paul: good morning. i am paul allen in sydney. we are under an hour away from the market open in australia, japan, and south korea. shery: from bloomberg's headquarters in new york, i am shery ahn. welcome to "daybreak: asia" this our top stories monday, u.s. stock futures tumble, and the yen top climbs on trade war escalation. the white house says president trump says he wishes he would hit china with higher tariffs

from the start. global uncertainty the most important issue for their markets as jackson hole discusses threats to growth. an hong kong protest take an ominous turn. place drug guns and fire a shot, as demonstration turned violent again. shery: let's get started with a quick check of markets. u.s. futures at the moment plunging 1.1% heard this after we ended the regular session friday and president trump escalated the trade tensions against china, saying he will boost tariffs. this coming after china's retaliatory tariffs. on friday we saw a negative sentiment across markets. the dow falling 600 23 points, the s&p 500 lower by tack and technology energy stocks. after chairman powell comments at jackson hole which raised speculation now about the fed potentially easing more in the coming months. that felt 3%.

continue to see these fears of recession. two/10 yield curve. we saw the three/10 yield curve. we are seeing that anxiety play out in the markets. let's see how things are playing -- shaping up in asia. a lot of anxiety across the markets here. we're seeing red across the board on futures as well as with new zealand trading now down about 1.5%. down 190 points. futures down 1.5 percent and a positive sentiment out of jackson hole being overshadowed by geopolitical risks here, concerns about an all-out economic war. this is after an already tumultuous august. of growthart on top concerns. yen we sought fault

to an all-time low in early asian trading at 1.1746. the previous all-time low was 1.14. analysts are expecting a graduate depreciation here, as we are seeing more pressure on the chinese economy with these escalations from trump about increasing existing tariffs higher. switching boards, taking a look at oil futures. a risk off mood we are seeing. 1.5 -- are falling about 2.5% here now. after closing 2.1% down on friday. oil is falling for the fourth day. this is the longest run in declines in more than five weeks. this is after already shaky global demand. now we have the trade war on top of that. seeing oil futures fall even more. right, thanks for much. let's get the first word news now. the tax on global technology and

potential duties on french wine were on the menu as the g7 wound up in de-risk, france. biarritz. infuriating the trump administration pumping threats of taxes on wine imports. france says the tax does not too late target -- the tax does not target firms such as google, anywhere. macron raised eyebrows by inviting the iranian foreign minister for last-minute sideline meeting. meeting was to de-escalate tensions with iran. the two met only 30 minutes he said the left other leaders were told in advance he was coming. >> the decision to fire the gun is the best option according to an officer. as clashes with protesters as later.

in a briefing police said the action was necessary as protesters were charging them heard police say they have arrested 36 people following sunday's protest. included several violent classes in the western territories. macau has chosen a pro-china businessmen as its new leader, after a put a protest -- process that featured no other candidates. leader be the third since the territory was handed back to china in 1999 after four centuries of role by portugal. unlike in hong kong, this appointment caused little public converse he, highlighting the cows week public opposition movements. macau's weekng opposition movements. billion, for $3.19 your final dividend per share now at 24 aussie cents.

against an estimate at 12 aussie cents year-on-year. in the past three months, has plunged more than 10%. we are now seeing their net income coming in at three point 2%. decks dictation was for a strong result because we have seen a rally -- the expectation was for a strong result because of a rally in iron ore prices. the focus this time will be on the outlook for the market. also progress on new project plans. at the moment, we are getting net income coming in. $3.19 billion, final dividend per share at $.24. our top story now, president trump has sharply asked leaded the trade war, and is one regret. the high duties on chinese imports. later said he is having second thoughts. the white house clarified that message, saying he meant his on the regret is not imposing higher tariffs from the start. china is not backing down either, with state media saying beijing is quote, cearley making preparations for a breakdown in

relations. ros krasnyditor is in washington. please excite what happens. president -- please explain what happened. president trump said he had regrets, people initially took that to me maybe he did not want to go as hard on china, and he is sensitive to the stock market falling. but stephanie grisham him mount and said if anything he regrets not having raised tariffs higher and earlier. that is a worry to markets. it seems on friday trump was very much taken aback by china's retaliatory move on tariffs, even though i think most people had expected them to make a move for a couple of weeks. and he hastily convened a meeting at the white house. now we have seen the results. at this point people are rattled

about the idea that president trump may invoke a national emergency decree to try to force u.s. businesses to get out of china. that is kind of a nuclear option, i think, for the u.s.. a lot of concern about that here. seeingyes and we are beijing also take a harder stance. tom, what has china been saying about all of this? >> china continues to stick to its playbook when it comes to how it responds to these trade actions from the u.s.. it implemented or announced the implementation of $75 billion worth of additional tariffs. in terms of the timing, that would be split between september 1 and december 15, into different trenches. that was in response to the announcement from the u.s. three weeks previously there would be tariffs on three had a billion dollars -- another $300 billion

worth of chinese goods. forhave heading back blow blow, then and slice of the rhetoric. that's we saw the state media you had the global times saying now there is seriously work underway, serious preparations for these tensions to continue to escalate, further deterioration in relations between the u.s. and china. times,tor of the global this nationalistic but influential tabloid newspaper here saying that the u.s. risked losing china, and pointing to not just tara -- tariffs but that banning of huawei, and u.s. actions in hong kong and taiwan, other zhou put glaciers as well. then the commerce ministry -- other geopolitical issues as well. then on saturday accusing the u.s. of bullying. the trade media saying the u.s. will fight this trade war to the end. the rhetoric is ratcheting up, hitting up -- heading back blow for blow other than trying to

overage. paul: there was also the suggestion from president trump that it is time for u.s. corporations to stop doing business in china. how is trump attacking corporate america now. as noted, he may try to use obscure national emergency power, rarely used by u.s. to putnt, to really try restrictions on u.s. businesses working in china or chinese businesses operating in the u.s.. this is something that has struck a nerve with business groups. they already were kind of thinking enough is enough, with just higher tariffs. now they are really very, very concerned. we heard from the head of the business roundtable, a business on grell a group -- umbrella group. tapping the brakes on business investment. he said the next move might be to really slam on the brakes. businesses like certainty.

they like to be able to plan their supply chains and other elements of their business or years and years, not just go from tweet to tweet. so they are very, very concerned. at one point that kind of stormed the white house to make their concerned tester concerns known. there certain -- to make concerns known. economist sees u.s. growth possibly falling below 2% on the latest tariffs. that is not a good environment for corporate earnings. you can see where the concern is coming from. paul: tom, you mentioned china feels at has already lost the u.s. to some extent. how seriously is going to take this threat of u.s. corporate divestment? very seriously indeed. out,s ros rightly pointed you have companies looking to taiwan, malaysia, some looking to move to the u.s..

you also have corporate's continuing to invest heavily in the chinese market. including tesla, ford, starbucks. china is having to weigh up these different pressures. it will strengthen the hands of those who have said, look, the idea, the proposition around decoupling is not an idle threat. this is now a view in the nsaid in the -- ascendancy trump administration. there'll because, you would expect for those here to see additional subsidies, for big state owned champions, for example. more support for chinese companies and brands. that indigenous innovation that has been accelerating since the trade war here in china. it strengthens the hand of those who have argued for more of that. you may also get additional measurements of lowering barriers for entry for companies or other countries outside of the u.s.. the european union, countries like to pound as well. and then there are -- countries like japan as well.

and then additional measures, nontariff barriers. when you talk to lobby groups, that is a key concern. those additional lobbies -- barriers, blocking deals, not signing off on the opening of new offices, hindering license applications, all of these kinds of measures. then there the -- there is the unreliable entities list, that china said it will publish at some point. the environment here will become much more difficult for u.s. companies, you would assume. even as many continue to invest in the chinese market. paul: all right, bloomberg krasny in washington and tom mackenzie in beijing. fires -- technology and fires the amazon. we will wrap up for the g7. shery: central bankers cannot say the down their own. a look at the fed's weekend meeting at jackson hole.

this is bloomberg.

paul: let's get a check on the markets, some of the haven trades now. we have the japanese yen continuing to strengthen against the u.s. dollar. spot 93. is closing in on that 2016 low that the u.s. dollar experienced with the japanese yen. take a look at gold as well gold rallying once in percent, now per ounce as55 the trade war continues to flareup. you see the yield on the u.s. 30 or slipping as well. uncertainty all the , fed chair jay powell has cautiously opened the door to another rate cut next month, highlighting the damaging impact of the es leading trade war.

surprisingly, that set off one of president trump's most vicious twitter attacks yet. our global economics and policy backr kathleen hays is from jackson hole. he compared mr. powell to xi jinping, saying he was the biggest enemy of united states. but i thought the signal of easing was something that the ?resident wanted to see echo > >> this is why they awaited is a speech. markets signals may be down the road. when he kicked off the symposium on friday morning, jay powell went into this and then send that signal, opening the door to rate cut your you see him in the marking with mark carney, the head of the bank of england. he said as he has in the past, yes the u.s. economy is fine now, but we have to look ahead, down the road. and tradelobal growth

uncertainty and muted inflation. list below one of his key statements. >> the global growth outlook has been deteriorating since the middle of last year. we know that is not going away. trade policy uncertainty seems to be playing a role in the global slowdown. he says its showing up in week manufacturing, capital spending in the u.s.. inflation is still below target. after this he went on to say that the federal act is a appropriate to sustain the expansion. that has been seen in the past as a sign there ready to cut rates. that got the stock market rallying. but apparently it did not impress president trump just we thought might of thought. because he came out fasting jay powell with us tweets -- blasting jay powell with tweets. let's take a look at this, first of all he seems to have been confused about what this meeting was. he starts by saying, as usual the fed did nothing. while this was not a fed meeting. maybe confused jackson hole with upcoming policy meeting. andave a very strong dollar

a very weak fed, and the u.s. will do great. my only question is who is the bigger enemy, jay powell or chairman she. - xi. that trump had tweeted traders coming. a tough day for stocks, but the fed part did not help iver. -- either. clinical, so much for independence of the fed. what was the reaction -- political independence of the fed. what was the reaction? kathleen: aghast. concern. what does this mean, it is undermining the fed as an institution. the concerned that fed independence is being threatened. saidn, everyone i talk to the fed, even though we are not perfect and do not know is make perfect decisions, that

independence of the federal reserve is absolutely critical for the american economy. kathleen: and for the federal reserve, let's remember. this does not seem to affect the rate debate, it is how they view the economy. pat harker says he is on hold for rate carts -- rate cuts. jim bullock says you have to run invert the yield curve. cut in 50 basis point september. the governor of the reserve bank of australia seems to be reacting to this his speech on saturday he said central banks cannot do everything with monetary policy, when politics and political disputes and geopolitical ventures, brexit, hong kong, et cetera, are weighing down on economies. i think he must have had something about trump and the text -- attacks globally on several banks in mind when he said that. -- on central banks. paul: plenty to watch on jackson

hole and the reaction to it. let's bring in our guest diana mousina economist, amp capital investors one of the highlights was phil lowe, rba governor's speech. he made a good point, there only much central banks can do in the face of so much political instability. to steady the ship. >> thank you for having me on. that is not anything new we have seen from the rba governor paid we have seen in recent commit occasions, the rba saying that fiscal policy probably needs to play more of a role here. we have seen that from others global central banks. mario draghi as been suggesting we need to see more fiscal policy as well in europe. thatpose it comes down to interest rates are at prevent zero in australia they are moving toward zero. so you are the lower bound of

what monetary policy can do. those central bankers are at a loose end. they cannot simulate the loot -- the economy any further using stimulus of monetary policy. it has been a matter of getting the government to act on that physical -- fiscal policy need. paul: the jobs market in australia has been the focus of the rba the last couple of meetings. is that about to be supplanted by this increasingly hot trade war? >> we think so. we see the rba cutting interest rates and month, and september. in a few weeks. that is the market consensus at the moment. is interesting you say that jobs in australia, it will be the key reason why the rba is going to move. we thought in the minutes of this month's meeting that the commentaryy -- toward the end was that they are probably looking at a more broad state of affairs in the australian economy and globally. even of the jobs market is

holding up, the unemployment rate is trading higher. not so much so that other issues plan more important role here. and trade is obviously important to australia and the rest of the world. and the impact that has on sentiment and on global many factoring, we can see that global manufacturing consistence -- conditions are at recession like areas. we think the trade war will be one of the key reasons why the rba decides to cut rates in september. we think will get another cut in november. shery: in the meantime we are not seeing earnings performing that great. that could be a catalyst for why the rba may feel compelled to move. where are seeing these downgrades and they aussie earnings environment. the earnings season this time around has not been too bad. we track the number of companies expectations. the number we have seen it come faces been over 30 expert --

30%. overall the earnings upgrades have been in the resources sectors. commodity prices have been strong nostril out. relying on commodities like iron ore, those are not taking a turn though. iron ore and coal prices are weakening a lot. and quite drastically. the outlook for the resources dr. is not a strong. other areas of -- the resources sector is not a strong. constructionntial activity we have seen developers follow over in australia. that is in line with our view that construction activity particularly in residential continue to weaken in six to 12 months, because we have had a boom in the housing market that is continuing to unwind. homeis not to say that prices have not found about improved with income price growth will be good over the next couple of months. sidney house prices are up by nearly 1%. thank, plenty more to

come on daybreak asia. this is bloomberg.

paul: let's get a quick check of the latest business flash headlines. some of the world weakest banks and advisory firms are making their case for role in the world's biggest ipo. saudi aramco has revived its much anticipated shout sale after shelving plans to buy a 70% stake in sabic. the company invited 20 advisory firms to visit its saudi hq and compete for role in the offering that could come as early as next year. shery: a 24% fall in first have risingglut over opposition titian among refineries. net income dropped -- down from 6 billion a year earlier operating profits slumped 51% to

$2.7 billion. sinopec is the most exposed of china oh copies. much more to come on daybreak asia. stay with us. this is bloomberg. ♪

tom: this is daybreak asia. i am tom mackenzie. president trump has further stoked trade tensions with his top spokeswoman saying he regrets not putting higher tariffs on china. stephanie grisham said the media misinterpreted the initial remarks about having had second thoughts. she says he doesn't regret starting the trade war but thinks he should have hit china harder from the start. the u.s. and japan have agreed in some of -- in principle to a trade deal for higher purchases american farm products.

they announced the news in biarritz, saying they have agreed on every point of contention. abe said there is still work to be done. they signed the deal during the yuan meetings in new york -- the u.n. meetings in new york next month. north korea follows up with a new super large multiple rocket. the latest test was unsuccessful or was, and kim jong-un saying it is a great weapon. president trump is not happy with these tests but that short range of tests are not a violation. he expects to meet kim again soon. a russian regret -- russian robot carrying a -- rocket carrying a robot failed to dock at the space station. they said there were problems in the docking system and second attempts will be made on tuesday.

the spacecraft took off on thursday with a robot called theodore in the pilot seat. the robot has not been taught how to manually conduct a docking. 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 tom mackenzie. this is bloomberg. we are an hour and a half away from opening in tokyo and seoul. what are you watching? reporter: stocks i am watching include lg can which closed up 3%. that tesla isrted agreeing to buy batteries from this company for electric batteries reduced in china. they will be used in the model wise -- model y's. this is not exclusive to lg

chem. and lg display closed down. they are beginning commercial productions for apple. this would be the first time lg display would be supplying those panels for the iphone. switching boards, look at this terminal chart. we saw the yen fall below the 2019 low against the u.s. dollar. it is going to the lowest since 2016. the next pressure to watch as you can see from this chart is the 104 level. when it reaches of it would be the strongest level since 2016. more on what we should be watching as trading gets underway in asia with adam haigh. just how bad is the markets' assessment of this latest flareup? it is a pretty across the

board off sale set up. futures, big declines for the s&p 500 futures. if you want one chart to send on to your clients, go to gtv . this is one which captures the yen which is of course yen dollar to a new level we have not seen for three years. we pulled fact a little but that was through that flash crash level at the beginning of the year. that put the lid on sentiment. all of this to do with trade escalations, a lot of traders thought they would be chat -- talking about jackson hole but comments are being overshadowed by the trade war escalation. reports we have been reading this morning about the significance of global gdp downgrades off of the back of this, morgan stanley saying it gets us further to the nearing of a global recession sometime

in the next six to nine months, so clearly a tricky start to the week for risk assets across the .oard open for u.s. bonds in half an hour, particularly interesting for futures and wealth, five or six basis points off of the 10 year treasury yield an australian bonds opened 10 basis points or so lower. it will be interesting to see the yuan fixing because we see the offshore yuan at the weakest against the dollar on record. what are traders positioning telling you? even before the latest escalation, you had already seen fairly pronounced positioning signaling people are betting on further declines for the chinese currency. you saw a little bit of a spike in volatility weeks ago with you on dollar hedge is coming back

and you would expect -- chinese yuan-dollar. we have gone through 7.1 per dollar, going towards 7.2, and you would expect the authorities would be thinking about spending some of this, because they want to maintain a sense of orderly move lower in the currency. we are starting to see moves that would test that. you might want to keep looking at that short. gtv , watch how the options market changes during the course of trading to see whether people are getting incrementally more sour on their views? haigh, you can find his charts on the library. not helping sentiment on china, protest in hong kong taking an ominous term -- ominous turn. one shot fired and protests

turning violent. beijing may have to intervene. stephen engle is following developments. this escalated quickly. we are getting strong words from the hong kong government and beijing. the hong kong government is saying these recent violent acts are pushing hong kong to a dangerous edge. we have heard these words before , but it is punctuated by the footage we are about to see, violent clashes last night and saturday between the more extreme elements of the protest movement and the police, where six police officers, they hold their sidearms and pointed them at protesters. one officer did higher his gun into the air as a warning. the police superintendent said the officer's life was in great danger. she defended the police use of force was a cesarean reasonable.

it punctuates the frustration boiling over on both sides. protesters charged towards the police and the fallen officer who apparently pulled his weapon. they have been charging them with metal pipes and other weapons including bricks and petrol bombs. footage in the daylight, the police also used their newly commissioned water cannon trucks, deployed for the first time. they use multiple volleys of tear gas, in the western new territories, and more clashes in bay.rn calvin a return to violence after a weekend, previous weekend of relatively peaceful demonstrations. can you update us on what beijing is saying in terms of its strongest wording yet intervening in all of this?

in a timely commentary from the news agency which is a government, let me read the comments instead of trying to decipher what they are trying to say. it does it is not only china's central government authority but also its responsibility to intervene when riots take place in hong kong. the commentary hearkened to words from the past leader who said beijing has to act under such circumstances. as you see the footage here of amassing, do iy daresay allegedly -- you can see them, but a lot of speculation on the major buildup of pla, people's liberation army soldiers across the border where the white house says there has , whatmassing of troops might be for large-scale

exercises, but also a bit of a threat to hong kong. now the protest, violent protests that turned in to a color revolution, aimed at overturning hong kong's constitutional institutions, and people read that as being the signal beijing could be ready for further action. david: stephen engle -- , thank youen engle for updating us. speaking to the former hong kong chief executive secretary. 10:40 watching us in sydney. but signs of future family feuds at the g7. we will break down headlines from europe. this is bloomberg. ♪ ♪

ongoing tensions between the u.s. and china as we see escalation with president trump announcing more tariffs on top of china's retaliatory tariffs. what will be the impact of this latest escalation? >> is very concerning at least to the other members of the g7 that had hopes to convince trump to take a more rules-based approach to engaging something in china. the g7 shares the u.s. concerns about the free market access in , even the role of soe's intellectual property theft but one a different approach from the u.s. and think a generalized escalating trade war is not the way to go about it when the g7 is teetering on the edge of a recession. trumps not appear as if has come any closer to changing his mind on china. if anything he has become more bullish with the idea he may even invoke special act called the international emergency economic powers act which would see him threaten to take out whatever u.s. businesses are in and the worsting case scenario and it doesn't look like the g7 has in any way, shape or form changed the substance of your -- or nature

of u.s. trade war to becoming a global trade war. betweene the escalation trade tensions, we are now expecting the g7 to not release a joint communique with president macron saying no one ever reads those, and that to read them only find disagreement. what do you make of this latest development? even if there would have been no real consensus, the whole point of going to these conferences was for leaders to try to find some common ground. now they are giving up one level process itself. precedent.cerning the cross had little choice. it used to be a family of values, the most advanced, economically advanced democracies in the world, a coming together of people, like-minded partners who saw the

world in the same way and came up with formulated responses. now it has become a tower of babel with mutual incomprehension by every one of these leaders, not just trump and the europeans but boris johnson and brussels, italians and french, french and germans. there is little maneuvering ground for striking a communique . the communique has more potential to embarrass leaders and default -- further debates. in some sense micron has managed trump i think to disarm from being able to hijack the g7 in the way he did canada's g7 signyear by refusing to onto a communique. he got rid of that idea altogether. what does it say about the state of affairs for the world's most powerful political alliance? west is in dire straits. point about shared

values, why would trump suggest russia be admitted to the g7, making it the g8 again? there is up support for it. -- not support for it. it was a nonstarter from the beginning. trump knew it would provoke fellow members. he sees the g7 as open format for debate, not coming together for like-minded partners. he doesn't see why putin should not be involved. the europeans say if you want to take china seriously, you have to take russia seriously. we will have to come up with a response on sort of a more strategic, more coherent vision of how you engage russia and china, and you can't have russia at the table if the g7 is the vehicle for accomplishing that. brexit would have been top of agenda. first as johnson's

appearance, has he made much opportunity out of being able to leverage the potential for a deal? >> was granted a reprieve as soon as trump walks into the room, brexit is no longer the frontline issue. we had an altercation between donald tusk, president of the european council, and boris johnson in the lead up to the g7 both ought to give each other blame for the possibility of a no deal, increasing likelihood. i think boris johnson had a tough balancing act and did well. he did not play all in the camp of the americans. donald trump sees him as an ally but boris johnson realizes that is a liability. he struck a balance. he stuck one with regards to the iranians. in as a reef and

the u.k. has held his line that it will keep with the european position here, french, u.k. position which is the nuclear accord is still the best way forward to de-escalate tensions with iran and the only way, and this is something trump was irked by. shery: what do you make of that visit by the iranian foreign minister? you would not have a high-level summit organized by micron without tricks up his sleeve. it has been donald trump with the most tricks up his sleeve, andon had to up the ante bringing in for a fleeting visit of six hours. it was in surprise move coming saturday night dinner whereby macron tried to get the g7 to agree to a need to be as good tensions.

donald trump for his heart seems to have tolerated it rather well. there was no twitter outburst, but he did stay in his roots note -- hotel and refused to engage but had no objections with the french, germans and british meeting with this man. it is a powerful summit -- statement from the europeans say the only way forward is to engage with iran. it is a policy dead-end to escalate with iran especially if the americans aren't even serious about this knowing what is next for them. they don't want to go to war or see an accord either. shery: let me turn to the domestic background because it seems macron or boris johnson, their approval ratings are pretty low. macron is below 32%. does president trump have more leverage on the global stage

aven at least he enjoys backing in the u.s.? presidents, but more than the european leaders. >> that is right. for anyone who thinks trump is unpopular in the west needs to look at macron's which are less than trump's. this is the new normal for many leaders in the west. they have to deal with this. it explains why macron was keen to make the theme of the g7 dealing with inequality, gender and environmental. he is trying to tackle the root causes of legitimacy deficit western democracies face, particularly in the wake of the yellow vests movement, which really pummeled his popularity. that,now recovered from but clearly he sees a need for

the west to rejuvenate his credentials by tackling these root causes that have caused the populist wave to begin including the election of donald trump. he hasn't made much headway but he has identified the issues. that would be framed as a victory. thank you very much for joining us. you can get a roundup of stories you need to know in today's edition of daybreak. bloomberg subscribers, go to dayb on your terminals. it is available on mobile. you can customize settings so you only get news on industries and assets you care about. this is bloomberg. ♪

paul: this is daybreak asia. i am paul allen. shery: i am shery ahn. let's get a look at business

flash headlines. royal dutch shell is being sued in australia over tax avoidance. the taxation office has been finding them for six years for the treatment in the project off of the northwest coast. at $500 is estimated million u.s. and relates to a dispute of $1.5 billion in tax to duction. planning aand is southeast asian electricity super grid and wants to be the power hub. they will triple the power they laosrom hydro projects in and will give to the rest of the region. shery: scouting parts of western germany, tesla looking for a europe.in germany -- they described in germany as a leading place in europe, the ideal place near the french border and the netherlands.

the tesla is the second-largest provider of electric cars in the next decade. markets open in tokyo, sydney and soul. let's go -- and seoul. let's look at what we are watching. losses werel of the not priced in on friday. we see red across the board, the trade war overshadowing jerome powell, saying the u.s. economy is in a positive place, nikkei futures down 3%, sydney futures down 1.8%. we had a report from morgan stanley saying if the u.s. raises tariffs on imports from china and china matches, the economy could be in a recession in six to nine months. looking at this very risk off news, we saw treasury futures surging to fresh peaks since september 2016 suggesting the

10-year yield will fall below 1.5% at 8:00 a.m. looking at japanese bonds, continuing to see the risk off move. a lot more coming up on bloomberg daybreak asia. ♪

paul: good morning. i am paul allen in sydney. shery: from bloomberg's headquarters in new york, i am shery ahn. >> welcome to "daybreak: asia" this our top stories monday. asian stocks set for steep losses as the yen climbs on trade war escalation. the white house says president trump wishes he had hit china

with higher towers from the start. fortescue want to watch this hour after earnings beat expectations. shery: and the hong kong protest take an ominous turn. police fire a shot as demonstrations turned violent. we continue to see downside pressure. we are seeing across the nikkei down almost 2%. topics also down more than 1.8% over the weekend we also saw on japanese focus news that the u.s. and japan agreed in prince ball on a trade deal, with the u.s. slashing tariffs on agricultural products, the u.s. would purchase large quantities -- -- japan repurchase quantities of wheat and corn. this overshadowed by the u.s. china trade war. take a look at korea, south korea and japan had vowed to maintain defense cooperation with the u.s.. afterting to that even

the decision to withdraw from the 2016 intelligence packed. we are seeing the kospi down, plunging about 1.76%. switching boards again, taking a look at what is going on in australia. reminder of what governor philip lowe said in jackson hole. central bankers have limited ability to cushion the global economy from a that headwinds of mounting legal uncertainty we are seeing that echoed by central bankers in jackson hole. .6% as 200 down almost well. a lot of market action. obviously, everybody has been absorbing what is been happening over the weekend over u.s. china trade. looks like a rough ride for equities today. how about haven assets? that's right. a tumultuous august. weeks shows that will continue.

some pain for traders. if you look at haven assets, the yen is climbing to the highest level since 2016. we saw that earlier break the perh crash high of 1.0487 dollar. $1550 perng above ounce. $1555 level the which is the highest since 2013. we are seeing this rush to haven assets continue. we saw the morgan stanley report that if tariff escalations go through, they say it global economic recession in the coming months. of course, traders are having a hard time figuring out how to price in all of these geopolitical headwinds. we are seeing that sustained rush to these haven assets. shery: to your point, we are seeing that 10 year yield now fall to the lowest level since august of 2016. we are talking about a 1.47% for

the 10 year yield. of course we have not seen this since 2016. that is when the all-time low was intraday at 1.31%. we continue to see the yield lower across-the-board, even the 30 year at the moment is below 2%. check in on the first word news now. hong kong police are defending an officer's decision to fire his gun as quote, the best option as clashes with protesters escalated overnight. at a press briefing a few hours ago, police say the action was necessary as protesters were charging them. police say they arrested 36 people after the sunday protest, including violent clashes in the western territories. macau has chosen a pro china businessmen as its new leader,

after a political protest -- process that featured no other candidates. he will be the third leader since the territory was handed back to china in 1999, after four centuries of role by portugal. unlike in hong kong, disappointment caused little public controversy, highlighting the week public opposition movement. attacks on potential duties on french wine were on the menu as the g7 wound up. techroposal to tax companies that make substantial revenues in france has infuriated the trump administration,, sing threats of 100% tariffs on wine imports. france insists the tax plan does not physically target u.s. firms such as google, amazon, and uber. raisedcalled also eyebrows at the g7 by inviting the iranian foreign minister for a last-minute sideline meeting. france said the arrangement with

zarif was a bid to de-escalate international tensions with iran. the two met for only 30 minutes before zarif left. the french team is that the other g7 leaders were told in advance that he was coming. news 24 hours a day and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am tom mackenzie. this is bloomberg. shery: let's get to another check of the markets. we saw the 10 year treasury yield dropped to the lowest level since august, 2016. moving toward that intraday record low of 1.3 one we reached in july, 2016. we continue to see the downward pressure on yields. the 30 year treasury also below the 2% market the moment. we continue to see yields around asia also at the moment falling lower. take a look at asian markets trading. we are seeing the nikkei falling

2.4%. this will be the lowest level since january 10th. that 212 level. the kospi is also falling to a two-week low, the asx 3%. we continue to see this risk off mood around the world as the trade war escalates. of the world's biggest corporations are heading back at president trump's latest escalation of the trade war with china. this after he ordered u.s. companies to start looking for an alternative to china ahead of the business roundtable said it members may halt investment of tension steepen. tariffs are the worst idea since the smoot-hawley tariffs act, which catapulted the country into the great

depression. ' president of the consumer-electronics association and joins us now. we continue to see this as collation of trade tensions with the u.s. and china. give us a sense of the impact on companies you represent, more than 2000 consumer tech firms. what would this latest escalation due to this firm? gary: thank you for having me. this is a big escalation, the biggest since initial tariffs were imposed. i have heard from many companies, including several-we all understand watch president trump is doing this. and there's a true menace about of support for his concerns that he is a stressing -- there's a tremendous amount of support for concerns he is expressing about china. but this is a turning, these tariffs. they are so random, so large, so quick. and you combine that with the mandate to get out of china, is

not being received very well they knighted states by the business community. -- in the united states. shery: your association has said it is right to fight against china's forced technology transfers and ip theft. how would you go about doing it? and what is wrong with the current approach. there are many options on the table. we think the united states should rejoin the trans-pacific partnership. it is a deal with many countries that wanted to compete with china. i'm not sure that present trump understands that or had understood that before. choking the wto where ip transactions can be litigated. also you can deny bad actors from china. finance markets or

access to united states. we have done that was other countries, but we could do it with businesses as well. and we have other bilateral agreements we should work out agreements with china. china is a tough place. we all recognize there challenges there. but you cannot ignore such a large, fast-growing economy. on the other hand, trump has succeeded in it one thing. every u.s. company with sick again operations in china is looking at how to move those elsewhere. it has been a dangerous policy to build so much there, problems eggs in one basket. dumb companies have done better than others about moving to the philippines, vietnam, buddy at, laos. taiwan, elsewhere. -- cambodia, laos, taiwan, elsewhere. that has been sped up a lot in the last year and a half. since this tariff war started. paul: what you make of the comments in the people's daily ,hat china has lost the u.s. now the u.s. risks losing china. where do you see this heading next in that context? gary: with this excel ration of

the tariff -- with this acceleration of this tariff trade war, there a lot of steps that can be taken. outside of the tariff angle. i do know how how you can go. going to 30%, 40%, 50%. these are two strong leaders fighting, they are two big elephants. we know that when the elephants fight, the ground gets trampled. other things can happen. there is a paid up horribles. i prefer not to go into them. -- a parade of horribles. i prefer not to go into them. if you have two of the largest economies in a battle, protect lowly when china's holding so much u.s. debt, and we have so many chinese students in the u.s.. they are buying so much what we do, from the finished products we sell or make, to line distancing intellectual property, because they are increasingly legitimate, it would be damaging to the world. we are not talking even recession. that is why i talked about smoot-hawley when i heard about this on friday. that was 1930.

mostess passed something, -- against almost every economist in the country saying trade war's don't work. let to the great depression that was only ended by world war ii. here we have a situation tariffs. there's only one economist that thinks this is a good idea that can be identified. sadly is the unique person giving president trump advice in the white house. paul: you mentioned recession, let's go there. we have morgan stanley now predicting one within six months to nine months. you think that is a credible risk echo gary: i think it is a real rest. i cannot imagine president trump would want that. if you could resolve this trade situation, it would give him the kind of booze he needs. right now people's 401(k)s, stock holdings are getting hit he is trying to press for lower interest rates. but he is also talking about moving capital gains task -- tax unless the holding. exceeded the rate of inflation, which would be a hugely similar

to the factor but if he does not resolve the trade war and if we continue going down with the volatility. this next week is going to be important to see what markets do, and how they react globally. i think he is concerned about the stock market. i think that is how he measures his performance since he's been president. it is a game he is playing, obviously with one other person in the world. but they are two very strong, very powerful leaders. except i think president trump has a timeframe, and that is the election in november. shery: what was your reaction when he saw present trump's tweet threatening to ban u.s. firms from doing business in china. what could businesses actually do to stop the president from making these very strong and harsh threats. gary: right now the owner with the present to do that is to use the emergency powers he has which he has been using only for broken nations. he has been doing it only for leaders of -- for rogue nations. his been doing it only for countries like iran. for him to extend this to china

on his own, it would incur the wrath of the business community and congress. i do not think that would go unchecked. what president is doing in terms of just declaring things and somehow mandating that every business get out of china, it would push us the wrong way. it was certainly hit financial markets even worse. for the companies themselves, now you still have american companies in china, and they are getting out in terms of at least their sales to the u.s.. but many companies, specially fortune 500, they are all over the world with facilities. we learned in japan with the earthquake, never made sense to put all your eggs in one basket. because that disrupts global supply chains. china is so cute, and it will take a while to get out of there. but companies -- so huge, and it will take a while to get out of here. he could say i will do this if you are not out of here in one year or two years in terms of production and at the u.s.. to say you must be out of the country as a u.s. company, is something that the reaction is pretty much shock in the

business community. coming after the greenland comments. coming after the i am the chosen one comments. there's a real concern i'm hearing from those who are suspect -- from those who were his strongest supporters in the business community about, what is going on here. is this something that is acceptable for a country that is as strong and morally righteous as the united states? this is a serious turn of events per it i think the stock market reflected that on friday. we will see what happens in the next 48 hours with other markets. and how they judge it. paul: consumer technology association president and ceo gary shapiro. checking in on the markets now. the u.s. ten-year recovering a little, 14762. to 147.28, that was its lowest level since august, 2016. in the asian equity markets, as you predict, the nikkei off the

.%, the topics off 2% here in australia where weaker by 1.6%. new zealand is lower as well. plenty more to come. this is bloomberg. ♪

they: let's get started quick check of the fx markets. we continue to see this move toward safe havens the japanese yen getting ground for the third consecutive session, strengthening the most against the u.s. dollar in three weeks. the top major currency of the year. as we continue to see volatility in the escalating trade war between the u.s. and china the offshore one now at the weakest level on record against the u.s. dollar. as we can to need to see weakness in the house he and korean won as well. the korean one weakening the most in three weeks against the u.s. dollar. it is para back some of the

declines but still at the 1218 level. paul: as you mentioned, the off sort you want opening -- asshore yuan opening at 1719 commons from u.s. officials and -- comments from u.s. and chinese officials .2 extended trade tensions. joining us is khoon goh head or asia research, australia & new zealand banking group yuan thee the offshore lowest ever. how important will be the fix that will be very important. markets will watch very closely. the chinese authorities have allowed the yuan to become more flex about since early this month in response to the 10% tariff wasn't trump imposed. now with the latest escalation in tariffs, i tickets clear the chinese authorities will

continue to allowed the you want to respond and help offset some of these latest tariffs. to me, even though the fixing will probably come in on the strongest side of expectations, to try and rein in the one-sided moves, i think the broader action is clear. we will be in for further weakness in the coming weeks. yes, politics casting a long shadow over everything at the moment. in that context there could be some support for the one history suggest that the pboc does like to shore up the yuan in times of national importance. the first of october the 70th anniversary of the prc closing in. yuan mightk that the remain stronger until then? and what happens after october 1? >> the question is at what level would the yuan stabilize ahead of the long golden week holiday.

. we are still in late august. there still scope for the yuan to weaken before we head into that. of stability ahead of the first of october. in this regard, i believe we are probably in a new hire trading range, looking at potentially heading toward the 720 level mark in the near term. perhaps that is the level where we could see some stabilization. of course a lot will depend on how things progress between the u.s. and china, whether received further escalation or some de-escalation which is still possible. sentiment, itrket is certainly very negative. i think we will see further bouts of risk off and with downside risk to growth growing, i think that will be spill away effects into other asian currencies. shery: we are already seeing that in the south korean won. the minister -- the finance minister say they will need to take steps on fx regardless of

currency levels. there watching closely if the market becomes unstable. we are heading toward the bok rate decision this week as well. how will this play into the calculations of policymakers? >> i think it is very complicated mix for policymakers in the region. we have already seen them ease policy in response to weakening growth. and the rate cuts by the fed have helped asian currencies to cut rates without having to worry too much about destabilizing their genetic financial markets. -- with trade tensions heading into new territory, it is fair to say asian central banks will need to do more to provide support to growth. our measure of financial conditions in the rena -- in the region is still restrictive. suggesting it is still exerting downside pressure on growth. that's why think further interest rate cuts from the region is needed to try and even

-- these financial conditions peers is not just banks. increasing authorities as well when need to step up. monetary policy by providing more fiscal stimulus in order to support domestic growth. shery: in the meantime, we are seeing haven demand for the japanese yen, which are does not help the boj. what can we expect out of japan, if the strengthening of the japanese yen now already, one of the top-performing currencies in the developed world, if this trend continues? khoon: there's not a lot the bank of japan can do in the immediate near term to offset safe haven demand. what it might mean is it might force them to also join in the easing party of the other major central banks as well, in an attempt to also ease financial

conditions in their economy. in terms of safe haven assets, it is not just the traditional ones like gold and japanese yen that are commonly talked about. within southeast asia, the emerging say haven currency is the high lot. thaie the tie bought for - bhat performing strongly. will probably see the bhat continue to outperform even with trade tensions. shery: plenty more to come on daybreak asia. this is bloomberg. ♪

paul: this is daybreak asia. i am paul allen in sydney. shery: i am shery ahn in new york. doubling the dividend to 24 hours a cents.

surging iron ore prices helped fortescue beat estimates with -- $3han 12 and dollars billion in 12 months through june. fortescue is the world's largest iron ore exporter after bhp, rio [-]o, and ]- earnings force in tech. net impact -- sino tech net income dropped down from year earlier. most exposede among china's top three oil companies to fall in refining margins. shery: a quick check of bond markets trading at the moment. thesetinue to see recession fair and trade were fears roiling the markets. 1.5%0 year yield now below

after falling to the lowest level of august, 26 team. jgb alsoe of the around that. the boj's preferred range. play more to come, this is bloomberg. -- plenty more to come. this is bloomberg.

>> this is daybreak asia. i'm tom mackenzie with the first word headlines. president trump has stoked tensions with his spokeswoman saying he regrets not putting higher tariffs on china. the white house press the media misinterpreted the president's initial remarks about having second thoughts. she says he does not regret starting the trade war. japan have agreed in principle on a trade deal that will include higher purchases of american farm products.

president trump and prime ministers shinzo abe announced the news during the g7 meeting in biarritz. done forll work to be the two sides. the aim to formally sign the deal during united nations meetings in new york's next month. arth korea has followed up string of recent missile tests with what it says is a new super large multiple rocket. casey na says the latest test was successful" kim jong as saying, it is a great weapon. president trump says he is not happy with continues weapons tests, but the sort range launches are not a violation of sanctions on pyongyang. he also says he expects to meet kim again soon. a russian rocket carrying a humanoid robot has failed to dock with the international space station. offia's space agency risk says the failer is because of problems in the docking system. second attempt will be made tuesday.

the unmanned spacecraft took off thursday with a robot in the pilot seat. the right space agency says the pilot has not been taught how to manually conducted docking. global news 24 hours a day on air and tictoc on twitter powered by more than 27 jury lists in more than a hundred 20 countries. i'm tom mackenzie. this is bloomberg. paul: let's get a market check wang.h selina we saw markets battered and bruised on friday. now that is continuing into the on the back session of trumps announcements. and those of bankers at jackson hole. take a look at the nikkei down more than 2%. new zealand down 1.7%. 1.52% and the kospi

down 1.5% i want to point out more on the korean economy. it is leveraged to trade and vulnerable from these most recent trade/and headlines. these corporate and household could see significant pain as exports continue to dry up. that korean won is vulnerable as well. have seen that we can significantly, rising most in three weeks with that 121 .940 level. that south korea will take steps in currency if markets continue to be unstable. take you look at muse verse in the market. lg household and -- movers. lg is -- was downgraded to sell at goldman ahead of the weekend. another to receive a $50 billion yen lifeline in october. the company makes iphone screens. and fortescue is down more than 3.7%. that is after reporting a record

annual dividend and full-year earnings that tripled on surging iron ore prices, net profit rising to under 63% in the 12 months to june 30. 263%.ing to shery: bloodwork strategist mark cranfield joins us from singapore. in less than an hour, all focus is on the yuan, fixing the offshore yuan at the moment, the lowest on record against the u.s. dollar. what should investors be watching out for? pboc has been pretty pragmatic with the way they have been doing the fixing so far. -- there havebeen not been major jobs from one day to another. they teach -- they seem to be taking an incremental approach. it would be surprising if they were to change the pattern today just because the offshore yuan has moved over the weekend.

of course the offshore yuan is freer to trade an onshore, so you would expect a gap between the cnh and the c and y traits. trades.y - and cny traits. we would expect the longer the trade war goes on the weaker that you want will get. and that pboc will recognize that is what investors will be expecting. they will not give encouragement to that. the last thing i want to encourage is disorderly markets. they can look around today and see there is enough frenzy, whether it is in equities are gold. they do not need to add fuel to that. i would think they will just be and theincremental move dollar-cny will be slightly higher than friday. it is unlikely they will want to trigger anything that sets off a big move in the yuan, considering everything else is jumping around anyway. shery: one of those things, the hung saying index.

help when you see protest p what should we expect of the open? it is that a couple situation for hong kong stocks. the u.s. and china ratcheted up the trade war of the weekend. when you see the ongoing disputes between the demonstrators in china and the fact that, even in hong kong, they used the water cannons as well this weekend, it seems to have deteriorated there. there's very little to help out hong kong at the state. if you are an investor look at hong kong equities, you may be thinking i want to keep away from this for a while. that means we will probably see it pretty bad day for hong kong equities. people will be looking at where the next major support levels might be. we might look back as far as

october last year. that is quite a way below where the market is trading now. beenome people would've last week into a small recovery in hong kong stocks. there will be short-term traders who have small bullish positions as well. as a pretty uncomfortable looking position for the hong kong market today. you can expect a pretty nasty day across asian equities. hong kong could be one of the worst-performing. havens. are saying japanese yen. do you think there's a chance we're going to see a takeout that november 2016 low of one of 4.46? 46/4, . >> there's a chance. after what happened over the weekend. there's an all bets are off

situation. people are probably going to jackson hole thinking there would have been some moderation. they would've been caught out by china increasing tariffs and trump responding right away. where into new territory now. people looking back to say ok, what is the worst case and arias that can play out they'll be starting to think about -- worst case and arias. -- worst case scenarios. ity will wonder whether might return to $104 yen. that is the kind of scenario we .ight -- extreme oozing gold, inequities. old, inme moves in equities. the dollar is one of those. to move in the coming weeks. strategist park cranfield, thank you. you can follow more on the story and that day's trading on our markets lifelock.

you can find that on the bloomberg at mliv go. thee's also commentary from expert editors you can find out what is affecting your investments right now. reporting beating estimates. from melbourne out to discuss fortescuelts, david, raped the benefits of iron ore's first half search -- reaped the benefit. how about the coming half? a different picture. >> exactly. that is the question on the minds of investors. certainly it is where those iron ore prices are headed that is the real concern. we will hear later this morning from fortescue's executives. and hope to get some sense of their outlook. what we do know is that extraordinary surge in iron ore prices we saw through the first

half of 2019. they have really reaped the benefit of that. we have seen annual dividends lifted to a record, as you mentioned extraordinary for your results there, 3-2 billion net income -- $3.2 billion in net income. beating analysts estimates. it is all about the four looking case now. fortescue looking to do what they can to add premium iron ore products. that will help offset any declined to the benchmark. the majority of the market sees the iron ore prices heading lower. so what we can expect is a reduction in profits this time. next year. shery: is that what other major producers are saying? david: there is that skepticism

about the outlook, driven in a small part by that confusion over, where's china's growth going, what are the impacts of the trade tensions that mark was describing. it is the more difficult outlook for iron ore. some specific supply-side issues in the early part of the year, also increased demand. both of those factors are now reversed. we heard last week from bhp, the world's largest mining company, they see more price volatility ahead for iron ore. they see it could be one year to three years before the markets really settled back to where it was at the end of last year. cautious.also we will hear later this morning from fortescue on what they see at the likely outlook. course fortescue more exposed than others to what happens to iron ore prices as iron ore as their only product.

what progress are they making on their growth projects? that's right, not only exposed to iron ore, but also incredibly exposed to china. 90% of sales. they fluctuate on those factors. it is looking at various growth options. they lacked again they are making progress in places like ecuador and libya and argentina, where they are looking for colombia ecuador and and argentina. fortescue is a company that will move beyond simile being an iron ore producer and become a more diversified producer of metals. you for the latest in melbourne. coming up next, a return to violence as hong kong protests taken ominous turn. will discuss the deepening unrest. this is bloomberg.

paul: this is daybreak asia. i am paul allen in sydney. shery: i am shery ahn in new york. violence referred to hong kong over the weekend. police fired a shot. in a sign that beijing may be losing patience, china sent a strong warning it may send in the troops. "anson" fang was the number two official after the chinese handover. we appreciate your time. we have heard people say that beijing wouldn't bear -- derek, to hong kong, that they have the police to act -- dare to come to hong kong that they have the police to act on their behalf. i hope that beijing will

never feel it necessary to send in the troops. not come to that point. but i fear that the longer the government goes without responding to any of the public events, then the higher the risk of escalating. it was very sad to see balance returning to our streets -- violence returning to our streets yesterday after a very, very peaceful march by 1.7 million hong kong people the week before. we have heard signals coming out of beijing including the state run news agency that it is there's possibility to intervene by the state authority. we continue to see the violence play out. what will break the impasse. >> i would not describe the general situation as a riot. yes, there are incidents of a small number of protesters resorting to violence.

but by a large, the crowd has been very, very peaceful demonstrating and reiterating their five public demands. so i hope very much that beijing will see this as continuing sign of social unrest and furthermore that beijing will feel it necessary to give to our chief executive some latitude so that she can accommodate some of the public demands. on the weekend, the chief executive carrie lam did invite 30 people to government house, in attempts to lease tensions. -- these tensions per breathe air and if not did you hearing thing about that meeting. no i did not expect to be invited. yes we did read from the newspaper some of what went on. the point is, there's not much point in setting up this so-called dialogue, unless and

until ms. carrie lam is prepared to seriously consider the public's demands. it is not as if she does not know where these protesters are coming from, what are their main worries, and their public commands. but she has so far adamantly refused to succeed to any of them. two - to aery -- ccede to any of them. it is all their wealth have a dialogue, but if it leads nowhere, this will -- it is well to have a dialogue but if it does not lead anywhere will add to the anger protesters. paul: we saw on the screen the list of protesters key demand. on the top is the withdrawal of the extradition bill. considering that has been shelved, does it strike you that withdrawing would be a fairly low cost, goodwill move. and why has it not happen? yes.: nobody understands why the chief

executive refuses to enter the word withdrawal, when she herself has conceded that the bill is all but dead. that being so, why don't you just complete the formality of withdrawing the bill, which then would satisfy the community that it is well and truly dead. and that the next time the government proposes to put forward similar proposals, it will have to start fresh. the other public demand that has received 80% support from the community, is to establish an independent commission of inquiry under the chairmanship of a reputable judge. to get at the facts surrounding this current crisis that we are facing. because until and unless you establish the facts and the truth, it is very difficult to take the first step to heal this very serious rift that we are seeing in hong kong society today. shery: is withdrawal enough, were carrie lam have to go.

will at leasthere have to be to demands that are entertained, which i have just mentioned. but i also feel that if the chief executive is not willing to take some of the very difficult decisions that will need to be taken, in order to allow hong kong to move forward, then yes, she should move aside and make way for something else. question, welier have seen the escalating rhetoric coming out of beijing. we have seen several editorials as well in china, claiming you are one of the masterminds behind these protests, labeling you among other people as a gang . how concerning is this and how do you respond. ofn:i think it is of course concern, to those people who have been named. actually theeeing state propaganda machinery in full swing.

smear campaign that has been mounted against me and several others are -- on very spurious grounds, we'll just impress hong kong people that we are no longer enjoying a high degree of autonomy. that one country, two systems is rapidly becoming one country, one and a half systems, and racing will become one country, -- system, that are sitting that our civil liberties are being seriously eroded day by day. and very soon the rule of law will be put at risk. it is what is behind the current crisis. it is the most serious crisis hong kong has had to face in the 22 years since the handover. and i think both are government and the government in beijing would do well to understand the root causes of this current wherebynd think of ways

they can harness the energy and the intelligence and the abilities of the hong kong people. this would be good not just for hong kong, but for the nation as a whole. now council members said recently that he sees a golden window to get this crisis solved , before the politically sensitive day of october the first, the 70th anniversary of the p.r.c. founding. if these protests are still rolling on october 1, does that increase the odds of a heavy-handed response from beijing? anson: it certainly could. but i'm sure mr. xi jinping would want to see the celebration on the first of october go without incident. so let's hope that between now and then, something will give, and perhaps ms. carrie lam will be allowed to sit down and have a serious talk with the protesters. and be prepared to concede on

some of these demands. right, former hong kong chief secretary "anson" chan . still more head daybreak asia. this is bloomberg.

shery: this is daybreak asia. i am shery ahn in new york. paul: i am paul allen in

sydney. a quarter the capacity used by global sportswear brands is lying idle. the exodus is making factories offer discounts to companies to use their dormant production lines. factories are under an pressure. shery: royal dutch shell is being sued in australia over tax avoidance. the u.k. guardian newspaper says the taxation office has been finding shells level subsidiary for six years for the project off the northwest coach. the bill is estimated at but her mother million u.s. dollars. -- at 500 million u.s. dollars, and 1.5 billion in tax inductions. thailand plans to create a southeast asian electricity super grid and want to be the power trading hub at the center. bangkok is proposing to triple the amount of power from hydro

projects in laos and resell what it does not need to the rest of the region. thailand has been pursuing the idea for 20 years, but has struggled to achieve enough government coronation regionally. shery: asian stocks in government bonds down across the board as we continue to see a risk on sediment spread. risk on sentiment spread. selina: ahead of the china market oh been i am watching offshore yen sliding to a record 7169 level. all eyes will be on the pboc yen fixing shortly. we have seen the pboc taking incremental moves. they will be watching to see how weak the pboc let's that slide. take a look at this terminal chart. we see that we are not yet in the panic sewn. the volatility levels are still far below those 2019 highs. stocks i'm watching ahead of the

market open, hong kong protests continue to rage on. cathay pacific said over the weekend it will show zero tolerance to employees who support illegal protests. there's been a lot of volatility for that stock after it named a new ceo. it has been suffering from a sales drop amid those protests. down about at the last close, 1.35%. i'm alto that's also watching great wall motor which will be reporting earnings later today, bmw's joint venture partner in china. bmw's efforts to make electric minis in china may face uncertainties. shery: a quick check of the market across asia. downside pressure across the board, with the nikkei falling 2%. this is bloomberg. ♪

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>> it is 9:00 a.m. welcome to bloomberg markets china open. yvonne: we are counting down to the open of trade in hong kong and mainland markets. david: markets down across the board as the chinese currency hits a record low. the trump ramps up the trade war and the white house says he regrets not hitting china harder from the start. bully on futures rallying almost 2%, the highest since 2013. tom: hong kong faces even more pressure as police fire a live round.

beijing hence it is