♪ haidi: good morning. we are counting down to asia's major market open. shery: our top stories this hour, stimulus talks remained deadlocked in washington. president trump says republicans are having a hard time with nancy pelosi and she says current offers are grossly inadequate. the yuan faces pressure after the pboc moved to calm the markets. the governor says he will

maintain normal monetary policy for as long as possible and fixing will be key. president trump wants to return to the campaign trail as his doctors say he is not a transmission risk. the u.s. and europe are not on the list for easing curbs. haidi: markets coming online for the start of the brand-new trading week. let's go to sophie kamaruddin. after inome enthusiasm cap the best week since april. australia posted record shipments when it comes to iron ore, putting some down pressure on the commodity. gold holding about $1900 per ounce, after its second weekly gain. $2300 for bullion, early 2021.

the aussie dollar under pressure. it had fallen by 4%. .4%. the offshore yuan on the retreat. looking forward to the fix to see if that will add more weakness on the offshore yuan. futures, nikkei futures holding steady while the 106,s trading around testing the 65 day line. today's south korean markets come back online after the long weekend. we have korean trade data later today. won trading korean at a high. on the oil patch, new york crude falling for a second day, $40 a barrel. saw the u.s. we

and libya reduce production. shery: president trump and nancy pelosi continuing a war of words over the stimulus package. republicans or democrats blaming each other for a lack of progress. kathleen hays joins us with the latest. where are we in this never-ending saga? kathleen: never-ending saga is right, isn't it? the stimulus soap opera of the last month. it started with republicans saying they would never agree to any more stimulus more than $1 trillion, and the democrats starting at around $3.5 trillion. they have made progress but not enough. president trump, nancy pelosi, speaker of the house, over the weekend, definitely playing the blame game. each saying it is your fault, your fault. sayingas on fox news republicans are having "a hard time with nancy pelosi." feel they have

ups the ante, up to what they were offering so many times and nancy pelosi is saying is not enough, you don't understand. trump also said we want to do the stimulus, we want to help airlines and restaurants, we want to help hotels. nancy pelosi for her part put out a statement where she said the white house offer on dealing with the health impact of the virus is grossly inadequate. she thinks around 45 in dollars or more is needed for that. around $45 billion or more is needed for that. she calls it a failure. larry kudlow, the white house chief economic advisor, actually said he thinks that pelosi and mnuchin will have more talks, the treasury secretary. he thinks they will booster the white house offer, which is up -- $1.6 billion.

-- $1.6 trillion. they are calling for funds to be used for small businesses. haidi: another top federal reserve official says more fiscal aid is vital to the economic recovery. kathleen: absolutely. neel kashkari, who has been very dovish on what the federal reserve needs to do in terms of boosting the economy, not hiking inflation until it is well moving higher, says it is vital for elected leaders to do more. here is what he said on cbs face the nation -- we are going to continue to see a grinding, very slow recovery with thousands of small businesses going bankrupt. that's why it is vital elected leaders take more action. what is going to get them together? what will get them to finally agree? because of the economic data in the last couple of weeks has

looked better, as the dallas week,ent said just last but the data this week, if it continues to show weakness, maybe add push to this. we will get retail sales, consumer prices, and jobless claims on thursday. how may people are still filing for new jobs and how money are unemployed? is that the push that everybody needs to take the big step? our editor kathleen hays there. let's get to karina mitchell or the first word headlines. karina: president trump planning a campaign event in orlando monday with his medical team saying they no longer consider him a covid-19 transmission risk. trump's doctor says he has met the criteria to end self isolation although many declined -- although he declined to say when the president last tested negative.

the president said he feels great. >> i'm not on any medication and the medications i took were pretty much routine other than the one that is the miracle, the antibody stuff, which is incredible, how it works. karina: coronavirus cases continue to rise around the world, with the u.k. considering new virus curbs. the country is said to be at a tipping point. boris johnson will address parliament on monday and is expected to one of a three-tier shutdown across england. indonesia will ease social jakarta,g curbs in despite nationwide infections at a record. fundnternational monetary says this is the worst recession since the russian, with rival -- revival dependent on a vaccine. they hold an annual meeting, and call on the g20 to extend a freeze on that payments from the

poorest nations. china says it will maintain "normal monetary policy" for as long as possible while boosting household savings and income. the pboc governor says he will ensure ample liquidity and growth of money supply. he also cautions excessive stimulus could increase debt and create asset bubbles. he also says institutions and shareholders are responsible for dealing with risk. global news 24 hours a day on air and on bloomberg's quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. will have more details on the pboc's policy ahead, with authorities making it easier to bet against gains in the yuan. how far they will go to cap the currency strength. plus, the world bank and imf begin meetings later today. analysis with steve cochran from moody's. this is bloomberg. ♪

♪ amid the worst recession since the 1930's, the imf and world bank hold annual meetings this week. the fed is warning the pandemic recovery will be long and uneven and our next guest echoes that. he joins us now. in your most recent notes, you point out some of the factors or the downside risks, i should say, when it comes to the nation recovery we have seen. so hopeful in asia, and potentially comes to a grinding halt. could you go through some of those for us? steve: the biggest risk is there is a second wave of covid-19. -- certainlyally if there is a large wave across europe and the united states, there would be a diminishment of global demand for goods and

goods production has been driving the asian economy right now. asia itself has been very down newl in shutting clusters of covid-19. my expectation is they will continue to be effective in containing covid-19. but you just don't know. the big travel week last week in china could result in some new emergence of covid-19. certainly the philippines and indonesia have struggled in managing covid-19 as well. that's the biggest risk. the second risk is simply that global demand for goods does not continue to grow. i guess in asia, the third risk is that any opening of travel and tourism gets laid further and further. this is one of the biggest hits to the asian economies, especially the smaller southeast asian economies that depend so

much on travel and tourism. is sort of consumption at the pace of the recovery, you have said multiple times it is the trade of goods, not services, even with the restrictions, that have kicked off recovery. you speak about domestic consumption led recovery, particular going on off of the numbers we saw in golden week in china. steve: the numbers in china look very good. it is still a little bifurcated in china when you look at retail sales, luxury goods are very strong. demand for other goods is still somewhat modest. you still see a two-tier recovery in domestic demand in china. it will take a little more strengthening of the local labor market and improved confidence among wage earners in china to really go out and spend money and not continue to save and be cautious about what might be coming down the road.

elsewhere, again, i think consumer spending will be good, but the loss of spending for travel and tourism will offset some of the gains in domestic spending in east asia and southeast asia. shery: with the economic rebound and china, not to mention the yield premium, it seemed almost assuredly with the more strength in the chinese yuan. now with the rule changes, where do you put the yuan for the rest of the year? steve: it's interesting, the --e changes make a different the strength of the economy has added to the strength of the yuan. holding the next few months to the end of the year. i expect to see the chinese economy accelerate. we will get export numbers this week. rising at anbeen accelerating rate. my guess is we will see another good number this week with

exports. last month, the purchasing managers index for exports was very strong. it would be no surprise if we get a very strong trade number this month. shery: chinese exports and chinese trade, with global demand hit, what if the u.s. cannot pass another stimulus package? steve: if the u.s. does not pass another stimulus package, the first quarter next year could be pretty weak in the u.s. and that will limit consumer demand and be reflected in some of the export numbers out of china. , probably across the entire globe, so the u.s. itself will not pull china down, but it would certainly slow the pace of the economy, the recovery. i think that is one of the biggest risks for the chinese economy, not that is going to

fall into recession again, i think exert to strong in china for that -- things are too strong in china for that, but the pace of recovery could moderate. shery: always great having you on. moody's analytics's steve cochran. scott minerd is saying the fed's so-called main street program is a disaster and the u.s. has done permanent damage to the jobs market. he spoke to bloomberg about that and the prospect for more fiscal stimulus. of whathe definition saving the economy is. they could put up the package that is proposed, one on a trillion dollars, that is probably -- 1.8 trillion dollars, that will probably buy 3-6nother three-x months -- six months and it will not come in time to make a difference for november. but the impact could start to be felt by christmas. in terms of the long run, the

cares act for instance, and the existing program, have done very little to lift structural growth for the long-term. saved they policy has credit markets in a lot of ways. a lot of these bigger businesses that have been able to seek financing. how would you compare that to the access for credit -- took credit for smaller businesses? many of them have shut down already. scott: policymakers are leaving themselves open to another round of criticism, just like they got at the end of the financial crisis, which is the government programs were designed to bailout the big boys left main street behind. the main street lending program has been a disaster. the ppp, which was a great program as an emergency stop gap , of course is gone. all of the aid to the airlines

has been used up you'd -- used up. were going to start seeing layoffs and structurally, more than half of americans are employed by small to medium-sized businesses and many of those are not coming back. damage permanently done to the job market, which some other industry or future growth is going to have to correct for and that will take a long time. >> you called the main street lending program a disaster. is the fed ultimately able to meet the needs of injury -- of main street? scott: i don't think the question is with the fed as much as in combination with u.s. treasury. when you look at how the main street lending program was are sittinge banks in these first loss position. they have to absorb a lot of losses if something goes wrong,

yet at the same time, they cannot use, nor will they be capable of the underwriting standards necessary to make good loans. i can understand why the banks are not having a lot of success with this program, because they are guarding their capital. the other side of it is the banks did get a big windfall here, especially those that underwrite securities by the record corporate bond issuance. we see the fixed income in major banks has been record profitability. i think there is sort of a feeling in washington that there is a quid pro quo. we did you this program that made you a lot of money, you should take some losses on these main street loans. i think they are at a standoff. >> does talk about the banks for a second. some have said the consumer outlook has gotten better for them, but do you think that is

selective bias, that the banks have chosen better customers anyways and there's a large part of the economy not seen by the banking system? scott: there is certainly a large part of the economy that is not being seen by the banking system. that has been an issue for chairman powell and other members of the federal reserve. getting money or capital inner-city communities and minority businesses is nowhere similar to the levels that get to other factors of the economy. i think that structural issue that is basically embedded in the system is going to lead to a pressure from the view of socialism and other programs, which basically directly protect certain groups

of our society. haidi: that was a guggenheim global ceo scott minerd. coming up next, the offshore yuan drops as the pboc moves to restrain the rally. the latest from beijing. this is bloomberg. ♪

♪ pboc moving to tame financialurge, saying institutions no longer need to set aside cash when buying foreign exchange for clients through a currency forward. tom mackenzie is in beijing. does this mean essentially making it cheaper to ensure the yuan? tom: cheaper and easier. these financial institutions don't need put aside 20% of their sales if they are buying fx derivatives. it is a change and they put the requirement in place about two

years ago when the yuan weekend to seven to the u.s. dollar. the story has been very different the last few months, the yuan against the u.s. dollar has had the strongest quarter and 12 years. friday alone, it rallied by four point -- 1.4%. there are fundamental structural issues at play. china's economy is recovering and you have the pboc far less aggressive in terms of stimulus and easing than some of its counterparts in major economies. the pboc coming out this weekend, trying to take a bit of the heat out of the recent run-up in the yuan. haidi: speaking of, the spot rate is already, if you look at these market estimates, already blowing past pretty much what we were expecting going into the second half and toward the end of next year. the reality of the stock market at the moment, how much further is the pboc likely

to go in terms of putting a lid on that strength? tom: that is the question, of course. will get some, we indication as to how far the pboc is prepared to go to remove some of the strength for the currency. we do have forecast of further strength prior to the move from the pboc. mark chandler, a strategist, sees potentially u.n. weakening to about 6.86. the last time -- the yuan weakening to about 6.86. again, we will be looking for the fix at 9:15 today and throughout the week, to see how much the pboc can take the heat away from the currency. shery: looking ahead to the trade data out this week as

well, and the strength of the yuan is likely to weigh, what are your expecting -- your expectations? tom: the pitch from china has been one of recovery, and we saw that from the pmi data. export and the import picture will look to gradually improve in china, but that is part of the currency equation for regulators here at the pboc. exports are a smaller part of the economy than they once were for china still significant, of course. the struggles for exports as manufacturers with you on strength is something factored in by regulators here in china. haidi: tom mackenzie there. let's get a check of the business flash headlines. a video sharing app is reportedly planning to go public and talking to firms about a shared sale. potentialworking on a deal with and acquisitions company. they hope to letter -- lure

users from tiktok and raise money in a fundraising round led by ubs. there may be new rules on market dominance. eu regulators are targeting up to 20 large internet companies with tougher restrictions. -- eu mako beyond monetary mako beyond monetary penalties. -- the eu may go beyond monetary viewed --s penalties. google says it does not oppose an australian draft bill that says at the moment it is unworkable. the company is concerned it would have an unclear definition and obligations. next, coronavirus cases in the u.s. and europe surging again.

the council on foreign relations with a warning for the president and advise for the future -- advice for the future. that is next. this is bloomberg. ♪

♪ let's get a quick check of the markets. the asx 200 flat at the moment. this after we saw the longest winning streak since july last week. we have the government budget, the rba keeping monetary policy unchanged. kiwi stocks continuing to rally for nine consecutive days the longest streak since may and record highs. this as we head toward the national election saturday, where the prime minister could win a parliamentary majority. looking at nikkei futures, unchanged at the moment, but

this as the japanese yen surged to the strongest level in about a week. at the moment holding steady. we have a few eco-numbers today out of japan, ppi, inflation, and machine orders. a lot of weakness in the offshore yuan right now, dominating the session. we got rule changes from the pboc, making it easier to short the yuan. we will watch what happens on that front. key fixing to a watch for sure. in this part of the world, we are seeing some strength when it comes to in particular mining stocks in sydney. gold stocks holding, william ullion-- will jan -- b climbing. extendingis a minor -- miner extending gains.

1%,escue metals up by extending their buyback program for an unlimited duration. climbing up 25% revenue growth for the quarter and looking ahead to a strong first half, one of the biggest gainers on the asx. shery: let's turn toward the top story, coronavirus cases rising in the u.s. and europe at rates that are troubling to public health officials. our next guest warns the latest surge in the u.s. is still just the first wave of covid-19. dr. luciana borio is from the council of foreign relations, and has held several high-level positions in u.s. government, including director for medical and i/o defense preparedness at the national security council. it is great to have you with us. thank you for joining us. if we are still in the first

wave of the coronavirus pandemic in the u.s., and we still have some people debating the effectiveness of masks, i can't help but be super scared about winter. are we headed toward inevitable lockdowns? way toio: we are on the a third peak. the first wave and came back to baseline. europe is surging toward a second peak. it is remarkable because we need to be able to control this epidemic today and not wait for a potential vaccine or any other thing on the horizon. public health begins with each individual and it does not bode well for us that we are headed into the winter in the northern hemisphere with this number of cases on the rise. call this the swiss cheese

analogy, where we need to layer all of these public health measures to slow this down. shery: when it comes to the layering of public health measures, where would the leadership come from? we just heard last week from the world's top medical journal, new england journal of medicine, here is what they had to say -- instead of relying on expertise, the administration has turned to charlatans to obscure the truth right lies.te out this is the first time they have condemned or supported a political candidate. when it comes to dealing with the pandemic into the winter, who do we trust? is it the federal government that will take leadership or is it just the science out there? dr. borio: that was a powerful statement. we know the countries that have done better have very strong political leadership, they had a

plan and executed that plan, and importantly, they had clear and safe communications to the public. it is unusual for the public to be so polarized around a common threat. clear communications really help people act as needed. the polarization we face today in the united states has been very detrimental to our ability to control the pandemic. we can compare our numbers to a country like south korea, which detected their initial cases within a day of each other, and the numbers speak volumes. we talk about south korea with a population of 52 million, about 24,000 cases, or hundred 30 deaths. the u.s. with a population of 213 million, we are facing seven point 7 million cases and 210,000 deaths.

the numbers speak volumes. communications are clear and i -- inhe cdc will be able fairness, they already do -- have a voice going forward. it is not too late. if a vaccine we hope for, it asset, theyamazing are accessible and trusted, but it is one measure among many that must be taken to turn this around. course, the confusion and conflict when it comes to rest medical practice and advise goes all the way to the top in the u.s., president trump's recent infection and reported recovery. how dangerous is it that the president is placing so much faith and hype around these

experimental drugs? he keeps going on and on about regeneron and talking about how he now has immunity. is there any danger that this is the message he is putting out to the public? dr. borio: we lost a lot of time up until now. a lot of trials that could have been done to establish infinitive leak what works -- definitively what works were not undertaken. it is difficult to enroll patients in a clinical trial because there's always the promise of a miracle cure around the corner. that has really challenged the community. regeneron has very promising data from early studies, as does lily. they have a cocktail that basically has been engineered, antibodies that target the virus in a powerful way. it looks like it could be a promising therapeutic,

especially if they have a challenging response. but we have much to learn about these therapies. who it benefits and when it benefits and what is the timeline from the administration? by no means is this a done deal. we need to let the scientific process move the way it always does -- and of course it is with great urgency, no one would deny it is with rate urgency. the companies are working hand in glove with the fda and regulatory agencies to expedite the process. we cannot jump to conclusions before we have the data. haidi: you headed up the medical and bio defense under the national security council. in terms of future preparedness, we know pandemics will come around again. what needs to be done now to make sure any future health care

crisis can be handled in a more effective way? dr. borio: oh my goodness, so much needs to be done. it really characterizes the importance of having coordinated leadership at the white house level with expertise to bring the whole of government together. it is important to focus on the fundamentals of pandemic preparedness. we have the testing capabilities. tests are so critical and they have not really been coordinated and taken advantage of. a team of people doing their own thing versus a professional team that need to leverage what we have in a coordinated way. we need contact tracing, to be able to understand where a disease is happening, data collection. and again, the success stories so far has been the rapid development of a vaccine, but everything else, leaves a lot to

be desired. we can't forget the united totes has a critical role play internationally and we need to be able to have a strong voice within the state department to help us work internationally with allies, the world health organization, because nothing really supplants u.s. leadership. not only because resources and experience, technical ability is essential. i hope going forward, we can engage more effectively internationally as well. shery: what about the standards for clinical study? have they been up to par, especially given we have so many different companies racing to get the vaccine and treatments? dr. borio: for the vaccine, the fda has done a sport -- a spectacular job working with vaccines. they understand the responsibility of their work. vaccines help individuals prevent the disease.

it was made very clear what the expectations are and they really want strong evidence of safety and effectiveness. sure the want to make manufacturing processes are high-quality. in the have confidence manufacturer before they agree to issue a vaccine. [indiscernible] haidi: that was dr. luciana onio from the council health. we have breaking news when it comes to the asx, the australian stock market, saying they are having technical issues.

announcing in a tweet that some announcements are not displayed on their website and announcements are still available by brokers and news agencies but they are not displayed on the asx website. we know over the weekend, the asx website was transitioning to a new build. not quite clear whether this it something to do with that, but there are technical difficulties when it comes to do with the asx website at the moment. coming up next, u.s. bank earnings top the agenda this week. investors washing for more signs of job cuts. our preview is next. this is bloomberg. ♪

♪ here are your first word headlines. stimulus talks remain gridlocked in washington with president trump and speaker nancy pelosi blaming one another. the president says republicans are having a hard time with pelosi and she responded by saying the administration's offers have been grossly inadequate. more talks are expected this week. the minneapolis fed president says action to support the economy is vital. >> republicans want to do it and we are having a hard time with nancy pollution, she thinks she can influence the election and i think they are hurting themselves by not doing it. karina: european union leaders gathered this week with the u.k. saying significant gaps remain

in brexit talks. boris johnson set october 15 as a deadline for the deal, telling angela merkel that progress is increasingly urgent. johnson said he is prepared to walk away if necessary. brussels is reportedly ready to call his bluff. meanwhile, china has removed an app that helps users sidestep its so-called great firewall. users mainland internet access blocked sites like google and facebook. it stopped working saturday and was taken off of huawei's app store. north korea marked its 75th anniversary of the nation, showing off the new intercontinental ballistic missile. it could deliver nuclear warheads to the u.s. and appears to be the largest mobile rocket of its type, developed even while kim jong-un was in talks

with president trump last year. they say they will only launch if threatened. global news 24 hours a day on air and on bloomberg's quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. let's look at one mover trading in the sydney session, an administration services provider jumping almost 26% after the company got a takeover from pacific agency partners. about a 30% premium on the previous close. we are seeing link administration holdings, which provide services to the largest pool of pension funds, jumping by over 26%. they are the largest provider of services to the australian pool of pension industry.

from carlyleal group. some of the largest u.s. banks will -- including j.p. morgan chase, bank of america and citigroup. investors will not only be listening for details on lending activity but covid-19 impact. we have a preview. there are already indications that banks are -- banks have assets of the safest levels. >> they are keeping more than 35% of their balance sheets in cash and safe securities, a decade high. citigroup will be the first to report and we may be hearing more about their ceo transition and risk management issues, the regulatory sanction they just received. meanwhile, wells fargo and goldman report midweek.

there is a whole slate of bank earnings for the week. in terms of what investors will be listening for, election scenarios by the various banks and executives will be of key interest. -- instance, if joe biden were to win, some might perhaps remove robust -- on overdraft funds, about $11 billion per year. there were also be commentary likely on stimulus and job cuts and compensation. recently resumed draft protection. revenues isriting expecting to be a standout area. analysts will watch closely to see which bank is winning, as they say, and gaining market share. sayarnings calls, analysts pay attention to any outlook on the uncertainty of investors that have to do with a lot of

the covid environment, the smaller businesses reluctant to borrow money at this point because of the lack of visibility. also looking at the growth plans of various banks because the fed has tightened down on that. shery: will-- this continue to be a bright spot? that will su: su: -- continue to be a broad spot. we had key volatility in stock and bonds expected to continue. banks are reining in lending. let's go into the bloomberg, a lot of interest on loan loss provisions. we saw a huge rise in those provisions back around the financial crosses -- crisis in 2008 and 2009. we saw that again in the last quarter and that will be another area of interest. and on the caution we are seeing in angst, moving more to cash

and other securities. also seeing loans and leases a couple more than less than half banks'snks books -- books. haidi: su keenan with the latest, just a preview of the big banks coming out with their earnings this week. let's take a look at what we are doing when it comes to facts -- fx. a little strength this morning, trading at 105. we have some breaking news when it comes to japan, core machine orders coming in with a contraction of just over 15%. that is marginally better than expectations for august. when it comes to month on month, seeing an improvement of 2/10 of 1%. we are continuing to watch out for signs of a nascent recovery

in japan when it comes to machine orders from big businesses. also getting the ppi number, producer prices and inflationary data contracting about half a percent in september on a year on year basis. month on month, exactly flat. still no inflation to be had when it comes to that survey. seeing a contraction year on and af 8/10 of 1% contraction month on month for ppi of 2/10 of 1%. complicating the need for the bank of japan to do more in the fight to defeat deflation in japan. if you are away from the screen, you can find in-depth analysis on bloomberg radio. we are life -- we are casting live from our studios. lots more ahead. this is bloomberg. ♪

♪ a quick check on the business flash headlines. a resort says it's casino has received a notice from the gambling casino about operators. it is required to show why it should not be disciplined over junking controls -- junket controls. it is reviewing its relations and processes. -- inrd chartered has

china. they gave no further details. the mainland's trillion dollar security sector is opening up to foreign banks, which will be allowed full control of their ventures. j.p. morgan and goldman sachs are among banks looking to open up in china. the current boom in ipo's and hong kong look set roll-on as company's lineup to sell shares. firms in tech and biotech look ready to -- in the near future as covid-19 boosts investment in r&d. hong kong has seen a rush of mainland companies listing as tensions grow between the u.s. and china. shery: another check at how markets are trading. the asx 200 holding steady. we've seen already the longest winning streak since july but we have the energy and industrial sectors weighing on the index as we are seeing the wti and brent

losing momentum. wti holding about $40 a barrel. ,iwi stocks at a record high nine sessions of gains already. the longest winning streak since may. new zealand has a national election on saturday where the prime minister could win a parliamentary majority. nikkei futures holding steady. the japanese yen at 105. kospi futures, the south korea trade data for the first 10 days -- exportscoming in rising 2.8% year on year. already inhave seen september, exports rising for the first time in seven months. plunge seen that exports easing, we've seen strength in semiconductor shipments, rebound and shipments to the u.s. and china, and for the 10th trading in october,0 days

rising 2.8% year on year in south korea. were going to get south korea opening back after a long weekend. we had already seen the south korean stock market at a three week high, gaining ground for seven consecutive sessions. last week, the korean won strengthened to a nine-month high as surplus widened in august. the first 10 days of the month, chip exports rose 11.2% year on year in south korea. coming up, what to watch this week in commodities. we will speak with the senior strategist as raw material prices hit a two-year high. tokyo and our in guest joins us with the outlook on stocks. this is bloomberg. ♪

shery: welcome to the bloomberg asia. haidi: i am haidi stroud-watts in sydney. asia's markets have just opened for trade. stimulus talks remain locked in washington. president trump says republicans are having a hard time with nancy pelosi. she says the current offer is grossly inadequate. the pboc saysf

they will remain -- retain normal auditory policy as longley as possible. korea displays a weapon that may be able to deliver nuclear weapons to the u.s. mainland but kim jong-un says he is open to talk. shery: we have south korea and japan starting to trade. sof? >> the boj remains a big player in asset markets. this after we saw the index have its best week since mid august. the yen is trading steady this morning. on the data front, we have orders from japan. the pickup on a monthly basis. from korea this morning we have

flash trade numbers for the first 10 days. you have the korean won trading stronger. trading at way for hundred points adding 0.4%. ground.ed also gaining we are watching this chemical company under pressure as we learned of its earnings update for the third quarter. companycerns around the given the defective battery cells that we saw. we do have them snapping a five-day advance. the are extending gains for session. adding 0.2%. we are seeing some fluctuations in sydney. gold stocks arriving with bouillon staying above $1900 per

ounce. the aussie trading weaker by 0.2%. this is what we are seeing. following the pboc moving to make it easier to short the currency's gain. haidi: let's continue to focus on the chinese currency. let me start of setting up the conversation for the benefit of our viewers. look at the strength we are seeing so far in the chinese currency. in last time we saw this was july 2015. it had shifted the peg's value. this we are seeing, the space in that bottom pedal, it is catch up between what we saw on friday.

an matterthe weaker yu if the authorities continue to clamp on risk assets? we have continued to see it as an important asset. >> it needs to be important for these economies. we will watching closely. the fact that this move has come after a 7% slide from the weakness of the yuan got people excited. that is parallel to the fall we have seen with the u.s.-dollar weakness. i understand why china is very -- the practical implications are low, but the symbolic

impact is very high. i suspect we will see some of these as the session wears on. expectdoes that mean you the greenback strength to be relatively low as well? >> i see that as low. sinceas hit three times 2015. while it is important for international trade, they are an impediment to importers and exporters hedging the foreign currency requirements, the practical impact is pretty low. the say, they knew it was strength of the yuan about the u.s. dollar. it is seen as reactive and not as a result of long-term policy considerations. shery: we have a lot of eco-data out of china this week including

trade numbers, aggregate financing. what will you be watching as the key catalyst for what is going to drive the markets in asia, given that we have the u.s. stimulus talks that are unfolding this week? particular, the import data will be important. the stage, we are seeing expectations that are largely in line with previous ro outes. it will take us a while to get the market reaction here with the shift in the market thinking around it. at this stage, we're cautious ahead of the numbers. unpredictable. these days, they are coming in --e with the broadcast with taking the bottom mark pretty easily. shery: in the u.s., we have seen a phenomenal rally.

the biggest weekly gain since july. it seems like any sort of news is another reason for the markets to rally. headed toward the end of the year? >> in the u.s. market, performance has been extraordinary. almost any argument or event is being turned to a positive for u.s. investors. it appears to be stronger than ever. win of that a joe biden the white house would be a positive for the markets. that is an extraordinary position for analysts to take. the democrats are seen as much more socially friendly, at a

cost to the economy. the idea that a democrat win anld buoy u.s. markets is inverse of what we would normally expect. this goes to show that the mentality in the u.s. is all of the bends are pointing northward for equity markets. at the moment, the momentum is very strong. has been hurt badly trying to stand in front of that. shery: thank you so much for joining us. let's turn to karina mitchell for the first word headlines. karina: president trump is planning a campaign event on monday with his medical team saying they no longer consider him to be a covid-19 transmission risk. his doctor says he has met the criteria to end self-isolation.

the president also addressed supporters on saturday from the white house saying that he feels great. pres. trump: i'm not on any medication. the medications that i took were pretty much routine, other than the one which is a miracle, the antibody stuff which is incredible. karina: coronavirus cases around the world continue to rise with the u.k. considering new virus cases and countries considered to be at a tipping point. socialia will ease distancing curbs in jakarta saying infections have stabilized despite nationwide numbers at a record. an economic data this week will shed more light on the state of the global recovery. the international monetary fund worst depression since the recession. we are ever more dependent on a coronavirus vaccine.

their own calling on the g20 to extend debt payments. than -- global news, 24 hours a day, on bloomberg and on quick take, powered by more than 2700 journalists and analysts in more than 120 countries. haidi: coming up, the stimulus saga rolls into another week as president trump and speaker nancy pelosi play the blame game. as supply outages ease. we take a look at the outlook leader this hour. this is bloomberg. ♪

yuan ishe offshore falling again. it seems worse against the u.s. thear in three months after

pboc says financial institutions no longer need to set aside cash. the fixing becomes a key focus. in sofia sophia. what should we be watching out for today? >> yuan fix is what traders are looking at. recently attempted to not give a strong signal either way. on friday they were allowing the u.n. to do its thing. any signs, whether it is weaker than expected or weaker than the the moves in the offshore yuan could be stronger.

if it is stronger, it could be confusing but the pboc does not what the market to be betting on the yuan strongly in one direction. in terms of some of the tools available to the pboc, what else would they do and what moves with a make to curtail the strengths? >> the news that we had over the weekend, it essentially made the cost of betting against the yuan cheaper. before, banks had to set aside he foreign-exchange sales in cash in order to make the trade and now it is zero. that invites betting against the yuan. it makes it easier to do that. the fixing is the strong signal. calculated using multiple

models. onlyrs look at it as the guide to how china sees the yuan. if it's too strong, and the pboc has used this in the past, set it weaker, guide it lower. not to cause panic. they have learned from 2015. the big priority is that the stability in the yuan is the most important, but the central bank is not comfortable with one way bets either way. sofia, ther ein hong kong. the u.s. state department says it is making good progress to

get allies to create clean networks, to avoid using 5g networks from companies like huawei. keith told us that transatlantic 5g's alliance is still secure. >> the tide has totally turned. it was eight countries, 10 cities. the integration of the clean network with the eu clean toolbox. to,he countries that i went luxembourg has nothing but clean vendors. this morning, belgium announced that. the big one was germany. they are ready to issue regulations that will exclude huawei. we saw the same with austria, portugal, spain, estonia, albania. now the transatlantic alliance

in 5g is secure. 25 of the 30 nato nations. >> why the shift? in recent weeks, there has been a shift with germany. what changed? >> i think it is a combination of three factors. and i spent a lot of time with secretary,the deputy and he said we cannot afford to have a fractured nato. we need the 5g civilian networks in peacetime and wartime. eu cleand is the 5g toolbox. i met with my old friend who is the eu commissioner. a lot of people don't know this but he announced it, that the telcoof directors for the in the eu have to make the decision.

if they choose to hire a supplier and something goes wrong, they are personally liable. thathird things is integration with the clean network. they see that momentum around the world. >> you look at some of these chinese telecommunication firms, whether it is huawei or bte, the y are making a lot of money. despite europe moving elsewhere, their profits are booming. does that concern you? how does the u.s. diminish their clout? >> i think you will see it show up in huawei's numbers eventually. they are a private company, so who knows, but you can see that their deals are evaporating around the world. announced 95, they 5g contracts. the most we can count now is seven. >> you are just in taiwan.

specifically on chinese digital payments, you look at alipay. what is the administration going nationalng about the security and economic concerns? >> i cannot talk about internal deliberations. obviously it is a cause for concern. that is about all that i can say. >> you were in taiwan attending a funeral. tell us what happened. how was that? >> i went over for the funeral for president lee, he is their father of democracy,, their george washington. highest-ranking state department official since 1979 when i went over there. andchinese sent 37 fighters bombers to break taiwan airspace. with such a great meeting president tsai and many of the

ceo's. we had an economic dialogue. they are a role model for capitalism and micro-see in that part of the world. and- for capitalism democracy in that part of the world. >> thank you for your time. shery: next, north korea shows a new ballistic missile that may be able to carry warheads to the u.s.. this is bloomberg. ♪

korea the crew -- north celebrated its 75th anniversary showing off a new missile which may be able to deliver warheads

to the u.s. this was delivered even while kim jong-un was in talks with the u.s. last year. >> it looks as though they were building this. is coming through on his threat that he made in december. those trump walked out of hanoi talks, leaving progress on the denuclearization pact in the air. kim jong-un threatened he would new deliver a new strategic weapon. it appears that is what he has done in this midnight parade through the streets of pyongyang. there were goose-stepping soldiers, military hardware, flyovers, fireworks. mobileend, came the new intercontinental listed missile that -- intercontinental

ballistic missile that he has long threatened to roll out. last tested iny december 2017. it looks as though they would have been developing this during the course of his talks with donald trump in 2018 and 2019. was he in those talks in good faith? yet to be seen. this is what kim, who appeared rarely throughout 2020 as questions of his health surface, did not wear a mask. he said, we will continue to strengthen our war deterrence capability, so as to deter all types of risk and threats including nuclear threats that are being constantly aggregated by hostile forces. he did not mention the united states by name. hewent on to say that

threatened a preemptive punishment of any military force who tried to use their force against north korea. shery: was kim jong-un about to cry in that speech? he did seem to get emotional talking about north korea's struggles. >> he talked about the hardships of north korea. 2020 has been a terrible year for the rest of the world but for north korea, because they are isolated, there have been reported cases of the coronavirus. he was also said to be incapacitated by health concerns. there was speculation that he had passed away. the international sanctions have crippled the economy. there has been bad flooding which have destroyed crops. for its worst set economic contraction in north korea since 1997. he did tear up talking about the struggles.

this speech was not as bellicose as the past ones against the united states and south korea. he expressed some willingness to continue talks with the south once the coronavirus subsides. shery: stephen engle there with the latest on north korea. let's get a quick check of the latest business flash headlines. melbourne casino has received notice from the victorian gambling commission about junket operators. it requires them to show why they should not be disciplined over alleged noncompliance with internal junket controls. crown suspended all links with junket operators until june 30 next year while it reviews its relations and processes. google has halted plans to launch it's showcase in australia. please not clear if it will be viable under the new media bargaining code.

google says they do not oppose the sale but says that the arbitration systems at the moment are unworkable. what itany includes calls unfair payment conditions and unclear definitions and obligations. reports from brussels say that big tech may face new rules on market dominance. eu regulators are targeting up to 20 large internet companies that would have to accept tougher restrictions and smaller rivals. the normaleyond penalties and force them to share data with competitors. they may be forced to police content and products sold online. tiktok is reportedly planning to go public. that thriller is working on a possible deal with a so-called special purpose acquisition company. they hope to lure users from china on tiktok and is seeking

to raise about $250 million in fundraising round led by ubs. it has already raise $100 million. this is bloomberg. ♪ loomberg. ♪

our asiane a look at markets taking office trading week. sofia is in hong kong. are mixedan stocks but nothing higher. korea'seaction to north reveal of its missiles. we are seeing stocks trading lower in japan. session lows looking to extend losses for the second straight day. --extending losses for the second straight day. banks under pressure while

miners are gaining ground. and currency markets, we are seeing -- edging higher while positivee dollar is a performer trading above 32 but losing about 0.3%. the korean won is gaining ground. this as we digest the latest data which does show a drop in exports for the start of october. trying to highlight what is going on with the offshore under pressure. the forex reserve. trying to encourage two-way flows. $30 an ounce. at the prospectigh for u.s. stimulus. penciling in $2300 per ounce for

gold. more details on those prospects. president trump and nancy pelosi continue their war of worlds. kathleen, where are we at? >> the blame game. president trump and nancy pelosi each one saying it's not our fault, it's republicans fall -- fault, immigrants fault. fault.crats' president trump on fox news looking at nancy pelosi in particular. saying they have come up on their offer. president trump saying he's looking at 1.3 trillion dollars

but nancy pelosi saying we came from three point 5 trillion down to $2.2 trillion. president trump saying we want to do stimulus. we want to help airlines. nancy pelosi saying that the on dealinge's offer with the health impact on the virus is grossly inadequate. she calls the planet deadly failure. saying, we remain at an impasse. there is only three weeks left until the next election. people think of it is not passed before then, it may not be passed until march. larry kudlow saying that he expects more talks this week, saying that steve mnuchin and the treasury secretary may boost the white house's offer. the white house chief of staff mark meadows calling to use paychecknds from the

protection program to help small businesses. both sides have mentioned them as desperately needing help and needing it now. they can't wait. haidi: you have another top fed officials saying we need more fiscal stimulus. presidentshkari, the of the fed bank in minneapolis was on cbs news face the nation. she said, it's vital. we're going to continue to see a grinding and slow recovery. small businesses around the country are going bankrupt. that is why it is so vital that our elected leaders come together to behave more action. are on tappeakers this week. are likely to echo what powell has said, that there

was an urgent need for more stimulus. he warned of tragic consequences. an interesting rubric. if they haven't done it yet, what will make the move? they say that the economic data is very important. the u.s. economy is looking better. that's less than the urgency for some of the voters in congress. maybe they felt the weaker data would be a good thing. the retail sales giving us a look at the consumers. new unemployment benefits. we know that so many people are out of work. will this stimulus package pass quickly enough? will the paycheck protection program be extended? those small businesses can get help. these are all the things that everybody is looking at right now. let's see if congress is

watching and if it makes any difference to them. haidi: the global cio scott the main street program is a disaster and the u.s. has done permanent damage to the job market. scott: it depends what the definition of saving the economy is. if they can put up the package the $1.8roposed, trillion, that is probably enough to buy us another six months. it won't come in time to make a difference for november, but the impact may be starting to be felt by christmas. the long run, the cares act and subsistence program have done little to lift

structural growth for the long-term. saved they policy has credit markets in a lot of ways. to would you compare that all of the access to credit for smaller businesses? >> what the policymakers are doing is leaving themselves open to another round of criticism, just like they got at the end of the financial crisis. they left main street behind. the main street lending program has been a disaster. greatp, which was a program as an emergency stop gap, is gone. to the airlines has been used up. we are going to start seeing layoffs here. more than half of americans are

employed by small to medium-sized businesses. a lot of them are never coming back. we have permanently done damage to the job market, which some other industry or future growth will have to correct for, and that will take a long time. >> you called the main street lending program a disaster. is the fed also going to beal to meet the needs of main street? muchdon't think it is about the fed as it is in combination with the u.s. treasury. when you look at how the lending program was designed, the banks are sitting in the first loss position, and they have to absorb a lot of losses if something goes wrong, yet at the same time, they cannot use nor will they be capable of the underwriting standards necessary

to make good loans. why the banksnd are not having a lot of success, because they are guarding capital, but the other side of it is that the banks did get a .ig windfall here see the fixed income in most of the major banks has been record profitability. there is a sort of feeling in washington that there is a quid pro quo here. we did this program that made you money. you should be taking losses on these main street loans. they are at a standoff. >> let's talk about the banks. some of the banks have said the consumer outlook has got better for them. is that lender's bias? the banks have chosen better customers anyway and that there is a large part of the economy not seen by the banking system?

>> there is certainly a large part of the economy that is not being seen by the banking system. an issue for chairman powell and other members of the federal reserve. communities and business -- it is nowhere similar to the levels that get to other sectors of the economy. the structural issue which is basically embedded in the system is going pressureo a lot more on the view of socialism and other programs which basically directly protect certain groups of our society. minard speaking to bloomberg.

oil is heading down again. we get those outlooks from daniel heinz next. this is bloomberg. ♪ [inaudible] [laughter]

karina: this is daybreak: asia. china has had it will maintain normal monetary policy for as long as possible while boosting household savings and incomes.

the pboc governor says he will ensure ample liquidity. he cautions that excessive stimulus could increase debt and create asset bubbles. he says institutions and shareholders are responsible for dealing with risk. european union leaders gather gapsweek with significant in brexit talks. boris johnson says october 15 is his deadline for a deal telling angela merkel that the deadline is urgent. agreementson wants an he is prepared to walk away if necessary. brussels is prepared to call his bluff. -- 75threan markets anniversary, showing a missile that could deliver warheads to the u.s.. it appears to be the largest of its type apparently developed while kim jong-un was in talks with president trump last year. he says he will only launch the

missile if north korea is threatened anti-singles' day -- signals a willingness to continue talks. global news, 24 hours a day, on bloomberg and on quick take, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. oil futures slipped for a second day and gulf of mexico operations resume. libya stepped up plans to restart productions and oil workers in norway called off a strike. let's get some analysis on the oil and broader commodity markets with daniel hynes. great to have you with us. does it make sense that we are seeing this bearish turn against wti and brent? heir long positions falling to six-month lows. daniel: it's not surprising. there has been a lot of talk about the impact of hurricane

delta, following on from laura. were certainly starting to factor in the impact in the shorter term. norway,the strike in the concern here and now is abating. i do suspect that we will see a forhtened level of risk supply disruptions in the next month or two. a niñanly the la weather system is at play. i don't think it is over but here and now, expectations have been pushed back a little bit.

shery: where do you see oil prices end? again expect to see opec if prices fall too much? >> it is certainly interesting, you are getting the supply side issue with disruption and libya coming back into the market, against a highly uncertain backdrop. opec are probably going to take a relatively conservative view here. there have been concerns about the lack of recovery in demand. certainly as we are seeing the resurgence in the coronavirus cases in europe and north america. restrictions in 2021 are probably going to come a little too soon. i'll havet meeting,

on the agenda the likelihood of pushing back those increased quotas. i suspect that the market is too fragile to handle that additional 2 million barrel per day increase. shery: when it comes to iron ore, the supply and demand fundamentals are starting to break down. we have seen incredible levels of shipments from major players. been an ongoing theme for some time. the market has been willing to ignore that in the face of the strong rebound in demand from china. i think that theme is certainly expected to get a boost when we of --he limitary session preliminary session of the chinese communist party. i suspect we will see more focus

on domestic stimulus measures in particular, infrastructure and in real estate. china steel mills in remain positive and expect to see additional support come through, it's hard to see how iron ore could fall significantly from these levels. even though, on the face of it, in terms of supply and demand fundamentals, they are probably too high. the environment is still very measures as a stimulus come through in china. shery: what about steel demand outside of china? for example, the indian markets? daniel: you look at that out of china and it looks pretty weak. we are starting to see signs of hungary well behind where china

is. outside of that, it's extremely weak. europe in particular, still seeing double digit falls in growth, year on year. certainly in other parts of asia. that's still weak. if you tgake china out -- if you take china out of it, the market looks particularly soft. at the moment it is all about y're willing to ignore those signals in the market. seen that despite global demand remains weak, and the uncertainty over what happens with the coronavirus pandemic, raw materials are hitting highs. we have seen the dollar break below it's 50-day moving average. how do you put this in sync

moving forward going to the rest of the year? especially when we are seeing a theer taking in gold with u.s. dollar as well. daniel: you call it for the financial's asian of the -- financialization of the moving markets. it's having an impact on prices at the moment. macroowth -- global investors and the movement of liquidity, because of that impacting, in the shorter term, some of those. you have to take that into consideration. dollaree a weaker u.s. leading into the new year. against some of these other macro events. that could be relatively thetive end to 2020 for industrial commodity complex. anz senior commodity

strategist daniel hynes. hong kong eskimo claims of sovereignty are still angering beijing. this is bloomberg.

shery: let's get a quick check of the latest business flash headlines.

despite forecasting record sales and operating profits. revenue at 5.1 trillion yuan. below the median analyst forecasts. 942 billionofit of yuan smashed median estimates. chemm will spinoff -- lg will spinoff the battery unit. expectedin hong kong to roll on as companies limited by the pandemic lineup to sell shares. ready to build the ipo pipeline in the near future. hong kong has seen a rush of mainland companies listing as tensions grow between the u.s. and china. regulator confirmed

stature's application but gave no details. they will be allowed full control of the venture. j.p. morgan and goldman sachs are among the banks looking to open up in china. haidi: taiwan celebrated its national day over the weekend despite rising tensions with china over its claimed independence. growingas seen international support for its sovereignty. let's get more on this from brendan scott. the weekend celebration coming as we have seen multiple instances of beijing's incursion into taiwanese airspace. holidayve seen this increasingly used by the taiwanese president to assert taiwan'ssees as autonomy and independence from

china within the bounds of the redlines that china has put in place against it. them sellse, we see reading taiwan's national day, although it is the republic of china's national day, a holdover from chang kai-shek's nationalist government brought over from the civil war in 1949. still being celebrated today in taipei. seen military tensions rising between china and taiwan lately. what is the latest? >> china continues to fly fighter jets into taiwan's air defense zone. it has also recently made some incursions across what is known as the median line, the line established by the u.s. to prevent these forces coming into

contact with each other. expecting more of those incursions to happen if the occasion warrants it. they have had a number of military drills staged off the eastern coast of china as a that they haven resolved to respond if china pushes things too far. we've seen the government seeking ways to assert itself without provoking china and to rally international support which is what we saw around this holiday with countries like india, citizens of india voicing support for taiwan. that's a new development that we have seen over the last few months. shery: coming up on the china contract ceo david

traynor gives us his market outlook. and ubs's outlook strategy. we debut the market open in china. this is bloomberg. ♪ so you're a small business,

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tom: it is not neglect a.m. in beijing and shanghai. welcome to "bloomberg markets: china open." i am tom mackenzie. david: and david ingles. let's get to top stories, the chinese currency beijing pressure after the pboc moving to calm its surge making the currency easier to short. we await today's fixing in 15 minutes. tom: