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tv   Bloomberg Daybreak Asia  Bloomberg  October 21, 2019 7:00pm-9:00pm EDT

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>> a very good morning. i am haidi stroud-watts in sydney. >> and i am kathleen hays. good evening from bloomberg's headquarters in new york. kamaruddinm sophie in hong kong. welcome to "daybreak asia." haidi: our top stories this tuesday, president trump raises hopes on chances of a phase i one trade deal next month. he says the word from china is that things are going deal. fast johnson moves too
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tracking brexit law after the house speaker blocked his bid for a monday vote. kathleen: the first polls are closing this hour in the canadian election. prime minister justin trudeau looks set to retain power but lewis's parliamentary majority. onto the markets and australia, where they have just opened. sophie, what is on your radar screen? sophie: building on mondays gains, up about .1%. aussie bond yields are set for a fifth day of gains. holding onto a four-day advance. we have plenty of updates from australia, including from whitehaven coal and oil. we are watching bhp this morning. the stock gaining ground, asding $35 this morning hile arein c preparing to halt operations. he restocks set to snap a
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three-day job. -- drop. over in korea, we will be watching for president moon jae-in to delivering his budget speech later to the national assembly this morning. the economy comes under more pressure this morning. we have producer price data from south korea showing further contraction, falling .7% year on year for september. haidi. haidi: we have more on these developing wework stores. wework's adam neumann, the cofounder of the company, is said to have less voting power in this new softbank deal, according to the financial times, reporting the plan is set to revise loading stocks significantly, set to leave adam neumann with less than 10% of votes. under this deal, he had been stripped of his voting power as well as chairmanship of the company. this is under the 9.5 billion dollar rescue proposal coming from softbank, the largest investor in wework. that is set to be considered by
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the board on tuesday. if he is left with less than 10% of the shares and voting rights at wework, he would potentially see a new chairman, the current officer who has been touted as the person to be tapped as the next chairman. softbank would emerge with 16% to 80% of the equity. that is the latest we are getting on the wework saga that adam neumann would be left with less than 10% of his voting stock. we will get you more on that story as more details emerge. let's get you the first word news now with revocable group to -- ritika gupta. ritika: boris johnson will seek to rush his crucial brexit law through the house of commons in three days after the house speaker on monday rejected his latest bid for a parliamentary vote on the deal he secured last week in brussels. opponents accused johnson of trying to ram a complex go through the parliament as he seeks to get the u.k. out of the e.u. by the end of this month.
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canadian prime ministers justin trudeau looks set to retain power in a close election, but polls suggest he will lose his parliamentary majority, forcing him to rely on a left-leaning party to survive a second term. trudeau's popularity has been hobbled by a series of scandals. if he loses the election, he will become only the fifth prime minister in canada's history to be ousted after one term. benjaminrime minister netanyahu has failed in his bid to form a new coalition, forcing him to return the mandate to do so back to the country's president. that tolans to pass benny gantz, who is expected to face an equally difficult task. two inconclusive elections this year have left israel in a political deadlock. the indonesian president has keep political arrival and the founder of the country's biggest startup to
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join his revamped cabinet. in theere reportedly -- last two elections. of the 35-year-old cofounder a ridehailing service. the full cabinet is due to be named on wednesday. 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. haidi. haidi: thank you. president trump is stoking trade optimism, raising expectations of an agreement with china that could be assigned at the aipac meeting in chile. what has trump been saying about the potential for this phase one many deal being signed at aipac -- mini-deal being signed at aipac? tom: this was at a cabinet meeting in the white house.
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president trump said i want to see them buying more. his comments dovetailed to some extent with what we heard from china's vice premier, liu he, over the weekend, who leads the negotiations on the chinese side. he said that, yes, there was progress being made towards this deal. both sides looking for this apec summit in november, potentially xi toump and sign off on this agreement. part of this agreement, phase one includes agricultural -- that also pledges from china around things like intellectual property, and some currency pledges as well. wilbur ross, the commerce secretary, said the real meat of the full agreement will be in and three in an interview with foxbusiness. it seems the two sides are aligned and how much progress is being made leading up to this
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summit in november. part of the agreement in terms of the phase one deal was for the u.s. to hold off on the october 15 tariffs, which they did, but they have penciled than potential additional tariffs and china is keen to avoid those. is leadingarco rubio the campaign to restrict u.s. retirement dollars going into china. where is it now? are you hearing any reaction from china? just when china is talking so much about opening its market, which would facilitate this kind of thing. tom: there really is that irony. we were speaking to the coo of than i, this big asset manager, looking to expand their footprint in the previous hour, and other financial companies from wall street are looking still at china as an opportunity, as you say, as the moves continue to open up the financial sector and the financial industry, but on the
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flipside, as you point out, there is this pressure campaign building, being led by marco pensiono ensure that funds, that u.s. money, essentially, has less exposure to what he sees as risky chinese equities. he is also calling them out in terms of what he describes as human rights concerns and national security concerns. he is targeting the msci which has think it's inclusion of chinese a-shares. they wrote back to marco rubio saying there is no u.s. law prohibiting has from making these inclusions, that we focus on the size of the companies that are included, and we do not make subject judgments. forrubio has called out, example, the inclusion of companies which have been blacklisted. he stays it is implicated in human rights abuses in shenzhen, for example. this continues between msci and rubio, but it seems to move the needle marginally in terms of this campaign to get the u.s.
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authorities, get washington to take this more seriously in terms of addressing concerns from some about the exposure u.s. money has to some of these chinese equities. kathleen: the same kind of rules apply to any investment fund. china correspondent tom mackenzie of beijing, thank you for this interesting story. still ahead, why global social unrest is the biggest risk for the largest dedicated asia investment specialist in the u.s. theresa, joins us next. haidi: canada's tight election race. live in ottawa for the latest at the polls close. this is bloomberg. ♪ ♪
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kathleen: you are watching "daybreak asia." political risk rising around the world with ongoing violent hong kong, chile, and renewed independence
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demonstrations in barcelona, mass antigovernment marches in lebanon and even the u.k. let's get some investment advice from theresa. she joins us from san francisco. can we start on the big picture? you indicated that all these geopolitical risks are the biggest risks to the investment outlook. why? >> i think a lot of the investment community has really been focused on the u.s.-china trade dispute. the reality is that that will ebb and flow depending on the sentiment, especially for the u.s. president. however, what we are actually a common that might be threat around the world. havingents are in fact increasing difficulty putting through any type of austerity measures, so if you take the case of santiago, chile, these
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are the worst protests they have seen for decades and we are talking about 4% increase in the affairs of public transportation. what we are seeing is that people, i think, are really quite fed up with the income inequality and the inability of the lower and middle it income class to really keep up their standard of living, and as the be taking tries to away, they will continue hitting these types of social problems. that is one case and point. we have problems in ecuador, which you know, is a typical emerging-market country. these types of risks will be here to stay and it is much more structural but cannot be addressed with the potential lifting of the current u.s.-china trade tensions. kathleen: there's a lot of things that will persist even as the deal gets more on track. the imf last week, the standard
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line was central banks can help with easing. we hope they continue, but now, we need fiscal stimulus. on subwayut a new tax fares or you put tax on whatsapp messages in lebanon, you are piling on the money. you are not giving the kind of stimulus to these people that they need. is this what it takes now? people need to protest to get the government to step in? teresa: governments are aware of the fact that there are limitations to monetary policy, and increasingly, there is a lot more of pointing fingers and throwing the ball back in the court of the finance ministries and what can be done on the fiscal side. globe, look around the we see countries with more room to do fiscal using. case in point, germany, and even places like korea. we think there is actually room for further fiscal spending, but in other places, there's a lot
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more constraints on the fiscal side. in those countries, it's going to be much harder to really push against that. those places include -- i think most of the emerging-market countries. haidi: it is also a case of perhaps diminishing returns as well as rising risks, right? you mentioned south korea. there is a problem with household debt as with australia as well. we are looking at the rba continuing to ease. the conversations about the boundary is -- boundaries of monetary policy and what unconventional policy could be in the future. frontier, if you will, that we are getting into and the next year or two to come? teresa: yes and now. specifically in the case of korea, the korean government has released david what has happened in japan and they have decided they do not want to go there. effectstive spillover
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in conventional monetary policy in japan has really led to intermediation. the whole channel of banks being able to lend money and breaking down. as a result, there is still room for horia tecau traits, but they aren't going to also become on the other hand, more open with fiscal stimulus. let me unpack that. the life insurance companies in korea will have to adopt a new new international accounting standards will force them to mark their liabilities. there will be greater demand for government paper, especially long data. that bodes well for a government that is actually looking to spend more, and to do that, they have to basically borrow more in the markets. so both on the supply and the demand side, it could actually foruite an opportune time
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the south korean government to step on the gas pedal and complement existing monetary policy. kathleen: japan viewers south korea inmirrors south one regard. japan, extraordinary stimulus still in place. the imf will continue on the fiscal side. meets this week, do you think there's greater on's now that they will actually do something to add more stimulus or are they going to sit back and wait and see how this plays out? towardsthe asymmetry is more stimulus. when i look back at the history of boj policy, we started with qe, and then we had qe with buying substantially of government assets as well as etf's, and then we had qe with yield curve control, and one of the things that is increasingly clear is that with the
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continuation of an existing monetary policy, it actually becomes less effective. a lot of this is through signaling. on like the u.s., where we have actually been able to step somewhat in terms of the purchases, we really do not see step having any ability to back on these types of asset purchases from the government side. we actually expect japan to maybe even come up with a new down this go farther path of unconventional monetary policy. case in point, the boj has been very adamant about the fact that there's actually no physical limits in terms of how low rates can go. once you have reached negative, there is really no fiscal limit in terms of how low rates can go either on the short-term as well as on the long-term, and that is what yield curve control has been all about. it has somewhat of an upward sloping yield curve in light of the negative overall rates. haidi: where does the hunt for yoko globally? where are you -- for gold go
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locally? where is the value? teresa: we are optimistic about a trade truce over the course of the next couple months. in that environment, i think a lot of the assets, especially out of china, are actually quite attractive, especially china high yields. you have to remember china high-yield, out of all the asset classes globally, has really taken the brunt of the trade tensions, and rightly so. i think the uncertainty of the current discussions will actually impact the chinese high-yield sector. i think that is one place to go bargain hunting. with respect to the other parts of the world, i think one really has to question if indeed the u.s. is going to be buying so much agricultural goods from the u.s. it will be interesting to see what the impact might be on other major agricultural exporters like brazil and argentina, because i think a lot
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of this demand will actually shift from one region to another as opposed to china's ability to really pick on any additional -- of this magnitude. there is still a lot of risks in our area. i think a lot of assets are oversold. haidi: we will be getting back to you in just a moment. teresa kong, portfolio manager, staying with us pick that's check in on some of the movers this morning in hong kong with sophie. saracentaking a look at minerals in sydney, jumping on its first quarter production report. it affirmed its cost and production outlook. e-sports -- they maintained their guidance on the payout. stop and under pressure. the stock was cut to underperform at macquarie, which is over its growth trajectory.
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the company said it is a solid start to the year. it is sliding after its hef with market conditions challenging it. reporting a4% after 10% drop in third-quarter production as well as lower sales and revenue for the period. the company cut its forecast while lifting its cost target. super beutel sliding 4% after its trading update. sales grew in the first 16 weeks in the first 16 weeks of fiscal 2020 but margins were weak. plenty more ahead. this is bloomberg. ♪
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kathleen: this is "daybreak asia ." i am kathleen hays in new york. haidi: i am haidi stroud-watts in sydney. the latest r.b.i. minutes suggest an accommodative stance as long as it is necessary to revive growth. speaking to bloomberg, the state
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describesdia chairman the benefits of the other fiscal policies. >> it is expected that there will be more investment in the economy. the profit, which they will be able to retain, it is expected that there is some time left. now fortill with us more is chile. -- is teresa kong. is there some sort of transmission issue we are seeing? teresa: the r.b.i. has always been very aware of the transmission problems that actually exists in the system. it has been questionable as to whether or not these lower rates are in fact translating to lower costs of capital for corporate's.
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lately, we actually believe there has been some easing of those channels. if you actually look at the comparison of the indian r.b.i. rate with the actual commercial rate as well as the 10 year bond yield, while they have not followed in tandem, they have come down quite a lot and if you think about the fact that the type of easing they have done in terms of the corporate taxes, these types of supply-side economics take a while to play out. we are talking about quarters if not longer before these corporations take what would have been tax payments and invest it into their company. medium-term, it is very critical for r.b.i. to continue to press on the gas pedal and to lower rates. the reality is that there is still room for the r.b.i. to cut rates. we have seen an uptick in terms of the cpi. core cpi continues to be relatively benign and we think
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that given the global backdrop, there will be some interest rate differential that will keep the r.b.i. policy still maintaining both its currency instable form as well as lower rates. kathleen: you have poor farmers in the countryside who can barely do their crops. you have people with loans on the books. has modi's government done enough to address those kind of things? are they part of the key to unlocking growth? r.b.i., not the main driver. ofesa: r.b.i. is one part the equation but there needs to be a lot more done, no doubt. we have been saying that poverty reduction is in fact the number one goal in the government. i think we just have to be somewhat patient with the modi government at this point. i think he has done a lot. in fact, the economy needs to take some time to digest all of
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the financial easing that has taken place. kathleen: thanks so much. matthews asia chile. -- matthews asia editor teresa kong. boeing shares fell after downgrades from three equity analysts. reports that a pilot working on the 737 max during certification expressed concern about a feature later implicated in fatal crashes. credit suisse called the news "indefensible." haidi: southbank group is looking to take a controlling stake in wework, according to a person close with video. it will value the company at $8 billion and it included an offer to buy back up to $3 billion in stocks, giving softbank a 80% stake. they are considering a separate rescue package from j.p. morgan chase. they have called for a review into the way the companies were valued. kathleen: the german lender may
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eliminate 10% of positions. we are told the bank will likely cut a low double-digit percentage of jobs at the business now. up next, a lot more daybreak asia. keep it right here. this is bloomberg. ♪
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haidi: this is "daybreak asia." i am how destroyed -- haidi stroud-watts in sydney. kathleen: the polls across closing.e justin trudeau looks set to retain power. let's cross to ottawa now on josh wingrove. we would not have thought this was possible with trudeau two years or three years ago. what are the three most possible outcomes? >> there is a lot of them but we are separating them into three categories. trudeau has a clear win. either a minority of parliament
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and the multiparty system that canada has come out or even kind of a longshot majority which would allow him to rule pretty much on his own. he loses to the conservative leader, but even in that scenario, you might remain prime minister if they are close in seats because the smaller parties are more likely to support trudeau and the third one is just chaos. we get a hung parliament with a mess of numbers that do not quite add up and that would be the one meaning we are in for a long night. haidi: what are the policy differentials when it comes to implications for the energy sector, implications for the economy, given the different possibilities? josh: there's only one real rival that can unseat trudeau and that is enter sheer of the conservative party -- andrew sheer of the conservative party. he is unabashedly pro-oil. trudeau tries to have his cake and eat it, too, saying he can develop oil well and reduce emissions. he has had a series of
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controversies and of course, during the campaign, it was blackfacee had worn three times as a younger adult and that was the most explosive revelation of the campaign, so there are policy differences. not a huge amount of fiscal differences between the parties, but fundamentally, this is a referendum on whether canadians want more of justin trudeau. haidi: certainly the political darling finding himself mired in these political struggles and controversies. what has been the driving force behind his campaign? it has been awfully quiet on the foreign policy front. parties have been focusing on pocketbook issues. a populist, trump like figure. this provincial premier has become very unpopular, like a governor in the u.s., and trudeau has been skipping over
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him and going straight to running against that guy. ontarioau wings big in or at least holds in ontario, you can frame it and say rebuke of this provincial premier. canadians are saying we will stick with the guy we have got, warts and all, in justin trudeau. climate change, a very important -- kathleen: climate change is a very important part of trudeau's platform. josh: this signals how tough it could be if trudeau's rival winds. a national carbon tax. this has never been done before in canada. it has been a big rally in clive for conservatives. andrew scheer has planned to kill it. if he wanted to do that through a lot, he would have trouble finding any other partner to do it with because every other party supports carbon pricing. this is a key battleground issue
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pitting liberals and conservatives together in canada but it also signals why trudeau may still have a road to stay in power even if his party does not win the most seats. kathleen: we will see if he does it. as for you, you can turn to your bloomberg for more on this story. you can go to tliv to get commentary and analysis from bloomberg's expert editors. first word news with ritika gupta. ritika: the united nations has condemned violence in chile and urged all sectors of society to reduce tensions after protests clashes that have left at least 11 people dead. police used tear gas and streams of water on monday to break up protests on one of santiago's main streets. many people lined up at supermarkets that reopened after stores looted or burned. companies accused of fueling the u.s. opioid epidemic may be
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closer to resolving thousands of lawsuits after three largest debaters and a major generic drug manufacturer agreed to pay $260 million to settle a case in ohio. the distributors and israeli drugmakers have settled just before a federal trial. the agreement may become a benchmark for a wider industry settlement involving dozens of companies. allianz chief economic advisor is still bearish on the global economy. the bloomberg opinion columnist normalizing the yield curve does not necessarily signal a brighter outlook and there are still plenty of reasons why the imf might issue more negative economic forecast. >> i am not sure if it is bothering me or not. if anything, i think we can have another round of downward revisions and imf forecasts. we are going to have europe in recession next year and that is not priced in full yet. we are -- this year.
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recession next year for the euro zone. ritika: japan is preparing for an elaborate ceremony later tuesday that is even bigger than the rugby world cup. political leaders and royalty from around the world will gather at the imperial palace in tokyo to mark the enthronement of the emperor in the world's oldest hereditary monarchy. about 180 countries will be represented at today's event that -- the days event. 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 to group to. -- i am ritika gupta. this is bloomberg. haidi: thank you. markets have been trading for half an hour now. what are you watching? sophie: checking in on aussie shares. now higher by .1% with energy and tech sectors clocking the biggest percentage gains. bond yields continuing to back
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up amid more interest rate calls. this after bill evans dictated limited room for easing from the rba. absence of extra fiscal schemas from the government could compel the central bank to cut the key rate to as low as 20 five basis points with unconventional measures likely by mid-2020. a quick check on treasury futures in the asian session, just slightly lower after cash yield crept higher during a lackluster session on wall street. cable this morning clinging to that level, not off from a five month high as boris johnson for parliamentary support. lee hartman saying we could see a range to 135. haidi. haidi: we will stay on brexit. prime ministers boris johnson -- prime ministers boris johnson hoping to implement his brexit deal in three days. it is a legislative sprint to pitch his desire deadline after
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the speaker rejected his bid for a new vote. let's bring in the director of the institute of global finance. he joins me here in sydney. great to have you. this is a sort of sprint to the finish, right? the third reading schedule for thursday could be done and dusted by the end of the week. is that likely? >> that is definitely a strong possibility because all indications are that there are enough members of parliament, about 320 possibly again plus, who are going to say yes once is introduced late today, and of course, once we get through this major steptone, then the next will be some of the legislative processes associated with this, and that is where the opposition parties might come into basically bring more amendments
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as part of this package. that process itself presents issues such as we should have a conditional referendum associated with this bill or customs union should remain as part of the u.k. commitment, the european union could basically be either completed this week that most people are hoping that will be the case, and if not, then that drag the whole process beyond this, which might create potential complications. also, more people are now confident that by the end of this week, it is possible we can get this bill and associated legislation through. haidi: if we do not come and to be honest, it feels like every week, we say this is a key week for brexit developments, if it does not get done this week, does that mean the possibility of a messy no-deal brexit is very much a possibility? fariborz: not necessarily.
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is, forld happen instance, the government could get basically this bill through. confident that they could get through, they can ask for a technical extension. may will be requesting a three-month extension. that could be associated with conditions attached to it. early toit too speculate. ofhleen: in terms of some these that could happen, 320 votes, i assume you are not including the dup, democratic unionist party, that presents northern ireland. it wants to be left in a customs union with the e.u., if the u.k. leaves it? fariborz: that is exactly right.
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the only group, if you like, which is quite upset on the conservative part of the politics, is basically northern ireland. there is no question that they are not going to work with the government. that is the very issue that might basically become part of negotiations. kathleen: so what would have to happen for boris johnson to be forced to call a general election? would it be if he doesn't have the 320 votes and he cannot quite pass it, that seems to be floating around in this brexit mix. there are a couple of scenarios. the option of general election will remain and this is a context in which it can be called.
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this agreement could go through, but we set conditions that boris johnson may not necessarily agree to. a referendum or remaining within the customs union. he can get this bill through and then call for the general election, so definitely, the option of a general election is well alive regardless of what is going to happen this week. haidi: much like the trade war, we have been talking about it in the context of what it means for the economy and for the bank of england. is it significant what happens this week in terms of the trajectory for the bank of england? fariborz: the issue of brexit is not necessarily only a short-term issue when we see the foreign exchange moving up or down depending on the news. but i think the brexit process has got a medium and long-term implication, and also the psychology of investors, and the confidence
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and the fact that they want to have certainty. that is my there is a new spirit -- it feels like there is a new spirit that we need to deal with this issue and provide that certainty for business, for the issue of trade, as well as for european union is soft. -- itself. kathleen: thank you so much. thank you for helping us figure it out. director of global finance, fariborz mashirian. breaking news from today. very important given the violence that has erupted since friday. president panera speaking on television, saying violence cannot and will not prevail. this comes within the same 24 hours when he said chile was at more and chile would win, referring to the protesters in the streets. more than 11 are dead. these protests were sparked after the government raised
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transportation taxes and college students got fed up and everyone jumped in. he said the government is working on chile's reconstruction. they are calling on dialogue to resolve chile's problems and saying they will meet with leaders. keep it right here. a lot more, coming up on "daybreak asia." ♪
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haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. kathleen: i am kathleen hays in new york. boeing shares tumbled as it received two downgrades. analysts cut their readings on revelations that boeing delayed telling regulators about key information during the certification process of troubled 737 max jet. seeking and giving us the whole story. it seems to go -- su keenan giving us the whole story which seems to go from bad to worse. su: credit suisse citing the
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increased risk. let's take a look at the five-day chart, and you can see where news of these internal messages between staff that indicate boeing knew about max jet problems during the certification problem. the stock was down almost 7%, down again on monday. if you look at the big picture, you can see the stock has been under pressure since the max jet was involved in a fatal crash. the perception of and heightened potential of the incomplete disclosure by boeing is weighing on things. you have a well-known analyst who is maintaining his outperform on boeing but even he says this is a problem. let's listen. concern is that this is going to morph into a criminal investigation, and also, very importantly, is this going to results into the faa
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taking more time to certify the plane? because if that timeline moves out, that will basically be very tough for their finances. direct into the faa timeline, they want answers. they need an explanation that these very indicting messages are indefensible revelations about what boeing may have known . how long could at have gone on --it had gone on? as 53ld cost as much billion dollars in terms of pressure on the stock. recent analyst downgrades, consensus rating is at its lowest. what are investors now looking at? su: how low it can go. the ceo will be testifying before congress at the end of the month. let's go right into the bloomberg because what you can see if you go into our bloomberg charts, and these are available on gtv, on the bloomberg, boeing
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has already -- is already well below its 200 day moving average and they are looking at the suppliers of bloomberg. look at one of the key suppliers. spirit aerosystems, which gets 80% of its revenue from boeing, fell in a big way. one analyst says it has outsized exposure to boeing disruption. boeing stock down far less than the actual supplier, but many say the downside for boeing is clearly an issue going forward. haidi: thank you so much for that. su keenan with the latest on boeing. turning to another company in crisis, more twists and turns for wework. our bloomberg china correspondent, selina wang, has the latest. what's the latest when it comes to the options on the table and the implications for the cofounder? board hase wework
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been considering two deals. one of them is softbank, offering to take majority control of wework. it would include an equity financing, $5 billion in debt financing, and $3 billion tender offer. financial times is offering details that it would strip adam neumann, who stepped down as ceo, from his chairmanship position and it would remove his outsized voting rights. current softbank's chief operating officer would assume the chairmanship position to on the other hand, the wework board is considering this jp morgan deal that would include a $5 billion junk that offering -- debt offering. there are pros and cons. the softbank deal provides more cash but it does dilute the shareholders -- existing shareholders. the jp morgan bill burdens the company with even more debt. investors are concerned that for a company that may run out of cash as soon as next month, they may not be able to pay the $5
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billion in debt financing. kathleen: the question of valuation, it looks like it has dropped significantly. what are you hearing and what is the significance of that in this deal? selina: how resources are saying that for the softbank deal, this would value wework at $8 billion or less, a dramatic fall from the $47 billion at softbank could invest in the company earlier this year. however, if this deal does go through, this would be a massive win for masayoshi son. he gets to lower the average price at which he has paid. it also means it would boost any possible upside for this company in a potential initial public offering a finance -- even if it goes public at a significant discount. this would result in the existing investors getting slashed. they get the rough end of the deal. this underscores the rapid
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unraveling of this company over the past several months, postponing and maybe shelving for quite some time this initial public offering. the board will make a decision very quickly on this because wework needs cover as soon as possible as they are scrambling to cut costs. we reported they are planning to offload some companies they recently acquired as well as putting up for sale a 60 million dollar corporate jet. how much breathing room would a deal even give them at this point? selina: again, this is a massive amount of money. i mean, nearly $10 billion coming from softbank, so it provides a very, very much-needed cover. they could be running out of cash as soon month, so even though they are trying to scramble to cut costs in addition to all the steps i mentioned earlier, as well as laying off reportedly as much as thousands of employees, they still need some cover as they execute on these measures, as they go through it as well.
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on top of that, a bunch of corporate changes. kathleen: following the ins and outs wework wework of this important story -- outs of this important wework story. you can listen via the app, bloomberg radio plus or bloombergradio.com. this is bloomberg. ♪
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kathleen: this is "daybreak asia ." i am kathleen hays in new york. haidi: i am haidi stroud-watts in sydney. acknowledgedrg has giving hiring recommendations to democrat pete buttigieg's presidential campaign but says it should not be misconstrued as an endorsement. zuckerberg sent several emails to buttigieg's campaign manager
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and two of the people they recommended were hired. it is a rare example of direct clinical environment from the tech mogul. kathleen: facebook says it shut down four separate misinformation networks, tied to iran and russia, as it tries to counter what it calls for influence campaigns. it removed 50 instagram accounts and a facebook account originating in russia and aimed at the united states. it said it had ties to the internet research agency, a group review's indicted for alleged u.s. election interference. haidi: snap shares jumped the most since july after a chorus of bullish commentary. the wall street rates began with partners and initiat -- toboosted its price target $21, saying the company had come full circle. snap reports tuesday after u.s. markets closed. they expect a meaningful beat. kathleen: moving onto markets
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opening in seoul at the top of the hour. japanese markets are closed. the enthronement of the new emperor. sophie, what are you watching? sophie: in south korea, we are waiting on president moon's budget speech. looking like a cautious start for asia with aussie shares easing earlier gains to trade near recession loans. tb shares matching higher while s&p -- is pretty much flat. with japan offline today, jgb's are closed. treasury futures trading flat after sliding on monday. aussie bonds edging lower with nothing on the schedule for tuesday. this morning, we did get some data from south korea. producer price is shrinking yet again, off .7% year on year for the month of september, adding to the triple whammy we have seen for the korean economy as consumer and export prices have been on a downturn. haidi, kathleen. haidi: thank you so much for that with the market open almost upon us. coming up in the next hour of "daybreak asia," most accurate
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forecasted for the yuan over the last two quarters will join us to give us his outlook ahead of aipac. we will break down earnings from a chinese telecom giant. this is bloomberg. ♪
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--from the bloomberg headquarters in new york, welcome to daybreak: asia. >> this tuesday, president trump raising hopes of a trade deal . he said were from china is things are going well. why he is forecasting a
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recession. >> polls getting ready to close for the canadian election. justin trudeau looking to retain power, but he could use the parliament -- lose the parliament majority. >> markets are off-line tuesday. 1% korean won is up 1/10 of president moon jae-in to deliver his speech, this as the economy comes under pressure. sagory prices continuing to in september. australia, all the shares looking flat while all is a bond yields are continuing to back up amid interest calls. a recent note saying it could
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compel easing towards 25 basis points for the key rate. chilly -- in and chile [indiscernible] the stock covering about around 35 aussie dollars. chile's president has called for dialogue and will meet with political leaders tomorrow. add water joins us on the phone from there. great to hear from you again. is this too little too late? this dialogue enough to appease protesters? -- is dialogue enough to appease protesters? >> he repeated what the ,overnment has been saying
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working on different plans to improve tensions, but he didn't give details. of features -- speech sort sounds empty. you can still hear people banking -- banging outside. >> is this a change of tone from the same president who recently le is at war and is going to win? >> absolutely. there is a big change of tone. he clearly said there is a war, but if you can see the protests today and the images on tv, not the ones during the night, many verysters, particularly in peaceful neighborhoods, people
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marched calmly chanting and jumping and smiling. you could see people even hugging police on the streets. so yes, there's a big change of tone. the government saying they are at war, that was a very big mishap and now it remains to be seen if the opposition leaders, particularly the communist party which are more to the left will actually accept this invitation and sit down to negotiate. >> how much scope is there to take that so many chilean people want to see? i was reading a report today
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that said there is some scope. e has a history of being , gdpfiscally conservative around 25%. there are reports that go up to 30%, but compared to other countries, the percentage is quite low and the government is aiming for a 2% fiscal deficit next year. the government also has so there wealth funds seems to be this totally fiscally conservative trend. >> ok. eduardo thompson with the latest on chile.
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let's get you to first word news. . boris johnson will seek to rush his law through the house of commons in just three days, after the latest bid was rejected. opponents accuse johnson of trying to ram a complex bill as he seeks to get it out by the end of the month. looks set tou retain power in a close election , but cole suggests he will lose his majority, forcing him to rely on a left-leaning party to survive a second term. if he loses the election, he will become only the fifth prime minister and canvas history to be ousted after one term. benjamin netanyahu has failed to form a new coalition.
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thatresident plans to pass right to opposition leader benny gantz who is expected to face an equally difficult task. two elections this year have left israel in a political deadlock. the founder of] the country's biggest sonnets to join the cabinet. his defeated challenger from the last elections was reportedly asked. the full is due to be named on wednesday. global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries. thank you so much. now, for look at what is still
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ahead, the world's biggest mobile phone carrier on track for its first profit drop since 2015. find out more. keep it right here. this is bloomberg. ♪
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>> this is daybreak asia. trump is talking trade optimism, raising estimation that china could be part of the mpeg meeting in chile. a steady stream of this is good, it is moving ahead. other reasons to believe it really is -- are the reasons to believe it really is? >> it is happy talk time again. there are positive signs coming out of the white house that there could be a preliminary deal signed at the aipac meeting later this year between trump
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and fidgeting. here's the thing. we talked about this before. what wilburlike ross called the issues between the u.s. and china. this is an impact on agriculture, sort of the pause in the trade deal, but the idea is that it could be put into formal language and ratified, that could take off some pressure related to additional tariff hikes and signal that the trade war has been tapped -- capped. the u.s. has had some positive signs in china said it wanted to have the details on the table and said there were more negotiations do and the thing you are seeing the markets react to is president trump said today
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those are going well and china started its agricultural buys and the talks were proceeding well. that is where you are seeing some of the market move and there certainly has been some movement on happy talk. there'sas we might say a difference between talk and, markets moved on today. >> what can we expect from mike pompeo's speech later this week? talk,re has been some some watchers on the u.s.-china talks that say the thing you have to know about is trump is the final dealmaker, but there are some other people you have to watch. hence is supposed to make a speech later this week on
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thursday where he is supposed to talk about china and i think that will be closely watched because parents may bring out -- hence may -- mike pence might bring out something else. there are some things that the u.s. is concerned about, namely human rights violations. a lot of the said concerns about human rights are cover for a more anti-china message. they have not been necessarily warmly received, so i think a lot of people are washing for other administration officials, not donald trump. what does mike pompeo say about these? there watching these four other signs. >> vice president mike pence scheduled to keep that policy speech on thursday.
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into the some insight chinese currency now. we have seen a third day extension of gains as we see this rather emerging-market continue despite what we are seeing with the protesters in chile. more positive signals about the potential for this trade deal to be signed. what's get some -- let's get some insight now. great to have you. you heard over the weekend from the governor saying that he not at a yuan is balanced level. i think we have been here at
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this for a decade, but to be honest, i'm not fundamentally constructive and believe that to appreciate two to three years, but over the short term, i think the risk is if there is a better deal between the china -- between china and the u.s., it could impact and also put forward in the coming months. i think that will be a temporary we are not very receptive of china's outlook. forecast of 11.15 at the end of this year.
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a couple of points you mentioned, one is a part two of the deal. [inaudible] is that really so easy? that does not seem like a company that could come together with the deal in a matter of months. >> i think the most important basically the two parts will continue to talk. i would have to also keep in mind that the u.s. presidential andtion is coming next year for china also, growth slowdown is a risk and [indiscernible]
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think there is real interest and a consensus that there will be a deal am a but the problem is what kind of deal they would come up with. >> meanwhile, the economy slows to 6%. it is just yellow bars. .ou can see you are now weaker you have said that it is a stress test for chinese policy investors and a lot of people are expecting lower rates and you have the imf director saying he does not think so. he's looking for corporate tax cuts. our people missing the boat. ? is he right?
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after dekesrnible] it does not pick up as much as expected. on the other hand, it is very see it wasn relatively constant, but overall policy is still very calibrated and we don't expect any [indiscernible] anytime soon. >> is that to stimulate growth to be a they be accused currency manipulator or market pushing it lower -- our markets pushing it lower? lower?markets pushing it that kind of thing finally,
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china is under pressure. rapid depreciation is also very risky. that -- balancing in theat [indiscernible] moment in the coming years. >> kathleen was mentioning market forces. what about the direction of the u.n. dollar? is that dependent on what the fed does? >> i think that is another interesting topic. overall, it is difficult to predict any significant direction because on one hand, we see the dollar is
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strengthening, but on the other they complain. in general, no clear direction for now and this case, i don't think there is a significant way. >> really great to have you. common bank director and senior emerging markets economist. mario draghi said to preside over the ecb's final policy decision. for the european central bank. this is bloomberg. ♪
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.> this is daybreak asia i'm kathleen hays in new york. >> i'm haidi in sydney. draghi setnt mario to preside over his final
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theing before he hence reigns over to christine lagarde. the transition comes at an uncertain time for europe's economy, inflation below the central bank's target. we have a look back at the last eight years of his tenure. >> the ecb is ready to do whatever it takes to preserve the euro and believe me, it will be enough. >> with these words, he is credited by memory -- many for saving the euro. in his first two meetings, he undid the 2011 rate hikes enacted by his previous [indiscernible] to battle the greek and then european debt crisis. that was just the beginning. >> the rate has gone negative. that is to start for any major central bank.
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>> for all the practical purposes, we have reached the lower bound. >> as it continues to deteriorate, the ecb introduced quantitative easing and not everyone supported in opposition was growing -- and opposition was growing. recovery, he of approached the end of his term and became clear europe still needed support. >> additional stimulus will be required. this outlook is getting worse and worse. ande cut rates again produced qe, reminding investors of his famous mantra. >> the ecb is ready to do whatever it takes. tochristine lagarde hopes
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avoid his staff it -- avoid his [indiscernible] >> let's move on to bloomberg mohammed.onomist he gives us his take on mario draghi's legacy. can go outernible] and say they will do whatever it takes and it is going to work was absolutely critical. i think that is what he will be remembered for. having said that, there will be a lot of noise in the short-term about how he pressed to unconventional measures and what he has done is set a course for the ecb for the next six to nine months hoping for other policymakers will step up to the plate, so he has made the first
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period of christine lagarde's , tellinglittle easier her go no further. we are not going any deeper. point when wene had $17 trillion of bonds with negative yields. we have drifted away from that. >> i'm not confident. it is not mean i would bet on them going low again. policy sides the and the other is i'm confident that central banks understand that they should not go any further into stimulus. they can go back. -- cannot go back. so that policy of exempting race is gone for now -- of exempting
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race is gone for now. think we arei going to have another round of revisions and we will have your intercession next year. >> 2020 a recession? >> yes, for the eurozone. >> where is the policy response come from? 2020 just a muddle through? >> yes, because the political process will have difficulty responding. bloomberg, with interestingly mario draghi thought he was even going to raise negative rates. time will tell how successful the measures were, but i think many support what he tried to do. up next, boris johnson looking
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to rent his brexit law through parliament. what to expect come up more action or positive stalling? keep it right here. ♪ from the couldn't be prouders
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to the wait did we just win-ners. everyone uses their phone differently. that's why xfinity mobile let's you design your own data. now you can share it between lines. mix with unlimited, and switch it up at anytime so you only pay for what you need. it's a different kind of wireless network designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you buy an eligible phone. call, click, or visit a store today.
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>> looking at the week in advance, they were definitely anti-climax. >> some has happened in nothing changes. position isnson's strengthening. >> it looks like he has the numbers to get the deal through. >> the risk of a hard brexit is really low. >> no deal could still happen. towards somehing sort of resolution one way or another. if. question of
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>> still difficult to call it. messy getting this deal through. guess, -- our earlier guests. he is looking to push the deal through the house of commons in just three days. david joins us now. bit dizzying over the last 48 hours. >> with all the brexit, there have always been twist and turns -- twists and turns. the narrative is that they don't and the catch is
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how will the deal get past -- passed? doesit get past and if it force johnson indicates he may yet the deal and just go whichht to an election would be sterling negative, so there is still some uncertainty out there. those agreements, if they got past would certainly put a wrench in the rally short-term. hurdlesother herders -- will sterling need to get through if it is passed by october 31? you see the hurdles coming up and one of the things is the economic data.
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that has moved into contractual that,, yound after .ad the bank of england report a few messages coming out [indiscernible] dave reston recently said rates may be and the markets can be watched to see if they are hawkish or dovish moving forward. thank you very much. let's move on to japanese check ofhong kong a the market elsewhere. >> asian stocks are headed higher, led by korea about possibly adding 9/10 of 1%.
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shares --dney, on the aussie shares are fluctuating. aussie bonds are slipping for a this session and we saw treasury yields on monday and korean bonds are moving higher with the two-year yield pushing lower as it continues to weigh with dvr falling you're on your. we did see a marginal uptick, but the overall trend is signaling for downside and fell into of zero territory last month will stop last month, a check of copper futures. that was the highest level since mid-september, but a rally may be at risk with some investors shifting attention from disruption to chilean supply as
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production in china hit a record last month, providing a cushion perhaps. >> get more to the unrest in chilly -- let's get more to the chile. in chilly -- >> he says he will meet political leaders tomorrow for talks revolving around the crisis. it has left at least 11 people and waterwo guest cannons were used to break up the unrest. --panies accused of stealing feeling the opioid epidemic may be coming to a settlement. settled justors before a trial.
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the agreement may become a benchmark for wider interesting companies.dustry [no audio] there are still plenty of reasons why the imf might issue more ahead of next year's economic forecast. >> are not sure if the global economy is bottoming or not. if anything, i think we can have another round. we will have your intercession next year. recession next year for the eurozone. >> japan is preparing for a settlement tuesday that is bigger for the -- than the world cup.
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about 180 countries will be represented at the day's events that will install him as japan's 126th emperor. global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries. >> holes are closing across -- polls are closing across canada. ands go back to ottawa now i'll reporter, we just talks to you about an hour ago. in terms of polls and what you are picking up, how does this look for justin trudeau? polls have10% of the closed and long story short,
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.here are no surprises yet expected to do well, but not as where he swept it last time. whether -- so on far with the big chunks that have closed in about one hour. >> in terms of potential outcomes, one of the the ramifications -- what are the policy ramifications? isi think the core question whether there is certainty or uncertainty.
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he won't be on a nice edge for every vote. any close outcome could get pretty messy and there were not be a big change to the fiscal track, but the ability to get things done would be cast in doubt. what has been the basis of this campaign? has it been more pocketbook issues because it is not seem like there is a differentiation on foreign policy? >> one guy has not come into play an early on, we thought economy, trudeau almost never talks about that. fundamentally, it has been a referendum on trudeau and
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his leadership and whether canadians want to give him a second take of the can. they closed just under an hour ago. it is notts west, trudeau country anymore, so he chunk do well in the next coming in. >> thank you very much for joining us following the results so far for the canadian election . you can also turn to get a lot more on this story, get commentary and analysis from bloomberg's expert editors. up next, the opportunities in china continue to lower some of the biggest financial institutions even as the trump administration continues to curve -- curb. this is bloomberg. ♪
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, i'm kathleenia hays in new york. >> on haidi in sydney. the world's second-largest atm provider is planning to expand in china, even as the trump administration considers curving flows to chinese equities. we spoke exclusively to the ceo envisioning. >> i figure that is an internal issue in china. when i focus on, the larger narrative is the opening up andda of the china renminbi i think if you want to call that making hong kong less important as an entryway into china. our offices are in shanghai and they areoing forward
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really important cities in their own right for the capital markets in china. >> are you still seeing demand in terms of inflows into your china etf's from u.s. investors? >> yes. let me be very clear. the headlines, the trade war, everything going on has put americans on their heels as far as investing in china. investors have been allocated for a while, but there have been -- has been a lot of weight and see. -- wait-and-see. i think of the long term, it is an interesting opportunity. focus to the u.s. and recession concerns and the yield curve has switched around some of the data points. concerneding -- how
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should we be about recession risks in the u.s.? china, i think the economy is pretty much ok. if he -- we look at monetary policy -- the central bank is being accommodative and i would say the big, undiscussed risk out there is our fiscal deficit. >> do you see a recession before the end of 2020? >> i'm not concerned. >> so further upside for u.s. equities? >> why not. if you can get that going, companies are cutting costs as well. >> in terms of the negative , how is that impacting and shipping market behavior? how do you do that? >> i can explain it.
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in the interest rates u.s. absolutely collapsed this summer? a lot of people interpreted it as a global recession here. looking at chinese pmi, it was case, the assets that did well are gold and those that compete with high real interest rates and if one is concerned about central banks in europe, basically they can't get the economy is going. central bankers have to put their superman takes away and they are not the heroes. you have to use fiscal and other forms of stimulus and that is the case, maybe you want to
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hedge in gold. the ceo jan benedict in beijing. joining us now from hong kong, head of asia telecom and intercept -- internet research. you cannot blame all of these things on china mobile, but the first drop since 2015. is this about over? aboutey give out -- get -- get back on a more profitable track? >> you can see the top line is basically flat and mobile revenue continued to decline at five to 6%, mainly because of the market, as well as intense
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competition. they see very modest user growth . it is very difficult to increase the 4g tariff at the moment, so they all have to accelerate the 5g and in this year, they will 500,000 stations and probably over a hundred thousand net year. if you look at the 5g plan they tried to position, the expect to --about 199 from indy [indiscernible] which will help word -- lift upward and revenue growth. >> other big companies, strong competition. do you think -- feel that
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competition is leveling out? do you think it will help average revenue per quarter take up for all of these companies? stabilized,on has however it is very difficult to increase prices for existing so pulling out 5g as premium services in order to lift up as well the overall revenues, so if you look at the 140lan, the minimum is you look at the 5g, china has been leading and i 's first 5g phone is that will drive
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the mass adoption of the 5g adoption and that could help lift them over apple. downek saw share prices about 12%. what happens with dividend yields? leaders of the company have been promising to keep that float. will that be maintained? china mobile has already been at a stable dividend. comes, that could be quite attractive. still likely to be
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restrained? >> yes, the share performer is tied to the furnace performance, they hadast result stable dividend yields for the company. and payment is not a problem for the company at all that is why the free cash flow will be very sustainable for the company. ofgreat to have you, head asia telecom and intercept -- internet research. thet forget you can find days big newsmakers on bloomberg radio. you can also listen in via the app.
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or bloomberg.com. this is bloomberg. ♪
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, i'mis is daybreak asia kathleen hays in new york. >> a quick check of the business flash headlines. actively traded bonds along with andcompany shares downgrades from at least three equity analyst -- equity analysts.
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concerns about cases into fatal crashes. [indiscernible] we are told it will buy the company at about $8 billion and include an offer to buy back up to 3 million in stock. considering ao second rescue package from j.p. morgan chase. intolation about future the way companies r-value. -- our valued. valued. about one not specific company, it is about trends we are seeing in the market. when there are fewer investors determining the value of a company, it is not risk like we .ee in the public markets
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there are tons of smart people in the private space. >> [indiscernible] the german lender may eliminate at least positions.icians -- the bank likely to cut a low percent of jobs at the business which employs several hundred staff. that get a preview of what to watch this morning. kongocks here in hong watching the city's stock for both equity and debt front raising to ensure the quality and china unicom is in view after its latest earnings update. itsar, only about 72% of 2019 pretext target.
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nine mobile on watch after months off, shares down about 12% as profitability has taken a hit even though the dividend yield has held up. burning brush on the mainland picks up ahead of the october 21 deadline and nearing the hundred day moving average. about 44% of the more than 1200 firms so far, they are forecasting further deterioration for-profits. ahead on the bloomberg markets: asia. es climaterson discuss risks. live int iger sake
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singapore. we are waiting to hear more on the results of the canada elections. of course, also waiting to hear about the trade war. president trump has signaled .hings are moving ahead >> in the meantime, asian markets trading moderately higher, but lots more to come. china open is almost upon us. this is bloomberg. ♪
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>> welcome to bloomberg markets china open. >> we are counting down to the open of trade in hong kong and mainland markets. here are the top stories. present trump talks of hopes for an initial trade deal with china. >> will it be softbank to the rescue for we work? bidding for a controlling state -- stake. >> can trust and trudeau hold onto power -- justin trudeau hold onto power. the canadian election with all the latest.

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