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tv   Bloomberg Daybreak Australia  Bloomberg  October 7, 2019 6:00pm-7:00pm EDT

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paul: welcome to daybreak australia. i'm paul allen. shery: i'm shery ahn. we are counting down to asia's major market open. ♪ here are the top stories we are covering. washington confirms china's top trade negotiator will be in town on thursday. the agenda will include tech transfer come intellectual property right. s. the white house backtracks on turkey's incursion in syria. president trump says he will smash the economy if they go off
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limits. president trump says that leadership in beijing should meet the demonstrators. shery: let's get you started with a quick check of the markets. u.s. futures under a little bit of pressure after the trump administration announced 28 euros and companies in china that will be added to the u.s. blacklist. we have seen the s&p 500 lose about a half a percent in the regular session as energy and consumer staples led declines. oil giving up the biggest gains in more than two weeks on conflicting signals about trade and energy demand, but also geopolitical stability. the focus this week will be on the trade walks -- talks in d.c. not to mention fed chair jerome powell speaking on tuesday. we are getting the fomc minutes on wednesday. what are we watching for in asia? paul: well, at the moment, we have the market open, new
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zealand that has been trading for a little over one hour. it is currently weaker by 1/10 of 1%. in australia, everyone back to work after the public holiday. futures pointing higher by one third of 1% after we did close recently higher on monday. futures out of seoul looking flat at the moment. payment datag for for the month of august. nikki futures a little weaker, even though the yuan has backed off a little. let's check in with the first word news. from the san index francisco -- china is probably growth isas it -- the likely more volatile than the numbers indicate. the physical activity tracker uses eight indicators including retail sales and exports to estimate how it deviates from the underlying trend. it says china is slowing but not
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about to collapse. trade talks back on track this week. the white house confirming top chinese negotiator will be in washington for negotiations on thursday. the administration says they will look to build on lower level discussions in recent weeks. the agenda will include forced tech transfer, intellectual property rights, and enforcement. the white house also welcomed a trade deal with japan. president trump and prime minister abe agreed to all outlines of the deal last month. the digital trade agreement has now been signed. the u.s. agreed to hold off lacing tariffs on cars imported from japan, but tokyo is concerned the administration might change its mind. the hong kong subway system is almost back to normal on tuesday after a long weekend of protests that left several stations badly damaged. some stations will remain closed and all trains will stop running after 8 p.m.
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president trump has warned china trade talks will suffer if "anything bad happens to the happens to the protesters." president trump: i would like to see a humane deal to be worked out and i think president xi has the ability to do it. i think if he, met with some of the leaders, that could be one problem, you don't have a specific leader. thana: powered by more 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul? paul: thanks. the trump administration is blacklisting eight chinese tech companies overinvolvement in human rights violation. the move comes on the very day deputy trade negotiators begin trip -- preparations for high-level talks on thursday. let's assess all of that with trade -- sarah
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mcgregor. what is the administration doing to restrict these companies? sarah: in similar fashion to what has been done to huawei and previously to zte, the u.s. administration is blacklisting a bunch of companies, video surveillance companies, ai companies in china. what is new about this action is previously, these blacklists have been mostly over national security grounds, concerns about the national security threats of these companies. the action would cut off u.s. suppliers to these companies as the punishment for it. in this case, they are citing human rights violations against these minority muslims. i think that this marks a new front in the trade war with the trump administration, trying to use a new excuse, a new reason for cracking down on china. shery: tom, this is not the first time we are hearing of these names.
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there so much focus on these specific companies? primarily, we are talking about surveillance and camera operators and camera makers. that is the likes of hikvision. the ai companies. in terms of surveillance companies, if you combine them both, they make up, account for about a third of the global market for surveillance companies. importantly, they are involved in and part of the system, at least according to the u.s., of mass surveillance on almost an unprecedented size and scale in chin zhang and involved in helping the chinese authorities there to control that population. you also have what are described as reeducation camps, people have called them concentration camps, that hold up to one million.
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these companies are expected or at least the u.s. says are part of that system of that control in the camps and the region. and then you have the ai companies. them is the most valuable ai company on the planet. again, cutting them off from doing business with u.s. companies will have significant ramifications. they provide the software used by the u.s. which helps in the surveillance base. that is why these companies are being targeted by the commerce department in the u.s. paul: great timing. just as trade talks are about to start in washington. is this going to go down with the chinese delegation? tom: clearly, it will not go down well at all. the issue with huawei is a major stumbling block for the chinese and it has been made clear by chinese officials in private and public that they need to see that huawei situation, the
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blacklist resolved. now you have this added to the list of issues that have to be tackled between the two sides. it is not going to go down well. we heard from trump reiterating his desire to get a comprehensive deal. we had that bloomberg scoop suggesting china is not going to on the tabledies when it negotiates with the u.s.. it is looking for a narrow deal. the two sets will knock heads over how much they want to get out of these talks. this adds another layer, another wrinkle of complexity to negotiations that are already pretty torturous. in terms of hong kong, you mentioned that. president trump making comments about the fact he wants to see a .umane resolution in hong kong if the situation became more complicated, it may make the issue of getting a trade deal more difficult. also commenting on hong kong. trump reiterating his desire to
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get a comprehensive deal. this action will make things more complicated. shery: also complicated is the state of trade policy in the u.s. sarah, blacklist coming up at a time the president is signing the u.s.-japan trade deal and also commenting on the stalled usmca. what is the latest on those different fronts? sarah: absolutely, this notice came out when trump was speaking about his trade deal with china, usmca. giving hope that perhaps some progress can be made. in washington, these deputy level trade negotiators are meeting for the next round of high-level talks later in the week. as tom was saying, it is one step forward, two steps back it seems like. one minute, it looks like there is progress with china and maybe they can get a limited deal. maybe there is some baby steps on agricultural purchases. the whole thing is thrown into
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question because of a move like this. as tom said, these are big companies. i think huawei became a little bit of a political football in the talks right now. it became something that trump would say is not officially part of the talks but would negotiate with. one questions whether this will sour the talks or it will be used as a leverage point for the trump administration to get something this week. shery: thank you so much for that. our thanks to sarah mcgregor and tom mackenzie. in the u.s., the white house is adding to the confusion about u.s. policy towards its longtime kurdish allies in syria. president trump first sparked widespread criticism for endorsing turkish military action against kurdish forces, and then he about turned and said he would destroy the turkish economy if the army does anything he considers to be off-limits. now the white house says the president never gave the ok for topi to cross the border.
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we will try to make sense of this with joe. help us understand where the president stands in all of this. joe: this all began sunday night after a phone call between president trump and president erdogan of turkey. the white house put out a statement saying the u.s. troops would not stand in the way of an operation by turkey going into the areas held by the u.s. kurdish allies and u.s. forces would not be involved in any way. that created quite a firestorm of criticism in washington from many of trump's allies among republicans in the senate, including one of his staunchest defenders, lindsey graham of south carolina. they denounced the idea that the u.s. would pull back and let turkey go in. that began a bit of a rollback by the administration, first from trump with his tweet, and then just a little while ago, an
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administration official briefed reporters saying the u.s. gave no green light to turkey to go into the border area with syria. right now, we seem to have reversed back to what policy had been, although the u.s. is still planning to remove a couple of, a few dozen military personnel who are in that area. and the next steps remain to be seen what turkey does. paul: joe, where does this leave u.s. allies of those kurdish forces that have been historical allies of the u.s.? what is it mean for them? joe: that is still unclear. will the u.s. provide them some production -- protection? will the u.s. forced turkey to back off? turkey considers these kurds as militants and terrorists, and has long been at odds with them.
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if the u.s. has not said what they will do further kurds at this juncture, except that president trump says they would do something beyond some "limits" or anything inhumane, the u.s. would respond. shery: this is going on as the impeachment drama continues to brew in washington. what is the latest on that? joe: there is another hearing tomorrow morning in washington, getting a deposition from the u.s. ambassador to the european union who is at the center of a lot of these interactions with the ukrainians and whether or not there would be some sort of ofeged quid pro quo in terms u.s. aide to ukraine. that is the next step. they are proceeding, the house democrats are proceeding in pace
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demanding more documents from the white house, state department and others, including the president's personal lawyer rudy giuliani. there are several more steps this week. they will also be hearing from the former ambassador to ukraine who was called back by trump last may. they have a lineup. so far at this point, those witnesses are expected to appear. thank youright, joe, very much for joining us. still to come, as we houston rockets deal with the fallout from the daryl morey swiftly deleted tweet, the risk of doing business with china. evans ties up trade talks decoupling jobs. and provide some insight on what to expect from the market. this is bloomberg. ♪
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paul: i am paul allen in sydney. shery: i am shery ahn new york.
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stocks declined as investors weigh the outlook for trade deals between the u.s. and china, that is on top of a string of weak eco-data we had last week. let's discuss this with medley global advisors ben evans. great to have you with us. we have some bad eco-data last week but as it happens these days, when you get bad news on data, investors keep thinking, maybe the central banks will come into play and you get good news. at what point does bad news stay bad? ben: it does feel a bit like that. the deceleration of the sector showed up last week and it showed up in the jobs data in the u.s. too. there was a concern that we are in the stage of the trade war really impacted not just in asia where it obviously is, but here in the u.s. too. actually, if you dive into the
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jobs data, the states that are trade whereve to trump had a narrow win in 2016 there are job losses in the manufacturing sector. things are happening on the ground as a result of the trade war. yes, the bad data stays a bit bad. shery: how much has already been priced into the markets? because we don't see that underperformance in the china exposed stocks that you might expect given all of the tension between these two countries. ben: that is true. still a definitely group that things worse could be priced in but globally, everywhere it is flat and inverted. signaling the bond market is convinced this is a trade war that has more negative impact then what the markets have been seeing. while the equity market is not only driven by low rates and central-bank stimulus, but the
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prospect there will be some forms of breakthrough at some point. yet, the bond market has been right by indicating the economy is a lot slower than what people thought. paul: to your point on the bond market, let's jump into the bloomberg and take a look at this chart. this is the fed's preferred measure of inversion. still inverted. what is this telling you about the risk of recession? ben: inversion is indeed still there, but it is slowly receding. part of this is a function of rate cuts by the federal reserve and other central banks. and partly the market discounting. at some point, this recession may be here in the future, it will be priced into the you curve. i think we are getting to the point here where we might steepen a bit more. it is an idea that yes, we are
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hitting subtraction of gdp next year that may be leads to the recession. we are at a point where we have to look forward for the next few quarters, that you might see much curve. paul: the u.s. jobs report probably did not do a great deal to end the dissenting views of the fed but more broadly, is the fed running out of options? is the real catalyst now something big like a trade war resolution? ben: i think the latter is important. it will have a major impact on sentiment. if you do get a resolution, confidence will pick up and market sentiment will turn in a different direction. yields will somewhat normalize. that will be very important to have, resolution. because there is so much uncertainty around that, the central banks are looking at tools they have used before --
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wanted of easing and rate cuts -- quantitive easing and rate cuts. there is a limited space. the european bank came out so strongly about fiscal stimulus. at some point in the u.s., we will have that too. i think central banks can do a lot. there is still more quantitative easing and rate cuts. shery: we have seen the potential of the fed actually going and doing some qe in terms of expanding their balance sheet given the funding threats we have seen in the markets. what does the liquidity position look like? ben: it is year end. getting the tightening of financial conditions. it is a bit technical. the repo situation that we had recently is another sign of that. what the federal reserve will do is starting the reserves to be reinvested. they will be reinvested and the
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reserves will expand that is organic. to catchake some time up with the currency growth. but italleviate a bit will not be year-end, it will be by the second quarter of next year. i think we will get a little bit of tightness here in the last number of weeks of the year. that will be a strain on the market. shery: something very technical or could we see some shades of 2018? ben: a little bit shades of 2018. we had a lot of technique at the same time because of the uncertainty. we are dealing with an agenda ahead of us that could cause new uncertainty. we know the trade talks are coming this week and whatever comes out of that. we also have october 15 and december 15. if they go up, more uncertainty. hong kong or elsewhere. my think the markets are very
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cautious going into this year. there is some level of comparison to what happened last year. paul: just very quickly, on the issue of the trade war, do you think politically that the u.s. is now getting into a space where it needs something to happen? ben: you would think so, because it is necessary that after all the escalation we have seen and the talks going on, this is the 13th round we are going through. that there will be some breakthrough at some point. this reminds me a lot about the european debt crisis. numerous negotiations and eventually some resolution happens. trump was somewhat optimistic in terms of that there was going to be a big deal. you hope he is for real what that -- with that. the chinese delegation on the table as well. it comes down to this, that you want both parties to shake their hands and move forward from this.
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we want to see this resolution. markets remain really cautious on what that actually will be. that is why you get this tightening of commissions at year end. shery: always great having you with us. thank you. of course, if you are away from a screen, you can always find in-depth analysis and the big newsmakers on bloomberg radio. broadcasting live from our brand-new studio in hong kong. tune into daybreak asia from 9 a.m. in sydney. you can download the app, bloomberg radio plus or listen on this is bloomberg. ♪
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shery: a quick check of the latest business flash headlines. the trump administration has placed eight chinese tech companies on a blacklist, accusing them of being implicated in human rights violations against muslims. the list includes a video surveillance company.
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some analysts say they control a third of the global markets for video surveillance. paul: the union representing pilots of southwest airlines is suing boeing for rushing the rollout of the 737 max to stay competitive. the suit claims boeing made a cap related decision to rush a reengineered plane to market. the union is seeking at least $115 million for damages sustained through this year, primarily for lost pay and legal expenses. shery: still not clear what apple plans to spend on content for its upcoming tv plus streaming service. bloomberg intelligence says the huge pile of cash means programming will not be a problem. assuming relatively few subscribers in the first year, apple would burn about $6 billion, almost twice the amount of negative free cash flow at netflix. apples 2020 cash flow is expect
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it to top $60 billion. you can get a roundup of what you need to know this edition of daybreak. it is also available on mobile in the bloomberg anywhere app. this is bloomberg. ♪
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paul: 9:30 a.m. in sydney. we have the market open 30 minutes away and we have futures pointing modestly higher, after we saw u.s. equity markets trade a little weaker on monday succession. i'm paul allen. shery: i'm shery ahn in new york where it is 6:30 p.m. let's get the first word news. ritika: thanks. chinese companies trading in new york just missed a session after larry kudlow dismissed a speculation they could be delisted. alibaba and initially reversed earlier losses, while tencent paired declines.
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baidu fell sharply throughout the day. the mood did not last long and all for companies closed the day in the red. >> the delisting is not on the table. i don't know where that came from. we are looking at investor protection, u.s. investor protection. compliance with the number of laws. ritika: the world bank is joining the growing list of institutions warning about global growth. this is the outlook is worsening with the downturn in europe, and trade tensions, and the uncertainty surrounding brexit. the president says the world economy looks even weaker than in the world bank's june forecast of 2.6% growth this year. most in august since president trump warned it would obliterate the turkish economy. the president sparked criticism
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by allowing turkey to cross the border of syria before backtracking and making his warning. the white house is adding to the confusion by saying he did not authorized military action against the kurds. climate change activists rallied around the world, blocking roads and major cities and cultivating in a die-in outside the new york stock exchange. it is part of a worldwide extinction rebellion campaign, demanding more urgent action from politicians and big business. the campaign started in australia and new zealand and rolls on through europe and finally into the u.s. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. let's get a quick check of how markets are trading across asia. we are seeing kiwi stocks under pressure now after two sessions of gains.
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city futures were higher, 4/10 of 1%, but futures stopped trading before the trump administration announced a 28 chinese entities would be added to the blacklist. we will see how they do. futures unchanged after they barely moved in the last session. nikkei futures under pressure, 1/10 of 1%, as we see the japanese yen trading around 107.22. we have seen the nikkei move ground in the previous session as well. paul? paul: let's get some more on what we should be watching as trading in asia gets underway. trade talks likely to keep investors on their toes after losses on wall street. our across asset editor is here. we also have chinese markets reopening after a weeklong holiday. hong kong coming back after a day off. what can we expect to see? andreea: a lot is riding on these trade talks and that will
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be the focus today. the outcome is not clear. we have that news on the blacklisting of these eight companies. for reasons of human rights violations. that could further strain this tension between china and the u.s. just as they are embarking on these high-level talks. we saw those losses in the u.s. and that will probably weigh on the markets a little bit. data overall also remains weak as there was concern about global growth increasing. we have a chart that actually shows bond bears are starting to retreat. they are cutting the short treasury positions. that is as it is declining and the outlook is deteriorating. a lot is riding on these fed minutes we will see this week. investors will scrutinize them for clues on the fed's thinking. that is as traders have bets for further -- for further rate cuts. in asia as well, china coming
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back after a weeklong holiday. hong kong returning after that long weekend where we saw escalating tensions. as wellgoing to weigh on sentiment in asia today. paul: we just got a little bit of breaking news from anz bank. aussiea $559 million charge for customer really meet -- remediation. this is connected to ongoing fallout from the royal commission of misconduct. we saw a similar charge announced from the national australia bank. we will see how anz responds with the market opens. million aussie59 for customer remediation. the second half likely to be impacted by that. move,a, in a surprise asian chipmakers have been driving a technology rally.
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what is going on there? andreea: this is quite interesting. the index is up almost 20% this year. that is beside the trade conflict and the down cycle in global chip sector. this rally has largely been driven by chipmakers. investors are starting to see a bottom forming for the global memory chip cycle. one reason is samsung electronics. the shares are up 24% this year and there is some optimism ahead of its earnings, due out today. alsoave tokyo electron, have done very well and have helped asian techs shares largely outperform the broader markets. bullish on chipmakers. a slide in prices slowed considerably in the fourth quarter. there is some optimism that investment in 5g technology increases, this will lead to more demand for chips.
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some positive signs out there underpinning these gains in asian chipmakers. shery: we will be watching closely for those results. we have been talking about a bottom for chipmakers for quite some time. thank you so much, andreea. you can find her charts on the library on the bloomberg. now, the nba is trying to hold on to its multibillion-dollar relationship with china. the league hopes to contain the damage after the general manager of the houston rockets tweeted in support of protesters in hong kong, a move that inferior rated basketball fans in china and saw the rockets lose vital sponsors. other u.s. companies are feeling the pain as well. our retail reporter jordyn holman joins us now. we know the bans on starbucks is the latest. jordyn: american companies are finding it increasingly difficult to stay out of the controversy around the hong kong protests. the nba got caught in that.
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vans, a popular sneaker company, they hold an annual sneaker design competition. there was a design that had a hong kong flag with protesters that was removed from the competition. backlash andg boycott calls because of that. in addition, starbucks is facing boycotts to pull out of beijing. american companies are just trying to figure out who's aside they will stay on and to make sure they don't lose customers in the process. paul: these aren't the first major brands to suffer from the protest. what other brands have suffered from their views or just the crime of having their stores located near the protests? jordyn: a lot of stores have stores around these protests. talking about levi strauss, prada, a lot of the luxury brands have had stores to shut
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down because of the safety of associates. a lot of the ceos say they are seeing declining sales in the third quarter because of the month-long protest. shery: the nba, we heard in 2018, 800 million people were watching nba programming in china. that is 2.5 times the entire u.s. population. we know how important it is for the nba, right? how crucial is the chinese market for all of these firms? jordyn: i think the nba is a great example of showing increasingly american entities are looking for growth and growth is in china. in the past few years, a lot of companies have invested money, time to build up their business to cater to the chinese customer. this is a moment with these hong kong protests of where do they stand? making sure they are not losing customers. they are speaking to chinese officials in the proper way. it is a tricky thing, especially when a lot of the ceos making
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these decisions are halfway across the globe. paul: bloomberg retail reporter jordyn holman, thank you. trade talks back on track this week with the white house confirming the top chinese negotiator will be in washington on thursday. joining us now to look ahead to those talks is labright stonebridge group amy. we heard some news this morning that the u.s. will blacklist eight chinese companies, including hikvision, over treatments of the weaker minority in the province. that is interesting timing. what sort of impact will that have on this week's talks? amy: yeah, you are 100% correct on that. it is going to certainly dampen the mood for any kind of positive resolution to come out of the talks this week. i think in advance of the october 1 holiday, we saw some good willed gestures being taken
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by the chinese side. they signed some agricultural purchases. by the u.s. aside, the president delayed implementation of the tariff hike that was scheduled for october 15. together, that really signaled that both sides wanted something to happen during these talks this week. fast-forward past this october ofiday by the chinese and, course, on the u.s. side, our president of course in some ways drying the chinese into the implication that china ought to investigate vice president biden's family. the chinese responded not well to that, that they would not be drawn into internal affairs of the u.s. following that, the vice premier signaled the chinese side was not willing to talk about subsidies, industrial policy at
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these talks this week. governmentu.s. 28eased its intention to add chinese entities to the entity list, which means u.s. companies will be restricted in selling any technology to those entities. yes, indeed, that goodwill we saw a week ago seems to be diminished significantly in advance of the vice premier arriving in washington. paul: the president was saying he wants a big deal but the chinese have been walking that back, saying they have been narrowing the scope. considering all of these developments and rhetoric prior to this week's talks, realistically, is a small deal the best hope and the most pragmatic hope here? amy: well, of course. for quite some time, most observers were seeing the
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possibility of a comprehensive deal being quite remote, because of both countries. neither side has been signaling a willingness to compromise on some pretty fundamental issues. so, small deal is what many were hoping for could come out of these talks this week leading up to president trump and president xi potentially meeting at apec next month. however, it looks like we have muddied the waters of the possibility of a deal this week by some of these external issues. we have not even mentioned hong row over the nba's owner, one of the team's owner actually saying something about the hong kong protests which the chinese citizens as well as government has reacted quite negatively to. i think that will impact the trade talks this week as well. as senators, presidential candidates here in washington,
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d.c. are starting to really push back on any implication that chinese citizens where the chinese government has the right to sentence or -- to make americans self censor about the hong kong protests. shery: is that why the president keeps bringing up the hong kong issue? just a few minutes ago, the president was calling for a humane solution in hong kong. that is not something that china wants to hear about coming from the president just days ahead of the trade talks. amy: indeed. the administration has been quite reluctant to get drawn into talking about hong kong. certainly, president trump has been reluctant. we are seeing that shift and the president making a statement about hong kong likely in response to some pressure internally. of course, the administration also taking the step to sanction these chinese companies further
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implication into surveillance of muslim minorities. these are human rights abuses accusations. that is something the trump administration also has been reluctant to get involved in, but both issues this week coming to the fore in advance of the trade talks. shery: president xi jinping has hong kong. president trump has his own impeachment drama unfolding in washington. who has the upper hand? amy: i have a feeling that both sides believe that they do hold the upper hand. i think the vice premier signaling in advance of the trade talks with the chinese government will not included in these discussions, talking about industrial policy or subsidies or enforcement policies. that seems to me to signal the chinese side of things it can take issues off the table because they have a little more leverage right now. i think president trump
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continues to focus on the fact that the chinese economy is weaker. of course, the hong kong situation unraveling gives the u.s. side in some ways a little more leverage. i think the danger is that both sides see themselves having so much strength that neither side needs to compromise and having a deal that will help american companies, chinese companies and our economies. paul: how about the political dimension? because president trump facing some domestic pressures here. there is the impeachment inquiry. there were some difficulties with the jobs report and some of those rust belt states. do you think the chinese negotiators have a sense of this and that might be part of the calculation for just going for a more incremental approach heading into 2020? amy: i think the chinese side sees the president's vulnerability on the potential for a slowing u.s. economy if we
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continue not to have access to the china market for our exports, particularly our agricultural exports. that is where the chinese government has signaled its willingness to reopen the doors to american agricultural goods. i think that was supposed to be a sweetener for trade talks this week. but the u.s. aside has been consistent in saying that is not enough. there is additional issues, market access restrictions, intellectual property issues that should be part of the deal. i think the chinese side again is trying to get a half loaf deal to be accepted on the u.s. side. i think the mood here in washington, d.c. is going to make that very difficult to achieve this week. shery: what is the best we can hope for on thursday? amy: the best we can hope for is a continuation of these talks. i think if the two sides don't
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see talks break down over disagreement over what should be comprised within these talks, if that is not happen, a best case scenario would be the two sides agree to continue to work towards president trump and president xi meeting in november in santiago at apec, and having some kind of resolution at that time. that would, again, allow more sales of u.s. products to the china market and prevent the chinese government from may be signaling that they don't welcome american companies to continue to operate in china. that could be retaliation for what we are seeing here in washington with this bif entity list against chinese companies. shery: thank you so much for your insight. amy celico. if you missed any part of this conversation, tv is
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your function. watch past interviews, watch us live. you can dive into any of the functions we talked about and become part of the conversation by sending us instant messages. this is for bloomberg subscribers only. check it out. this is bloomberg. ♪
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shery: one of the federal reserve's most ardent doves is are going once again for more rate cuts just today after one of the fmoc's most ardent hawks says she is not convinced more stimulus is needed. kathleen hays has this story. neel kashkari against esther george. who wins? kathleen: let's talk about what they said. neel kashkari, president of the minneapolis fed, he was arguing for 50 basis point cut. he has been firmly on this all year. important voice.
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today, he said the risks are rising. saggingal economy is and inflation is still far below its target. he said we should be supporting the economy, not tapping on the brakes. in one very distinct sentence, he summed up his most powerful point. >> i'm happy that we are cutting interest rates. i don't think we should have been raising them. how much more do we have to cut? i don't know yet. kathleen: let's move on to esther george who defended against rate cuts in july, in september. the argument has been for some time the economy is ok, the labor market is still strong. consumers are spending money. you don't need to cut rates unless the slowdown has deepened. if the data calls for it, sure. interesting too, but she says inflation is below the 2% target by not that much. inflation is not quite behaving
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as it used to. will cutting rates make inflation a big target? esther george's position is no. it's pretty clear the jobs report last friday did not really change anybody's view. i think we will wait to see for something that does. paul: well, how about the fed chair jay powell, is he going to be the policy tiebreaker? kathleen: on friday, everybody was geared up to come out with the jobs report and give us a sense of are you tilting towards the rate cut. it was only a six paragraph intro to an event. he's speaking tomorrow at the annual meeting of the national association of business economics in denver. it is the perfect place for jay powell to look at the economy, look where fed policy has been and give it a sense of where he things it is going. his recent mantra has been the economy is in a good place. but after the last meeting when the fed cut rates and he did his
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press conference, he said the fed will do what it needs to keep the expansion going. if he repeats that, he's at least open to another rate cut, certainly in october, maybe the end of the year. he has said also that research shows if you are in the instance of the economy slowing, that is the time to be preemptive. don't wait and see. you want to be. preemptive. one more thing that is interesting -- jay powell was speaking in california. there is a movie opening about martin echols. he was one of the legendary fed chairs. he was crediting him for making sure, enshrining central-bank independence. that is what the movie is all about. however, with the assault on his independence, and has a ring to it. shery: thank you so much. findurse, you can also
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in-depth analysis in the day's big newsmakers on bloomberg radio, now broadcasting live from our brand-new studio in hong kong. this is bloomberg. ♪
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shery: that is almost it for daybreak australia. we are seeing some pressure for kiwi stocks after two sessions of gains for kiwi equities. we are seeing a little bit of upside first sydney futures, up 4/10 of 1%. the futures stopped trading before president trump put a eight chinese entities onto a trade blacklist. futures,omes to nikkei
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under a little bit of pressure at the moment. that is it from daybreak australia. we will get all of the action in daybreak asia next. this is bloomberg. ♪
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paul: good morning. i am paul allen in sydney. we are under one hour away from the market opens in japan and south korea. shery: i am shery ahn. welcome to "daybreak asia." paul: our top stories this tuesday, washington confirms china's top trade negotiator will be in town on thursday. the agenda will include tech transfer, intellectual property rights, and enforcement. the white house backtracks on turkey's


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