>> welcome daybreak australia. i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. sophie: and i am sophie kamaruddin in hong kong. we are counting down to asia's major market open. >> here the top stories we are covering in the next hour. deal or no deal? an agreement is near. president trump wants a siding to take place in the united states. the world top oil company presses go on its long-awaited ipo.

saudi aramco brushes off concerns. the fed says the u.s. is in a good place and the data justifies keeping rates on hold. we hear exclusively from the vice chairman. marketsck check of the close on the friday session in the u.s.. we saw fresh records for u.s. stocks with the s&p 500 dating 1%. energy and materials led to gains. oil jumping the most in six weeks on a more positive, solid jobs report, not to mention optimism on demand as we saw chinese manufacturing data more positive. we also had positive trade sentiment with that china commerce ministry saying the u.s. and china had achieved a consensus in principle. the nasdaq gained more than 1%, the dow gaining three hunter points. -- 300 points. >> we have asia stocks set for gains after the rise on wall street friday.

we had this week a lot of focus on chinese trade data, along with policy decisions from policy in southeast asia and australia. this monday we have australia retail sales headlining earnings, the bank missing earnings reporting it 15% drop in cash profit. dividend andl seeking to raise $1.4 billion at a discount -- to come. -- japan aussie bonds open low. closed, aussie bonds open low and the aussie sticking above 69. strength,st temporary a warning. moves toimism as china stabilize the currency. haidi: let's get you the first word news.

least 200 people arrested in hong kong as pro-democracy protesters clash with police over the weekend. on saturday police fired tear gas and deployed water cannon on demonstrators who had built barricades or cross streets. more unrest broke out sunday when police and protesters clash at shopping malls, and a pro-democracy district counselor was attacked. worth 1.5co may be trillion dollars or even less according to research sent to potential investors by the banks involved in the company's long-awaited ipo. that is well below the 2 trillion targeted initially by the kingdom. i suggest a struggle to pinpoint a precise valuation. aramco says it will list on the cotter wall stock is change in riyadh and likely start trading next month. -- tara while. have fullwant to

proof to that, you see the oil prices. while prices went up the first two days by 20%, then came down by 10%, and all the future .raders saw this we have 1/8 of the oil production. in the world. traders, they saw this as a nonevent and that means it is really safe, that is with the money says. su: the european central bank meanwhile enters the lagarde era monday when the new president they serve first public policy address. christine lagarde will speak in berlin at a time when ecb policy makers are split over stimulus plans with the eurozone economy teetering on the edge of recession. analysts expect her to call on governments to do more to boost demand and left growth and low inflation. -- left growth and low inflation. pollution in new delhi officials

say should be treated as a public out emergency. the air quality index rose to 744 on the weekend according to the website monitor air visual. 50 is in a safe any reading about 300 is regarded as hazardous. the toxicity is blamed on a range of factors, including construction dust agricultural burning and auto emissions. global news 24 hours a day and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. haidi: the u.s. and china say they are close to agreeing to the first part of a trade deal. commerce secretary wilbur ross buckets with lead to bro learn -- exclusively to bloomberg saying a global trade deal would be reached this month. >> we are in good shape, making good progress. there's no natural reason why it cannot be.

whether it will slip a bit, who knows, it is all is possible. haidi: let's head to washington and are bloomberg editor ross crassly joins us. we are hearing about potential for this signing. what needs to be done for phase one of this deal. ros: wilbur ross did not rule out slippage. have.s. china trade talks been so erratic at times, with progress made and then walked back, and at certain times close it seems and that president donald trump get angry about how things are going. until something is finalized it is too soon to say that the two principles are ready to meet here. course this is the phase one deal that would see china boost its level of agricultural buying to pre-trade war levels, keep

its currency stable and open its financial services markets to u.s. firms. if they show any wavering on those elements, it is possible there will be a slept. -- a slept. if the deal comes together, the main thing that would probably happen on the u.s. side is doing away with higher tariffs planned for december. even that is not 100% certain. the good news is the two sides have been talking regularly since getting back together after break in talks. it seems progress has been smith. -- has been smooth. president trump often talks about how this is boosting the stock market, so that is a big motivation for washington. erraticne of those actions or inactions from the trump administration was the sales of components to huawei. in june he said he would allow the components sale.

to have an update on that? it sounds like the component sales will go ahead per what wilbur ross said to us. but don't assume that it is all done until we see some kind of announcement. todayher big thing we got is just the question of where to sign the deal. i think the irony of the situation is that the u.s. and china had a neutral location, date, theth a hard not beenting, which is canceled. there somewhat similar sum in getting together president trump and china's president choosing paying, it is a big moment of local theater that is very appealing to the u.s. president -- china's president xi jinping.

locationg that neutral could be another stubbly block. know oned of course we of the possibilities is somewhere that xi jinping is fond of as well. in terms of this being a phase one of this deal, do we have any more certainty as to whether phase two or even three, whether those talks will be ongoing as well? be good to think that phase want to be signed, and then lather, rinse, and repeat, get in there and work on some of the very bigger and structural issues. between the u.s. and china. but chinese officials indicated late last week that they do not know that they can get that kind of deal signed with the trump administration, so i think there is certainly no guarantee of that. that het trump has said makes china would like to wait for a democratic administration, which she does not think is going to happen. so no guarantee that there will

be smooth sailing to phase two or phase three. i think because some of the reforms the u.s. would like to see from china are just elements that beijing is not going to give up on easily. haidi: a really difficult structural issues there. ndc on trade. we will be hearing more in our exclusive conversation with the u.s. commerce secretary. or details in bangkok at the asean summit. including an interview with the u.s. timber commerce in repeat. still ahead, fed vice chairman says monetary policy and the u.s. economy are in a good place. come, watch out for a bond market bubble and wife qe is causing huge -- and how qe is

causing social issues. this is bloomberg.

haidi: i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. you are watching "daybreak: australia" oil outlook. investors on wall street continue to digest earnings. berkshire hathaway, softbank and prudential will be reporting. su keenan has are look ahead. big week for earnings , the last big walk -- or offer the heavy earnings. the bank of england. also the reserve bank of australia interest rates. president she delivering a keynote in shanghai. check out the snapshot. notice the chance for take an index -- transportation index was strong friday.

we were up with the big bang with a strong jobs report. let's take a look into the bloomberg. the dollar closed month with the worst monthly decline since january, 2013. that is the trend many are watching. in terms of earnings that are becoming -- that will be coming at us. big names, berkshire hathaway, prudential, softbank and brookfield property among big names to watch. yes and we mentioned this is a big week for earnings. bus a preview -- give us a preview. tech names, auto also retail. su: yes we really cover the spectrum of big industry groups with very big names that have been in the news. qualcomm, we are interested to see how the chip fab is doing in respect to the trade issues. the bigook at some of names, disney and media, over --

uber in the auto industry and a recent ipo. the stock has gotten a big pop on recent positive news on production. under armour and adidas and the retail space are being watched closely for spending trends. those are likely to send -- those are also likely to set the tone for trading. a look ahead with what to expect this week. joining us now with a look at markets. chart on aat this fresh record high with the s&p 500 friday, largely on they really good jobs report. i'm wondering, given the macro picture globally continues to deteriorate, we had the south korean exports seeing another horrible month for an 11th straight month, is this really moderately in your more possible on equities than anything else.

>> i am positive on equities relative to debt. they look a lot better value to us. this is been one of the most hated bull markets in history. there has been net outflows out of equity funds for the past three quarters. all the money has gone into credit. we cannot say that there is a whole lot of optimism around equities at the moment. is this move justified? probably is justified given were interest rates are and the backdrop of were many will need to go. we think there's a lot of reasons to really look at equities going forward. just to give you a brief anecdotal piece of evidence, ge's current, for its pension assets are assuming a 6.75 percent return over the next 20 years. there's no way they can us achieve that using debt. if you get 2% interest rates on debt. pension funds will have to allocate more to equities going forward. that is a good drug backdrop to equities in our opinion. haidi: is there another level of

concern you hold over corporate debt including investment grade? >> i've a huge concern over corporate debt. i may concern is the trouble be. theowest -- the bbb, lowest investment grade that. that has ballooned to now sexy percent of the entire investment grade market. -- 60% of the entire investment grade market. it will not take much for them to get downgraded. the average leverage is three times ebit da. there is a rating downgrade at some of those move into junk status, a lot of people will be forced to sell. we think if there is a bubble and there are reasons to become concerned, it really is not a debt market. we see a lot of that in the bbb area, and also negative yielding debt which is guaranteeing a lot of -- to maturity. haidi: fiscal stimulus, will it come to the rescue? >> we're going to have to.

the monetary policy really has not worked as a should in our opinion. it has created a lot of imbalances around the world. the last time i was here, i mentioned the social problems it is creating around the world. what we have had with monetary policy and near zero or zero interest rates is asset price inflation. the rich have gotten richer, real wages have not kept up so most people of gone backwards of the last 10 years. that is why we have had rings like in chile where people protested a 4% increase in public transportation fees. that is why we have had brexit, trump, northlake and italy, yellow vests in france. i could reel off more example but we see the current monetary policy creating huge social issues which will have overflow for the real economy in time. think fiscal stimulus is going to have to come and it will be a very good thing. pengana we are looking more industrial than cyclicals which have been neglected until now. haidi: given the uncertainty

globe link, is not surprising we are seeing a huge gold rally in the gtv chart on the bloomberg. not all-time highs. given the run-up so far, does the still have room to rally? >> with it does. there's a lot of risks built in in the world and we think gold provides a nice hedge print paper money has lost its worth in our opinion, its worth has declined in the near zero interest rates world. have beenentral banks issuing way too much cash and gold provides a nice heads. shouldainly think people hold some gold in their portfolio and at the end of the day it should be thought of primarily as a risk hedge. and there are a lot of risks out there. haidi: is qe a risible expectation and will it be meaningful given this market? >> the rba really do not want to

do this. there clear that the australian needs fiscal stimulus more than monetary to malaise. its hard to say where they will go. -- more than monetary stimulus. it is hard to say where they will go. i do nothing qe is realistic. i do not think we need it. so i do not think it is something the rba wants to pursue. haidi: you wrote in your notes about the flow on impact of qe monetary policy globally. do you think that is one of the -- ?ns we protests echo is that geopolitical disruption or tension something we are not cap letting up for me at growth in markets? enoughre not calculating and we look at growth in markets? the quite generational and access -- existential? >> yes and quite oppress you time or we are more aware of all these issues -- quite a press he and time -- prescient time.

we see the protest in the hong kong market might we can abet. people tend to look at it here and now appeared but if you look at it long term, this is going to have real impact. what we think may happen is a crates wage pressure for to long they were has been losing out to corporate profits. we think there is a case for wages to go up. that will be very inflationary. therefore you want to be in things that create good inflation hedges. all the money that is flown into debt now, and there's been massive, massive inflows into bond funds. all of it i think is taken hughes rich -- taking huge risks in my opinion. it just takes a little changed to result in big impacts i think that is where the real danger is. haidi: what about the danger of increased regulation for use in your notes that you actually , goings. health insurers into the 2020 elections, one of the risks of having more scrutiny in this sector? those health insurers have

been hit very hard because we have had warren and sanders saying they want medicare for all. we think that is an unreasonable electric taste and. first of all, for to happen they would have to win the, craddock nomination and then the democrats would have to win the lower house and also passed the senate and also get it through the legal cases sure to follow. at the end of the day, it does not make economic sense. how can we have mega care for all -- how can we have medicare for all if we cannot find medicare for some. these health insurers have been hit hard and are cheap at 10 times pe. they continue to grow and are good businesses. they benefit from network effects. and there unloved because people are reacting to headlines but we think the headlines are unrealistic we think there is a lot of money to be made there. we own cigna and unitedhealth. haidi: great to have thank you. just ahead, aramco kicks off what could be the biggest share

sell in history. the company may not be worth as much as riyadh hoped. this is bloomberg. ♪

haidi: let's get a quick check of the latest headlines. mcdonald's has fired the ceo fortifying company policy by having a relationship with an employee. the company's board voted on the move after investigating the relationship. president and new ceo. according to wall street journal, the ceo had sent in email to one employee said acknowledging his mistake and agreeing with the board that is time for him to move on. berkshire hathaway enjoyed its best quarter ever with operating profit topping a record and net income rising to $52 billion. that makes it the most profitable listed company in the world with one or 20 and billing dollars in cash. billion in- $128

cash. year, are up 6% this short of the 22% gain of the s&p 500. top apple chip supplier time once, conductor says it expects significant growth next year amid strong demand for 5g handsets and new iphones. sales weren says west mayor earlier as demand increases for apple's latest smartphone in the coming months. the trumpet administration urged butr's to work in the u.s. he says that is not a tenable solution for worries about security. saudi aramco valuation has become a talking point as it finally kicks off its long-awaited ipo. research center investors by banks involved says aramco navy worth as little as 11.5 chilly trillion, less

than the target. the company's intention to float, we will see aramco shares trading probably next month. we will see a prospectus from the company around the ninth of november. we still do not know what the valuation of the company is looking to achieve is, the chairman said today that the market will decide. it will be up to the book building process to determine the value of the shares and how big the offering size is and ultimately what the valuation of aramco will be. interest,ge amount of huge amount of scrutiny around .he final valuation figure the crown prince previously said he wanted to achieve $2 trillion . the next few weeks we should start a seen answer to those questions. you can get more on the

aramco ipo and more stories on today's editions of daybreak. bloomberg subscribers go to dayb on your terminals. on thelso right there mobile app and you can customize the settings for the stories you care about. this is bloomberg. bout. this is bloomberg.

shery: breaking news. federal officials are investigating under armour's accounting practices, according to people familiar with the matter. talking to the dow jones peer this would be a probe examining the company's shifted sales from quarter to quarter to appear healthier. they have already questioned people in baltimore according to the dow jones. the justice department prosecutors are conducting this as a criminal inquiry into the matter. they are coordinated with civil and investigators at the securities and exchange commission to see if under armour's accounting practices are in line with the law as they

investigate whether the company shifted its sales from quarter to quarter to appear healthier, according to the dow jones. haidi: let's get the first word news with su keenan. su: we will start with president trump sang the potential phase one trade deal with china is close to being completed. he wants it signed in america. he has previously suggested iowa as a venue for a deal, as it is the largest corn producing u.s. state. wilbur ross has also hinted at alaska and hawaii as well as various locations in china for the two sides to formalize any deal. the trump administration has eased tensions with europe saying tariffs on auto imports may not be needed. wilbur ross welcomes what he termed a good conversation and told bloomberg that duties may not be required. back in may, you may recall the white house delayed tariffs on auto parts. washington has reached an agreement with japan but has yet

to clinch a deal with the eu. the governor of okinawa is warning the u.s. to look elsewhere. this is the pentagon hunts for the sites to deploy new missiles. to base newattempt weapons would be firmly opposed by local residents. he was elected last year on a campaign to move the u.s. out of there. he says okinawa carries an unfair burden by hosting half of the 50,000 u.s. military personnel in japan. the u.s. and south korea will suspend a planned military grill for a second straight year. this to avoid raising tensions with north korea while denuclearization talks continue. joint exercise, code-named a vigilant ace, is scheduled for december and involves hundreds of aircraft including u.s. strategic bombers. have a finall

decision later this month. 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. haidi: australia opens at the top of the hour. sophie is watching for that. . sophie: we are keeping an eye on the bank. they reported a dismal set of earnings, the first decline since 2009 after posting a 15% drop in cash profit. highlighting how tough 2019 has been for australian banks amid the misconduct probe which has seen lenders cough up $3.5 billion to pay for the industry's bad behavior. analysts had to prepare for a polar result from westpac. this was worse than forecasted. the return on equity falling. a final dividend was slashed to $.80 a share from $.94 last year. westpac is seeking to raise $1.4 billion and a 92% discount to

fight its closing price to meet capital rules. an august 28d at low after citing for five straight sessions. westpac ceo brian hartzler said of the challenges they remain after this disappointing year. haidi: sophie kamaruddin there in hong kong. let's get more of watching the training get underway across asia. global markets editor adam. we saw pessimism give way to optimism. no doubt it will go in swings as it goes to trade. i'm wondering if the comments from president trump had enough substance to keep treasury yields edging higher and equities gaining higher? adam: i think we can say at least that it firms up the position markets have been taking. that we will get the resolution, this phase one deal signed. that is the kind of move you have seen overall broadly speaking in the last few weeks. the appetite has taken more risk and it is clearly there. as you alluded to, there is not

anything more concrete for a year that has already been pretty good for treasuries. the last 12 months has been a really tale of two halves. you have had that constant threat and indeed, materialization of easing of u.s. monetary policy and indeed, the bond market is still position for more fed easing next year. you would have thought there was room for yields to wedge lower. as we get these incremental data points like we did on friday with the surprisingly good jobs report and also an easing of the trade tensions, you are seeing a pickup and yields. we are off those lows in treasury yields we saw back in the earlier part, a couple months ago. we are continuing the upward trend. the question is what have we got in the last two months of the year to upset the apple cart? this year, we have a few regional for -- fed presidents who may get more color around

the thinking for fed policy next year. as we heard last year -- last week from powell, the situation is balanced, not favoring the fed to move in either way. shery: in australia, there was an interesting analysis from goldman sachs that shows if qe is needed in the country, the stock market may not get the sugar hit it needs. what is that about? a veryeah, it was thorough analysis. as we have seen from a number of different banks and companies over the last few weeks, this qe planning is clearly taking place to a very large amount of detail. the base case for goldman sachs as we do not get to this scenario. if we do, they alluded to other problems of buying securities when things are already quite expensive. if you compare their forward price earnings, multiple on australian equities today, around 17 on a forward number, that is significantly higher than the valuations you saw when

ecb began their program, when the fed also, and the bank of england did there's. for the case of the bank of england into thousand nine, you were looking at a 10 times earning pricing ratio. they make the point that the extra sugar hit you may expect in equities in australia just were not materialized. onse elevated evaluations the equity side are coming at a time when bond reasons -- bond yields are depressed. a fair re-rating in bond markets. lots of calculations being made. but a market that is moving further away from the idea of qe coming sooner than perhaps we were a few weeks ago and the forward rate on cash rate futures for the rba really only expecting may be even less than 25 basis points of easing next year. we have seen that pickup and yields continuing on short and long dated bonds in australia. shery: adam haigh, thank you so much.

you can find adam's charts on the gtv go library on the bloomberg. fed officials are hammering home of the view that interest rates are on hold after another unexpectedly strong eco-readings psalm 128,000 new jobs in october. it validates the fed's message and underscores continued consumer resilience. global economics and policy editor kathleen hays is here. what have fed officials been saying now? kathleen: that the economy is in a good place. monetary policy in it -- is in a good place. the vice chair of the federal reserve, you know he's going to be in step with chair jay powell. you know when he speaks as he did to bloomberg television, to the japan society, he was all over the map on friday but he certainly had the same message. and that was being upbeat after a stronger than forecast job reports. let's listen.

>> the economy is in a very good place. growth as we have characterized growth is moderate now. the global economy has been slowing. that's a factor. the u.s. economy is very resilient and these are good numbers. both the gdp number and the labor market number surprised on the upside. kathleen: in the bloomberg library, these turquoise bars, keep your eyes here. this is what the federal reserve is watching so closely. this is the most important monthly report, the most coincidence, it is also the most leading indicator in some ways. what we got in the latest month, october, 128,000 jobs. that is even with 46,000 jobs lost to the gm strike. it was versus 85,000 forecasted. 180,000.right here, up a gigantic upward reduction come 80,000 workers.

it wasn't just that october was stronger than forecasted, it was that the previous month showed that things are doing better in the labor market making the fed's call on the pause look good. say, we willa did be data-dependent. a lot of other fed speakers, randy quarrel, it puts the economy in a good place. john williams, job growth is strong. mary daly, policy is at accommodative now with these three cats, that's good, there are risks. the cuts bring policy to an appropriate level. we should be patient now. eight more fed officials speaking this week. i expect they will sing from the same book. haidi: a big central bank meeting this week. kathleen: nobody is expected to move. it's interesting with the reserve bank of australia, what they will be looking at. mr. lowe has led the rba in three rate strut -- late -- rate

cuts in a row it and they are worried if things are weaker, will the government be able to provide fiscal stimulus? things have looked up recently. to the bloomberg library, you can see unemployment came down 1/10, 5.3 to 5. 2. inflation ticked up. getting closer to the target. that is why the rb is expected to hold tight and a what happens next. progress on the trade war will not hurt them at all. the central bank of malaysia, they potentially will keep their rate on hold. they have been lucky. the trade war does not seem to have damaged their economy as much as others. reserve bank of thailand, they are dealing with a lot. will they decide how to curb that bought rise that can be problematic? most people say no. they have fx tools they can use, they will wait and see. i think the reserve bank of thailand is one we will watch very closely. shery: kathleen hays, thank you

so much with all the major monetary policy decisions this week. major uncertainty for the central banks around the world is what happens on the u.s.-china trade front? u.s. commerce secretary wilbur ross spoke exclusively to bloomberg in bangkok about the prospects of a phase one trade deal. will see i think you that there was a suggestion about alaska, there was a suggestion about hawaii. i'm sure the chinese will have some suggestions in china. that should be the easiest part of the whole thing to negotiate. >> the trade deal will be signed in november. you say: well, wonderfully definitively and i wish i could be as definitive. [laughter] mr. ross: i think we are in good shape. we are making good progress. there is no natural reason why it couldn't be. but whether it will slip a little bit, who knows. it is always possible. >> are there still obstacles? mr. ross: not so much obstacles,

but making sure that each side has a very correct and clear detailed understanding of what each side has agreed to. trade deals are very, very complicated. this one is particularly complicated. >> secretary ross, it has been since the huawei plan. some american companies are confused as to whether or not they can do business with huawei . given the progress made it the phase one trade deal, is there a possibility that huawei could be removed from the entity list or whether restrictions can be eased? mr. ross: first of all, huawei is an enforcement action. huawei is not a part of the trade negotiations. second, there have been some 260 requests filed for licenses, the way the entity list works, is you need a license to sell any

controlled product to them. that is a lot of applications. it is frankly more than we would have thought. lists,r too with entity there is a presumption of denial. so the safe thing for these companies would be to assume denial, even though we obviously approve quite a few of them. >> speaking of licenses, the special licenses for huawei suppliers based in the u.s., which are not dealing with security linked components, when do you expect the trump administration issue those licenses? sec. ross: those will be forthcoming very shortly. >> what is shortly, can you quantify? sec. ross: is shortly. [laughter] sec. ross: it is less than a longly. >> economies have been disappointed by president trump's absence for two years running now, and asian economies are signing a trade pack backed

by china. is there concern within the u.s. leadership that perhaps economies here maybe even more economically dependent on china? sec. ross: first of all, our staff is not much of an agreement. it is not a free-trade agreement, it is not anything remotely like tpp, nor anything remotely like our severed arrangements with japan and with south korea. i don't think you want to blow that out of proportion. it is a very low-grade treaty. second, in terms of our participation here, it is very, very wholesome. wilbur rossis speaking exclusively to our haslinda amin. wilbur ross there sticking to the position of the huawei dan being separate to the ongoing trade negotiations. we are getting news from the financial times saying the government is pushing taiwan to

restrict its biggest chipmaker from producing semiconductors for huawei. to introduceurse stricter controls on tech exports to china. we do know washington over the past year has been repeatedly making requests and putting pressure on various governments, including the government of taiwan to restrain taiwan semiconductors from producing chips and selling chips to huawei. if you are away from the screen, you can always find in-depth analysis and the days big newsmakers on bloomberg radio. we are broadcasting live from our brand-new studio in hong kong. you can find the app on bloomberg radio or at bloombergradio.com. this is bloomberg. ♪

shery: welcome back. our next guest says the more constructive risk is the demand for havens while lower global interest rates act as a

headwind. joining us from sydney is peter. great to have you with us. weare talking about havens, have seen the japanese yen underperform given more expectations of a u.s.-china trade deal. where do you see the yen going forward? some say it may be undervalued. peter: i think if you are looking at it from a short-term perspective, the markets are pretty much in a risk on setting. everyone is upbeat around the prospect of a partial china u.s. -- china-u.s. trade deal. it will keep equity supported and even the last couple of days, you have seen bond yields back up the bid. it keeps the dollar-yanai bit elevated. north of 109, 110, is a stretch. we really need to see a complete shift in the global policy cycle and the fret -- the fed actively moved toward a tightening bias. they signaled that they are on

hold. hikes are still a long way away and we are still seeing there is more scope for the fed to provide more support over the next 12 months. the yield structure will stay fairly low globally and that is going to see dollar-yen top out and drift lower over a medium-term basis. shery: do they need to signal or move towards tightening or is it enough for other central banks to continue to ease for the u.s. dollar to actually remain supported? peter: i think it is probably the latter. i think it is a relative game, so even if the fed sits there and does nothing, after delivering a couple insurance rate cuts, the rest of the world is still in the easing mode. the ecb's latest qe program has only just kicked off again. you have other central banks like here in the rba and even the bank of canada has turned more cautious as well.

the rest of the world, the divergence is still going to be there. a positivet resolution around the trade story, that was one of the reasons why the fed was cutting. it just keeps them on hold for a period. on the net basis, it keeps the dollar pretty supported over the next 12 months. if you are looking at it from a longer time horizon, the dollar will turn lower but it will take the rest of the world starting to do the heavy lifting. haidi: i want to throw up this was talkingt shery about. the bloomberg dollar index suffering it's worth -- its worst. i'm wondering, if we get a phase one, maybe a phase two trade deal, is phase one priced in nfs mark -- fx markets? how much instability do we expect leading up to earnings? 365 days away from the u.s. election. peter: i'm sure it -- i think phase one is priced in. all the rhetoric we have gotten is that it will get signed on

they want to do it as soon as possible before the next stage of tariffs. phase ii and phase three is where the hard decisions need to be made. that is where you probably see more volatility and some of these risks be revived around the trade outlook. --ical timidly, both parties i think ultimately, both parties want to make a deal. i'm sure donald trump would like to have a trade deal as something he can promote in the election campaign. i think the chinese officials would rather deal with a pre-election trump a man a reelected trump because he could be re-emboldened and generate those risks again. over the next 12 months, we do think we will get more definitive trade deal. but it will be a hard slog over the next six to nine months. haidi: in the aussie will stay depressed regardless if the rba holds. what if they do qe? peter: in australia? it would be an interesting

dynamic to see what happens. if you look at it, 60% of aussie government bonds are held by foreigners. euronet marginal will sell us where we will be on the offshore rather than domestic holders. that will put more downward pressure on the exchange rate. obviously, to get there, you will need a couple more rate cuts from the rba. then they will have strengthened their forward guidance. qe is still the last result -- resort approach. ultimately, i think he would keep the aussie on the back foot. that is actually a good thing. it supports services sector like tourism, education, boosts inflation expectations. preferred mix of easing of monetary conditions that you can get. i think that is something the rba will be front of mind about is the exchange rates, given that is the transmission mechanism that is work the most effectively. there is the debate about what

rate cuts are doing for mortgage holders. haidi: always a pleasure. thank you, peter. peter dragicevich. watching us live, you can see our past interviews on our interactive tv function tv on the bloomberg. you can dive into any of the securities in the bloomberg functions we talk about. send us instant messages during our show. this is for bloomberg subscribers only add tv . this is bloomberg. ♪ >. this is bloomberg. ♪

a quick check of the latest business flash headlines. housesis planning party and clamping down on unauthorized raids after a fatal halloween night shooting in california. five people died in the incident which policed said took place at a home advertised on a short-term rental website.

airbnb says it will create a dedicated party house rapid response team and expand screening of high-risk reservations. shery: they chairman of the thai airwaves -- of thai airways has quit as they struggle to stem deepening losses. the airline has instigated a cost-cutting plan that includes a review of about 40 aircrafts and enforced to rebuff media reports of liquidity problems. second quarter losses doubled amid the widening global slowdown, rising competition, and the strengthening bot. tic toc is owned by beijing, and is one of the most downloaded apps in the u.s., making it one of the few chinese internet companies to succeed. u.s. lawmakers have called tictoc "a potential counterintelligence threat that cannot be ignored." that is just about it for

"daybreak: australia." we will have all the action up next on daybreak asia. this is bloomberg. ♪

haidi: i'm haidi strand nods -- haidi stroud-watts in sydney. shery: good evening from bloomberg school global headquarters in new york, i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." haidi: our top stories this monday. >> i think we are in good shape. we are making good progress. and there's