setting up in asia. sophie: futures are hinting at a cautious session potentially on a busy final trading day of september.

the offshore yuan recovering a touch after slipping to a three week low on friday on the u.s. report falling options. board ahead of the visit to the u.s. after the golden week holiday, we are going to get a read on pmi's for september. expecting contraction for that official survey. we will also be getting factory outputs from japan. retail sales also do from japan ahead of the sales tax hike on tuesday. from australia, a read on inflation as well as private sector credit. paul: all right, thanks, sophie. let's check in on first word news with su keenan. su: thank you. we start with news out of taipei. financial markets and offices will be closed monday as a tight soon approaches the northeast coast of taiwan. the weather bureau says the storm is bringing winds of more than 100 kilometers an hour and

is warning of torrential rain. the bloomberg terminal is tracking the typhoon and shows it will reach taipei around midday. the euro zone is taking another hit with confidence in the industrial sector falling to its lowest level in six years. this amid rising trade uncertainty and brexit. the latest european commission survey shows industry managers increasingly worried about customer demand and being left keen to hiring new staff. the overall measure of euros on settlement is at its weakest since early 2015. is planningernment to present new proposals to break the brexit deadlock. in the coming days. this after the conservative party conference takes place. we are told the plan would set out a solution for the post-brexit border in ireland, an issue that has loomed over the split since the referendum in 2016. prime minister boris johnson attempts to send the proposal out of an eu summit on october 17.

the world's top iron or exporter, australia, is cutting its outlook for global field demands because of trade tensions and slowing growth. the government's quarterly report says threats are rising and a range of downside to the sector are emerging. top steelmakers are painting a bleak forecast as the trade war drags on growth and a first-half increase in iron ore prices also heard profits. 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. thanks. hong kong police used rubber bullets, tear gas, and water cannon on sunday as they clashed with demonstrators in one of the most violent days of protests in four months of continued unrest. our correspondent stephen engle is in the city. describe the events of this latest day of unrest for us. stephen: the weekend was another

weekend of violence. unrests in a row now of here in hong kong with no sign of it fading. granted, some of these more violent elements of the protest movement have gotten smaller. it is not a broad movement of violence. but they have been becoming more violent. more tear gases being fired, more water cannon and shots from the government. rubber bullets as well. more injuries. we saw one person who laid unconscious on the ground here in central hong kong during the unrest yesterday, which of course was banned by the police but protesters still tried to march towards the legislative council off here to the left. however they were met with stiff resistance by the police here. again, there is no end in sight. late last week,, we had carrie lam the chief executive hong localmeet the 150 citizens to try and engage in

dialogue. still, 26 out of the 30 questions that were posed to her were urging her to meet the four remaining demands. there is still a lot of angst in the. society there is nothing the government has said so far that will appease the hard-core protesters. shery: this is of course in stark contrast to the mood in beijing where we are of course ahead of that national day celebration that president xi jinping will preside over. stephen: that's right. this rally over this weekend, at least on saturday, was commemorating the fifth anniversary of the on bella movement in any 14 -- the umbrella movement in 2014. this unrest in 2019 has far outlasted that, surpass that 79 days with no end in sight. you mentioned those key anniversaries. tomorrow is the first anniversary of the founding of the people's -- of the october 1

holiday which is the 70th anniversary of the founding of the people's republic of china. security is locked down in beijing. here is another story because protesters and hard-core elements are saying they will rally again tomorrow to get their point across. they want among their demands, universal suffrage. they want beijing to stop interfering in their local affairs as promised in the basic law of a high degree of autonomy. paul: we do appear to be at an impasse. nothing has happen to advance the cause of the protesters. how does beijing respond with this october 1 anniversary closing in now? do they just ignore it? pretended doesn't happen and carry on? they arewell, i guess hoping that is going to happen. they are also -- all indications are that the leaders in beijing are wanting the local

authorities here to handle the situation in hong kong. so far that has been the case. there have been threats with the pla across the border and the 6000 plus soldiers that are garrisoned here. that is always a threat. everyone i've talked to in the government and ells will hear and hong kong do not think that is a viable option right now for the chinese to use military in for -- military intervention. they are of course probably consulting carrie lam quite considerably. we are understanding that carrie lam is heading to beijing. she will be a -- attending that parade for the 70th anniversary. could be a raucous day tomorrow as obviously hong kong celebrates the founding of the people's republic of china very differently than they will be in beijing. shery: chief north asian chief correspondent stephen engle joining us, thank you. an official at the u.s. says there are no current plans to

stop chinese companies from listing on american exchanges a day after bloomberg reported that trump administration is discussing ways to limit u.s. investor access to china. let's bring in washington editor ros krasny. and tom mackenzie in beijing. let me start with you, ros. city is calling this potential move coming from the u.s. the most extreme american move against china. what do we know? ros: i think that is absolutely right. there has been a huge push back against this very good bloomberg reporting on friday. basically that there is a lot of measures being considered within the trump administration. a big escalation of nontariff barriers, and really something that pushes to the heart have chinese growth, and chinese technology sector. and plays more into the script of what we've talked about over the months, of the u.s.-china trade war being more than just about export flows and import

flows. but really a generational battle for world economic supremacy. we believe among the measures being considered by the trump administration would be delisting chinese companies from u.s. exchanges, limiting america's exposure to the chinese market, and possibly putting limits on chinese companies included in indices managed by u.s. funds. it is unclear how this would go down. we do believe it will be subject to president donald trump's approval and he is at least -- he has at least okayed the talks which has been led by larry kudlow. 2018, chinese companies raised something like $9 billion on u.s. exchanges. a lot of alarm about this move. citigroup described these possible measures as extreme. tom, i'm wondering if there has

been any reaction from china? we have yet to have any official reaction from china. what we did however -- have over the weekend is a statement put out by the financial stability and development committee. that is a cabinet level committee set up in 2017 and headed by vice premier, who will also lead china's negotiations on the trade front. the committee put out a statement, not in direct response to this reporting by bloomberg, but because they had been meeting anyway saying they were going to continue to encourage two-way financial opening. and that they were going to put in further measures to ensure that foreign investment banks and foreign institutional investors could continue to access and expand their footprint in the chinese market. they didn't detail any specifics.

we know over the last two years, china has made -- this is one sector, where china has made some reforms and some progress in terms of opening up the financial sector. whether that is the stock and bond connects or the removal of these quotas and capswe know ov, china has made -- this is one for investors buying up chinese security. there has been measures to try to open up the financial sector. what we heard over the weekend was that those measures would continue. in terms of an official response to this reporting and the plans being put to play in washington, we are waiting for that. s, this cutting access to u.s. finance, this dramatic move seems to have the signature of the china hawks in the administration. do we know where the different factors -- factions stand on this now? ros: as we have discussed over the months, it is always a battle within the trump white house about who is driving the trade a bus. this definitely looks like the trade hawks, the anti-chinese sections within the trump administration and certain key that trump confidants

outside the minute -- the ministration like stephen bannon, who left to be involved in this. also in congress, marco rubio, a florida republican, has looked to push through some sort of legislation along these lines. it seems like there is no firm timeline to go ahead with this and to some extent, just in divulging the stocks, the trump administration will be able to measure the pushback and measure the opposition and really do a market test of this proposal as they sometimes do. this really unclear as will be discussed at the upcoming meetings in washington. it is unclear if trump will be listening to outside voices on this. we do know a couple weeks ago, one of his outside advisors, sheldon adelson, called trump to say listen, this trade war doesn't look good for the economy and it doesn't look good for your reelection. so take that under advisement.

it's possible that trump will hear from some of his advisors about this too. the good news is the trade talks are still on. this is a pretty drastic move that overshadows anything that might be discussed in washington, starting on the seventh of october. paul: yes, in terms of those talks, it is hard to imagine that this is an somehow coincidental. leo heard does travel to washington. tom, what is the impact likely going to be, the mood around the table will be different i imagine? hard to see how this doesn't overshadow those talks. in terms of the dates, the view is he will beget the two sides getting down -- sitting down, those have yet to be confirmed. you are right to say leo her will be flying after october 7 for those talks. that is a positive. has would be major as citi

been saying this would probably be the most significant move against china in terms of economic battles since the blocking of huawei from software and hardware components from the u.s. side. of course, it is being deliberated as we have discussed. nonetheless, it will very likely make these trade talks that much markup did, and certainly will strengthen the hands of those hawks in beijing who have been arguing this is all part of an attempt to undermine china's rise. whether that is the sale of arms to taiwan, whether it is the increasingly vocal comments from washington and moves by legislators there to support the hong kong pro-democracy protesters, or whether it is the attacks on the belt and road initiative, or of course those blocking actions around huawei. this is an attempt to undermine china's rise. that is the concern amongst the hawks in beijing, and this will only strengthen that view and that china needs to double down in terms of isolating itself from some of these pressures. again, this is what we are

looking forward to in terms of those talks in washington, whether there will be additional progress. and the additional threat of tariffs lingers in october and december if there is not progress in these negotiations. right, washington editor ros krasny and our china correspondent tom mackenzie there in beijing, thanks for joining us. still to come, an interview with the foreign minister of south korea including the relationship between seoul and tokyo, and the push for peace on the korean peninsula. shery: i've annexed, sandy bob got gives -- but up next, sandy bob is here. this is bloomberg. ♪

shery: i'm shery ahn a new york. paul: i'm paul allen in sydney, you are watching "daybreak: australia." u.s. stocks are sitting at a three week low. with an array of factors weighing on investors minds from impeachment investigations and a jobs report, to the planned

resumption of china trade talks. watching all of this is sandip bhagat. he joins us today from los angeles. thank you for joining us. i want to start off with, kind of about the fed. the top story on bloomberg at the moment, companies with a lot of debt seem to be outperforming at the moment so the rate cuts are working. i'm wondering if you see that money being invested in capex, will it be reflected in earnings? nobody was really complaining that borrowing was too expensive, where they? sandip: no. i suspect a lot of this may be along the lines of a technical bounce. you know the diversions that has taken place between so-called growth fell -- growth stocks and value stocks. they are sensitive to the economic cycle. there fundamentals may not be strong. if this drive is being influenced by leverage, high debt on the balance sheet, that is hardly a winning strategy for the long-term. it has its place every now and

then on a tactical basis. but don't get tricked by this. growth will be scarce going forward. high-quality growth companies with high free cash flow margins will continue to do well for a long time. very goodhad a attitude toward second-quarter earnings. as the third quarter dates approach, i'm wondering what you are expecting to see there? sandip: we can write this year off. there is no earnings growth. this will be the year a flat earnings growth. yet the market is ahead when he percent. it is all because of multiple expansion. we have this massive selloff in december that put the s&p 500 forward pe at 13.5 times. in this era of low interest rates, the fair pe on stocks is not the historical 15 times forward. it is not 16, i might argue it is 17 or 18. this has been the year of the multiple expansion.

there are some green shoots that are emerging on the economic front. manufacturing pmi that was reported midmonth seems to have turned a corner, there has been a lot of global easing, there is concerted global easing, and hopefully as diminished as the effectiveness of monetary policy is, maybe that will kick in and an uptick in earnings. shery: let me go into individual sectors. we saw last week, micron disappointing markets. this gtv chart on the bloomberg showing how the semiconductor index has really rallied, the line in blue, expecting the prices of chips would a bottom out. line inan see, the white is not going anywhere. do you still like the tech sector when there is so much industry pressure, not to mention that they are very sensitive to the trade tensions right now? sandip: the semiconductor stocks have caught up in the throes and in the crosshairs of the global trade war.

there are regulatory risks floating around for the likes of google and facebook and apple, that have been accused of doling out preferential treatment for product placement. there is a lot going on. but the biggest dynamic to keep in mind is that these are companies that are producing very high free cash flow margins, and those are being derived from a competitive advantage in a moat of intellectual capital that is hard to reproduce. and it is far more scalable than physical capital. so these companies have a long-term secular advantage. they are growing the line and they are doing so in a very profitable manner. i will leave you with one number. the technology sector alone accounts for one third of the u.s. stock market's free cash flow production. that is a pretty telling statistic. and enough to overcome this

temporary headwind related to regulatory risk, and a trade war that could yet change literally on a tweet. shery: and what happens when you marry this tech with the consumer stories such as amazon when we continue to see consumer strength in the u.s.? sandip: i think it bodes well for the likes of companies like amazon. as much as we think about amazon benefiting from a technology backbone, we know the crown jewel of the company is aws. and how much operating leverage technology has created. let's not forget the connection they have built with the consumer through a very loyal brand, which allows them to do the following things. it improves user engagement and adoption, and allows them to come up with price increases, which in turn leads to scale, which gives a semi-competitive advantage which helps them to gain a bigger share of

transactions and therefore wallet share. proposition, its economic mode and different -- and differentiating factor is the scale that an incredible brand has created, which makes switching costs difficult and cost very hard to compete against. shery: sandip bhagat, was great having you with us. you can get a round above the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb terminals.r also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪ also available on mobile in the bloomberg anywhere app. ou onl

shery: let's get a check of the latest business flash headlines. the credit suisse board is set to meet monday to face the executives implicated in a

scandal. the banks investigation shows coo was involved in authorizing the surveillance of former wouldive, over fears he coach former colleagues after deciding to move to rival -- to a rival company. paul: reports from london say bob dudley is preparing to step down over the next 12 months. the ceo took the reins of bp iser the 2010 disaster and focused on restoring the company to the status it had before the crisis. the explosion in the gulf of mexico killed 11 people and spilled billions of euros of oil into the ocean. facing billions of dollars in legal costs and damages. shery: morgan stanley has slashed its evaluation of alphabet's waymo saying self driving technology is taking longer than expected to develop. worth $105says it is billion, well below his $175 billion valuation 12 months ago.

he says autonomous driving faces a series of hurdles, adding that morgan stanley had underestimated how long human safety drivers would still be needed behind the wheel. plenty more to come. this is bloomberg. ♪

paul: it is 8:30 a.m. monday morning in sydney. market open 90 minutes away. futures pointing weaker at -- by 2/10 of 1%. this after u.s. equity markets closed a little lower at the end of last week as well. i paul allen in sydney. shery: i'm shery ahn in new york where it is 6:30 p.m. you are watching "daybreak: australia." let's get to first word news with su keenan. su: we start with u.s.-china trade talks. beijing has confirmed top negotiator leah her will travel to washington next week for new trade talks. the ministry of commerce as the chinese team will fly to the the after golden week after

70th anniversary of the people's republic. u.s. treasury official says there are no plans to stop chinese companies from listing in the u.s. after reports that the trump administration is discussing ways to limit investor flows into china. meanwhileprotesters clashed with police again on sunday on one of the most violent days in four months of ongoing unrest. police used water cannons, rubber bullets and tear gas on demonstrators who hit -- who lit a building on fire and through petrol bombs as they tried to march on government offices. earlier, tens of thousands rather for a rally to mark the fifth anniversary of the pro-democracy occupy movement. now, prime minister benjamin netanyahu is making a last effort to form a government. this after elections this month produced a parliamentary stalemate. partnership talks on sunday

morning with the rival blue-and-white party broke up without success. netanyahu maysays return as presidential mandate to form a government if negotiations fail. elon musk has announced a new rocket that is designed to carry a human crew from cargo to the moon, mars, or elsewhere in the solar system. the starship inventor as it is called is expected to make its first launch in the next few weeks and will climbed to about 20,000 meters before landing back on earth. the presentation came on the 11th anniversary of spacex rocket reaching orbit for the first time. 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, su. let's go to sophie and hong kong for australian stocks to watch. are watching amp on a

report that they grew plans to merge its bank and into -- into wealth division. details forthcoming october 8. new farm on the radar after delivering a be down underlying profit. it has agreed to sell its crop protection in south america to a chemical. rio has decided to cancel the sale of its canadian iron or business which has been up for sale for years. myron and energy stocks are on sale today. gold export earnings are forecasted to jump 32% to a record for 2020 driven by higher prices and shipments. keep an eye on gold players today. paul: let's get more on what we should be watching as trading gets underway in asia. adam haigh is with us. bonds in australia making a comeback, even though we have the rba looking to cut tomorrow. could there be life in the rally yet? adam: in this sense, we are

looking on the corporate side of things, u.s. dollar bonds that have been performing pretty well. the mortgage asset space is up 9% so far this year. as you say, we have had those cuts from the rba. we have also had a few other things that have removed the risk premium going into the election. there was a lot of fear around the restrictions to what would flow through the housing market, if the labor market got in. that didn't happen. you have had a decent. run up as we go into the rba meeting, it looks pretty set up for a market that is expecting a third interest rate cut this year. the thing that may sway of course is what has been happening with the housing market which is enjoying a nice recovery. it does put the governor in a tricky spot as to how far he wants to reinflate prices they are given there was so much scrutiny over the last few years. it will be an interesting

meeting tomorrow. the tone and commentary from them will be crucial to find out what the outlook is for the next three to six months. shery: investors looking closely at the report that the u.s. could be cutting access to u.s. finance for china. of course, investors in china will only have monday to react to that news as they head into a weeklong holiday. what are we expecting? adam: it does kind of put the focus right on chinese markets for monday. as you say, then we get into tuesday and the close through tuesday to the following week. we have already had a bulk of the move play out on friday. one of those big moves we did see was some of these u.s. listed china etf's which performed fairly poorly on friday on the back of this latest escalation. some of the commentary this weekend is played down some of the worst fears in reaction to the original headlines. you may see somewhat of a muted

start for equities across the asian region. with that onef, day of trading remaining, you might see more volatility with people wanting to get in and price this next outcome. this is such a changing game as everys and days incremental headline comes out that it is a tricky situation to read. whether or not people are saying this really affects the longer term trend, which is the trade tensions remain and remain in a pretty tricky place prior to the high-level talks that are expected to get going next week. there isn't huge amounts for people to really swing them one way or another. we did see u.s. equity futures open reasonably strongly this morning. they are tracing a lot of that friday loss that we saw on wall street. looks like a reasonably muted start for asian equities this morning. shery: u.s. futures up to dance of 1% as we speak. adam haigh, thank you so much,

bloomberg global markets editor. for for -- for slowing growth with the u.s., the backdrop ahead of celebrations for 70 years of the people's republic of china. beijing hopes to paint the positive picture for the occasion, our next guest is taking a hard look at china and the challenges it faces. research cofounder and stephen yang joins us in new york. great to see you. thank you for joining us. let me get started with the latest report that the u.s. could be restricting portfolio flows into china. we have no clarity on what mechanisms would be used. what does it about the longer-term broader impact of this decoupling happening between the u.s. and chinese economies? >> look, it is going to take a long period of adjustment and accommodation for the united states and china to find their footing in a new relationship. i keep feeling like the trump administration has only suddenly discovered that china has a

state owned economy. and seems to be shocked that that is the case. they went through this tantrum period with the trade talks when they were asking for no state control over companies. that is something that is ugly never going to happen. and then they were shocked when it didn't happen. i kind of don't know what is going to happen now. i'm not sure. shery: something that seems to have changed within china at least is the rise of president xi jinping, the most powerful leader somewhat argues since masa tongue. what is -- how was i going to affect the chinese economy becoming a major power? anne: i think it is not surprising to see increasing vertical is asian of power as the economy because looms weaker theuse otherwise, how is communist party going to hold onto power? i would say xi jinping has been really not a deft leader at all. but he has been effective in

strengthening the party's power of the economy. that'll to millie is not a good thing for the chinese economy or of the u.s.-china relationship but it is a good thing for the ccp. paul: earlier, we were discussing whether or not the almostispute has become indistinguishable from a broader struggle for soprano see. is this more about the u.s. trying to lean on china's rise? four is a just a trade deal that can be worked out with a few more rounds of negotiation? anne: it really kind of looks like the former at the moment. think the u.s. administration seems to be quite confused about its motivations and goals. i think the trade deficit which was the original goal of the trade negotiations to reduce, i think the trade deficit is really a sideshow. i think the important thing is the technology relationship. that's what china cares about.

china would allow all of the exports of shoes and toys and rubber products to the united states, they would allow them to go bust. they don't really care. i mean, the chinese leadership. what they really care about is semiconductors and technology. paul: this latest report that we have had that the u.s. may start to restrict chinese companies -- company's access to u.s. capitol, how do you read that? anne: i don't know what the mechanism would be. i know there is a bill that would delist companies that don't -- that have auditors that are not audited by the pca, which is directed at china. there are very few countries that don't allow the pca be in. china is one of them. it would delist companies by 2025 if that happened. i think that is a good idea. i think it will force china to

force them in. it is not a silver bullet. show: does this at least more understanding from the trump administration of what would really hurt china? anne: you know, it is so hard to say. i have been continually surprised by the trump administration's unwillingness to strike a cosmetic deal, because that is what they have done with everybody else. and it really looked like what they were going to do when they dealt with the zte and huawei issue earlier on, but in this negotiation, they seem unwilling. and yet, what exactly is being sought? shery: unwilling or unable given there is more consensus this time around within washington, that something needs to get done against china. anne: there is. but consider this. china would be completely willing to announce several billion dollars worth of soybeans, soybean purchases, auto parts, and some kind of

tariff reduction. and then trump could declare victory. he's not doing that surprisingly. shery: let's bring in the hong kong protest right now. 17 weeks, i'm starting to lose count. this is going on for a very long time. putting a lot of pressure on president xi jinping. stayelevant will hong kong as we continue to see this political pushback and as we had already seen from beijing that they wanted to boost other parts of the mainland? anne: beijing has been talking about that for 20 years, replacing hong kong with chong i -- with shanghai. it simply can't happen because the whole point of having the financial capital is having a legal system. so very sadly, hong kong is shriveling up, and that will strongly affect the. chinese economy. . but nothing is going to replace it. in the whole reason is because

china counts -- can't allow an independent legal system. shery: great to have you in the studio. thank you so much for that. j capital research cofounder anne stevenson-yang. coming up, my exclusive with the foreign minister of south korea on relations with japan and the chances of peace on the divided peninsula. this is bloomberg. ♪

shery: i'm shery ahn in new york. paul: i'm paul allen in sydney. you are watching "daybreak: australia." the fallout from the trade war will be revealed in a series of economic reports this week, starting with asia in the coming hours and winding up with the u.s. jobs reports on friday. our global economics and policy editor kathleen hays is here with a preview. what are we looking out for this week?

kathleen: we are looking out for many numbers that could have big influence on central banks when they meet this week or in the weeks ahead. i want to get to the china's purchasing managers index because this is a big one. everyone is waiting to see how much of a bite the trade war continues to take out of that economy. this is a powerful indicator. you can see the yellow line which is manufacturing is down to 49.5. it is in this territory that signals contraction. you have to be above 52 signal growth. it is expected to pick up, but if it doesn't rise above 50, it points to weakness. the services line, yes services have come down a bit, but that part of the economy is holding up in spite of the trade war. the key to this may be new export orders. they have rebounded to 47. a long way from 50. let's move on to what the bank of japan will be watching. in another hour or so, we will get industrial production for japan. weak exports, the story on

japan, like so many other countries. they are supposed to depress that number when it comes in september. more important on tuesday, the bank of japan survey of manufacturers large and small is expected to show falling confidence at big manufacturers. all of this ahead of the bank of japan's meeting at the end of the month where the governor has already hinted that things are bad enough, that they could add more stimulus. now we are going to move on to korean inflation. just a month ago, we saw inflation in korea hit zero year-over-year, and now, it is forecasted to go even lower. -0.3. over the weekend, governor lee rising. downside risk more than upside risk they made a surprise rate cut in july. will this still to them toward another rate cut ahead? as the two meanings we are going to see, we will get the reserve

bank of austria, a big debate. divided by yes they will cut the key rate, they will cut it again, others saying they will wait, because the governor has indicated he sees a gentle turning point in the economy. reserve bank of india is not expected to wait. they are expected to make another rate cut to spur growth, boost inflation, and are terrific interview we had last indicated that. maybe this is not quite time but we will be watching anyway. shery: here in the u.s., drumroll to the september payrolls report. what are we expecting? kathleen: this one -- the question here of course, the fed is wondering, we had a weak jobs report in august. we thought it was a one time thing, or is there a downtrend in dog -- in job growth. ist you are going to see

these bars, turquoise bars. 130.ast one was if you took out temporary hires for the u.s. census, it is only 100. i was a weak number. other components looked better. wages, unemployment near a 50 year low. this could be key to what people think the tilt will be at that next meeting. we know patrick harper who is present in the philadelphia said he is in the camp who would not be in favor of a rate cut at the last meeting. big one foris a determining what the fed also does when it meets at the end of the month. shery: kathleen hays, thank you so much, our global economics and policy editor. ties between south korea and japan are at the -- with the disagreements over trade and compensation. wouldonth, so fed said it withdraw a sharing agreement with tokyo. prime minister kang kyung-wha spoke to me exclusively about

the impact from this latest move. expected has. as expressed its disappointment of our decision, but we have the compelling nature of our decision which would -- which was triggered by japan's unexpected and unilateral trade measure. therefore, i think we respect the u.s.'s position on this but i think our position, the position we have made and you are talking about the military intelligence sharing agreement, this requires a great deal of trust between the parties. has played with trade restrictions on us, based upon their rationale of breach trust, than it does not make sense for us to maintain this agreement which requires a higher level of trust. shery: in the past, washington has played the role of mediator

between japan and south korea, many times. what role is washington playing now? ofg: washington, i think, is course urging the two sides to talk in the first instance. also using opportunities vis-a-vis, us, vis-a-vis japan, to make the point that the trilateral cooperation is very necessary and important as we deal with the north korean nuclear issue and other security issues. and we

paul: let's get a check of the latest business flash headlines. hsbc shortlist for the next ceo includes banking had stephen heard and an insurance ceo, stephen hester. that is according to the u.k.'s sunday times newspaper. it says the banks interim ceo is seen as another strong candidate. the report says a key consideration is experience in asia where they generated most of its profit last year. shery: they are spending 800 million u.s. dollars to buy the

south american crop protection asset of australian agriculture company, new farm. units and isas expected to complete the transaction in the first half of next year. new farm says it will use the money to reduce debt and help shift focus to its operation in north america, europe, and asia. paul: september is on track to be a record for foreigners buying a-shares. data compiled by bloomberg shows overseas investors have injected more than $9 billion into the market by friday. shanghai composite indexes heading for its first monthly gain since june. there is plenty more ahead in the next hour on "daybreak: asia." a guess joins us to discuss the week ahead in the markets. that is it from "daybreak: australia." all the action in daybreak asia next, including industrial production numbers for south

korea for the month of august do out at the top of the hour. futures in sydney, looking weaker by a fifth -- by 1/5 of 1%. this is bloomberg. ♪

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paul: i am paul allen in sydney, we are under an hour away from the market open. shery: from bloomberg global headquarters, i am shery ahn. sophie: i am sophie kamaruddin. welcome to daybreak asia. ♪ paul: top stories, talking thee, beijing concerns, team will be in washington next week amid reports the u.s. is considering restricting fund flows to china.