♪ 11:00 a.m. sydney and 9:00 p.m. in new york. i'm haidi lun. rishaad: i am rishaad salamat coming to you from hong kong. this is "bloomberg markets: asia." ♪ haidi: president trump to restore straining ties with china pursuing an investigation into rp theft. rishaad: america's top general says diplomacy is a top priority in korea, but there is a warning things could escalate out of control.

haidi: markets don't seem to care. stocks are surging with traders seeing no chance of imminent war. death by a thousand cuts. noble is downgraded again, moody's worried about default. with all these north korean tensions, with got gold going up late. we also see action on the equity markets reflecting the simmering words taking place between pyongyang and washington dc. i talked to a currency trader yesterday. aboutasking questions what is most, and he said it coin -- bitcoin. bitcoin has gone over the 4000 level. a flight to safety, you could argue. it is mirroring what is going on with gold prices.nonetheless

, it is a traditional haven. is bitcoin also a place where people can take refuge? this is continuing in the week -- wake of a split that has taken place with the crypto currency. incredibles pretty what a world we live in where the chinese currency and cryptocurrencies are aware investors are seeking havens. elsewhere, risk back on the table. we had a rally overnight in wall street. as the war of words is turning into a war of action, suddenly so markets are getting back, in action. last week was a correction within a broad trend is the question, or whether this was just volatility. 30 minutes later open in china and hong kong.

singapore, taiwan, and malaysia are coming online. sophie: it looks like asian markets are putting in last week's tumble in the rearview mirror at least for now with stocks set to gain a second straight day. japanese stocks are playing catch-up. gaining 1.3% this tuesday to snap a four day drop for tokyo markets. that is playing out when it comes to the yen. half a percent tumble trading at one point point -- 110.88. this is after north korea decided not to follow through with a threatened missile attack on guam. we do have gold falling further away from the 1300 level. of course, it is a safe haven asset. 77 andrading around level. we also have volatility trading.

the 10 year yield for the treasury is that 2.24%. bigs falling 21% overnight. this perhaps is a return to the new normal. we have alliance cautioning that trump's bluster could put risk in the picture when it comes to the rally in asian assets. the item to watch this hour, the rba minutes elect the bottom of the hour. the aussie is rising about a 10th of a percent ahead of that even as iron ore is falling along with steel and aluminum. is dropping following the latest chinese output data. we are seeing prices steady somewhat. wti trading a 10th of a percent higher.

haidi: certainly a brighter day today than the way we ended the week. let's got caught up with headlines. we have first word news with paul allen. paul: president trump has finally denounced white supremacists for their role in the deadly violence in charlottesville over the weekend. this as the administration tries to handle the fallout from his earlier more tepid comments. the president called racism evil and said those who cause violence and in its name are thugs.ls and 32-year-old heather heyer with killed when a man drove his car into a group of counterprotesters. >> racism is evil. and those who cause violence in its name are criminals and thugs, including the kkk, neo-nazis, white supremacists, and other hate groups that are repugnant to everything we hold dear as americans. paul: meanwhile, the president

has taken the fifth -- first step towards investigating china on intellectual property violations, adding to the tensions between washington and beijing.he signed a memo howonsider an inquiry to american companies and china are forced to hand over technological expertise. potential reprisals include ta rriffs on chinese goods. strong inflation is raising questions on this month's rate cut in india. cpi rose 2.4% in july of the year earlier. that is faster than 2.1% estimate in a bloomberg survey, but it is in line with the rbis you. wholesale prices rose indicating building pressure after the benchmark rate was cut to a seven-year low. the new york fed says it is reasonable to expect a timeline for trimming the balance sheet month.e fomc meets next

he supports another rate hike this year if the u.s. economy continues to grow. his comments signal optimism among policymakers despite .luggish inflation our outlook hasn't changed. >> we have further strengthening in the labor market which we think will push inflation to the medium-term back to the objective of 2%. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. let's return to the tensions on the korean peninsula with america's top general reassuring the south that a diplomatic solution with pyongyang remains the priority. defense secretary james mattis says the situation could escalate quickly into war if north korea attacks u.s.

territory.let's bring in stephen engle . where do we stand right now? u.s. was asked if there was an attack on guam, was that part of the u.s., and he said absolutely. reporter: absolutely glom is part of the u.s. 1980's.there in the is about 170,000 citizens in addition to 7000 u.s. military. a lot of people think of long as a floating air carrier, but no, it is an island full of people. the only difference is they cannot vote for president. it's a u.s. territory. they have u.s. passports. this is what jim mattis had to say when asked by reporters about his assessment of the situation. i don't need to be trite, but there has been a war of words so far. says it could escalate into were very quickly.

that's called war. if they shoot at the united states, i'm assuming they hit the united states. i'm assuming they had that and then it is game on. this follows what we heard from cia director mike pompeo and what we heard from h.r. mcmaster kind of ratcheting down the rhetoric we have had from last week with donald trump talking about fire and theory -- fury and being locked and loaded when it comes to an attack on guam or u.s. land. a news agency saying kim discussed an attack on guam yesterday in a review with his military commanders in north korea. now we are also getting reports out of north korea that they are perhaps backing down on carrying that out. lots of reports and rhetoric still going on. rhetoric, wet the were watching a meeting in seoul

between top u.s. military brass president.th korean is that less hawkish than what came out of the american president? reporter: the chairman of the joint chiefs of staff was in seoul and met with the south korean president. he has now landed in china. 's first visit to china as the chairman of the joint chiefs.this is the marine general, basically the top brass in addition to jim mattis. they were very diplomatic in their statements to the press. he said that everyone helps to resolve the differences without going to war, but also reaffirmed washington's "ironclad commitment" to the south korean alliance. he conveyed the u.s. readiness to use force, the full range of capabilities to defend u.s. allies and u.s. homeland, including the island of guam. also we had rex tillerson,, u.s. secretary of state, jointly with

jim mattis saying the u.s. is going to negotiate with pyongyang. they are again a bit of an olive branch, but rejected china's suggestion of a suspension proposal that would ask for north korea to suspend the missile program in exchange for the u.s. and south korea scrapping joint military exercises, which begin next week. rex tillerson and jim mattis jointly signed commentary rejecting that proposal from china, saying that north korea has a history of dishonesty. stepping back from the someand fury rhetoric, relief across the markets. thank you. the game according to kim. iflast if his -- we will ask his ultimate goal is to reunify the divided peninsula.

rishaad: we are looking at the challenges trump might face in taking on china. this is bloomberg. ♪

haidi: this is "bloomberg markets: asia." i'm haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. china is speeding up expansion plans on the mainland. 18 intends to open thousands of new outlets, making china the largest market outside the u.s. > we feel there's a lot of room to grow. the differentiation between them -- this isainly where we see tremendous consumption power growing.

at the same time, urbanization is a driving force.that's why we believe adding that growth rate, another 2000 stories -- stor es, that is where kfc is at now. haidi: singapore's sovereign wealth fund selling out of snapshots. . they unloaded 300,000 snap shares in the second quarter. , andllows similar news comes after a blackout period. snap reserved -- reversed earlier losses to close up. shares surging after morgan stanley said it could see "substantial hit value in "everal of its brands.

fiat chrysler's u.s. shares saw the highest close since listing in 2014, having jumped by more than 40% this year. trump straining already tense ties to china by pursuing an investigation into alleged ip theft. this?re piece in joining us is the vice president of china operations at the u.s. china business council. great to have you. this is a longer-term investigation, not expecting anything to happen today or this week, even this year. irritant that will continue driving a wedge between beijing and washington? >> the memo that was announced today by the white house begins the process which may lead to investigations or negotiations with the chinese government which could resolve this issue.

it's important to know we have been here before. the obama administration issued an investigation into the chinese for unfair practices primarily involving solar panels. this is not what happened today. we just have a memo to begin that process. we negotiatedlier a settlement and did not lead to unilateral action against the chinese, and did not affect the overall u.s. china trade relationship. it is pretty much are now to say whether this will be a long-term irritant on the trade relationship. haidi: is this something you think would have a significant or substantiate impact? this is kind of a headline making gesture from the president that routed his campaign on coming down hard on china. >> this is an issue that a

number of companies face on a daily basis. we just finished our survey. more than 20% of companies indicated they were approached by the chinese government or commercial entities in the past three years and requested transfer of technologies in exchange for market access. for companies operating in china we see this on a daily basis, whether through the requirement to be a joint venture to access industries in china, requirements to disclose a source code or shared technology to be included on the procurement catalog, which happens very frequently. companies deal with this on a daily basis. we note the chinese government doesn't frequently write these down in regulations. they are communicated orally to companies. get investigation begins to at an issue that is of significant concern to companies affected. for those that are affected, it's important we address this. this might be going into

technical territory, but i'm wondering how it fits within the wpo structure -- wto structure. >> absolutely. under the wto agreement that the u.s. agreed to, section 301 cases are allowed. if the united states through its investigation to the side and it needed to take unilateral actions against the chinese or come to eight is the -- come to a dispute, or if it needed to take action under the wto rules, it should do it under the dispute mechanism. not since the u.s. joined the wto has it taken unilateral action against another actor. we expect that would likely be challenged by the chinese if the u.s. were to take sanctions. in ambassador lighthouses

see ifny, -- we have to there is an investigation and what the investigation decides whether we know it will be wto complaining -- compliant. ishaad: this relationship very important for both sides, but is it more important for china to keep on the right side of the u.s.? i will bring up this function. it shows how far and away china states' biggest trading partner and vice versa. that's the thing about the u.s. china trade relationship. both economies benefit. any kind of trade war or tit-for-tat exchange would negatively impact both countries and impact the u.s. consumer. what --ortant to note

when we talk to companies, this is on u.s. trade data that is 80%, only 6% produced in china are imported to the u.s. when we got about sanctions, it would not address the core issues that president trump indicated are important to his platform like reducing the bilateral trade deficit. it's important we have this context in place when we talk about the relationship and recognize that both sides benefit from positive relations, particularly member companies that are operating here. rishaad: the other aspect and argument being made is if the u.s. wants to set up in china, they have to transfer technology. is there any traction on that in your view? issue at ases the very senior-level, and it is important for our companies that this issue be addressed.

for too long, administrations have not taken this head-on. we don't necessarily think a section 301 is the best way to move forward. there are other mechanisms that could be taken such as continuing negotiation of a high standard bilateral investment treaty, which would get at many of the issues raised in this ,ase for fair market access which is ultimately what they are hoping for so they can have people access to the china market as competitors, and don't need prerequisites when it comes to transferring technology or intellectual property in the china market. thank you very much for joining us. jacob parker, vice president of 10 operations at the u.s. china business council. china's mmg saying it is expecting to see first half-year profits in 2014 -- since a 14,

and there are rising metal prices to think. -- thank. ♪

rishaad: we are counting down to the start of the session tuesday morning in hong kong. this is what we've got. some gains and significant , upwinds from new york snp over 1%. we are in the green at the moment in the hang seng by nearly half of 1% of the market. futures also indicating a game. mmg, it is down to metals prices coming back, with the company saying it will make the first profit since 2014. has been helping

the company along. it bought that in peru from glencore. this is what you're looking at here today -- year to date when it comes to mmg. stock up 79% in that timeframe frame. expecting to post a net profit of $130 million in the first half of this year. gain, butt's a nice i'm going to say the stock i'm watching today is more impressive. inrazy rally, 57% gain london hotel yesterday. it closed down by a relatively more modest by 45%,. investors are cheering this idea assettructuring involving injections of 6.3 billion yuan. a lot of doubt coming through from analysts. shareholders have been starved

for positive headlines. some research saying the stock rally is not justified, up over 130% this month to date. coming up, surging metal prices sounding the bell on inflation in china. this is next. this is bloomberg. ♪

9:29 a.m. in hong kong. counting down to the start of the session. pre-market, a bit of a boost. the snp on public the nasdaq. -- the snp on top of the nasdaq. tadh korea perhaps easing a with tensions, although we had a fresh salvo from the u.s. this morning. the federal reserve signaling that the central bank is looking this year saying quantitative perhaps the unwinding of the balance sheet will take place next month.

we've got alibaba and tencent reporting this week. that will be important for the tech space. the rba in australia meeting shortly. haidi: we are not expecting any rba, but wer the have some polls taking a look. we have the rba saying the housingsuggest household balance sheets need careful monitoring. also noting consumption growth forecast could be curved by wages. if i can get a little more. the aussie dollar rising.

this: when it comes to inflation, and the risk of low information -- inflation clearly works with the record low wage growth. paul: and the rba noting inflation is still expected to increase gradually as the economy strengthens. they are still optimistic. wage growth remains low. the rba is still expecting to increase conditions in the labor market. we will get a bit of a read thursday. a little bit of snarkiness when it comes to the aussie dollar. have a forecast based on the assumption of no change in the aussie dollar. the on the is right thing, but not like it did back in july when the bank was talking about a neutral cash rate of 3.5%.

the aussie dollar has given up almost all the games it made sense the last minutes. haidi: thank you for that. we will get a look at the rba minutes over the next hour or so.shanghai and hong kong markets just opening. that's go over -- let's go over to sophie. sophie: check that was going on with chinese stocks. benchmark index aiming about a 10th of a percent following monday's rise in over 1%. hong kong shares popping almost half a percent today. rise, above the 27,000 level adding to gains on monday. we are seeing a continuous rise higher when it comes to the equity rally. check out what's going on in the currency space. particularly the yuan. we saw it go below the contrary i attended a percent following the weaker reference rate from the pboc. in first time it is weaker six days.

offshore rate hovering around 6.69. we had the yuan weaker. the dollar is firming up ahead of the new york chief saying he does see a rate hike potentially this year. that is putting a move in the .urrency markets to 10th of ap percent. the korean won is higher first in straight game. given the dollar strengthening of late, our editors are cautioning the potential move higher could drag on asian stocks. there are some signals that after a five-month slifer the dollar, -- slide for the dollar, it could continue a recovery into september with a catalyst

like the german election. we can show you how it is moving in tandem to the msci asia-pacific index keep an eye on the. dollar and the korean won given the looming fear of geopolitical risk. not entirely out of the woods yet. rishaad: getting lines coming out of china at the moment. china saying they are hoping that the u.s. is going to be prudent in their review of china's intellectual property policy, expressing serious concerns about the u.s. review. they say they will be if therding legal rights u.s. hurts bilateral ties. that is from the china commerce ministry. let's look at first word headlines. the chairman of the u.s. joint chiefs of staff thing that

relationships on the peninsula is washington's top alley -- priority. jim mattis says the situation could escalate weekly is north korea fires a missile at american territory. reports from north korea say kim jong-un has discussed a glamis strike plan with his senior generals. hisuam strike plan with senior generals. says a strike was on the table. to stopg was the u.s. what it calls arrington provocations. kim jong-un says he would release plans for a military strike sometimes in the middle of this month. update, third quarter cash profit of $1.4 billion.a tear when equity ratio of 920% as of june 30.

online shopping mall jd.com, raising spending to drive sales in the midyear promotion. shares are falling sharply in the regular session. they are facing competition from alibaba and smaller players while expanding rapidly into southeast asia. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. metals at multiyear highs , analysts are sounding alarm bells when it comes to inflation in china and what could have a negative effect on bonds is having little impact. let's bring in our metals and mining reporter from shanghai

what is behind the rally. and what is up with the bond guys not noticing? it's an interesting situation here. normally the bond markets and commodities have an inverse relationship. rallying in rebar the way it has to three-year highs over the past month, you would expect bonds to come down. that is not actually happening. there seems to be a difference in perception in those markets. that is being expressed in the prices. there is concern we will see steel reforms driving that part of the commodity rally. we also have the disappointment when it comes to the data out yesterday. industrial output is also disappointing. what does that say about what

you are seeing? in the midst of the steel rally, on the demand stage, you had profit and spending, are property sector humming along well. on the other hand you had fairly significant and far ranging supply cuts. drive uphelped to prices, particularly of construction steel. that is one reason why there is a mismatch between the bond market and steel. administrative measures are quite focused on the steel markets rather than being a macro driven element. we got the slowdown you yesterday the figures , definite signs of softening in

the property market. investments are high so that could keep a floor under the demand this year. rishaad: isn't this rally rather speculative? that's why prices have gone up this much. what is the view on that? reporter: this isn't exactly the first time you have seen crowds of investors piling into commodities and steel. wave.ly 2016 we saw a big that was at the start of china's wave of stimulus measures, which is still continuing. what happens is you have a pretty big money funds running into commodities. these are the players with a lot of cash behind the. and you get a lot of rookeries

-- brokers managing wealth management products. retail creates a lot of momentum china's commodities markets. you've got fundamental factors underlying the rally and an element where prices are getting a little stretched. what is the general consensus on all this? it's a very good question. if you asked me six months ago, it was prices were supposed to soft in and demand would get weaker. the prices in the first part of the year would not last. but the markets got stronger. steelhe bias is toward softening but remaining pretty and steel mills in china enjoying pretty good marches --

margins until the end of this year. rishaad: thank you very much indeed, martin ritchie from shanghai. coming up, the man with a plan. kim jong-un's ultimate aim is to unify at the korea's. we have brian myers joining us next. this is bloomberg. ♪

>> we have limited defenses. that's a good thing. we have been seeing the north korean threat developed for some time. as of right now, we have a limited but important degree of protection to give a little insurance in the event he does something unsettling. >> these trade actions should not be tied to our efforts in north korea. they are entirely separate u.s. interests. if we say we will back off on

usde, that will hurt obviously on trade. we have to stand up and keep moving forward in a solidly. -- solid way. significantls higher than historically. ykim jong-un is hard to predict. i don't think he is a rational actor. a lot of people say he would never use nuclear weapons because it would be suicidal. i think it would be suicidal, but i don't yet believe that is not a possibility. rishaad: some of the comments coming from our earlier guess korea.e latest on north over all a sense that people are taking stock at the moment, and as a result, frederick has become less barbed. that is helping equity investors. 1.3% gain for the nasdaq. the federal reserve's did signaled us -- that they would

tapering is -- taking place. let's go to north korea. our next guest believes they are not protecting themselves from the u.s., but they want unification of the peninsula. joining us is brian myers. thank you for joining us. both sides want reunification, although reunification by either would look very different, wouldn't it? >> yes. the korean states have very different ideas of unification. the problem is that in 2000 and 2007, the south korean government reiterated a pledge to form a confederation with north korea. the current president of south korea came to power promising to attain a confederation of the very near future, perhaps in his

term. keeps interesting when you in mind west germany always rejected confederation proposals because it meant recognizing the other as legitimate and because the other state regarded them as a trap. the great leader in north korea's history made very clear in 1973 that if south korea signs off on confederation, it would be "done with." the situation is comparable to a hollywood star promising to marry her stock in the near stalker to marry her in the near future, but still wants a bodyguard to hang around just in case. the u.s. is the bodyguard in this situation. dangerous situation to be in. rishaad: what about domestic ?olitics

how does the north korean society and the way it is framed and organized lend itself and project itself onto the international stage? tell us about that linkage. >> north korea is less interested in protecting itself on the international stage and protecting itself on the peninsula. this is not the failed communist state it has been made out to be for the past 25 years. i think that fallacy has been the most disastrous single factor in getting us to where we are at this point. this is an ultranationalist state, which from day one has been committed to reunify the peninsula and routing american troops. this is the final victory north korea talks about. when it talks about the u.s. stopping hostile policies, it doesn't mean military exercises, it doesn't mean donald trump's fiery rhetoric, it means the presence of u.s. troops, which it wants removed.a lot of the

wishful thinking in the west derives from the assumption that south koreans i like west germans. the same page, standing firmly behind constitutional values, intent on resisting north korea. it is just not that way. the south korean left has never developed and anti-totalitarian tradition. the north has been given very rotten signals -- round signals. it has been made to believe that if they could just get american troops off the peninsula, it could subjugate south koreans without bloodshed. this is a problem that will apparent. when donald trump and president way theered over the two countries look at north korea. haidi: we are getting lines from the south communion -- south

korean president delivering a speech today. he's urging north korea to stop with provocations and begin talks. no word on the korean peninsula and saying so prevent war in korea again at all costs. some lines coming through from the south korean president move -- president in his liberation day speech. going back to your theory that they want to reunify korea, where does that leave china? is washington barking up the wrong tree in terms of putting pressure on china to use leverage on pyongyang? >> that's exactly how i would put it. americans have been barking up the chinese tree for a quarter-century now in the chinae assumptions that would not want to see the peninsula unified under north korean rule. i think if you are china, you

are nothing more than to see american troops off the peninsula and you would be perfectly happy dealing with a unified peninsula under .yongyang's rule that is preferable from their standpoint to a peninsula unified under south korean role, with americans standing on the riverbank. haidi: has your view of the situation changed with donald trump at the helm in the u.s.? when you had the line coming out that north korea says the u.s. president is a man bereft of reason that kind of, paints in stark relief the image of two leaders potentially at the brink of military action, regarded by many as being very much inconsistent and unreliable. >> that is the regrettable thing about donald trump's behavior in the past few months. i think he succeeded in making the world believe there is some kind of equivalency here, that

both sides are equally to blame for what has been going on going back to. 2013 power,rack obama was in we were seeing exactly the same kind of rhetoric and saber rattling. there was more fear for years ago here on the peninsula then there is at the moment. people were -- x patriots were sending family's home. we need to take a step back and picture.he historical we are seeing the end stage of a strategy that north korea has been following for decades. donald trump is a convenient operation for the north koreans, but he's not the cause of the problem. haidi: we have to leave it there. very fascinating stuff. we have seen markets take a little bit of a breather from the geopolitical turmoil, but not the last of it. thank you for that. brian myers, a professor at a university from pusan in south korea.

the president of south korea is giving his liberation day speech at the moment coming up., why the philippines, taiwan, and indonesia are more resilient than you might think. that is next. this is bloomberg. ♪

haidi: this is "bloomberg markets: asia."i'm haidi lun in sydney. rishaad: i'm rishaad salamat in hong kong. chinese minor and then he has flagged first profits since 2014. glencore is expecting to post a net profit of $113 million for thatirst half of the year, is from a loss of $93 million a year ago. joining us is miners posting strong results, bolstered by a metals profits.

moody's and p's and movies have warned struggling commodity trading house noble may default on debt obligations in the next six months. they cut nobles rating deeper into junk territory, lowering by two notches. moody's also cut back to levels adding significant default risk from their operating cash. , declining liquidity and large that -- that maturity. rishaad: one president trump threatened to unleash fire and. north korea, the cost be in -- when president donald trump threatened to unleash fire and. on north korea, the kospi and hang seng took a stumble. most companies are their

revenues domestically. north asia, for instance korea and taiwan, earn 40% to 60% of revenues overseas. , thethere's turbulence next day you will see korea, taiwan, and hong kong move. indonesia, india, and the philippines are in a world of their own. rishaad: you have written that hong kong is perhaps the most precarious. is that a result of it having such a great year so far? >> partially. also hong kong is polled by china on the one side and the s&p 500 on the other. we have a regression alice's looking at hong kong's daily return -- an analysis looking at hong kong's daily return. basically for every percentage increase in the s&p 500, you

would see china going up 50 percentage points. rishaad: thank you. coming up, how will the philippines address the slumping pace? we asked the country's budget secretary. ♪

♪ announcer: from our studios in new york city, this is "charlie rose." charlie: the news in washington this week is dominated by missiles, mcconnell, and manafort. despite the crisis over north korea, president trump found time to call out mitch mcconnell over the failure to pass health care. the president's lawyer reportedly accused robert mueller of "gross abuse of the judicial process" after the f.b.i. searched the home of the former campaign chairman. joining me for perspective is the host of "face the nation," john dickerson of cbs news. welcome to thgr