paul: welcome to "daybreak australia. i'm paul allen in sydney. shery: i'm shery ahn a bloomberg world headquarters in new york. sophie: i'm sophie kamaruddin in hong kong. we are counting down to asia's major market opens. ♪ paul: here are the top stories we are covering in the next hour. >> i think it's going really well. i will say. paul: time to talk. the u.s. and china revive stalled negotiations and will meet again friday. president trump says day one was good. the uncertainty around the talks cast few doubts on growth.

the fed's robert kaplan says he's not sure the u.s. economy can avoid a severe downturn. tim cook defends apple's decision to remove an app that tracks hong kong police. he says it was being used maliciously. shery: let's get you started with a quick check of the markets. we see u.s. futures gaining .2% after president trump said u.s. china trade talks were going very well. that optimism translated into the regular session and we saw the s&p 500 game .6 percent. as we finally had the first day of those two-day negotiations kickoff after we saw a lot of conflicting reports on if that would happen. we had banks and automakers leading the gains on the s&p 500. the semiconductor index also gaining about 1% for a second consecutive session. the nasdaq also rose .6%. we had a weaker than expected u.s. cpi print, which did little

to discourage market excitations that we could perhaps be seeing more fed easing. energy was the best performer as well in today's session as we had wti rebounds from a two-month low and also jump by the most in three weeks as we heard from the opec secretary-general saying its members and allies, including russia,-- including would do whatever it takes to avoid a global oil slump. sophie: it looks like we have a few good friday's on our hands with futures pointing higher. we are seeing ossian bond yields track treasuries lower -- we are seeing ossie and that's we are seeing a -- we are seeing aussie and bond yields tracking treasuries lower. season the earnings warming up in the region. we have emphasis this friday following rival pcs which did post weaker profit growth. we also got earnings from a tech

bellwether, not meeting estimates. rugby fans will be waiting to see if matches on sunday in tokyo will be called off, so of alers being warned typhoon making landfall potentially sunday. hundreds of mostly domestic flights will be canceled and trade operators also warning there may be cancellations as well. a great shame be for the tournament if the scotland and japan match were to be canceled. anyway, for now, let's get the first word news with jessica summers. jessica: thanks, paul. the united nations security council has held a closed-door meeting on turkey's incursion into syria amid widespread criticism. the european ambassador called on turkey to call off the attack while the u.s. envoy refrain from joining the criticism. turkish president erdogan is threatening to send millions of refugees to europe if his

country comes in for under criticism. the dallas fed president has told bloomberg it is not clear if the slowdown in the u.s. will turn more severe in the face of weaker global growth and the trade war. robert kaplan said the u.s. is in a fragile place and could go either way. growth slowed to an annualized 2% in the second quarter, and forecasts have further moderated in the third quarter. in a fragilewe are period in here, which is why i'm glad the fed has taken some action in july and september, but i think this could go either way. we can avert a more severe slowdown, but i think the jury is out right now. month's ecbm last meeting shall policymakers were divided on parts of the stimulus package announced by mario draghi. it comes as the meeting shows some members of the governing council were ready to support deeper rate cuts in exchange for dropping the idea of resuming bond purchases.

others needed to be convinced about lowering rates at all because of concern about adverse effects. ceo has defended its decision to pull an app that tracks the location of police officers in hong kong. it said it had received credible information from authorities that the software was being used to attack police. removed from the app store after apple flip-flopped between rejecting and excepting it. the app developer dismissed the claim that an endangered anyone. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 100 20 countries. i'm jessica summers. this is bloomberg. paul: thanks, jessica. let's get to our top story now. trade talks wrapped up in washington with initial signs pointing to a positive day one. high-level meetings extended late into the afternoon and will continue on friday.

a we just completed negotiation with china. we are doing very well. we are having another one tomorrow. i'm meeting with the vice premier over at the white house, and i think it is going really well. our whites cross to house reporter in washington and our china correspondent in beijing. given that these talks have gone on for a very long time, can we take that as an encouraging sign? justin: i think there are reasons to be encouraged. one is comments we heard from the president, who really seemed to say that he thought things were going well. the fact that there is a scheduled meeting between him and the chief chinese negotiator tomorrow even though there had been some reporting suggesting that meeting might not happen is a positive sign. we also heard reports the u.s. is sort of paving the way for huawei to get some limited

licenses to buy from american companies. that is a symbolic gesture that suggests the trump administration is trying to ease ahead with some sort of deal, and we have heard the trump administration might be willing to do a smaller package, even though the president's preference is for a larger one. these are all positive signs investors are looking at, and i think will really, especially if the president is involved, here tomorrow how close we are to some sort of agreement that could hold off additional tariffs. also talk there could be some sort of currency pack. will this be different from what we could have seen before talks broke down? reflectives really of a deal, as you alluded to, that was reached between the two sides at the early part of this year, an agreement around the currency regime in china that steve mnuchin, the treasury secretary set at the time back in february was going to be one of the strongest agreements ever. when this news broke that it was being considered again as part of talks in washington this

week, when the news broke yesterday, you did see a significant strengthening of the --yuan as aou on result of that. implications the practical and petitions will be limited because china is unlikely to sign up for any sort of style. they are students of chinese history and so are reluctant to go down that path. it may be face-saving, hoping to get as many deals so the talks can move forward. it may reflect some of the limits that were in the canada-mexico-u.s. deal and may include some of the commitment around the g-20 on transparency when it comes to fx regimes. it may not be as significant as markets are expecting, but if it helps move the deal forward in the negotiations forward, that is a positive. paul: in terms of the currency deal, robert lighthizer said they have spent a lot of time on

currency. how difficult will it be to reach a pact on that given all the rhetoric swept up on currency later in the year, china being labeled a currency manipulator and so forth. how will they reach a deal there and enforce it? justin: i think the real question is how serious the agreement will be and how big the impact will be. you spoke a lot about rhetoric. labeling china a currency manipulator was sort of a political win for tromso fire but did not have a serious sort of practical impact. the treasury department can kind of hold off any consequent is consequences for that, so i think the question is if it is part of this harvest deal, how big the reforms will be versus the longer-term bigger structural reforms the u.s. is seeking as part of this trade deal. those are the more complicated things, but something the president has seen in the way tariffs are having on the economy, might be willing to push off, particularly heading

into an election year. justin mentioned there could be some deal on relief for huawei, some suspension of tariffs. do we know at this point what china is asking for? when we came into negotiations, the understanding was china wanted all existing tariffs will be lift -- to be lifted. it seems the demands have fallen . >> at the least, i think china once the additional tariffs to be frozen. they have also asked, and we know this, and our sources, for the sanctions on costco shipping, one of his biggest shipping companies -- in fact, its biggest shipping company -- to be removed. these were imposed by the u.s. over what the u.s. says this company's involvement in shipping iranian oil. again, it has had a major impact on the shipping industry. china has requested those sanctions on that company be removed.

all of this moving forward, but again, in turn some of the terrace, that has been a key focus for chinese negotiators, but it may be at the point where they just are content these terrorists being frozen at the moment. talks continue on the trickier issues going forward. thank you both for joining us. tromso fire's positive comments on the negotiations boosted u.s. futures. we had already seen u.s. stocks higher on optimism that day one of the trade talks had gone ahead. we had banks and automakers leading the way higher. su keenan has more on the market moves. it was a broad risk on day as finally those negotiations actually happened. --su: negotiation talk dominated and what we know as this will clearly be the sentiment going ahead on friday. it was a strong day for stocks,

second day higher for the s&p with banks and autos moving way higher. notice you have a slight uptick for futures. we go into the bloomberg -- i don't know if the controllers can bring up my bloomberg. notice volatility is still in the mix. what we have is these two days to the right moving higher, but you can see since the trade negotiations began, it has been a rough ride. pg&e was the big story after the bell yesterday. big story again because that court decision now raising concerns the stock could go to zero even that control over the bankruptcy restructuring is an outsiders' hands. eloton, the ipo, is under pressure and we have strong earnings boosting other stocks. paul: let's talk commodities. dollar in particular falling after one of the fed officials a word of-threw caution. su: we have the dallas fed

president talking about a word of caution. the pause in the rally is not in any way causing etf investors to hold back their investments. it has been the longest run in a decade in terms of the rally. oil is moving higher on optimism about even a mini deal for china-u.s. trade. that could definitely support the demand equation. back to you. paul: thanks very much. still to come, former ustr official claire read tells us why pragmatism is the key when it comes to trade talks. shery: up next, against a backdrop of political and trade risk, kevin nicholson tells us why his money is on the u.s. equities. ♪

shery: day one of the revived u.s.-china talks wrapped in

washington. threatsts says trade will keep markets down. great to have you with us. have near record highs, just not being able to surpass that. not surprising given the uncertainty out there, but why do markets keep reacting on these trade headlines? it is not like anything has changed in the past 18 months. >> right. i think the big thing is people are just looking for optimism. anything that is positive in the marketplace. trade has been the big elephant in the room, and that is what has been holding markets in this range we have been talking about. any time that we think that there is going to be a trade deal or the president tweets that things are going well, then markets kind of perk their ears up, and they want to go and test

old high, but until we get a real trade deal, one that has -- one thate to it, has some substance to it, i think we will stay in the same range. shery: you are saying the u.s. is the best house in a bad global neighborhood. in this case, how do you structure your portfolio? >> we have brought a lot of our international assets to the u.s. this year we are slightly overweight the u.s., but by and large, we have kind of stayed pretty neutral relative to our benchmarks, and the reason for that is because if you don't get a trade deal, you are going to go to the bottom of the range, and so that is why we want to make sure we stay nimble. we are fully invested, but we want to make sure that if there is some downside, we are able to protect our clients' interests. paul: what are your expectations for the earnings season?

a chart we bring up frequently shows earnings guidance heading to one of its lowest level since 2016. what are you expecting for the quarter? >> i think we will see what we have seen the last few quarters. you go into earnings season with very low expectations. companies have done a good job in setting up analyst to believe they are going to miss expectations and they deliver just enough to get to earnings season that a slightly positive or at the very least neutral with no change, and i think we will see a similar thing occurred this morning season. how much responsibility can the fed take for the performance on equity markets we have seen this year? i just want to reference robert kaplan's comments that we are not in a full-fledged rate cutting cycle. we saw gold ease on those remarks. are we not in a full-fledged rate cutting cycle until markets

go to pieces again and then we are? >> i think the fed thus far this year has been rear -- very reactive to the market. cuts thus far, and i think that you will see another cut will occur at the end of the month, but i think the bar is becoming increasingly higher because you are getting that do noters now want the fed to cut more because they actually want to have some dry powder when we actually do see the economy slow if we are in a recession down the road, but i think the market has rallied quite a bit based upon the fed being dovish over the last few months. the bar seems to be a little bit higher for companies as well, especially those with high valuations. we have seen software stocks take a hit recently.

are we going to see this wework through sort of syndrome where your caution about these companies that do not make very much money but have high valuation? >> it's always possible. one of the things we try to do when we structured our portfolio is we were trying to have a nuanced approach to growth, right? for highk dividend-paying companies that we wanted to follow that were able to support the high dividend with a high free cash flow, and we also look for companies in the technology provideat were going to efficiency for our every day lives, so that let us into technology, more software and services, and financials. more specifically, banks. i think that there is a high bar that if you have guided down, you've got to make sure that you

hit your numbers. i think that a lot of companies war hidden behind the trade has an excuse, and i think that that is going to start to get old with a lot of investors going forward. paul: riverfront investment group chief market strategist kevin nicholson, thanks for joining us. just got news coming from s&p, reporting third quarter preliminary results and reaffirming 2019 outlook. we have s&p saying new cloud bookings up 38% nca -- s.a.p. year 2020 non-frs total revenue between 28.6 billion dollars and $29.6 billion, so some preliminary third-quarter results from sap reaffirming its 2019 outlook as well. do not forget, if you are away from a screen, you can always find in-depth analysis and the days big newsmakers on bloomberg radio, now broadcasting live

from our brand-new studio in hong kong. you can listen via the app, bloomberg radio plus, or bloombergradio.com. this is bloomberg. ♪

shery: i'm shery ahn in new york. paul: i'm paul allen and sydney. you are watching "daybreak australia." fbi agent have arrested two ukrainian men for u.s. campaign-finance violations. the pair is said to have helped rudy giuliani seek damaging information on democrats and are the latest characters in the impeachment drama. greg sullivan joins us now from washington. what can you tell us about these men and how are they connected to the impeachment inquiry? greg: these individuals are not new. they have been in reports recently. they are associates of rudy giuliani, president trump's personal attorney. we know they were arrested last night at dulles airport with one-way tickets out of the

country in their hands. these two had -- we know they have sought to contribute possibly in violation of campaign finance laws to an unnamed congressman before turning around and later seeking that same congressman's help in removing the u.s. and bested her to ukraine. we also know rudy giuliani tried to help -- try to persuade ukraine to help probe joe biden and his son. that effort is the subject of an impeachment inquiry, and these arrests are likely to increase scrutiny on rudy giuliani and possibly the president himself. earlier today, president trump said he did not know these individuals, but already calls are coming from congress that the top democrat in the senate saying that giuliani needs to testify under oath about these arrests. foreign policy front, we are hearing house republicans could be introducing a turkey sanctions bill. what else do we know?

greg: that is correct. several house republicans are introducing legislation to sanction turkey over their incursion into syria. several top congressional leaders, including the top republican in the house, and his deputy number two, are cosponsors of this legislation, so it's possible it could gain broad support. we know that in the senate, there is a similar effort, which is actually bipartisan. one leading republican, lindsey graham, and another democrat have introduced legislation targeting turkey over this incursion. to be realseem momentum in congress to hit back at turkey as punishment for their incursion into syria here. paul: a number of so far loyal allies to president trump have also raised concerns. has all of this pushback affected the president's thinking at all on syria? greg: it is interesting you mentioned that because we have seen harsh criticism from lawmakers in both parties. it has been striking because while other scandals and

controversial things have not provoked the same sort of backlash, this move in syria does seem to be provoking lawmakers to actually speak up. in one high-profile case, a gop congress meant saying he is no longer on the trump supporting list, but trumps are fire does not seem to be changing his mindset, speaking to reporters short time ago -- president trump does not seem to be changing his mindset. he spoke a short time ago and said that he does not think the american people want to see u.s. troops in syria and while he does see the possibility for sanctions against turkey, he would rather try to mediate a solution between turkey and the kurds. thanks veryght, much for keeping an eye on that story for us. cook ways in, tim to defend apple's removal of an app that tracks police activity in hong kong. it was legal, then was banned, then was legal again. i'm getting confused. anyway, you cannot use the app

anymore. we will have that story as well as a check of the day's news and a look at how we are setting up futures trading for the final trading day of the week in asia. this is bloomberg. ♪

paul: 9:30 a.m. friday morning here in hong kong. the market open 30 minutes away. futures currently pointing u.s.r by .67% after we saw equities close modestly higher as well. seems to be a little optimism in the air around trade talks. i'm paul allen in sydney. ahn in newi'm shery york where it is 6:30 pm let's get to first word news with jessica summers. jessica: president trump says trade talks in washington went "very well" after a near three-month pause. negotiators will meet again friday. the president also said he will post the chinese vice premier at

the white house. however, he did cast some doubt over if some kind of agreement can be reached, tweeting, china wants to make a deal, but do i? >> we may get a trade deal we are happy with, but then china macy that the united states is such an unreliable partner, that they may structure us out of this market anyway, and that would be a shame. jessica: the u.k. is a step closer to agreeing to a new brexit deal after talks between promised her boris johnson and his irish counterpart. sterling jumped the most in seven months as he said the sides could now see what he called a pathway to a potential agreement with the eu. the two met at a sick a location in northern england. brad carson said he believes a deal as possible ahead of the brexit deadline at the end of the month. >> i had a very good meeting today with the prime minister and our team together. very positive and very promising. that both ininced

britain want there to be an agreement in the interest of the united kingdom and european union as a whole and i do see a pathway towards an agreement in the coming weeks. jessica: bankrupt utility pg&e suffered another bad day as a court ruling threatens to put its fate in the hands of outside creditors and potentially send the stock to zero. shares plummeted more than 30% after pg&e was stripped of exclusive control of its restructuring process. the news came as the company shut off power to much of northern california to prevent its equipment sparking wildfires. almostia has found that workinghe country's palm oil locations are illegal. authorities are trying to thetify the owners of officialrking without

permits. 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. i'm jessica summers. this is bloomberg. paul: thanks, jessica. apple is defending its addition to remove a controversial mapping app in hong kong. tim cook defended the decision, app was being used to target pulleys. what is the status? why all the confusion? >> yeah, well, this speaks to the much larger issue of u.s. companies wanting to tread this really fine line when it comes

to china. it is a very important market for a company like apple in particular, but at the same time, they are very sensitive of chineseng afoul officials, particularly at this sensitive time when hong kong protests, as you guys have been talking about every day, have become so fraught. in this particular instance, it is one specific app, and there's a question about if the app is useful to people to avoid .nstances of police brutality chinese officials are saying that it is also being used as a tool to point people in the direction of where the authorities are, and it is making them and citizens vulnerable to violence. apple is caught in the middle of this. again, china is very -- is a very important market for them. you don't want to anger and antagonize chinese officials.

at the same time, hong kong, this region that has become so andght with the protests the violence being shown in both directions. shery: very interesting that google's play app store still has the app. of course, google pulled out of mainland china years ago. how important is china, then, for apple? withina, when combined hong kong, is the second largest market for apple outside the u.s. -- sorry, the second large market period right outside the u.s. we have seen other ways apple has moved, other steps apple has taken, removing, for example, the taiwanese flag from the emoji lineup. these might seem like small things, but symbolism is very important to chinese officials who believe that taiwan is part , as youarger country know, so small things take on

added resonance, and we are seeing in light of the flap over the nba general manager's tweet was an appearance of voicing support for protesters in hong kong, this small thing, even a tweet, even an emoji, take on really added significance when it comes to the chinese market, and so we are seeing with the nba and reaction on the part of chinese fans where there is a lot of following for american basketball in china, but these are things you cannot simply trifle with on twitter and with emojis and apps in the app store. that. thank you for our executive editor joining us from san francisco. australia opens at the top of the hour. let's turn to sophie for what to watch in markets. sophie: let's take stock this friday morning. a chop a few sessions we saw in

the yen, s&p futures on trade. yuan is sticking their 710 after breaching 716 ahead of a high-level meeting. not everyone is on board. pmo capital markets points to a slowing chinese economy and ubs says beijing is unlikely to allow significant depreciation. beijing at one point had its biggest intraday gains in early 20 17 on optimism over deals thanks to the irish leader, and that has seen a jump in cable one-month riskth surpassing power, with if you climbing a spot pound rose as much as 2.2%. sterling bulls looking ready to hope for an end to the brexit nightmare and banks not taking chances as they scrap holiday to liquidity. shery: thanks so much for that.

the head of the dallas fed is in -- is in favor of near-term rate cut to avoid a more severe slowdown in the u.s., but it does not mean robert kaplan is on board with the longer production cut some are expecting. kathleen, the market reaction was swift. we saw gold prices fall. kathleen: first, let's set the table. robert kaplan is a centrist. he is not considered a dove or hawk. very important to listen to a fed official like this, as always. this limited support for more will -- more rate cuts is what got the fed here. he said the fed can avert a more significant slowdown if it occurs, but the jury is still out what the fed needs to do. he basically made the argument, rates are already low, you only have so much room to cut. here is what he said? that's what he said. >> i think we are i fragile period, which is why i'm glad

the fed has taken action in july and september, but i think this could go either way. we can avert a more severe slowdown, but i think the jury is out right now. kathleen: he also talked about needing to move now and move quickly. gold prices fell when mr. kaplan argued for limited rate cuts. so much uncertainty and so much policy uncertainty, i think it would be wise for us not to over telegraph where we are in the cycle. this cutting we are doing should be limited, restrained, and modest, and not the start of a full-fledged cutting cycle. kathleen: the chance to still seen around 76% of an october cut. down around 40% for a december cut. very data dependent. that is the message from the fed these days.

paul: the fed minutes indicated a very robust -- a fairly robust escutcheon around inflation. the latest test does the latest u.s. report support and cut this month? kathleen: there were talking about what to do with the deep picture. ae consumer price index on monthly basis came in flat in september. it was up 0.1 the month before, and the core cpi was up just 0.1. it was 0.3 in august, so some people said this supports the need for a rate cut. bottom line, let's take the big picture -- you can see year-over-year cpi in the turquoise bar at 1.7%, down from almost 2% at the beginning of the year, and the yellow line is the core cpi. used car prices are falling. maybe that is a sign of weak consumer demand. probably not a big deal for the fed, they have a lot of other reasons to cut besides this. the president of the minneapolis fed says he does not know how many more rate cuts the fed has to do, but he definitely think they need to do them because the

downside risks are increasingly. important, loretta mester of the cleveland fed, who has been a hawk, says she opposed the july but opposed september cut, now, what she is worried about is the economy looks pretty good having the manufacturing weakness spread to the rest of the economy. i think this is a very important signal because she represent a shift on the committee, all the more support for an october cut, and maybe if this weakness continues to spread or that december cut as well. consent --weakness if this weakness continues to spread, for that december cut as well. paul: thank you for joining us. still to come in a moment, day one for trade talks wrapped up in washington. the very latest from d.c. next. this is bloomberg. ♪

paul: let's get more on what we should be watching us trading gets under way in asia. we got trade headlines and the ongoing talks. , bloomberg's global markets editor" is here. these high-level talks to do show some encouraging signs in washington. adam: yes, and of course, we've gone through that first day at least with the development that we are going into a second day of talks. trump sounding very positive coming out of that. we have not heard many comments out of the chinese side, but it certainly lays the foundation for at least they're not to be an escalation of the current situation which is really kind of the baseline markets are assuming now. of course, volatility has gone of going into these talks and one place that has been quite notable is in the chinese currency market with you one volatility kind of sitting around the eight-week high, and of course, there's a lot of debate still as to what will really happen as talks conclude

on friday. we still need to wait until we get through that second day to see what that might look like, but there's plenty of debate, too. ct group on the one hand saying you still want to be fairly toitioned on the downside balance risk, but there are folks at ubs saying there is some caution around that, that the authorities are not going to want to let the currency weaken too much further from here, and of course, we have seen recent strength in the last 12 hours or so. the offshore yuan has been trading pretty well as this momentum kind of builds going into that friday continuation of the talks, but, really, the base case for the market now is you getting some relief rally because you have not got an escalation of the current tensions, not so much that you've got any kind of short-term resolution of anything substantial. of course, we have seen volatility surge in the treasuries market.

the dtv chart on the bloomberg showing how the treasury volatility is actually higher than the vix even. what is going on here, and what can we expect? adam: and it has been an interesting dynamic because you have had that pickup initially in the early part of september, even when yields were backing up in sovereign bond markets, but treasuries, volatilities remain pretty high. what this tells you about a bond 10 basisere seven to point swings intraday for 10 year yield is becoming quite common is that a lot of the market is still being governed by incremental news on the trade front, and of course, the friday session in asia looks like it could be more of the same. we've still got to wait to find details coming from those negotiations between china and the u.s. in washington and the thursday session at least in the first few hours of the day, it was particularly volatile.

certainly you want to stay fairly tightly buckled in for the rest of friday just so people can get more of a sense as to what might conclude when those talks friday in washington really get going. at the moment, no indications of that drop in volatility. if we do have any more of a relief rally, there is potential for yields to move significantly higher. right. thank you so much. bloomberg's global markets editor. you can find adam's charts on the gtp library on bloomberg. we have breaking news -- s.a.p.'s ceo, bill mcdermott, is stepping down. s.a.p. naming jennifer morgan and kristian klein as co-chief executive. s.a.p. saying bill mcdermott will remain in an advisory capacity until the end of the year to ensure a smooth transition. mcdermott has been the ceo of s.a.p. since july of 2014.

we know that s.a.p. just reported preliminary third-quarter results as well as reaffirming their 2019 outlook. they said their new found bookings were up 38%. they have also announced ceo down,cdermott is stepping to be replaced by jennifer morgan and christian klein as s.-chief executive paul: let's get back to washington where revived trade talks have wrapped up for the day. president trump saying they went very well. joining us now is senior counsel claire reed who spent eight years with the u.s. -- the office of u.s. trade representative and was assistant ustr for china. thanks very much for joining us. here we are at the end of first day of talks. so far, it appears to be progressing well. what are your expectations for a best case outcome? is it a small deal that achieves a few realistic objectives?

say it'ss i would probably going to be a confidence building set of measures if we get a good outcome. it's going to be, you know, a step along the path as opposed deal that is going to basically take care of the fundamentals, and i think that is because of the number of issues and the complexity of the issues on the table just does not make it realistic to get everything tied up in two days. experience, can you remember as much background noise and negative rhetoric as we have seen around these talks? how difficult does that make it to achieve an outcome? >> i think here, the major difference from the path is on both sides of the pacific, we have one person -- for we have two people in total who are actually running the show, and

the outcomes have to satisfy aree two people, and they very complex for negotiators who are sitting at the table because they cannot actually close a deal. they have to take whatever it is they have come up with and make of the fits the needs , and that isr side really very different. i frankly would assume that when the chinese negotiator came over here, that he had his mandate pretty clearly established, but it will be more complicated for the u.s. side because they will need to go and report to trump, and trump will make the final decision. shery: what about the complexity issues at play right now? it seems the key issues are not only about trade but also

discussing issues related to national security with some blacklisting of tech firms, not to mention now you are bringing into the ricks human rights issues -- bringing into the mix human rights issues and potential capital flow restrictions. >> yes, well, i think the original scope of the negotiations was supposed to focus on intellectual property, china's industrial policy, market access, as well as president trump's focus on having china buying more goods from the united states. i think the question here is going to be how far do we get with those issues because i don't think the issues regarding national security or human rights are going to be resolved .hrough this process i think if you look at how president trump has approached some of those issues, he has stayed off of twitter on quite a number of controversial topics

that are outside of the trade lane, and maybe that is significant. day, ist the end of the a partial trade deal still better than nothing, or will it encourage china to not deal with bigger picture issues? >> i don't think the united states is going to take its leverage off the table, so if there is some kind of a deal that comes out at the end of the week, i think we have to locate step the u.s.im could reverse if they feel china is not moving forward and try to resolve the fundamental issues on the table. i would only look at this as, if you will, a bit of a truce, a as opposedcking off to some kind of deal that has everybody leave the table. paul: does a truce and backing off make sense on the chinese side to maybe wait out the next potential election cycle and

maybe even the one after that because anybody but president trump might be more willing to, i guess, abide by more conventional diplomatic practices and as you say, stay off twitter. >> they might stay off twitter more than he has, but i think it would be wrong for china to anticipate that a democrat coming into the white house would be an easier to deal with commodity. democrats traditionally have been more skeptical about trade and have been more emphatic andt labor and human rights environmental issues, and i would anticipate that china would face a number of additional challenges with a democrat in the white house. they might be different ones, but they may feel that they would be better off if a reasonable deal from there perspective can be reached to go

with a deal that would be on the table from the trump administration. happense will see what as friday talks get under way. if you missed any part of that conversation, tv is your function. you can catch up on past interviews and watch live, dive into any of the securities we talk about and become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out. this is bloomberg. ♪

paul: i'm paul: i'm paul allen in sydney. shery: i'm shery ahn in new york. here are some key events investors are watching. deadline1 brexit looms. boris johnson will lay out his

schedule monday. wednesday, there may be more protests in hong kong as chief executive carrie lam gives her annual policy address. on friday, we will get key chinese data in the form of third-quarter gdp. early indicators pointing to further weakness with growth expected to slip to 6.1%. the investor take on that may depend on the result of current trade talks and the impact of u.s. tariffs that are set to rise on tuesday. and it is a busy week of earnings for u.s. banks. tuesday will be the big day with numbers from goldman, jp morgan, fargo.nd wells paul: just a little bit of news for you on a typhoon bearing down on tokyo at the moment. cancels it is going to numeral forge to mystic flights and 14 international flights today.

plenty more to come in the next hour on "daybreak asia," from brexit to the trade war. bank of america merrill lynch has trade place for every major theme. this is bloomberg. ♪

paul: good morning. i am paul allen in sydney. we are under one hour away from the market open in japan and south korea. shery: i'm shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this friday -- pres. trump: i think it is growing really well. i will say, i think it is going really well. paul: the u.s. and china revive