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tv   Bloomberg Daybreak Asia  Bloomberg  September 16, 2019 7:00pm-9:00pm EDT

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paul: good morning. i am paul allen in sydney. we are under one hour away from the market open in australia, japan, and south korea. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this tuesday, president trump blames iran for the aramco attack. forould be weeks or months saudi oil production returns to normal. the president says the u.s. reached a trade deal with japan. the agreement could be signed
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next week. the brexit drama. boris johnson skipped a news conference as his host says the u.k. is not serious about talks. shery: let's get you started. we are seeing u.s. futures slightly higher by .1%. this after the s&p 500 slumped the most in two weeks. coming after president trump announced an initial trade agreement with japan. when it comes to the safe haven moves we saw in the last session, we had wti crude higher, the biggest gain since february of 2009. those are being reversed with gold futures getting pressure, down .3%. not to mention, wti holding above the $60 per barrel level but still under pressure, down 1.5%, this after jumping 13% in the previous session, given the previous attacks on saudi arabia and oil facilities.
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let's see how things are shaping up in the asian markets. sophie: there may be impetus for risk appetite after the mixed session we saw on monday when energy shares rallied while financial firms led declines. u.s.-japan lines on the trade deal being narrowed in with a trade deal in the coming weeks. we have aussie contracts snapping a four-day gain ahead of minutes from the rba along with the data from australia. new home prices from china and south korea, we will be getting the meeting minutes from the bank of korea. today, korean officials will hold a meeting on the rising oil price impact on the economy. paul. paul: first word news now with ritika gupta. ritika: wall street may soon see one of its most consequential victories of the trump year at with regulators considering scrapping a rule that forced banks to set aside billion's of
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dollars for trades. the requirement was approved during the obama administration and makes lenders post billions and margins when engaging in derivative transactions for their own affiliates. lobbyists argue the requirement is redundant. greece is asking its european union creditors to approve the early retainment of part of its bailout loans to the imf. the government says paying ahead of schedule would reduce servicing costs by more than 70 million euros. it adds the annual interest rate of the loans is 4.9% and greece can borrow money much more cheaply elsewhere in the market. johnson says he is optimistic about striking the deal on brexit. -- boris johnson says he is optimistic about striking a deal on brexit. he skipped a news conference with his luxembourg counterpart.
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he said the u.k. had offered nothing new and that a no-deal brexit would be a nightmare. moody's has lowered its outlook for hong kong, cutting rating from stable to negative because of the growing threat of street protests as the global financial and business how. the unrest may hurt the government and policy more than originally thought. creditdamage hong kong's fundamentals. moody's reaffirmed its rating. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am ready cook up to. -- i am ready cook up to. -- i am rich because good to -- ritika. this is bloomberg. shery: it can restore output. riyadh claims weapons from iran were used against two aramco plans. the u.s. has blamed tehran with
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president trump saying there is strong evidence of its involvement. it is looking that way. we are having strong studies done but it is certainly looking that way at this moment, and we will let you know. as soon as we find out definitively, we will let you know, but it does look that way. shery: that's bring in our reporters. let me start with you. we continue to see these conflicting comments coming out of president trump saying he does not think the u.s. diplomacy with iran is exhausted so what can we expect in terms of the iran-u.s. relationship going forward? >> it kind of depends on what conclusions they come to regarding iran's responsibility in this strike. president trump clearly is trying to keep his options open. might be a meeting between
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president rouhani and president trump at the meeting next week. the iranians said they do not want to do it just for the sake of photo ops. but this attack really suggests that this is probably not going to happen now. on if thel depend u.s. definitively concludes that it was iran that was behind it. riad, aramco's facilities obviously suffering substantial damage. what are the prospects for recovery? riad: the latest reporting we have is there might be some initial recovery there, at least of some of the lost production. but to recover all of the production, remember, this is almost half of what saudi arabia is producing that has been lost. to recover all of it may now actually, it looks like a mate
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-- it may take weeks to fix completely. we don't have official word on exactly that. the saudi's are currently assessing the damage to know more definitively where that takes us. shery: bloomberg spoke to the opec secretary-general, and he says it is premature to weigh output changes. take a listen. it will be a collective decision of not only opec but the opec plus. it is beginning to contemplate on what will be done in terms of volume. shery: could we expect any sort of action coming from opec perhaps before or even during the december meeting? think it is much a question of what will it do but what can i do. theaw cabinet from --
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representative from credit suisse there's less than one million barrels of oil from the rest of nations. that is a relatively small amount. reality, their options are fairly limited before the saudi aboutthe u.s. was serious bringing more capacity, they could look at easing some of the sanctions on venezuela. be a potential political cost. relaxing their sanctions on iran anytime soon. limitedreasonably options for opec right now. paul: we saw that big spike in oil prices. wti up the most since 2009. brent up the most ever. going forward, what can we expect for the oil price?
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>> we have seen a little bit of a pullback this morning and early asian trading, which is probably to be expected after that huge again yesterday. the biggest percentage move ever. going forward, what you hear from analysts is we really need more clarity on when this loss production can come back online. it looks like it is going to take a matter of months, you know, we could see some more upside. that initial shock has worked its way out of the market and i would suggest that further gains might be gradual from here but certainly, there's going to be a strong underpinning to the price before we get clarity on when they can bring that back. paul: thanks for joining us. president trump says the u.s. has reached an initial trade agreement with japan and there are indications it could be signed in the coming days. let's get the very latest now from our senior editor, derek wallbank. what more can you tell us? is very breaking news. it came out quite recently. here is what we know so far.
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the u.s. and japan has been in talks for quite a while now, and it appears that this is now headed to the done stage. president trump and shinzo abe are supposed to meeting next week -- to be meeting next week for u.n. stuff. they are going to be possibly signing right at that moment. the president has signaled his intent for a deal in a letter to congress. he said there is going to be a action on thetive digital side, but what this means in terms of japan is that you are talking about a reduction quite likely in the threat of automobiles ever facing specific tariffs. this is a thing japan has been concerned about for quite a long time and it has been an impediment. that is firmly and fully off the table. shery: what do we know about the potential content of this deal?
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it is just an initial agreement, but we know it is being really hard for japan to agree to the transpacific partnership that the u.s. pulled out of. yeah, and we are still waiting for a lot of those details to come out at this moment but certainly, right now, this is a big lift. you are seeing markets start to react on the lift here. japan and the u.s. have had a lot of these sort of devil in the details kind of things. if you're talking about cars, agriculture, certain sectors are trying to open up the economy, so i think this is going to be one of those cases where we are going to need to see exactly what is covered by the content of this, but for certain, this is removing quite a fair bit of uncertainty that was hanging over the entire sort of u.s.-japan relationship. this is something that trump and abe had very much wanted to get done this month by the u.n. meeting, so they could sign
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something, be done, and clear it from their agenda. the u.s. has bigger fish to fry. they are dealing with china, an emerging iran situation, so something like this, for the president, it was important to here, and it looks like he will be able to sell something and say he has negotiated a trade back. shery: derek wallbank, thank you so much for that. still ahead, we talk more trade with max. he tells us how he sees the upcoming talks playing out. hill givesxt, john us his outlook ahead of this week's pivotal fed meeting. this is bloomberg. ♪
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shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. the stakes are rising for the feds rate decision this week as the attacks on saudi aramco facilities sent energy prices surging and revived memories of oil shocks that lead to previous recessions. kathleen hays is here, so how big would the shock have to be to tip the u.s. into recession? kathleen: bigger than it has gotten yet. theuently, it is not just fed tightening. there are usually many things going on that cause an economy to tip over into recession, a shock. we had the biggest one-day surge and -- in brent crude's price ever. bloomberg chart will show you
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what has to happen. let's look at this one. the point of this chart is oil prices have to rise by 100% to be high enough to be a driving force behind the recession. nine of the past 10 postwar recessions have been accompanied by some type of large move up in the oil price. a classics example is -- classic example is the early 1970's. all kinds of inflation. the fed move. early 1990's, iraq invaded kuwait. oil spike of 100% or more. early to thousands, you have 2000's, youlapse -- have the dot-com collapse. even in the great recession, oil prices moved sharply higher. they hit an all-time high of $137 a barrel, july 2008. it is much more about the housing market which led to the
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structured mortgage derivatives meltdown that caused the great recession. nevertheless, we saw it there as well. there are reasons why we are not there yet. they might not be. the u.s. is much less dependent on imported oil than it used to be. that is one big reason to be looking at it this way. but i think the bottom line is if the fed is looking for one more reason to cut rates, this has to be it. it has to be this. we have had a lot of shocks in the making, worries about shocks. here is one that could unfold. another reason for the fed to move. shery: is this a complication for the fed? kathleen: it has to do with liquidity. it has to do with corporate tax payments. it has to do with the recent bond auctions, settling. the repo rate has been driven higher. to over simplify a little bit, what people are worried about is
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what i am going to show you on this chart. you have the fed funds rate. you have the white line is the top of the range, the yellow line is the bottom of the range. in the middle, you can see the effective rates. insist on excess reserves. this is something the fed uses a lot more now when it is trying inkeep the fed funds rate the middle of that range. it has been constantly driven higher. the ioer goes above the fed funds rate. banks are going to start lending at a higher rate. it is complicated. the fed has already had to tweak it three times and people are wondering if this will be part of the decision-making process. it is technical, but it is an important issue. shery: kathleen hays, our global economics and policy editor. john hill is head of u.s. rates strategy for bmo capital markets.
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i bet you are not the only one who cares about the fed decision, obviously. whatthleen was telling us, are you expecting in terms of the funding stress we are seeing in the repo market? well this because a reactionary step from the fed? john: today's volatility in the repo market was huge. there are a lot of potential synonyms you can throw out. the call point is what we saw today is not something we should be seeing basically ever in their repo market, but especially not on quarter end. while you can point to corporate tax payments, to treasury market settlements, the volatility was super outside. a lot of people focus on the feds rate policy. should they be cutting 50? should they not be coming? -- cutting? whatever. the big thing going into wednesday is did we see price action enough to justify a
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change? we talked about ioer. i do not think they will tweak it just yet. it will be too reactionary, but we are kind of approaching a moment where the fed has to not only stop shrinking the size of the balance sheet. but eventually, it is going to start growing again, and that is the moment we have normalized. we might be heading that moment as early as q4 this year. shery: what happens when we look forward to the fed's actions, as we continue to see the search in oil -- surgeon oil? -- surge in oil? if not in this meeting, when? jon: absolutely, it should be. energyn increase in prices that feeds through into consumption as consumers pay at the gas pump. i do not think it changes fed policy on wednesday. i think they cut 25 basis points.
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it adds to the laundry list of potential risk points for the global economy. you can point to the u.s. and china trade war. this adds to another one, brexit. the problem is, as the laundry list gets bigger and bigger, powell eventually has to hit a point where he has characterized this as a midcycle adjustment. ok. 25basis points total, three basis point cuts. he needs to walk the market back from what they have had. you have the market pricing in deeper cuts than this while you add another geopolitical risk point. it is a very difficult communication challenge and it is something we will have to watch very closely. is there a policy ever being built into any of this, or frankly, are they threading the needle? moment for thelt fomc to produce their policy. paul: make or break moment for expectations. as everybody seems to know, the
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25 basis point cut is pretty much baked in. is that what this really is all about, jay powell managing expectations and communicating that clearly? jon: absolutely. there is no doubt they are going to cut by 25 basis points. the risk point for wednesday will be what is the forward guidance? are they going to cut again in 2019? will it be october or december? where i think a lot of the debate comes in is once they have finished their midcycle cut cycle, however you want to call it, are they going to be on pause in the future? do they sustain a cut bias going forward? we have seen a pendulum swing, some benefits and that it -- in the data. if they do not spread this needle by not being too pessimistic or optimistic either, you could see some negative reparations in markets. i think you are praising the
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make or break moment really as just a point where fomc communication has achieved expectations of a midcycle cut. will we be able to actually achieve that or will financial conditions tightening and then the -- tighten and then the fomc has to go back to zero? paul: it was a pretty exciting month for the bond market but it is a typically volatile months. we have seen yields climbing a bit. what have you seen in terms of bond market reaction? jon: we will be focused on the slope of the yield curve. if you see powell come out, cut rates, but then indicate that maybe we are not going to cut as much as we would in the future, you would expect a flattening of into the inversion. we are going into a new cycle inverted basically. however, if they are able to scenario,e goldilocks
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where they cut interest rates, there's confidence in the economy, inflation expectations continue to build back, you would expect them to steepen. in addition to the outright level, we will be watching the slope of the yield curve extremely closely. shery: how are you factoring in the august numbers we got out of china? jon: that is another downside risk that continues to get powell to cut. the u.s. economy currently does not justify a cut. you are trying to manage monetary policy to the future. monetary and policy -- monetary policy affects the land. insurance from a risk management perspective. the august data looks concerning. add that as one more point for justifying a cut. the recent spike in energy prices is an input cost for china that went up significantly that exacerbates concerns. shery: thank you so much for joining us today,
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jon hill. you can get around up of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪
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paul: let's get a quick check of the latest business flash headlines. an investigation into price rigging precious metals. current and one former trader were charged with manipulating markets. prosecutors described it as a racketeering conspiracy run out of the bank. said manipulation was routine and sanctioned by managers. shery: standard chartered says it can explain how some of its
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wealthy clients made their money and has launched a review into thousands of accounts at its private bank. a two-year-old regulatory review into my -- in dubai has been made public. plenty more to come. this is bloomberg. ♪
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ritika: this is "daybreak asia." the first gupta with word headlines. president trump says his administration has reached an initial trade deal with japan and he intends to enter into the agreement in the coming weeks. trump also said the u.s. will be entering what he calls an executive agreement with japan over digital trade. on monday, there were reports in japanese media that an official deal is due to be signed next week. hong kong exchanges and clearing the after -- its bid for london stock exchange. the people's daily commended them for the existing tieups with the shanghai stock exchange
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as its preferred access to china. they had already rejected the ex. from hk it said it is watching the situation. >> we are in listening mode. anyone who implies any view i think is quite wide of the mark. we are obviously very keen to hear all the proposals and to understand them and the full implications but that is as far as it goes. ritika: president trump says it is unlikely he will accept an invitation to travel to north korea to meet kim jong-un. kim asked the president to visit pyongyang for their third summit. the white house has not confirmed the information, saying it is not appropriate to comment on a private letter. the president said he probably will not be traveling to north korea. he said kim might go to the u.s. renzi is leaving the party to found his own movement. he is pledging to support coalition leader giuseppe conte.
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e he will not risk the fragile government. he resigned after voters rejected his proposed overhaul of the constitution. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. shery. shery: thank you. we are half an hour away from the open in tokyo, and seoul. let's turn to sophie for what to watching markets. sophie: wti taking a breather. oil surged the most in over a decade. prices are likely to remain elevated as markets assess the geopolitical premium. we are keeping an eye on energy related stocks, likely to play catch up after monday's holiday. nearlyplored the jump of
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6%. and then it surged 13%. japanese trading firms may benefit from the rally in oil. airlines may track the tumble we saw in regional carriers on monday and we are watching chemical stocks in tokyo. higher oil prices may be a negative for makers of oil derivatives. paul. paul: let's get some more on what we should be watching as trading gets underway in asia with bloomberg's asia cross-asset editor, andrea. for investorsoday in the aftermath of those attacks on saudi arabia which overshadowed developments on trade. it might fed meeting provide a catalyst for the market? andrea: investors are going to sit back and assess the fallout and the longer term implications. we need to keep in mind that asia largely reacted to oil during the trading day yesterday. and look, there are a lot of pieces that are up in the air for investors now, and as you said, it has overshadowed the
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trade, and maybe there is some positive impact from the news that the u.s. and china will resume those negotiations, but i think the next thing investors will be looking at for some direction either way is the fed meeting. the markets have fully priced in a .25 point rate cut. the futures market is showing traders banking in one more cut -- baking in one more cut. jerome powell, how devilish he is going to be. and trade, everyone is saying trade is still the biggest factor in terms of risk assets. what we are seeing in the oil is having more of a short-term impact. it is interesting. jp morgan has come out to say oil prices will need to reach in a barrel of 80% to 85% to really start having a negative impact on the s&p 500. we are still a long way from that. 30% away from where crude is
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trading at the moment, but look, a lot of things up in the air, and definitely, the next thing the investor will be looking at is the side and what message comes out from there. shery: let's talk about india stocks. they are facing a record quarter . what is happening there? andreea: that's right. global investors over the last aboutars have talked india's stock market and that was largely driven by optimism and hope that prime minister narendra modi was going to harness the economic attentional of india. what we have seen recently is economic down for the last five quarters. you have got a banking system in india weighted down by the world's worst ratio. iso this spike in oil prices really bad news for a country that imports most of its crude,
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so a lot of this euphoria now is tapering off. investors believe modi has been too slow to bring in some of those reforms, which is why you have got international investors really heading for the exit. they sold 4.5 billion in indian shares since june, and that is trillion stock market on call for its worst quarter since at least 1999. shery: andreea papuc, thank you so much for that, bloomberg cross-asset editor. you can check out those charts on the dtv library on the bloomberg. -- gtv library on the bloomberg. boris johnson insists he is optimistic about reaching a new brexit deal with the european union, but e.u. leaders are increasingly doubtful. they skipped a scheduled news ex-pats.e amid noisy
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jodi schneider is watching that. any progress in getting closer to a deal? jodi: boris johnson says he is optimistic but it does not look like the two sides are any closer. he started his day with optimism, saying he thought they were going to be able to reach a deal. and then of course, came that news conference, where he was not. his counterparts from luxembourg did take the lectern. mr. johnson left amid those noisy protests, and his luxembourg counterpart said brexit was a disaster, dreadful. so that did not start so well. and then he went to meet with the e.u. commission president, jean-claude juncker, who basically has given no indication that they are any closer to a deal. there was a lunch and they were meeting. they seem to respectful, but it did not look like any deal was coming out of that, certainly not at this point, and of course, mr. johnson says he is
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determined to leave the e.u. on october 31 even without a deal. paul: that default option becoming more likely, jodi. david johnson offer any -- david johnson offer anything -- did johnson offer anything at all? alternative arrangements for dealing with the irish border. that has been a very contentious issue, some would say the most contentious issue in trying to come up with an agreement, always to leave the -- a way to leave the e.u. we know he continues to say, even though parliament has told him that he cannot leave without a deal, that he is supposed to give an extension, he continues to double down in saying that u.k. will leave the e.u. on october 31, deal or no deal. paul: alright. senior international editor, jodi schneider, thanks for joining us. still to come, trade
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negotiations expected to resume in washington next week. we will assess the chances of a breakthrough with max baucus. this is bloomberg. ♪
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shery: we are counting down to asia's first major market opens this morning. japan's futures are slightly higher at the moment, gaining .3% as the japanese yen is holding above 108. of course, this is as japan comes back from a holiday. before it went on holiday, it was gaining ground for nine consecutive sessions. the nikkei, the topix, all above that overbought level on the 14 day rsi. the nikkei seeing its longest 2017.since october of let's get a quick check of the latest business flash headlines. ahead of the federal aviation administration, boeing
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personally assessing the status of the grounded 737 max. a former delta pilot is qualified to fly the 737, and he says he intends to perform tests the faa investigates boeing software updates after two fatal crashes. he says the faa has yet to see an application to return the plaintiff service. paul: india's most valuable steel producers as iron ore prices are set to plunge. toy forecast trading at $80 $85 aton for the next few months but says it will drop you just $60 over the next year as demand from china slows and supplies recover. iron ore has had a volatile year. it surged in the first half, triggered by supply disruptions, but plunged last month as growth slowed. shery: most analysts are watching apple say demand for the new iphone 11 appears to be generally strong. weekend, interest in
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the devices was off to a good start, although it warns against extrapolating too much from the early numbers. so, reports on current demand seems to be ahead of similar iphone launches last year. just over $1m paid billion to buy the rest of the partnership with apple japan's cdk corporation. they set up their holdings partnership in 2016. they designed radiofrequency components which are a crucial part of smartphone design. qualcomm says the deal will help it sell more chips for phones supporting the 5g standard. shery: -- upgrading the ride-hailer to say the recent stock clenches have made them attractive investments. shares in uber have lost more than a quarter of their value since may's ipo while lyft has fallen 16% over the same period. hsbc says both companies are on
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the road to profitability and that the price is right to take the ride. paul: the strike at general motors could cost the company $50 million a day in pretax earnings according to credit suisse. the united auto workers is the firsts walkout, one in 12 years. the automakers offered $7 billion of investment and more than 5000 additional jobs. the union says the proposal still falls short of several key areas. shery: let's take a look at how u.s. futures are trading at the moment. we are seeing some gains of .2%. this of course after the s&p 500 was down the most in almost two weeks and also coming after president trump said that initial trade agreement had been struck with japan. we are seeing gold futures and crude also falling. of course, we had some haven moves with gold futures gaining ground in the previous session after those drone attacks on saudi arabia and oil facilities
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and that led to the wti jumping 13%, which was the biggest gain since february of 2009. now, we are seeing wti under a little bit of pressure but still holding your $62 a barrel. paul. near $62 a barrel. paul. paul: it was up .5% at the moment. a different story for futures here in australia, currently off by .25%, but those numbers will reset at any moment. nikkei futures currently pointing higher. it looks like a flat open for the kospi in seoul. we have plenty more to come on "daybreak asia." stay with us. this is bloomberg. ♪
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shery: this is "daybreak asia." i am shery ahn in new york. in sydney.paul allen top-level trade negotiations are expected to resume in washington by the end of next week.
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beforehand, beijing is encouraging companies to buy u.s. farm products such as soybeans and pork, and it will exclude those goods from additional tariffs. let's discuss the state of the trade war with max baucus. thank you for joining us. ofsee a few possible rays sunshine in the u.s.-china trade talks and i wonder if there is a silver lining among the attack on the oil facility we saw in saudi arabia. if we are looking for any positive, maybe there is a sign of a breakthrough there. maybe china will lend tariffs on u.s. oil -- will and -- -- tariffs onwill end tariffs on u.s. soil? tariffs on u.s. oil? >> when i talked to my friends in china, they tell me they want a deal. american friends and chinese friends. it all comes down to saving face. each side has to save face.
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little adjustments by both china and the u.s. on exemptions, i think they indicate both sides are looking for a way to get at least an interim deal. both are trying to find a way to at least save face, to keep going forward. the chinese would like tracks. they would like to separate the the national security difficulties. i think that is a good idea. temperature, not bringing huawei, zte, and other issues like that. both sides like a deal. whenever there is some kind of a deal, we do not know how long it is going to last, so president trump sometimes changes his mind. they like consistency. if they reach a deal, they will try to find some way to keep president trump's feet to the
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fire so he does not change his mind. paul: ok. we do get something incremental, which seems to be the best case scenario for the talks next month. what looks like being the easiest thing to achieve that both sides can agree to? max: we are all holding our breath, hoping that is what happens. even if it is interim, it is better than nothing. we are likely -- my friends in china, my american friends in china, are more pessimistic about china's economy. on the other hand, there's is rising consumer growth in china which keeps america's business in china, and i think that is helpful. shery:, the flipside of that argument is we are still -- ambassador, the flipside of the argument is we are still seeing issues between the u.s. and
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china if you only agreed to a limited deal, including issues over ip theft and state subsidies that china has that the u.s. considers to be unfair. resolvedwe get those if we just go for a limited deal? max: that is one of the key questions, clearly. again, still quite concerned about ip theft and subsidies. know, weo that, you have elections coming up in the united states. both parties will be tempted to be quite critical with china. democratic presidential candidates are not going to be soft on china. that is for sure. having said that, i think that the markets realized that some of it is just political. that will be baked into some of the market's reaction to the politics of washington. having said that, still, it is
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going to be difficult to get an interim deal, difficult to maintain and sustain it through the next couple of years. most businessmen i talked to are quite wary about that. how long will it be sustained? shery: if you are going to have to resolve these issues eventually, does it make sense to put pressure on china when they are already dealing with a slowing economy? we saw the august numbers when it comes to their economy really not looking great, not to mention that they have issues in hong kong with the protests as well. if you have a stronger u.s. economy, isn't this the time to get to a deal that could benefit washington? max: that is the argument. i would take it with a few grains of salt. it was an exultation to the party faithful four or five days ago. he used the word struggle 50 times addressing the already faithful.
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china has a long struggle ahead, and china could eat better, it suck it up, do- what it has to do to survive a challenge by any country, anywhere. the economy is somewhat strong. president trump spent so much time criticizing chairman powell because trump himself knows that may be the economy in the u.s. is not quite as strong as you might think it would be. there isne, statesmanship on both sides. it is important for neither side to call the other side names, and let things cool down. the twoobviously, helps biggest countries in the world, and it helps the world, therefore. paul: of course, we are getting into the u.s. electoral cycle now, ambassador. do you think the president would be more likely to seek a lasting
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deal before that election or is it better for him to keep the chinese as a scapegoat and try to do something after? max: that depends upon the state of the american economy over the next 12 months. if the american economy is going south, i think president trump will want to do a deal. and a deal will be to roll back tariffs as much as possible, maybe get some kind of that agreement on structural issues. if they get the deal when tariffs are rolled back, the stock market will shoot up. he think that will help them get reelected. on the other hand, if we are bumbling along and the u.s. economy is not doing too badly, find athink he will scapegoat rather than trying to find a deal. paul: who does need a deal more right now if you step back and looking at -- and look at it from the 1000 foot view? president hsing is using rhetoric like "prepare yourselves for another long march." is the u.s. consumer starting to
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look vulnerable? politically, if american farmers and ranchers are really at the tipping point, they tend to be republican. they are so far still sticking with the president. but if china does not buy enough soybeans and farmers cannot sell enough -- or corn or some wheat -- that is politically going to be a big difference. the american consumer has not been hit too hard yet by tariffs tariffs to gouled into effect in october and if they do go into effect, i think consumers are going to start to feel a little bit of a pain. apple, for example, is eating it. they are not passing on price increases to their consumer. they are just eating it. they are taking the cost increases that they are getting because of the trade war. shery: ambassador, quickly, we
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have the white house now announcing an initial trade agreement with japan. how helpful will this be in building united coalition against china in asia? max: i was disappointed that we pulled out of the transpacific partnership. a big, big mistake. huge mistake. i was happy to see japan pick up the mantle and start to put together a regional pacific partnership agreement. the bilateral agreement with japan is helpful. trump likes the bilaterals. he thinks he has more leverage. that is inaccurate. other countries have politics, too. most countries can do more to free up trade if there is an agreement because then the pain is shared. we will see what is in the deal. i do not know what kind of deal the united states and japan agree to. baucus, former u.s. ambassador to china, thank you
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so much for joining us. markets open in tokyo, sydney, and seoul at the top of the hour. let's get over to sophie in hong kong for what she is watching. sophie: futures are hinting at some potential pressure coming through for tokyo, sydney, and seoul this morning, as japanese markets are set to reopen paired we have good news and trump signaled an imminent trade deal with japan. domestic politics are at play ahead of the sales tax hike on october 1. one of his would be rivals is calling for it to be scrapped entirely. the yen holding your a six week low. jgb's may start a weaker ahead of the boj's bond buying operation. the focus is on the upcoming fomc decision with surging oil reinforcing rate cut vents. two10 year yield off by basis points this morning. a quick check on wti, reaching $63 on monday. importers are considering their options.
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japan saying it has more than 230 days of oil reserves which is prepared to release data for south korea with officials saying they expect short-term impact of the oil price to be limited to the economy. cherie. ♪ -- shery. ♪
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>> asia's major markets are about to open portrayed. >> i am shery ahn. sophie: i am sophie kamaruddin in hong kong. :asia." to " daybreak paul: our top stories this tuesday. president trump blames iran for the attack in saudi arabia, and he could be weeks or months before their oil production returns to normal. an agreement with japan eases fears of other tariffs that may be signed next week.
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shery: investors turn to the fed. the pressure is on with the surgeon oil prices, an indication that the u.s. economy is slowing down. take a look at how brent is kicking off trading. we are seeing them down 1.3% following wti crude lower. brent at $58 a barrel. this after we saw the biggest one-day gain since 2008. it settled above that $69 a barrel. it is feeling pressure at the moment after the storage in the previous session on those drone strikes on saudi arabian oil facilities. let's get straight to the market action with sophie in hong kong. sophie: japanese markets are reopening after the long weekend. pressure coming through for the nikkei 225. the u.s. has reached a trade deal with japan, the agreement likely in the plant --
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coming weeks. we have u.s. futures holding steady. oilre seeing losses for with both brent and wti falling over 1%. let's check in on how the cost kospi is faring. qe stocks are gaining ground. with ratesclimbing very much in focus. jgb seeing some movement ahead of the boj bond buying operations through tuesday. aussie bonds rising above the previous. let's check in with the first word news. >> president trump says is that administration has reached an initial trade deal with japan. he intends to enter into the agreement in the coming weeks. in a notice to congress, he also
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said the u.s. will be entering what they call an exhibit of agreement with japan over digital trade. on monday, there were reports in japanese media that an official deal is due to be signed next week. wall street may soon see one of its most consequential victories of the trump era with regulators considering scrapping a rule that forced banks to set aside billions of dollars for swap trades. the requirement was approved during the obama administration and makes lenders post billions and margin when engaging in transactions with their own billions. lobbyists argue the requirement is redundant. kris is asking its european union creditors to approve the early repayment as part of its bailout loan to the imf. they say paying ahead of schedule reduce -- will reduce debt servicing costs. the servicing costs are 4.9% right now.
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they can borrow money much more cheaply elsewhere in the market. boris johnson says he is still optimistic about striking a deal on brexit. even as a trip to luxembourg descended into farce. he skipped a plan news conference with his luxembourg counterparts amid noisy chance from british protesters. he said the u.k. had offered nothing new in that or no deal brexit would be a nightmare. moody's has lowered its outlook for hong kong from stable to negative, fighting the growing threat of protests in the city. mayagency says the unrest hurt the government and policy more than a thought. double reaffirmed its issue rating for the city. global news --global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
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this is bloomberg. shery: to our top story now. going lessa is optimistic it can return to full oil production after the weekends attacks on its refining plants. it said it could be weeks or months before full output is restored. we are joined by two commentators. take us through the oil moves today. we are seeing pressure on both brent and wti that a huge rally we saw in the previous session is swiped -- quite short-lived. saw a huge surge in oil prices. we are seeing at the moment is that oil prices retreated a bit on tuesday. they remain -- they remain elevated down the road. they say it is getting less
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optimistic and likely that there will be a rapid recovery from the saudi oil facilities affected by the drones over the weekend. these heightened and geopolitical tensions, it is more likely to see prices elevated than falling sharply from the levels we are seeing at the moment. paul: we are already seeing asian markets taking a little in early trade, with the exception of new zealand. how does this set us up to trade in the region? garfield: it makes everybody nervous. especially in asia, where we have highlighted asia depending a lot on saudi arabia for its oil supplies. one of the main buyers of saudi arabia and crude. even if there are other supplies out there, and some companies have been -- countries have been shifting to get more from america. it's still a gap that is
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difficult to address immediately. asia has also been the most exposed on the growth side of things. is that forining now, if oil prices don't go too much higher from here, we are back to where we were in may. it's a hit, but at the moment, it's only a moderate hit. we see theong will attacks affect will markets? sungwoo: that's a big question at the moment. not a big question is who can boost crude supply to offset the lost product? according to the bloomberg columnist julian lee, there is an spare capacity at the moment to offset the affected output in saudi arabia. according to some of our even ifg calculations,
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the opec plus did decide to rollback their cuts, they would only be able to add to just about 900,000 barrels a day. the is just a fraction of lost output in saudi arabia. amounts in at the saudi arabia, which announced -- amounts to 5.7 million -- million barrels a day, about 5% of global supply. the question is whether opec plus can rollback their cuts. they are currently under an agreement to cut back output by 1.2 million barrels a day. ist we are hearing so far that, according to opec's secretary general, it is premature for them to blowback there -- rollback their cuts.
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in meeting of the group is not on the cards. shery: to your point, it seems that jason will -- jp morgan has warned that the s&p 500 won't see a huge impact. it's only when oil gets to say $80 a barrel or higher. garfield:garfield: that makes sense, especially for the s&p 500. some other global equity indexes will be in trouble. europe is a major oil importer. the u.s. is the world's largest oil producer. it's actually not necessarily all that bad for the u.s. stocks. again, unless it gets significantly high, like $80 a barrel. the question is whether it could get there. that has to be the worry. if the u.s. iran complex goes hot overonflict goes the allegations that it was iran
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, that wouldponsible certainly take oil significantly higher than where it is here. that would be the move that would turn this mild anxiety and markets into something close to or even reaching an actual panic attack. paul: thanks for joining us. you can follow all this on our markets live blog. that's on the terminal at mliv . you can get analysis from our expert editors so you can find out what is affecting your business right now. still to come, we will look at signs that some bankers of softbank's vision fund are rethinking their commitments after we were turned south. shery:shery: a trade breakthrough. a digital deal is among agreements president trump says have been struck with japan. this is bloomberg. ♪
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shery: this is "daybreak: asia." i am shery ahn in new york. paul: president donald trump says he has struck what because an initial trade deal with japan and intends to formalize the agreement this week. the notice to come -- talk -- congress, he said both sides will enter into accords on digital trade. enda curran joins us now. what do we know about this deal? >> it seems to be in executive around industrial goods on the japanese side. japan, will reciprocate by cutting tariffs on agricultural produce, dairy, beef, and pork. there's also some agreement
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around digital trade also. we don't really know much more than that at the moment. we do know we haven't had any clarity around the big elephant in the room, which is, will the u.s. take away the threat of putting tariffs on imports of japanese cars? we know it's the biggest threat facing the japanese economy at the moment. it spurred trade talks in the first part. tariffs around removing on some goods in both directions. it will face opposition on both sides. you would think the japanese farmers might be a little bit concerned. in terms of the big unknown, which is the threat to bring tariffs on japanese that will remain somewhat in the air. this comes at a time when the u.s. is in a trade war against china. how beneficial will it be for the u.s. to have another ally in these trade tensions?
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enda: it's a fair question. one of the points of criticism about the u.s.'trade strategy has been it is a unilateral approach rather than building alliances. this could remove at least one of those threats that puts japan back in the u.s.' corner. they've already it greeted deal with -- agree to deal with korea. that could allow them to proceed to talks with china. we are waiting for signal whether to go to the next level next month. the mood has improved somewhat. we saw a series of goodwill gestures on both sides with china talking about purchasing u.s. farm produce again. of course, the u.s. pushing back the initial tariff increases of one to october 15. getting japan out of the way does allow the u.s. to focus more on the china deal.
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by all accounts, most observers say they would have a long way to go. exportersave u.s. selling a quarter million of times to china but also have the u.s. chamber of commerce saying --will be "extroar extraordinary challenging -- extraordinarily challenging." what does success look like? >> the first thing everyone is looking out for is whether or not the mid-level talks slated for this week proceed to go to the higher level. inthat happens, you are back the realm of stoking expectations. perhaps there is still an interim agreement on the table. -- table.
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perhaps they could will often extra tariffs for now. that is the kind of relevant expectation we are talking about. nobody is really expecting this year or really even ahead of the election next year, is for all of big problems to be resolved. there are national security tensions and technology tensions. there were tensions over merchandise goods. i think there has to be some agreement on the merchandise good side of things before years end. that will probably be enough for the markets for now. hopefully they can kick them down the road and into be on. -- beyond. paul: let's turn to monetary policy. one big central bank rate decision down. three more to go. kathleen hays has a look at what themove last week means for big banks this week. another big leap when it comes
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to central bank rate decisions. >> it's interesting because european central bank's cap their key rate. they reopened the bond purchases they thought they were done with forever. they thought they would be hiking rates now. they pulled out every stop they could. also, the relatively new chief economist speaking at a event in europe today said they will keep that key rate where it is until inflation robustly hits its target. what is interesting is he said he knowledge there was a bit of a debate. he said it was a clear decision. let's listen to him talking at a bloomberg event earlier. >> its natural. hasy central bank i know of concerns about how you deal with target inflation?
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if you look around the world, this debate is everywhere. kathleen: that's for sure. the fed wrapping up its two-day meeting on wednesday. will the dissent change? we saw two dissenters against even one rate cut. will they turn, especially with that oil price spike, they are seeing a could turn into a shock, will they change their minds. -- will they change their minds? will some be pushing for a 50 basis point cut? as for the bank of japan, a bloomberg survey shows that 83% see more stimulus, just not yet. that the guidance could be reinforced when the boj wraps its meeting up after the fed. saying they will keep rates low for an extended period. others said they will lighten
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the band for have negative that 10 year jgb yield can go. 23% say the boj could push its negative rate even more negative by the end of the year. for now, they are expected to wait and see. there is no monetary policy report with this meeting. in october, there will be. perhaps that's what -- when they are waiting to make the move. paul: what about the people's bank of china? we will they follow? kathleen: they still have a lot of -- they still have a lot on their plate. worse than expected numbers on retail sales. the industrial production numbers were the weakest since 2002. some others, morgan stanley, said expect the pboc to make a move in their medium-term
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lending facility numbers. it is just over 3.3% right now. that's the turquoise line. the people's bank of china will be rolling over one year loans. they are maturing later today. will they take the bonds they roll over reduce the medium-term lending facility rate? morgan stanley says it could be 10-15 basis points. it wouldn't be a big move, but it would open the door to a move in that purple line, the repo rate, the seven day repo rate. a lot of people are thinking that they're getting ready to have their new rate in place. they are trying to make things more open and transparent with the people's bank of china and the rate moves they make. they're getting back with a used to, which is a fed. maybe they make a cut. maybe we get some pboc action later as well.
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check let's get a quick of the movers in japan. seeing the japanese market moving sideways at the moment after coming back from holiday. japanese oil stocks rallying. seeing refiners gaining more than 4%. priceon the back of crude jumping in the previous section -- session. also seeing softbank falling more than 3%. this, as we had heard that the biggest backers of the softbank group vision fund are reconsidering their commitment. we have heard about saudi arabia's public investment fund. have abu dhabi's find reconsidering their role. plenty more to come on "daybreak: asia." this is bloomberg. ♪
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paul: this is "daybreak: asia." i am paul allen in sydney. shery: disruption to oil supplies may underscore the case to go carbon neutral. even as renewable energy resources are getting cheaper, much of the growth in consumption comes from fossil fuels. it's turn to sophie for what to watch as the u.s. and china remain the largest consumers of energy. sophie: for now, china is the biggest user in terms of absolute carbon emissions as it remains the largest consumer of coal. we saw coal consumption that has kept on the government's long-term plan to curb causal fuel emission. even with coal plants being shuttered, it remains a key source of energy for china. the investment in renewables that are seen power for nuclear
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and clean sources a quadruple, even with that, looking toward 2045, china expected to retain the carbon crown. over27, india is likely to take the u.s. when it comes to carbon emissions. in terms of per capita emissions, it is australia which is the biggest culprit further down the track by 2045, u.s. is set to take that unenviable top spot with emissions expected to be lower all over the world. paul: let's get a quick check of the latest business flash headlines. japan's number two steelmaker says it will scale back a proposed 9 million -- $9 billion costsl investment to cut as the industry struggles in the trade war. holdings may sell stakes in other countries -- companies. they outlined an ambitious plan to revamp aging facilities over
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three years to march 2021. shery: u.s. prosecutors are foring in on jp morgan price rigging of precious metals. to current and one former were charged with militant -- manipulating futures markets and what prosecutors described as a massive alter year racketeering conspiracy run out of the bank. some traders already pleaded guilty. they submit relation was routine and sanctioned by managers. paul: standard chartered says it can't explain some of -- house of its wealthiest clients either money and has launched a review into the private bank. made public and found the bank did not have documentation to show the source of some clients wealth and lacked patient -- basic data. coming up next, michelle lam gives us her outlook for the
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property sector. of the -- top stories day and the markets as well. this is bloomberg. ♪ here, it all starts with a simple...
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>> i have the first learn headlines. hong kong exchanges a clearing the people's daily also commended them for their existing tie up with the shanghai stock exchange and its access to china. it had already rejected the bed -- bid from hkex. they say they're are watching the situation. >> we are in listening mode. anybody who applies the view is quite wide of the mark. hear all theeen to
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proposals and to understand them and the fortifications. saudi aramco is a ways away from full production. they provide about 5% of global crude provide -- supply etiquette take weeks or months before the facility is back up to speed. they say damages worse than originally thought. for production could be some time away. president trump said it is unlikely that he will accept an invitation to travel to north korea to meet kim jong-un. he asked the president to visit pyongyang for what would be their third summit. they say it is not appropriate to comment on the private letter. the president said he probably won't be traveling to north korea although he said he might fly to the u.s.. minister ofrime italy is leaving the party to found his own movement. he is pledging to support
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giuseppe conte. he may announce his plans later hetuesday and told konta won't threaten the latest fragile government. presidentsent -- vice until 2016 but resigned after voters rejected an overhaul of the constitution. israel had to the ballot box on tuesday with benjamin netanyahu vowing to annex all settlements in the west bank. told before the vote, he the radio that he intends to sovereigntyxtend over all settlements in the territory of palestinians. this is bloomberg. ♪ --global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ breaking news out of singapore.
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domestic exports year on year for the month of august in singapore contracting 8.9%. contractionaller than the revised 11.4% we saw in the month of july. when it comes to month-to-month numbers, it grew more than expected. 6.7% in the month of august. bigger than expected gain. from the previous month of july. when it comes to electronic exports, a slump of 25.9%. that takes the double-digit contraction to a sixth consecutive month for electronic exports year on year. exports contracting 8.9%. now to the markets with sophie. sophie: taking a look at the mood this tuesday. asian shares are under pressure.
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crude prices giving back some monday surge. brent below 69. opec's jumping with other energy related stocks. playing catch-up after a long weekend. speaking, seeing losses on the nikkei 225 by .1%. i want to check in on some movers in seoul. report had five u.s. officials in a june visit pitched a project for 50 nuclear power plants in the middle east. paul: china is set to publish the latest new home prices in the next couple of hours. they come after retail sales and fixed asset investment growth slowed in august. joining us is michelle lam, greater china economist for societe generale. what are your expectations were
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house prices in china in august? than -- ii think think the second and third tier cities remain under pressure because of the reduce meant of the shantytown development scheme. -- we development scheme. the government has increased larger tightening, especially for the top tier cities. i think we may start to see some of the impact on that. ating said that, if we look the real estate sector data, for august, coming out yesterday, so far, we haven't seen a sharp deterioration in housing or in property investment. somell, there is still resilience in the sector. resilience for some, perhaps, but refinancing is putting pressure on those smaller
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developers, isn't it? michelle: definitely. we think the problem for the smaller real estate developers is that the sector is undergoing consolidation and there will be -- that will be increasingly difficult for the smaller real estate developers. the policymakers have already tightened different sources of financing channels, raising -- ranging from trust funds and offshore bond financing for developers. also, not to forget that this year, the housing sales growth has been pretty low. havingring we are now more notable slowdowns in the economy going forward, we expect growth to slow to 5.8% next year. the macro economic slowdown may weigh on sales. real not bode well for the estate developers overall. shery: it's interesting for the
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fixed asset investment numbers we got for the month of august. we saw this booth and infrastructure spending, but not necessarily when it comes to private investments. what are we seeing from business sentiment? michelle: definitely seeing a picture of weak manufacturing investment. that's because, first, we have trade uncertainty, which in august, escalated. also, the reported growth has also been pretty weak. i think the government's, although they have already year,d things early this is not showing up in the investment data. i think what the government has to do is they have to announce more rr cuts. probably one more by the other the year. they should also lower their interest rates. rate, andday repo
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they've already backed on their lpr reformed as the low crime rate. we expect -- that is the low crime rate. we expect some support to the private sector confidence. having said that, most importantly, it would take time for the private sector to, for their confidence to recover again. .ow we have a growth slowdown the most direct rates to cement the government to go back on infrastructure. in the right to go direction based on yesterday. when will they filter through the real economy? when will they be felt by people and businesses out there? we have seen some of these measures taking place already with the rrr cut. that's the lowest level since 2007. measures thate
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have already been taken are being felt in the real economy, and when can we expect the new measures to be felt in the future? unfortunately, if you talk about monetary policy, it takes maybe two-three quarters for a typical economy. for china, the most effective ways infrastructure. because the government wants to rank in the illegal channels of example,, for irregular forms of private public for ships. they have been trying to clean up their pd database since 2017. this kind of cleaning up will funding with amounts of and reaching infrastructure investors. at the same time, the government has to open the front door for infrastructure investment through sparkle -- special local government bond issuance or bond for -- government funds. and of course, the bond
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issuance, they have already stepped up this year. we expect even higher next year to support infrastructure. fund,ng of the government a component of it from this -- is from the land sales revenue. considering the real estate sector is cooling off, the land sales revenue has also declined quite dramatically since the beginning of this year. that is not bode well for infrastructure investment. -- does not bode well for infrastructure investment. the government will increase the supports for infrastructure and local government bond issuance. you will see a proactive approach that is pretty measured. they only respond when they see the data coming out. it's not a preemptive way we see -- have seen it in previous cycles. are your observations
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about leverage of the moment? do you have concerns about this? michelle: the deleveraging problem? sarah emerson, managing director of energy security analysis, inc. yes. --paul: yes. michelle: i am concerned about the bank defaults. it may cause some tightening in interbank liquidity, which would make monetary conditions tighter and make banks less willing to lend to the private sector. having said that, i don't think it will be a -- a systemic crisis. we talk about the incidents that have happened, these are very small, regional banks. they do not have a high share in terms of the bank latitude. i don't think it will cause a systemic issue. that just highlights how important it is for the policymakers to ease monetary policy and make sure conditions overall are accommodative for private sector lending.
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paul: before we let you go, i have a macro question. paul: before we let you go, i have a macro question. what is the biggest challenge facing china in the coming decade? michelle: i would say it's to open up the service sector economy to the rest of the world. if you look at, since china joined the wto, they opened up the economy by trading with the rest of the world, and opening up manufacturing sectors. that has led to robust growth. you can say is a growth miracle. now we are having a growth slowdown in the demographics are also turning more challenging compared to the past. china really needs to rebalance for the manufacturing to high-tech manufacturing, and also services. i think opening up the sector to the market to the rest of the world will be the top priority
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in order to generate more potential growth in the space of the economy. shery: thanks for joining us. michelle lam, greater china economist for societe generale. next, why saudi backers are rethinking their role in softbank's vision find on we work, amid reports the workspace provider will delay its ipo. details next. this is bloomberg. ♪
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paul: this is "daybreak: asia." softbank is sliding this morning amid reports that the issues surrounding we work are making some big backers rethink their role in the next vision fund. sources are telling us the workspace startup may delay its debut until october. what would this mean for
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?oftbank pavel: the we work idea, i think it's a will they one day territory. we will see if they go through for the roadshow that was planned for this week. for softbank, the motivation for delaying the deal is fairly straightforward. in january, they invested several billion dollars at the $47 billion valuation, which now seems to be falling to as low as $15 billion. for the vision find portion of the investment, which predates the most recent round, the math is more forgiving. you can understand why masayoshi son may not be in the road -- in the mood to book paper losses at the moment. at one moment, you still have the uber ipo and the shares are still trading below the overpriced. at this moment, he is trying to convince investors to join his
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second mammoth technology fund. the optics of having to book losses on to marquis investments are not great. tments arequee inves not great. paul: there are signs that abu dhabi and saudi arabia, two of their key investors are scaling back their investments into the vision fund. our masayoshi son's partner starting to get cold feet? -- partners starting to get cold feet? they were the biggest investor for the first one. that we are hearing date might only reinvest their gains from the first one if there are any. and the other was put in $15 billion are now scaling down to 10. this is not entirely a surprise. when the vision fund to was announced a month ago, they were not on the list. only foxconn and apple have come back for more.
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the mou's included a bunch of big names from microsoft to japanese medevac -- megabanks and even investment vehicles of the republic of kazakhstan. hadvision fund one had not enough time to deliver proper returns. that's why you don't see large institutional investors and investing, because the numbers are not there. tries to drum up support for the second fund, it is not looking good. shery: why are we seeing softbank shares holding up pretty well? not today, but last week, gaining more than 1%. pavel: just to put things in 'srspective, softbank group exposure to we work is about $10 billion. that is probably the biggest weak point. softbank has personally gone out and bagged we work far above what vision fund was willing to pay.
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even with uber, there was a small portion of a $100 billion portfolio. not all of it is equally risky unicorns. slack and united health care. the vision fund has never overvalued shares at all. they have been trading consistently at a 50% discount to -- so the value of their is that, the value of softbank's stake in alibaba is worth more than the next company's valuation of the whole world. in a sense, there has not been a bubble on valuations. at the same time, vision fund has been a mainstay for quarterly earnings. it has constantly been a good source of good news for masayoshi son. if that were to change, the shares might react differently as well. shery: thank you so much for the latest.
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if you have any of the -- if you missed any of the conversations we have, tv is your function. you can watch us live and dive into any securities or bloomberg functions we talk about. become part of the conversation by sending us messages during our shows. this is for bloomberg subscribers only. check it out a tv . this is bloomberg. ♪
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♪ shery: let's get a quick check of the latest headlines. strike to seeing a general motors could because that company $50 million a day in pretax earnings. according to credit suisse, the united auto workers is leading its first walk out against gm in 12 years. they have been offered $7 billion in investment in u.s. plants, and more than 5000 jobs. they say it still falls short in several key areas. paul: the head of the federal administration -- aviation administration went to boeing to personally excess the status of the grounded 737 max. says he intends to perform tests on a simulator as the faa investigates software updates after two fatal crashes. they say the faa is here to see
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an application to return. shery: india's second steel producer says iron ore prices are set to plunge. they are trading at $85 a ton for the next few months. it drops to just over $60 next year as demand from china slows and supplies recover. iron ore has had a volatile year. output recovered and growth slowed. p most analysts watching apple say demand for the new iphone 11 appears to be strong. it implies interest in the device is off to a good start. the report says current demand seems to be ahead of similar iphone options from last year. singapore leaves hong kong by just a whisker. the battle to be the areas
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largest exchange hub, but they are -- singapore is not giving up without a fight. what is singapore doing to stay in the game? ruth: singapore is still asia's largest foreign exchange hub with 633 billion dollars turnover a day. hong kong is catching up. singapore is really investing in electronic trading space to beef up its market share. in the last year, that we have seen the likes of ubs, standard chartered and jp morgan investing and trading engines built on singapore, and the monetary authority of singapore is looking to entice another 3-5 major players to set up here. that is part of their strategy. shery: singapore also betting on the region's booming wealth. what is their strategy here? ruth: i'm sure everyone is well
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aware that asia is the growth hub of the world. we have seen a $22 trillion wealth market here that looks set to grow. singapore is obviously very aware of this pool of money. happening in family offices. increasing wealth -- with increasing wealth comes an increasing need to move money around. singapore is betting on that space. paul: what are the most traded currencies in singapore? ruth: g10 currencies dominate. the dollar, the euro, yen, aussie dollar in the kiwi dollar. emerging-market currencies are also making headway. the staff ethic -- south african rand and peso in particular are climbing up the ranks. shery: thank you so much for that. let's get a preview of what to watch and markets later this morning. sophie: we are watching hong
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kong property stocks which have fallen on 10 of the last 11 mondays as developers take heat amid the political unrest in the city. bloomberg intelligence expects the proposed vacancy taxable obscure earnings visibility, especially for players in the luxury segment. number of unsold housing units in the city soared to 2200 at the end of june. that is the highest level over the last decade. also watching macau casino stocks. projected to have a 3% drop on 2019 due to concerns over delayed hotel openings. projected to have a 3% drop on 2019 due to concerns over delayed hotel openings. shery: let's get a quick check of how oil is trading. we are seeing brent and wti holding above $60 a barrel. we are seeing downward pressure
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after the surge we saw in the last session. the biggest gain since february 2009. at the moment, under 1.3% pressure. off anlso coming intraday rally that we saw in the previous session. john attacks on saudi arabia and facilities. that is it for "daybreak: asia." our market continue -- market covers continues with the china open. this is bloomberg. ♪
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>> it is 9:00 a.m. in beijing, shanghai, and singapore. i'm tom mackenzie. >> i'm yvonne man. talking about markets. >> president trump lames iran for the attack. it could be weeks or months before saudi oil production returned to normal. >> investors turn to the part -- the fed. the pressure is on with oil prices in the u.s. economy slowing down. >> the latest snapshot of the chinese economy. new home prices may indicate how much pressure policymakers are under to ease property curbs.

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