david: kathleen hays is with us.ow he is not happy in terms of his fed pick, but should we be surprised? >> it's not the first time we have had donald trump complaining about the federal reserve, complaining about interest rate hikes. in an interview with the washington post, he said he is not the least little bit happy. said the following. donald trump said he had it in his gut to fight china on trade, taking them on directly. he believes this is important. he is doing deals and the fed is not accommodating these deals. he blames the stock market drop in the layoff of gm workers by mary barra on fed rate hikes. jumping into this again, larry kudlow said donald is giving his opinion. he is not trying to tear down the independent wall that keeps the fed independent from the white house. at the fed was asked about independence when he spoke in new york. hasaid monetary policy things we are looking at regarding policy, but there could be differences of opinion on the pace and definition of rate hikes. it sounds that guy

haidi: kathleen hays.g saudi arabia's plan to cut out will -- oil output as tensions rise between washington and saudi arabia. more on this complicated situation with ihs market next. this is bloomberg. ♪ ♪ asia. this is daybreak i'm shery ahn in new york. stroud-watts.di tensions between the u.s. and its allies saudi arabia are rising after president trump slammed the kingdom's proposal to curb oil production. he said this should not happen and prices should be falling .ased on supply scenario hopefully saudi arabia and opec will not be cutting oil production. they should be lower, prices based on supply. our energy reporter in tokyo. the president has been busy i guess jawboning when it comes to equity price action and the oil markets. theld we expect action from trump administration following this? seeing this ass more bark than bite. the oil price did decline after trump made that tweet, but there is not much more the united states could do. they put the sanction on iran. they asked for saudi arabia an

global economics and policy advisor kathleen hays attended his speech. he went from ways up, to just below with a span of one month. the markets really relieved for that. kathleen: that is certainly what it looked like. i think it is interesting that his view of the neutral rate is seen as dovish because as he said, there does seem to be a difference over the course of about six or seven weeks. last month, october 3, jay powell was in an interview situation where he said the fed looked like it was probably a long way from the neutral rate. the neutral rate, when you get to that level, you are not stimulating the economy because he think it is weak. you're not pushing rates higher because you think inflation will get out of hand. today come in a carefully worded jay powell did express a slightly different view, just below -- listen for those words. >> interest rates are still low i historical standards and they remain just below the range of estimates of that level that would he neutral for the economy. that is neither speeding up nor growth -- nor slowing

our editor kathleen hays attended that event and is here. of these officials actually speak from the same book? kathleen: they are overall, the fed -- the economy is looking good. inflation is 0.2%. they seem pleased. they seem more rate hikes, but i don't think they're all sure more and more how much they will need to get to neutral. neutral rate is worthy economy is not sped up or slowed down by with the fed fund rate is. particularly with answers to the moderators question in new york, they talked about how the fed -- look at 2015. three years later, we are closer to our destination. it becomes a different kind of question. they also said we are assessing the data in two ways. incoming data, what does that tell us about where the economy is? we are also looking at it to try to determine this uncertain neutral rate. where's it? hadhe afternoon, you charlie evans from chicago, kansas city fed, everything is good. charlie evans, the auto industry is plateauing, but things look good. esther george has a strong economy in her district, but she

our global economics and policy editor kathleen hays is watching all this happen. d with the president and not being alone on criticizing the fed for the need for more rate hikes. kathleen: exactly. this was not a major speech president trump gave. i was talking to reporters and he said he still sees the fed as a problem. i would like to see the fed with a lower interest rate. we have much more of a fed problem than they do with anyone else. maybe that will make xi jinping sleep a little easier tonight. i am just kidding of course. we cosans after seeing data. yesterday, the homebuilder sentiment was out. housing was stronger in the u.s. but that was due to both the family dwellings. single-family starts fell. permits were down. a lot of this building we did the last month is considered after hurricanes and things like that which have provoked a wave of building. bloomberg economics thinks this is not going to last. let's put that- on the table. he says he thinks the fed should pause in these interest rates hike. preemptive hikes could cause the next recession. kudl

kathleen hays is here. may is determined to fight this bottle and win, but so are her opponents. yvokathleen: don't count her out. this is one tough promised her. there are problems on both sides -- kathleen: this is one tough prime minister. she says she is confident she can get it through and ready to -- >> before christmas mp's will vote on this deal. it will be one of the most significant votes parliament has held for many years. it will depend whether we move forward together into a brighter future, or open the deal -- door to more division and uncertainty. kathleen: many on the european side say if there was any better deal, theresa may would have gotten it. she was stubborn, tenacious. many hope the deal can go through, including jean-claude juncker, saying brexit is the only deal for britain. let's listen to what he said, because this does seem to be the sentiment overall. >> those who think that by rejecting the deal that they would have a better deal will be disappointed in the seconds after the rejection of this deal. kathleen: of course head of the ec commission, his v

haidi: kathleen hays with a look ofwhat it has coming ahead it.least of which is brexit and italy. lots more to come on "daybreak asia." this is bloomberg. ♪ ramy: welcome back. this is "daybreak asia." i am ramy inocencio in new york. haidi: i am haidi stroud-watts in sydney. the outlook for the chinese properties sector will remain stable. sales are expected to fall. that is according to moody's investors service, which adds rising financing costs will weigh on developer's profit margins and liquidity. let's get over to hong kong, where we are joined by frank. it looks like on the balance of things, the outlook is not great, but a steady slowdown going into next year? frank: that's right. the china property outlook is stable, but that is not without challenges. the reasons why we keep a stable outlook on the china property sector is mainly because sales growth will decline and more specifically, nationwide sales will decline by 5%, but this is a more manageable level, because we have a high base effect in 2018. the second reason for a stable out

let's bring in kathleen hays. let's discuss the data out of japan.ve ppi data, and what it means for the boj as well. they are so focused on inflation, and a couple of numbers are going to not be in the plus column for them but producer prices were released. they were a little weaker than they had been. talking about producer prices in the month of october. it is the sunset of consumer prices because business to business. 2.9% year-over-year, export prices not so bad. import prices up 9.5%. 4.5%tic demand was up three looking ahead, cpi has seen slowing again because oil prices have fallen, although if the yen weakens, that could provide offset. next week is when we will be getting cpi numbers, so they can be showing weakness. it is important gdp comes out this week, and that is expected .o weaken in the second quarter a weaker gdp even if temporary or has special factors will not add to inflation pressures. it is a week where the gop -- boj looks at numbers and say, what is ahead? haidi: india, also releasing inflation data. r.b.i.ttle between the a

our economics and policy editor kathleen hays is here to dive into the data. leen come of policy statement had very minor tweaks? kathleen: we can only say so much, in a tersely worded 303 word policy statement. if you take out the names who only 200the decision, 65. nevertheless, the fed counts on these statements to send a clear signal. there was nothing to change the view that this federal reserve is on track for a rate hike in december. when we tell you about the tweaks, they were pretty small. they said business investment has moderated from a rapid pace, previously they had said how strong it was, for some reason it pulled up shortly in the quarter. they said household spending has continued to grow strongly and that is a bit of a stronger statement than they made before. implement rateon has declined, is that of stating that it had stayed low. acknowledging the 10% drop. they also see the economy rising at a strong rate. our bloomberg chart, when of our most popular chart that we look at every day, 12 outl see that we have of 16 looking for the rate hike

kathleen hays is here with a preview. what is at the heart of this standoff? : reserves, liquidity, does the banking system have enough? should the reserve bank loosen up the level it wants to see in the banking system? it is a tax question. they have a lot of reserves their building up, creating surplus, due to holding a foreign currency. they are not really related to the kind of issue the banks are raising. and you saw a picture of finance minister -- who is definitely on the side of prime minister modi saying the r.b.i. has been too tough on the banks and bad debt, and they need more reserves in the banking system. this is something the r.b.i. could do. the economy was after because of a lack of liquidity caused by the reserve bank of india, r.b.i. are worried about independence. they are worried about government influence. they want to have their inflation fighting credibility intact, and they think it is important for the big banks in india, state-owned banks, to clean up the bad debt. they could help prime minister modi correct his budget deficit. saysco

our policy editor kathleen hays has the latest on this brexit battle. now that theresa may has of her cabineten members, so what is she doing now? kathleen: she is fighting back. she said i got the deal, this is the deal we need. inc. back to june of 2017 when she called that snap election. she survived with a bad outcome been. you cannot underestimate her determination to move ahead. on sky tv, she said about the brexit battle, it is not about me. it is about what is right for the country. a change of leadership will not make the negotiations any easier or change the parliamentary arithmetic. it will bring a degree of uncertainty. theresa may took control of the game. reporting rob and also important, the brexit negotiator is no longer going to be involved in the negotiations. still surprised that john said he was hoodwinked by the final result. they need 48 letters saying they want a vote of no-confidence. they might have a little more than half. in terms of jockeying for who might be running if we get a no-confidence vote and who could ultimately repl

kathleen hays has minutes from the meeting and the words and phrases that matter.ignaling aey are more flexible policy path. this is so important because they are getting more cautious, not dovish as the fed nears neutral. we will be emphasizing data dependency to ease away from the commitment. , if the rate hike incoming information will be in line with expectations. they talked about modifying the gradual rate hikes of language as we move on to this next screen we can see that. it might be appropriate to transition to policy statement language that praise -- places greater emphasis on data dependency and assessing outlook. it would convey the fact there is no preset course. remember the new fed vice chairman yesterday said he is adamant we are not on a preset course. rate thaty neutral jay powell said is near neutral, trying to wean everyone off the idea we will rate hike every quarter and backed the idea that we will watch the data before deciding what to do. ahead, biging numbers coming out of japan. bank of korea decision day. we are expecting to be ok after s

kathleen hays is here. is finally in sight. the pound reacting positively after three days of declines. are we getting ahead of ourselves given the uphill battle theresa may still faces? >> there has been such a earth of information, so maybe it is not surprising the pound did see its highest level since april against the euro. however, it is clear now that they are moving ahead. there will be a cabinet meeting tomorrow to discuss the draft deal, and the question is if theresa may can convince her cabinet that the whole thrust of brexit is leaving the european .nion there could be a special u.k.-eu summit on november 25. votes she needs to fight for -- doesbrexiteers who say it not go far enough, that they will be tied to the eu for way too long. there's also bureau files in the group opposing it. they are still worried about sovereignty, and then there's partymocratic unionist for northern ireland. everyone is worried about what will happen to northern ireland. tories, break away from the eu, you got to do it 100%. pro-eu cons

kathleen hays was listening to tell speaking of the economic club and said that it is just below the words that moved the markets. kathleen: absolutely. there are a lot of moving parts here. for a lot of people that are traitors and watching the fed, they say what is going to happen next. hikeset three more rate and that is where they put their dot plots when they met in september. we want to the just above the neutral rate and they say that that is what is catching so much attention. we have a lot to do with where they stop with the interest rate increases. it seems to me there is uncertainty now over where the neutral rate is. it is in the heart of the candidate. and remember last month, it was tooff-the-cuff the remark judy woodruff that said the set is still a long way to go for neutral, but this is what he said. more measured it today. interest rates are low by historical standards and just below the range of estimates for that level that would be neutral for the economy. that is neither speeding up north slowing down growth. kathleen: just below the neutral rate. this was a spee

. >> let's get to kathleen hays, whose here with the key take away from powell's conversation with the dallas fed president in texas. optics, powell does not seem very upbeat about growth overall. >> absolutely. a really interesting conversation. powell's style of communicating with the public is to try to use words and concepts that everyone understands. i think kaplan did a great job asking the questions we all want to hear the answers to. powell seemed to beginning giving the fed credit, the time he spent they're going from flat, low interest rates, and he does see challenges, but the economy is strong, inflation right on target, and to me, it was significant when rob kaplan asked what are the challenges for fed policy, and he raised the idea of we have to look at what we're doing for rates and how fast we are going to get to where we are going. listen to what he had to say and see what you think. >> there are challenges that are typical of this point in a cycle, and that is we have to be thinking about how much further to raise rates and the pace at which we will raise rates, and i

our editor kathleen hays has the details. with the shortcomings listed in this report, the fed's vice chair said lenders are in good shape. why? kathleen: let's find what they found. failing to banks measure up when it comes to risk management. itis pretty important, isn't ? they got high marks on the amount of capital they are holding. that has been pushed so hard by the fed and other regulators, liquidity reserves, they could have another downturn. where the fed sees risks -- mismanagement. remember it being too big to manage? protectacks, failure to the banking system overall and less than 60% scored well on strength measures. this needs to be addressed. the vice chair of supervision speaking on friday at an event in washington said all the data would show us a healthy industry. return on equity is the highest in 10 years. hard to argue. when it comes to the idea maybe banks need to have another step they could take if there is , he says they don't see a need just now. listen to what he said. >> financial stability risks a

our global economics and policy editor kathleen hays has the details could we marked the 10th anniversarylehman brothers. bankers are falling short. but they will not tighten the rules? kathleen: not just yet. i think they want more time to see how this is going and perhaps pointing out that there are still misses that might encourage big banks to take another look at their practices and get them more in line with what the fed is looking for. it is interesting, 40% of banks are failing on broad measures of risk management. the fed does give the banks high marks on the amount of capitals they are holding and liquidity reserves. this is one of the biggest pushes coming out of the fed, coming out of basel. have to hold more capital to be safe in a big downturn. banks -- the bigger risk from it -- from mismanagement, that is surprising. cyberattacks, not surprising. and some failure to protect the banking systems. they see more things -- say more things need to be done. scored well. randy quarles spoke in washington on friday. he sees possibles changes whending not announcing they failed to b

kathleen hays is here with more on this debate. independence, prime minister modi, election motivated, they say the central bank isn't doing their job. kathleen: it is a question that is at once technical. but as part of the reason it is subject to interpretation. prime minister modi is against an important general election in 2019. he wants the banks to be lending, have more liquidity. maybe that could help get the economy on better footing. the real question, the bloomberg , the r.b.i.am banking could be more generous with liquidity. but modi's team is saying probably the r.b.i. has been too tough on banks, trying to clean up their bad debt. they think the case for lower reserves is strong. they cited sanction -- section of the reserve bank. minister said he will not let the economy suffer because of liquidity. he criticized the r.b.i. for lending to much from 2008 to 2014. he wasn't the chief of it then. the r.b.i. wants to preserve its .nflation fighting and ability it says the reserves are telling us to let loose, but they are

we got to more from our global economics and policy editor, kathleen hays.r they hold that extraordinary stimulus in place, the negative side effects potentially arise. they are putting more importance on that, to date. but they don't see inflation hitting 2% until at least 2021. a former policy board member at the bank of japan spoke to us. the bank ofybe japan is signaling a shift that could mean is something down the road. -- mean something down the road. changes from short-term to long-term targets will be an important precondition. they made their famous policy tweaks back in july. they raised their range from 0.1% to 0.2%. of's put this in the context what we said today about risks. it looks like they're skewed to the downside. it seems like this extraordinary stimulus -- there are lots of questions about this. >> what financial stability concerns are there? their last reporst concluded things areoncluded stable for the banks. new norm ishinks a e reigionalth especially, because the curve is so flat. they are making riskier loans. this was not particul

kathleen hays is watching this.s negotiations are in the end, but many opponents think it is game over for any kind of deal, especially if you are looking at the november deadline. i have to say parenthetically, my heart goes out to theresa may. this is a tough thing to do because it isn't just a deal the european union has to agree, and they have been pushing back for over a year. it is also something u.k. parliament has to agree and her cabinet members and meanwhile she has a lot of opponents in the wings who it seems would be pleased to see this go down and smoke because they are itching to get a chance at the prime minister seat. after the brexit deal is best. it is a thankless job. that the deal was in the endgame, the chief negotiator for the e.u. had said the deal is nearly finished. we saw the dollar rising against the pound a good bit, but when she gave her speech, she seemed convinced it is just around the corner. listen to what she said earlier today. the newincludes relationship we will forge with our eu

kathleen hays is here. we have been cautiously optimistic and sort of skeptical. it is a hard road. kathleen: there are so many hurdles to cross, different parties at war with various parts of the deal as it is written, but let's rembert brexit was passed in 2016 -- remember brexit was passed in 2016. the deadline is march. something has to be on the table for everybody to pick apart whether or not they can agree on it and what they will be are the cabinet to approve is an important first step. it is like any negotiation. to get a conclusion or deal, everybody has to give up something great nobody gets what they want out of negotiation or it is not negotiation print you have the upper hand and forced it on the other side. it is not where conservatives or theresa may are. as much of it is not a victory in the sense it would put a big smile on her face -- you can see her on 10 downing street -- the next step is more difficult to achieve has to speak to parliament tomorrow and negotiations begin. give: people have to something. they have to be concessions. the wonder she calls this a co

david: kathleen hays is on the story. where do we get started? proud aboutind of growth. absolutely. it was not casual. it was very serious. there were jokes made. a great job of interviewing jay powell, but he talked about when he joined the fed how weak the economy was and how it started to normalize. he is saying that the fed has done a good job. the economy is very strong and healthy. answer to one of the questions about the fed said hees, jay powell is watching the pace of rate hikes. i think he gave us a little not tocern that he is oblivious the fact that the fed has done too much in the past and could do it again. >> there are challenges that are typical at this point. we need to be thinking about how much further to raise rates and the pace at which we will raise rates. the way we will approach that is to be looking very carefully at how the markets in the economy and this is contacts are reacting to our policy. kathleen: he thinks things are looking pretty good right now. he said it is something we're watching very carefully. housing, auto sales, very sensitive.

policy editor kathleen hays is here with more. ations for tightening have been pushed out to 2020. now they are thinking 2019 could be possible. why? kathleen: they took that pretty seriously. the pound having it best rally since april 2017. it really hit the market. the bank of england saying it sees faster wage growth and the mustek cost rising. , even though they left their rate unchanged, they surprised people a little and added fuel when he said a hard brexit could cause inflation to jump. u.k. companies are now understandably postponing investment until they have greater clarity over future trading relationships with the eu. their hedging their bets against downside. kathleen: movement in the pound has been so important to inflation rate. it shows a where inflation is above the target pretty firmly. it has had some progress made. seeing inflation staying above target for the next few years. thoughwards hiking, even depending on brexit, we could move in either direction. right now, betting on a smooth brexit and this idea out

kathleen hays is connecting the dots.us what drove the stunning drop in prices. >> isn't the oil market exciting? 2016, below $30 a barrel. 7.1%, the biggest one-day drop in three years. hey bloomberg chart illustrates that pretty well. let me tell you what is driving it, opec's negative view. inventories are rising in the u.s. and output is rising. you have donald trump doing his what notell the saudis to do, not to cut output, tweaking about that. that is another thing that drove this amazing price drop. prices are steady in asia trade. that is a good thing. i mentioned those key dates. since theoversold second half of 2014, when the price of crude fell more than $50. $30since prices fell below a barrel in 2016. what you expect to happen? the capitulation ends, but steadies and bounces back. we talk about the fed reserve and what it means for inflation, remember, inflation is the change in prices. if we get a big drop in the price of oil, which drops the price of gasoline, once the drop is done, the downward pressure on

focus.entral banks in how global economics and policy editor kathleen hays is here with what they all i think we will look at two asian central banks in focus. for them, it is the same. rbnz held its key rate at a record low, exactly what was expected. the head signaling that cash rates will stay there through 2019 into 2020. they did make one change. that aopped this phrase change to higher rates are lower rates was in the cards. people felt it was less dovish. they do see inflation getting to 2%, the middle of their target, sometime this year. let's jump into our bloomberg library. look at how well gdp is going. , staying ina climb a healthy range. if you look at their trade balance, there is some concern over exports, another reason to sit tight. let's move on to another bank, the central bank of malaysia. the same call. they keep their key rate at 3.25%. they raised it in january because they were concerned about inflation and their currency. inflation has eased a bit, and the ringgit is stable. here is the key policy rate. there is the rate hike in december. it has come down, dow

kathleen hays is with us with more details. will bloomberg economics be more polls have seem? look at the political scorecard. they say it does show republicans keeping the senate, they give a state-by-state analysis and maybe a little more hope for democrats. consumer confidence in the present and future, consumers' view of government policy, economic health, coincident, meaning current, and leading indicators, and here is what potential signal shows they will remain republican, very strong economy. florida and west virginia having not quite so strong economies. they will stay democratic according to this analysis. according to this economic satisfaction index for democrats in new jersey, indiana, missouri, montana -- remember, indiana is very important in terms of the question of who in the senate.et one interviewee said if we do get something like that, it will not lead to gridlock if we have division between the white house and congress. he says in fact, we will probably get more stimulus picking upocrats some of that populist feel of donald trump will pick up on that. he

hays joining the latest. issue when ite came to prime minister abe's reelection in japan. that it mightring be a tiny part of the labor shortage. kathleens a sensitive issue in japan. demographics. they have an aging population. it is supposed to shrink dramatically. neede same time, they will some of these workers. what has happened, prime minister abe, we will be showing when he was speaking to parliament recently. he had to dial back the plan. he is proposing to pass legislation by the end of december to allow 345000 and change workers into japan. he was hoping for a bill that would allow 500,000 workers. people are saying it seems too rushed. there is the sensitive question of is it guest workers or immigration? resistantse have been to foreign workers coming in, despite how much they need it. there is a chart i am going to show you from my library. trying to boost inflation. we need to think about this in the context of what japan needs. see that the unemployment rate is just above 2.2%. 164 jobs open for every 100 workers. this was going to probably be the most dramatic immigration workers. overhaul. they told the japan chamber of