does monetary policy at the boj change in any shape or form? >> he will stay through his 2023.which will end april still 2.5 years. says the governor will if heside -- resign becomes incapable to carry on the duty. to protect the independence of , it istral bank important he stay on until the end of the term. kailey: independence aside, barada -- what about the path or policy? boj reduced rates four years ago, it does not have a lot of maneuvering room. japanoes it do next as competes with coronavirus? >> four years ago, boj introduced the negative interest rate, which turned out to be unpopular. on pop there among banks, which cannot pass on -- unpopular among banks. flattened.urve was later in the same year, boj introduced yield curve control to make sure there is a slope between organized and 10 year bonds. introducedmr. kuroda so-called overshooting -- which turned out to be very similar, or the same as mr. powell. he has done a lot of communication and guidance. expectationy, the is not reason to the 2%. , we arefessor ito starting to see

and that does not to say that they, that the boj is losing independence. name? the mmt argues that the central bank is subject to the fiscal authority's and they will buy whatever the amounts that the fiscal authority issues. but i think there is a real boj or thethat central bank has its own mandate set in the documents, and its independence written by law. do risk their own mandates and calculations. as we have to say that we, outsiders, that may be it is whatvationally equivalent, mmt allocates and what boj does, what the central bank does. i think the real test comes when the central bank achieves an inflation target and the inflation rate goes beyond the target, and the central bank wants to tighten, then what happens? whennk the real test comes the current crisis over there, stagnation, is over. so we don't see it until 2022, something like that. interesting thing about what the governor said was, after his prepared remarks, and i would like to tell everybody, they want to see more of this interesting conversation monetary policy minds, they can find

scrutiny by the impact of economics and boj policy.ocks opening higher more than 1% amid rising volatility. yen trimming friday's gains. output this morning rising a percent month on month amid reopening of the sunday -- over the summer. a focus on boj bond buying. steepening of the treasury curve will be a key factor. local media and south korea reporting the government is preparing extra steps to help small businesses as social distancing rules have been week.d for one kospi opening higher at 1% while korean won is gaining ground below the 1180 handle. factory output edge tire in july but consumption waned as retail --es jumped x percent dropped 6% month on month. trading near aar 74. hi edging towards in wellington bc stocks reduce -- resume trading. -- in wellington, we see stocks reduce -- resume trading. another development for new zealand. andding out august, asian 80 set for the best august performance since 2003. vietnamese stocks have been in the lead this month. this is a topic of second-best performer in asia in august and

the boj plans to keep current pace in september. let's listen to what shinzo abe has to say. >> we have been fighting against an invisible enemy. we tried to minimize the infection as much as possible. we tried to avoid symptoms of the people and protect the people based on expertise. the government has done its level best. many people have been affected and infected, some of them died. for thosences victims. at this moment, doctors are trying very hard to treat the disease of the people. today, from summer to autumn and into winter we made decisions about countermeasures. by taking countermeasures, we strike a balance between preventive measures and social activities as possible. we have seen the advancement of treatments. half of the people who died are in their 80's and older. they have a high risk of symptoms. people are suffering chronic diseases. we trying to save lives of the people. the most important key for the government is how we can deal with countermeasures. winter is coming. we may have more people with fevers. we hav

he laid out a plan for the boj to exit easing monetary policy.also be more hawkish with china. if you want to talk about real dark horses, the environment minister. that is a familiar name. he is the son of the former prime minister. he is a rising political star. he is 39 years old. he is not joining the race yet, but says he would back the man i just mentioned if he does enter the race. manus: from a market point of view, abe's successor, it is about the continuity of abenomi cs. confidence in business in japan. how sure can we be of abenomics mark 2? >> if you look back over the last eight years it has a checkered past, but it started out well. monetary easing, fiscal policy, and regulatory reform. the last year, especially the last eight months, we have seen the coronavirus take wind out of shinzo abe's sales, literally, put everything into a tailspin. the boj has had to shift from providing inflation to throwing lifelines to businesses. inflation is flatlining right now. deflation could accelerate after the coronavirus decimation of the econ

it is not as if the boj can do anything else but support the economy even the other problems.ts don't seem to be perturbed, given the extreme scenario people were thinking a couple of days back. annmarie: thank you for that context. also with us is stephen engle from hong kong. you have covered asia for years especially the geopolitical ramifications of this. what is your take? stephen: it is a sudden departure for shinzo abe. he is the longest serving japanese prime minister. as is his second stint. he had to quit in 2007 for health concerns. it is believed it is because of this colitis he has been suffering from since he was in high school. he has been in the job the second time since 2012, the longest serving japanese prime minister. looks as if health issues might bring his downfall. nows at an interesting time with the coronavirus outbreak, pandemic, donald trump also up for another election, what happens to the coalition between donald trump and shinzo abe? it will be an interesting scenario to playoff to the next prime minister of japan. annmarie: right, abe has worked

i am not sure the boj is going to like the dollar-yen much more than 1.04. -- from the boj and proppedittle more. it was drivennt, by certain currencies. what i am also struck by is how we have not seen emerging-market currencies react as much to that weaker dollar. of its: e.m. has a lot own problems. as you head into the election, stimulus conversation, it's that for, a lot of what drives e.m is a positive economic tone.. we have a situation in washington now where the democrats and republicans cannot even agree on the price of the stamp. they cannot get past the postal situation. how they are going to get past fiscal stimulus will be a more difficult conversation. blokes these -- pelosi's birx -- pelosi's spokesperson coming out saying we need to move forward, republicans and democrats need to compromise. that is not a conversation republicans are having right now, so there is a big separation between where the two parties are and where a stimulus plan needs to be. of a stamp -- is a $25 billion or $10 billion? hard to say. expensive stamp. we also want to get your take on how the d

the stimulus that has been ongoing from the boj is also of importance.ment,ing a governor kuroda reemphasizing the stance of the boj remaining unchanged. whether it is next week or to coincide with the election of a new prime minister, but it might depend on the way in which the financial markets respond over the coming days and weeks. abenomics worked? in.rought kuroda the idea was to use monetary policy aggressively. the japanese economy still remains in a difficult place. at what point do you think the new japanese leadership has to reassess what they are doing rather than continuing what abe started? derek: to be fair, we can measure success in different ways. what i've been highlighting to clients is before covid came along, we actually had 39 consecutive months of positive coordination wide cpi in japan. that is the longest run of positive inflation since we had the first episode of deflation in 1995. why we did not get through the 2% target, i think it would be a little bit unfair to criticize japan in not achieving that goal when you consider the

the coronavirus has put everything into a tailspin in japan and the boj has had to shift from revivingrowing lifelines to businesses. we will have to see, but right now, most of the candidates we are seeing, the five main aso --te, suga, i would say they will stay the course for now. haslinda: no jitters in the market before japan went to break, it was up 2%. quick check ofa the latest business flash headlines. china's biggest banks suffered their worst decline in profit for more than a decade as a wave of -- posted loan loss provisions which soared by as much as 97%. the banking system has been drafted onto the frontline of helping the economy survive its worst economic slump in four decades. lenders are asked to put cheap funding ahead. sinopec posted its first ever yearly bond as the lockdowns and cheap oil way on earnings amid china's fragile recovery. asia's biggest refiner reported a shortfall of jumps of $3 billion through june compared with a profit of 4.7 billion a year ago. sinopec has never reported such a loss since the company listed in hong kong 20 years ago. yum! china i

he also cast doubt on the sustainability of boj monetary policy. we would have to say whether there would be continuity on abenomics. on the geopolitical frontiers aligned with abe to keep ties with china on a steady path. he is far more resistant to change the constitution. the other name, a current defense minister, he urged the boj to lay out a strategy for monetary policy. it is speculative or not to see who they are going to choose for the next year until elections have to be held. anna: thanks so much for joining us. subject.ck with the let's go to our colleague who has been covering for us of course the market side of this. keeper of our bloomberg markets live team. really interesting, we have seen strength in the yen has you might ask act. if anything, throws abenomics into question, we are going to see the end. weakness in the dollar created a bigger uptick. the euro and the pound against the u.s. dollar. stronger than the end -- the yen. >> what we are seeing in the reactive to the yen. essentially creating this high bar for any rate hike

the reflation inflation butwant we know that the boj and the ecb have been falling all over themselves to manufacture inflation and haven't. the whole replacement story is that we have a massive output gap. are exceptionally weak. that is the big conundrum. do you pric ein inflation and reflation against a back trap -- backdrop where you know there isn't any inflation? alix: selling off yields in the long and is -- long end is weird. plus the lack of growth. is that positioning? do you take it seriously? are we seeing investors look for inflation down the road? >> italy is complex. when we look at italy, we are looking at the inflation story. will push uprates the italian long end rates. from ast things are growth perspective, the work -- the more concern there are about debt dynamics. italy is about 150 over germany. it is not too long ago that it was up to hundred over. -- 200 over. there is a lot of volatility out there. the: do you think that inflationary world in europe wi ll turn disinflationary if we keep propelling higher with the euro? >> we are bang on zero in germany. there

it is the most obstructionist intervention for the boj in this or is that overstating the currency aspectear term come it is about getting a grip on the virus. another over 600 cases over the weekend. is -- and if it spreads, they would have to impose new restrictions. isthe positive side, there stimulus of about $2 trillion including cash hands out -- cached handouts -- cash handouts. the view is that the next quarter should not be as bad. manus: thank you very much. that is the bloomberg chief asia correspondent. it is all about oil and the fed for me this week. and do you trust scott minerd? 50 -- we zero stoxx will also see how sanofi opens up. you gave us details earlier about the breaking news. that is it for "bloomberg daybreak: europe." this is bloomberg. ♪ you doing okay? yeah. this moving thing never gets any easier. well, xfinity makes moving super easy. i can transfer my internet and tv service in about a minute. wow, that is easy. almost as easy as having those guys help you move. we are those guys. that's you? the truck adds 10 pounds. in the arms. -okay... transfer your ser

speaking of the boj putting out the board, some japan market watchers are anxious about the potentialon the etf holdings that could affect future buying, particularly with att breakeven point now ¥20,000. increasing that impairment risk. 75% of owns more than the etf market in japan and has already slowed their buying after raising the ceiling on purchases back in march and going forward, several former officials of the boj say the bank can skip some buying in the month to come given there is less market turbulence in japan, haidi. haidi: we have lots more to come on "daybreak asia." this is bloomberg. ♪ shery: let's get a quick check of the latest business flash headlines. group has filed for a twin ipo in hong kong and shanghai. john -- ant generated more than $10 billion in revenue with just over 3 billion profits. the simultaneous listing could be one of the biggest in years. saudis say it could top aramco's record, $29 billion. apple is said to launch its first online store in india next month, taking advantage of the loosening of strict curbs against foreign direct retail. we ar

yields, a bigger driver for japanese bonds with no changes expected from the boj.he rba expected to stand pat, yet the aussie dollar ahead of that. gdplso have second-quarter from australia expected to confirm a recession. this morning, we are going to get chinese pmi. stable recovery is the consensus. offshore your one holding just -- youan holding. it is the longest winning strength -- streak in nine months. even with liquidity weighing on bonds. hightrading at a january while they dollars at a two-year low. why the dollar is flashing over u.s.-china tensions continue to simmer. shery: the sale of tiktok's u.s. operations have hit a major snag. overseasas added the transfer of artificial intelligence to a list of products it considers vital for security, meaning any sale will need the approval of the chinese government. let's get the latest from ross ey.sby -- ros crasn it seems like a dramatic development in a process that has been mostly driven by the u.s. and what president trump wants to happen so far. ultimately, it is surprising beijing would want to have s

is focused on whether the fed is going to adopt negative interest rate policy through the ecb or the boj, and kind of microscopically focus on the nominal short-term overnight interest rates. the fed has engineered negative interest rate policy in the u.s.. it has done that by compressing the nominal yield market down to very low levels, at the same time that inflation expectations have come back from very low levels earlier this spring, and are now back at levels that existed pre-covid. so they are not high, but with the 1.50 to 1.75 normally -- and nominally 65 basis points for the 10-year note, you got a real rate that is slightly in excess of 100 basis points. the term structure of rates is very low. the fedprecisely what was trying to engineer in terms of stimulative and accommodative domestic financial conditions. i think they have done a very good job of doing that. tom: thank you so much. a briefing there on the dynamics , giving backme much of the excitement we saw yesterday. it is reallira, simple. last 24 lira over the hours, 40 eight hours, whatever. then we've given it back,

we can say that investors are getting kinder numbers ahead of the boj rate decision tomorrow.t is expected to cut its gdp growth amid that surge in cases. anything worse than 1% contraction will be a negative. losses for the asx right now. >> let's look at the oil market right now, it is in focus. we have crude at the moment at five-month highs. there is an industry report that added to optimism. hurricane laura has the potential to take the line and disrupt global energy flows. according to a disaster model, on its current track, the storm 12%d lead to around 10 and of u.s. refining capacity being shut down. we will have a look at that on the breakdown. there we go, that is what we have at the moment. he could inflict as much as $18 billion worth of damage to that part of the world. it could shut these refineries down for months upon months. key, whether it hits refineries, 10% of refineries at risk. 80% of u.s. oil. a lot at stake. all thelook like shutdowns are just precautionary measures. we have to wait and see the actual impact of them. with the more analysis senior oil

it holds more than switzerland and the boj.tinues on this trend, it could be in striking distance of the pboc. this week has also become the most popular etf in the world. that is in terms of inflows, taking in $21 billion worth of inflows, beating up vanguard's s&p 500 etf and ishares investment grade etf as well. certainly a lot of popularity here. francine: is there any danger with having investors fed on gold through etf's? dani: it would depend on who you ask. one provider says it is a helpful mechanism to be able to buy etf's, to be able to buy and sell on gold. providing pressure to the underlying market. but according to ken harvey, he takes issue with the etf's, he calls it the etf financial is asian of gold. now he sees a correlation -- the zation of gold. we might see more peaks and troughs in the gold. he also said we might see in stocks because of etf's, you can see irrational exuberance within the gold market. much.ne: thank you so great reporting therefrom dani burger. joining us now is howie li. great to have yo

the ecb and the boj are already in negative territory, and we have seen the same thing in switzerlandthe u.s. has come relatively late to the party in this low yield environment. so i think the constraints on low risk qe might not be far away as well. so if i had to rank, i would probably say that the ecb is in ,he better position in general and it will probably be tougher for the fed. francine: brilliant as always, steven major there, hsbc global head of fixed-income research. coming up on the open, mohamed chief economics advisor. 9:00 a.m. in new york, 2:00 p.m. in london, and this is bloomberg. ♪ tom: "bloomberg surveillance," from london and new york. jobs day. please stay with us. and a lot of good guests. ellen zentner and jim glassman joining us right near that 8:30 report. turkey -- this is a economic issue that involves the domestic and international future for mr. erdogan. there is an experiment that has happened. that is we are going to boost the economy, keep interest rates low, and to hell with the currency. ant joins us now. is the experiment over? are we done with the

will be there until 2023 if he serves on his time, so it will not mark any significant change in the bojolicy, in the idea that they are continuing to buy and a norma's number of financial assets. they continue to keep interest rates slightly negative. however, the relationship corona shinzo abe and was a strong one, and they worked closely together, so some are wondering if a new leader would have the same relationship and if the bank work as smoothly with the fiscal authorities as it has over the past several years. lisa: since abenomics is coming to a close, what is his legacy? mike: you have to lop off the last couple of months. when you look at the totality of the abe term from when he took over, it looks like he is ending up where he started with growth and inflation very low or negative, but that is because of covid. if you look just before that, he had gotten the economy going again, but not very much. he had gotten inflation but not very much. by the standards of japan and the many prime ministers they had before him, several lost decades, it was an improvement. he had a three a

ecb and the bank of england and the boj all to some extent and if it from that safe haven quality androm this being center market, the u.s. is the primo on that, and it gives us more room to be responsible way and mored a rope to hang us with i guess, but there is no evidence that that ability to kind of stretch rules has changed. the u.s. seems to be able to borrow pretty much as much as it needs. alix: well said. ethan harris, bank of america securities, head of mobile economics, thank you. happy friday. this is bloomberg. ♪ bloombergime for the is this flash, look at the biggest business stories in the news. wells fargo started their long awaited jobs cuts. some of the biggest rivals have held back terminations in the midst of the pandemic. wells fargo is under pressure to reduce costs. a spokesperson said terminations resumed in early august. bloomberg reported they may cut tens of thousands of jobs. farmargest maker of equipment has cut their costs. they have stayed resilient despite the coronavirus pandemic. their net income be the highest analyst estimates. now, uber and lyft a

opening to the upside by 1.1% and the yen marched towards 105, and jgb set to decline ahead of the boj'sthe month, kept its purchase plan unchanged for the first time since march. let's switch it out to check in on the open, the kospi opening higher after rounding out a fourth monthly game -- again with pharmaceutical names among the tech performers. the korean won under pressure after climbing to a march hike and korean data to digest over the weekend showing third straight month of easing declines with chip shipments rising. now looking at the open in sydney, the asx 200 opening slight -- flat, stabilizing after four months, stalled at the end of july. the aussie holding right is drop slightly higher as we wait on the rba policy decision tuesday and investors assess the heightened virus risk in victoria state. the s&p is finally higher while the dollar is under pressure but steady after the worst month for the greenback since 2010. that is a look at how we are setting up for the start of trade in august. all right. let's get more on the markets. our next guest says we are in the midst

sophie: we see weakness for the kospi, focused on whether the boj will take action after it announcedt will buy 1.5 trillion yuan in debt. and yesterday we had india with the largest gdp slump among major economies in the second quarter. we've also seen a rise in indian bond yields. asian stocks could falter after wrapping up the best august performance since 2003. japanese futures lower as well, the yen below 106, focused on politics. belowssie dollar holding 74. a quick check on the pipeline in asia, september 10 will be up as a day. china started -- to start trading in hong kong. opens forscription the gaming unit priced at the top of the range, and here in ngfu springs set to raise $1.2 billion. haidi: beijing has detained australian journalist without charge. get the latest from our managing editor, and johnson. we were speaking -- ed johnson. about this, and it looks like the journalist was caught in the crossfire. what has been building in recent weeks? ed: that's right. it is hard to see this in any other light. relations between australia and china have been in the deep freez

switching out the terminal, on thursday we saw the ecb, boj, and boe announce in a joint statement they will be reducing the frequency of dollar liquidity operations to once a week from september. so a sign that stress in credit markets has eased and dollar demand has dropped. haidi: we are going to talk more about that structural theme. joining us for more is research affiliate head of equities feifei li. great to have you with us. we have been talking about and what sophie was just talking about, discontinue divergence when it comes to growth and tech stocks as well as value. just the outperformance of growth stocks overvalued. we see this time and time again continuing. a lot of analysts are saying that the short period of time it takes to supersede the highest stocks from the s&p suggests we will see a broader rally to come. do you see that rotation play finally eventuated? feifei: i think you are right. the longestrienced and biggest over the past more than a decade. the value stocks have not been outperforming growth stocks. i would say if we think the economy is entering broader