good morning. to daybreak:me asia. ♪ our top story this monday, no great expectations, china increasingly reluctant to agree to a trade deal and the topic has narrowed considerably.

hong kong recoils from one of its most violent weekends yet. vandals attacked across the city. more pressure on president donald trump, he may be faced by a second whistleblower as impeachment drama moves on. kathleen: let's get onto the asian markets. a bit of an update on the u.s. on friday after the jobs report was good enough to make investors by more stocks. how does asia look this morning? thana: after that better expected u.s. data ahead of the weekend, it looks like the focus for investors is squarely back on trade with the latest headlines saying the china side is looking to narrow the scope of discussion, not providing any positivity ahead of the talks. it is looking like asia trade will get started to a muted and mixed open. china and hong kong markets are closed in australia is on holiday, which is why we might see some trading.

last week, the nikkei fell 1.5%. osby futures fell last week. to the trade headlines, markets are digesting the hong kong protests dragging on as well as the headlines. attching boards and looking currency reactions to the latest trade headlines, a little bit of a risk off sentiment. losses, downarlier about 1/10 of a percent. earlier we saw the yen strength into a one month high. looking at the offshore yen, it is weakening to the seven point 12712 level. aussie and new zealand dollars are weakening. data,f the economic taiwan september exports are due

today. the forecast is for slow down but it is one of the bright spots when it comes to asia's largest exporter. also looking at china's pmi composite and services will be imported indicators after we saw the mixed picture when it comes to china's manufacturing pmi. differences between numbers and the official numbers. zealandan's ppi, new pmi, and singapore retail sales. kathleen: moving onto a big story. chinese and u.s. negotiators are preparing to restart long stalled trade talks this week in washington. we are learning that china is going into the talks with new reluctance about a broader trade deal. we are going to our senior editor in singapore. you have spent a lot of time in washington and asia. when you look at the two sides, they are going into a negotiation. if they are not serious, maybe we can ignore the pre-negotiation talk, but if they are the least bit serious,

these talks, both of them set up to go in with leverage? astutei think that is an point. i think there is a certain amount of leverage building at this point. our reporters are showing that china will walk into the talks with a lot of things off the table. specifically they are looking at pulling off the idea of dealing with their own government subsidies, chinese industrial policy, and presenting an option for more limited deal. that is quite a thing to take off the table because as you know, if you been following u.s.-china trade talks for a long time, that is really a core u.s. complaint. some might say is the heart of the u.s. complaint. to bring an offer that doesn't include that suggests china is looking for, at max, a limited deal out of this. paul: does this look to you like

pragmatism? after all, after all of the hot rhetoric we've heard on things is a limiteduawei, deal a realistic first step? the japan deal that the u.s. just struck could provide a template for a limited deal to get the door open, to get practice and doing the deal between the two sides, feel what success looks like. while still maybe weaving forward on bigger issues. the second thing i would note is both the u.s. and china are kind of in a spot right now where even though neither wants to back down and looked to be backing down, they are both in the spot where concessions on key issues could be really helpful. if you are looking at china right now, with the african swine fever disease that has china,ted pig herds in

they could really use agricultural imports, some of the u.s. pork to help supply and move pressures downward on pricing. on the american side, i know we have talked a lot about this but it is really true that donald trump does not want to have an economic slowdown walking into a 2020 election fight. maybe easing off on some tariffs might help on the presidents side. we are looking forward to this, there really are some good reasons for both sides to concede, even though neither wants to be looking like they are conceding. paul: all right. thank you for joining us as we await the beginning of those trade talks. hong kong is reeling from one of its most violent weekends in the long-running democracy protest. shops and subway stations vandalized and banks and atm's knocked out as well.

stephen engle joins us from outside the admiralty subway station. dramaticrough another 72 hours in hong kong. stephen: that's right. there are irreconcilable differences between the hard-line protesters in the government. the government late last week of voting emergency powers to ban facemasks but protesters showed up this weekend with facemasks, defying the emergency ordinance that dates back to 1922. there are other measures the government can invoke under the sweeping emergency law. so far they haven't. this is the first up and it didn't do much good to contain the agitation of protesters, as any businesses that had china in the name or perceived ties to china were attacked and vandalized. late last week, when i saw protesters light a fire in front

of an entrance way to the subway system here, a protester came up to me and said, why are you calling it vandalism? well, it was vandalism regardless of what side of the political spectrum you stand on, but she said it was retaliation for some of the steps and closures they took. nonetheless, it was vandalism. what i gathered from a number of protesters i have spoken to is they are justifying their behavior and this vandalism because of acts by the government and specific companies. we are at a standoff with neither side giving in. nothing the government does helps the situation or resolves the situation. it seems to infuriate the protesters even more, at least the hardline element. saturday there was a bit of a lull. the weather was turning a little bit sour. but yesterday, hard-core

elements came out again. you can see the gateway behind me to the admiralty subway station, the entire station will be closed all day today. keep in mind, it is a public holiday in hong kong. are, youostications point becauseot maybe people will turn out, maybe they will take a rest, we simply don't know. tohleen: i want to switch the government, and so must a two-part question. looking at the 1922 not allowingded facemasks, which is why protesters came out again. the pro-democracy contingent of the hong kong government, 25 of them, asked for a temporary injunction against the move and it was turned down. the hong kong government is divided. we have china in the background celebrating the 70th anniversary

of the republic. what does it mean for the government and what is next? generally --e is these are broad answers -- but two answers -- two options for the government to take. they can take more broad measures under the 1922 emergency provisions ordinance. it could include a curfew or a clampdown on the internet and publications. it could also include possibly the extension of the police detention period. right now, the protesters -- excuse me, the police have 48 hours to hold those arrested before charges can be made, otherwise they have to release them. they can do like the british did in 1967 and do away with a 48 hours so the courts have more time to build a case, the police have more time to build a case for the prosecutors. they could also make the courts run 24 hours to help process these cases. there are number of different

steps they could take. on the others, the government could given to some demands and that could help alleviate some of the pressure that has built up in society. the government has given no indication they plan to do that. asia chief moore correspondent stephen engle outside admiralty station in hong kong. let's check in with su keenan. numbers in thel u.s. are showing a worrying sign that job losses in manufacturing are possibly indicating serious weakness. total employment at factories contracted by about 2000 positions last month, and economists have been exciting again of 3000. these are the latest indicatn of the beating u. manufacturing is taking amid the global slowdown and president trump trade war with china. two brexit, reports from london say prime minister boris johnson will refuse to resign over brexit and is prepared to

challenge the queen to fire him if he fails to win a new deal with the eu. the times says johnson will not step down if his plan is projected by brussels and will not step down if he loses a vote of confidence in parliament. johnson says brexit will happen while the mps voted to prevent that in the event of a no deal brexit. china's foreign currency holding dipped in september with official figures from the pboc low estimates to only just over $3 trillion. china boosted its gold reserves for the 10th straight month to almost $63 million, with the current value of $93 billion. the reserve bank of india meanwhile says it will ease for as long as is necessary. this after lowering interest rates for a fifth time to support a slowing economy. benchmark cut the repurchase rate by 25 basis points, in line with the majority view in a bloomberg survey.

the governor echoed comments president mario draghi, saying he will keep an accommodative policy for as long as required. 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. i'm su keenan. this is bloomberg. paul: thank you. we have plenty more to come on "daybreak asia." ther damaging headlines for trump and mr. asian, i whistleblower may come forward. what it means for the impeachment investigation. kathleen: and next, after a somewhat upbeat jobs report for the u.s., the ongoing trade war with china and slowing global growth. this is bloomberg. ♪

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this is "daybreak: asia." paul: there was something for everyone in the u.s. jobs report. president trump lauded the tight labor market is unemployment hit a 50 year low, but payroll at factories contracted and economists had expected again. the data is called decent but not overly impressive. our chief economist joins us. the job number, something for everyone. will it be enough to into the dissent in the fed? furthermorehink so, hawkish members, 3.5% and overall employment up also point -- up will support the view they don't need to be doing more. also, the trade war is starting to pinch and that will support the doves think the fed should react and move ahead of the curve and provide more monetary

support. i think we will see another rate cut. probably in october and then likely again in december. paul: what other rate cuts doing other than propping up equity prices? overseeing evidence of the cheap money being put to work in terms of growth or inflation? sarah: a good question. were seeing a turn in the housing construction cycle in the u.s.. employment supports household. also mortgages are a little less per month and that is critical, it will keep the u.s. out of recession. it should be having an impact at the margin. what you are right, a lot of it is floating around in equity markets and pumping up those prices, which is less helpful in terms of growth for the u.s. economy. kathleen: it is kathleen in new york. after george speaking tonight,

president of the kansas city fed speaking in denver, i believe their bank is kicking off a listening conference. she said unless there are signs of abroad slowdown in the is,omy -- she said if there she could provide more accommodation. on the other hand, it seems like the fed chair himself, jay powell, is in favor of more preemptive moves, moving before you can see it is actually damaging the economy more severely, and when you see things like the curve steepening. how many more rate test you guys see this year? sarah: we have two more for this year. we think the preemptive motivation would be the driver. one coming up this month, just over a week, and another probably at the december meeting. that might get pushed into early next year, but from an economic perspective it doesn't matter too much when that one occurs. wo think it is to more -- t

more in the near term. they are trying to get ahead of the potential spillovers from the manufacturing and drag the trade war uncertainty is creating in the broader services economy. if we see the spillover start to take hold, it will almost be too late for them to counteract and the economy will enter into a recession and then yes the rate cuts will help back out, but they are trying to avoid the downturn in the first place. we think the preemptive will win the day on the board, but we are likely to see dissenters still dissent, because from their perspective, nothing has changed in terms of the help of the economy and the need for rate cuts or the lack of a need for rate cuts. kathleen: in the reserve bank of australia, a cut and they -- and a lot of people are expecting another cut. the head of the rba in jackson hole, he was saying rate cuts can't thwart trade war effects, has to be from the fiscal side.

he has grown a lot more concerned about australia and the downward forces in the global economy. what do you see there? we've i think over here got a few domestic headwinds as well. the global picture is ,hallenging but we've also got unlike the u.s., we have a chronic weakness and wage growth and it's just not picking up. our jobs position is not as healthy either. our unemployment rate is about 5% right now. we have domestic headwinds around consumer spending and the residential construction cycle, opposite of the u.s., we are going into a downturn in construction activity, not coming out the other side. i think that is fueling the need for rate cuts in the rba's mind. they haven't taken the focus away from fiscal policy, they are still pretty clear that additional spending from the government, they are focused on infrastructure products, --

projects, would be beneficial. there are other options for fiscal policy, income tax cuts, for example. spending on current consumption as well. there are a lot of options for the government but generally speaking, more fiscal support for the economy would be welcome from a jobs growth perspective at this stage. paul: let's talk about the risk of recession, a recurring theme. it is not your base case, but how big is the risk and if it would happen, how severe would it be? sarah: in the australia context, is not our base case for sure. australia has a number of fundamentals that make it hard r the untryo go ito cession. population growth, for instance, is really robust, more people are spinning more money. the risk of recession in australia is low, and for it to materialize, we would have to have a continuation of the current domestic trend and a much bigger international shock. as for the global economy more

broadly, that is where we see the risks coming from the risk of recession in the u.s. is relatively elevated right now. even our base case is no recession but it is very weak next year, well below 2%. lower with some factors coming through. looser monetary policy generally. across-the-board we would like to see more fiscal policy, more use of additional spending, and we think the multipliers from that would be substantial, comfortably above a 1% boost in terms of spending, it would give us a 1% bang in a gdp growth. there's a lot of tools on the table but the government is not choosing to use them. paul: the complaint of central bankers the world over. there is plenty more to come on "daybreak: asia." ♪

paul: this is "daybreak: asia." trump maypresident have another whistleblower to deal with now. the lead attorney representing the first says his firm is representing multiple whistleblowers, making for a new 12 in the impeachment drama. let's -- making for a new twist in the impeachment drama. let's get to ross krasner in washington. i want to talk you about how this plays into trade. china's nearing trade talks suggests the ground has shifted between the two countries ahead of these discussions. could have to do with china's sense that the whistleblower and talk of impeachment has drastically weakened donald trump? ros: that's a great question and i think it is casting a shadow over everything in the trump

administration, even the north korean talks in stockholm this we can come and certainly the trade talks. china may feel that a weekend -- weakened trump can't get everything he was wanted. he has said as recently as last week he doesn't want a partial deal. but it may be that he feels he needs a win. we have talked many times about how he watches the stock market like a hawk. he wants stocks to be higher and to be able to talk about 401k's. i think china feels like it has the upper hand, and some of the major structural changes may have not wanted to do but suggested they would consider seem to be off the table by now. it makes the stakes for this week's talks really hi, i think. ros, let's talk about

other talks. low or mid-level ones, north korea over the weekend, they did not go terribly well. what happened? ros: another interesting development. apparently the two sides spoke for 8.5 hours on saturday in stockholm, and after that, north korea's envoy came out and basically said they don't want to have further talks with the u.s., even though more talks have been offered for a couple of weeks time. they said the u.s. brought nothing to the table and seemed to indicate that even holding the talks were a bit of a political circus for the u.s. once again, this is one of s signature moves, his diplomacy with north korea's kim jong-un. i think pyongyang may feel they have a bit of an upper hand. they've been testing missiles on an offer several months and they

may feel like it is time for the trump administration to give them something. paul: all right. thank you very much for joining us. some in hong kong, citizens are looking for a way out. that is next. ♪

keenan. su we start with north korea and the u.s. which are at odds over the success of nuclear talks in stockholm. the first meeting for eight months was described by washington as good explosions -- good discussions. pyongyang says expectations were not met. the talks came after a string of missile launches including the firing of a submarine-based missile -- ballistic weapon. trainf hong kong's stations remain closed after a weekend of more protests and violence.

vandalism escalated after the government invoked a colonial era emergency ban on facemasks. turnede demonstrations into clashes with police as protesters set fires and damaged train stations, banks and businesses. china is signaling his reluctance to agree to a broad trade deal with washington. sources say senior officials in beijing have told the u.s. the range of topics they are willing to discuss has narrowed considerably. the vice premier said the offer he will carry to washington will not include commitment to reform industrial policy or subsidies. in japan a new poll suggests three quarters of respondents are unhappy about the higher sales tax. says 71%by kyoto news of people are concerned about the likely impact on the economy after the tax went up.

the increase has been a key part of shinzo abe's policy program. 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 su keenan. this is bloomberg. kathleen: let's get a quick check on what to watch in asia. markets are waking up. what are you seeing? taiwan i am looking at september export numbers which are due out today. the forecast is for a slowdown of 1.1%. taiwan is the only bright spot among asia's largest exporters. if you look at the chart, you can see the blue line, taiwan has been in the slight uptick the past few months. that is better compared to south korea, singapore and thailand who have been on the downward trend pressured by the u.s.

-china trade war and japan-south korea trade spat. switching boards, looking at the four markets open, hong kong and mainland markets are closed, australia is on market holiday. looking at fuji co-which has earnings out, offering a shopping center chain as well as home entertainment and fitness center clubs. looking at the bank which is upgraded to buy at del potro. there were concerns of pressures by the cash rate cut dragging down banks. anz stocks has been up 10% since the start of the year. looking at lg display friday. a close down 1%. this was news that lg is going to cut the number of executives by 25% to streamline its lcd business and accelerate the switch to oled screens.

and -- d by south korea thank you. wealthy hong kong citizens are looking for new passports. thereet protests make future uncertainty. are people offering citizenship rights in exchange for a sizable investment. inquiries from hong kong have more than doubled since the protests started. joining us from singapore is the head of the asia-pacific -- thank you for joining us today. what kind of evidence are you seeing wealthy hong kong people are getting ready to immigrate? good morning. we see an increase in demand for western migration solutions. people calling from hong kong,

where can we go, what is enough, and we give them the right solutions in different parts of the world. -- ry: so shery: paul: so what are the target countries? there are some surprising names on the list. it is not what you consider traditional destinations for wealthy hong kongers, so what is the deal? >> canada is on the list, very traditional. people have been going to canada for a long time. it has closed, most of the provincial programs have closed. ,ut new kids on the block europe, portugal, wanting -- montenegro. these countries in europe do not require a long-term physical presence. a minimum short physical presence is good enough to

maintain your residency status and to qualify for citizenship. people who are not about leaving hong kong immediately, physically, they may choose those european solutions so they can stay in hong kong but they have plan b in place and they can leave for europe at any time. kathleen: people have to be wealthy to do this. before hong kong was taken over by china, people went to canada all the they had to invest a lot of money. what kind of investment, what kind of money do these people who are going to apply for the visas have to put down in order to have this, even if it is on the back burner? and canada, quebec and western migration program required bond investments of 1.2

million canada's dollar. we can -- in europe it is different. you don't need to buy bonds. you buy real estate. $350,000.m is after five years when you are eligible for citizenship or permanent residents, you can sell the property. in bulgaria it is government bonds. the value is half a million euros. it can be financed again. montenegro it is a mix. you don't just get residency but you get citizenship right away. you have to buy a property. you have to make a donation to the government 100,000 euros. these are the amounts lower, medium-sized. you said in your note to us, the u.s. has become difficult unless attractive.

is this because of the cost of moving? is it because the united states doesn't have these programs? is it something about the doors to immigration seeming to be not as wide open as they once were? u.s. has become difficult for different reasons. one is the long waiting time for waiting time for chinese citizens. the process is slow. another reason why the u.s. is less in favor for western migrants from 20, 25 years ago globalhe handover is the tax is on the mind of everybody. in the old days it was less of an issue. favor the u.s. less than they did in the past. new countries are available. if you are a resident of portugal, you can travel not

only piece of free but also passport free within the whole zone which is the same size as the u.s.. portugal is small but it is part of the zone which gives access almost all over europe. there are alternatives in place which were not there before. the english-language has become much more commonly spoken in europe. today more people speak english in bulgaria, montenegro and portugal than they did 20 or 30 years ago. it is attractive for asian westerners. paul: let's talk about the violence and uncertainty which would be behind the thinking of a lot of wealthy hong kongers to get this plan b in place. are there other factors as well? there are different factors we see.

those three.nt are people don't like. they don't want chaos. people want stability and peace. other factors that have to be taken into account our education. i have studied in europe, in singapore, and it is amazing. most of europe countries, e.u. and on e.u., have excellent universities where students can study. if they are citizens of an e.u. , very often the cost for minimal, veryare low. sometimes even free of charge. that was not an option in the past because the courses are usually held in a local language . today many courses are in english, easily available to of thoseor residents

countries. it is another reason why people start looking at other options instead of the traditional ones in north america. informing us are about a part of the world we did not think about, portugal, getting these pieces. let's say somehow in hong kong, the whole matter is settled. , they stops fine protesting. do you expect looking around the world by the citizens of hong kong who can to continue? you have presented attractive aspects, particularly if you want a point in hong kong and someplace else like portugal. the divan -- demand will continue even if the street protest ends and stability comes back as a remedy hopes and wishes. people will keep looking at

second homes, plan b, at other countries to settle. because the world has become more globalized. if you have a home in europe that allows you to go and spend there, ited time doesn't require you any visa or permit even to go to other european countries, why not do it? the cost of property in places like portugal, montenegro is so low compared to hong kong many of the wealthy hong kong say why not? it will give us a second passport in the end. our kids could go to study. what is the downside? people like these solutions and they are more popular than ever before. they are on the mind of everybody. settle, that is fine, but people will not turn away. tohleen: thank you so much

artan capital's phillippe may. we will be joined by standard chartered's reporter. we will -- keep it right here. this is bloomberg. ♪ this is bloomberg. ♪

[speaking simultaneously] paul: we have some live shots from portugal where the prime the election.on he is celebrating. 99% of the vote counted, appears he has won 106 of the 230 seats in parliament, short of absolute majority but strengthens his hand. onheld 86 seats and relied the communist party and the rest of the left block to get legislation through.

his can hand strengthened and portugal. it will make his job much easier to govern. stability in that country appears to be assured with that election result. kathleen: a very joyous celebration. a look at business flash headlines, facebook's cryptocurrency was dealt a confidence blow. paypal has pulled out. they will focus on other business. we have been told other founding members have been considering pulling out on concerns of maintaining positive relationships with regulators who have resident -- reservations about libra. has started a cost-cutting drive which threatens 10,000 jobs. thank executives are questioning why it has so many staff when many of the highest returns are in asia. new custom on top of i thousand redundancies made in august.

hsbc could announce the cuts in the report of third-quarter results later this month. china's state oil company pulled out of a project to develop a gas field in iran which is the latest corporate casualty of u.s. sanctions on the islamic republic. they said it is no longer part of the deal but gave no reason for the decision. a french energy giant also has withdrawn from the project which is apparently taking a majority stake. moving on to currencies, the yuan slipped, after reports china is increasingly reluctant to agree to a broad trade deal ahead of talks with the u.s.. let's bring in the fx strategist lemon zhang. when you look at currency, one of the reasons we have seen the yuan gone from a year ago about 6.3 to the dollar, now seven and ifing in terms of the value,

the trade war continues, will it continue to put downward pressure on the chinese currency? thank you for asking this. our forecast for the end of this year, [indiscernible] which is still some upside from current levels. we actually see some technical novemberrom now until because there is a likelihood , u.s. and china will meet in november. we see downside from that. week fxan see from last reserve release, china is reluctant to use the fx reserve .o defend their currency

the escalation between u.s. and china has changed the stance from poc. they will allow [indiscernible] looking at 7.23 at the end of this year. kathleen: i know you are concerned on the dollar side. you think it is overvalued against other currencies. a median jobs report, the federal reserve looks ready for a rate cut. what could be weakening the dollar and you think it is likely to happen or will we continue to see what you are calling overvalued u.s. currency? >> we do see the dollar is overvalued. [indiscernible] dollar index is the highest level in 20 years. the valuation is extremely high, but as you can see there is a lot of risks such as brexit, uncertainty surrounding u.s.

-china trade talks. it puts downward pressure in em currencies. [indiscernible] positioning some other neutral -- mutual funds that help [indiscernible] to put their cash in dollar assets which can push higher dollar. [indiscernible] but we still have a dollar higher from current levels especially against asia em currencies. we see higher dollar [indiscernible] higher dollar-korea. paul: given you believe the u.s. dollar is overvalued, what is your attitude towards the japanese yen? it continues to get stronger. where is that trend going? thehe yen is one of

currencies we feel comfortable to long against the dollar. yen is to face stronger yen from because ofven 2020 the narrowing interest rate differentials between u.s. and the yen. boj packet is putting a 10-year yield which will continue to provide support for the low -- real interests. opportunitieshat, of slowing growth globally and lower inflation everywhere. [indiscernible] safe haven driven currency which will [indiscernible] looking at lower dollar-yen and looking at 100 i q3 2020. [indiscernible] against korea. paul: if the yen gets to

hundred, that would invite response, increase the chances of intervention in japan? boj, we think it will be a progrowth -- in q4 this year. 0.1% and jgb yield at 0%, but next year they are trying to do more easing for demand. year,ow until h one next there are too many [indiscernible] the monetary easing measures from global central banks, global growth are still going. until we finish on civilization from global growth, global inflation's, the yen will remain one of the top six of currencies. paul: thank you so much for

joining us. more ahead on daybreak asia. this is bloomberg. ♪

kathleen: this is daybreak asia. i am kathleen hays. paul: i am paul allen. let's get a quick check of business flash headlines. apple has changed its mind and approved a controversial app that shows police deployment in hong kong. it is called hk live and it is a mobile version of a website the developer says helps users avoid dangerous parts of the city. it was rejected by the store because apple felt it encouraged illegal activity. it is now cleared for sale in hong kong. kathleen: hong kong exchanges are clearing oil rates differ the lfc after many conditional support from key shareholders.

a times newspaper said the initial offers a valued it at 83 it was$.61 a share but quoted by investors they needed to offer between 80 and 100 pounds if it wants to be taken seriously. trade talks set to resume in washington later this week. china narrowing the scope of issues it is prepared to discuss. us get over to singapore. what are the events investors should be watching? >> it is really the trade talks everyone is having their eyes on. that is amidst the impeachment news about donald trump. vice premier going to washington to resume the trade talks thursday for a talk, it is days before higher tariffs on chinese goods will be kicked in.

very few are expecting breakthroughs. is a chance impeachment could put him in a vulnerable situation which means he might be rushing for a limited deal. this is helping china as bloomberg reported china is looking to narrow the scope of the trade talk and the prime year -- vice premier wen include comments to reforming the industrial policies and government as part of the talks. at the be looking minutes which will be released wednesday. investors will be passing the minutes for any clues on the division among officials in the september meeting which will provide a clue for october rate decision. also we are looking at earnings coming out from asian nations like samsung and korea and more in india. paul: our leader running from

singapore. more to come. the u.s. and north korea differing on the first -- the former u.s. ambassador. market open also next. this is bloomberg. ♪ ♪ sometimes your small screen is your big screen.

and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. keep what you watch with you. download the xfinity stream app today and get ready for xfinity stream tv week. watch shows like south park and the walking dead october 7th through 13th.

paul: good morning, i'm paul allen in sydney. asia's major markets are about to open for trade. kathleen: i'm kathleen hays in new york. selina: i am selina wang in beijing. welcome to "daybreak: asia." ♪ paul: our top stories this monday, china dials back expectations for trade breakthroughs this week. recoils from one of its most violent weekends yet.

protesters turned to vandalism as retaliation on a government cracker -- crackdown on facemasks. koreaen: and north rejects talks from what it calls a hostile usa. now we're going to get straight to the market with selina wang in beijing. what is going on? selina: after we saw that better-than-expected employment data in the u.s., u.s. talks slightly higher, the focus for investors is squarely on the u.s.-china trade war with a onrt to and downbeat tone the headlines, china is looking to narrow the scope of the trade deal and it's -- and it is unwilling to discuss industrial policies and subsidies. the nikkei fell more than 1.5% last week. were seeing pressure on the ust jpy. some risk of sentiment seeing the yen strength in on the back

of the trade headlines. the japanese 10 year yield continues to fall as markets remain wary of the boj potentially reducing the longer term maturities. looking at korea, we saw the fall on negative news around global growth. than now slightly up more 5/10 of a percent, continuing to see pressure on the korean won. switching boards one last time and looking at australia and new zealand markets. australia is on holiday today but markets are still trading, mainland markets and hong kong markets are also closed, so we are seeing intentionally thinner and more muted trading. the asx 200 is up after falling to straight days. we are seeing the aussie and new zealand dollars weakening after three straight days of gains. this is contributing from some

of the risk off sentiment as a result of the latest u.s.-china headlines. kathleen: thank you. chinese and u.s. negotiators are preparing to restart long stalled trade talks this week in washington and now we hear that china is going in with reluctance about a broader trade deal. as go to our senior editor in singapore. what are you taking away from this? you are in singapore, you've been covering asia, but you covered washington a long time. you have a unique position to assess this for us. derek: thanks. i think here you are looking at china walking in looking for a narrower outcome. china is apparent going to walk into the trade talks this week not talking about industrial policy and not talking about subsidies. those of you who have followed this a long time will think to yourself, isn't that like the core of the u.s. complaint?

it is the core of the u.s. complaint. this sort of signals that china is looking for not big deal or no deal, but little deal or no deal. the grand ambition on these talks seems to have muted a little bit. that will present the u.s. with a little bit of a challenge. that said, there are incentives you could deal with if you are the u.s. or china, to try and get a smaller deal, but it does appear that china is not really targeting a big, grand rate through at these talks this week. paul: derek, considering all of rhetoric,storms and is this merely a pragmatic approach starting with a small, achievable step? derek: i do think there is a little bit of precedent for how you deal with the trump administration. in trade talks, you look for a small deal. in japan, there was a small deal

inked between the u.s. and japan that covers some issues, not everything, and seen as a way to get something on the ward -- on the board. maybe you talk about big issues later. that is if the u.s. and china wanted to go that route, there is a little bit of precedent for. -- for it. both of the u.s. and china, eb ven though neither of them wants to be seen to be conceding, both of them have incentives to concede on key points. if you are china, you're looking at an issue of african swine fever that has decimated the hog herds in the country and put pressure on the prices of work -- of pork and supply. easing agricultural imports could be a good thing, whether that is soy forefeet or hogs themselves.

for president trump, a lot has been said bui willay it again, about the need to mbe temper the pressures on uity markets that the trade war has done. 2020, an election is coming up, and the president does not want trade headwinds weighing on markets walking into election day. even though nobody wants to concede, no one wants to be seen to concede, there are actually some incentives on both sides to concede on some points. right, thank you for joining us. hong kong is reeling from one of the most violent weekends in the long-running democracy protests with shops and subway stations vandalized and bank atm's knocked. correspondent stephen engle joins us from admiralty. 72 hours on the streets of hong kong, run it through -- run us through what happened. no end innd there is

sight because today is a holiday and people will not be going to work. the city this monday morning seems to be operating as normal but it's kind of a new normal. usually there's a clean up on monday morning bital -- morning, but a number of shops will state closed. you can also see the admiralty station is barricaded and it will not open today. the npr will have limited services and be closed as of 6:00 p.m. today. they have closed a number of stations, including on saturday, it was pretty much networkwide shutdown except for limited service for the airport. again, protesters have used the npr system, the subway system, to move around and avoid police action. late last week, we have the government invoking emergency limited partast a

of the emergency powers that originated in 1922. this band face masks and organized protests. protesters turned out en masse anyway. yesterday, in defiance, wearing masks, and the hardline element of the protests turned to violence and vandalism. we saw companies with china in their name or perceived ties to the mainland attacks and fires set at barricades and within some shops. i can't confirm whether there was looting but there were definitely -- there was definitely some violence. an off-duty police officer was surrounded and he pulled his service revolver and discharged one round. a 14-year-old perceived protester was shot in the leg. that makes it to protesters -- on octoberers, one 1, and now a 14-year-old shot by

police. both of the protesters have been arrested by the authorities. but yes, more violence. kathleen: it seems a lot of hong figuringa watchers are beijing, the hong kong government are trying to manage this and hoping this dies down and blows over because they really can't replace hong kong. shanghai cannot be a replacement financial center. they have to keep hong kong open and thriving. what is next for the government in a situation like this? the government according to the protesters have towardady intransigent the remaining demands, and not willing to concede. the fifth demand of universal suffrage is a much longer term issue that protesters say is thed into the basic law, constitution here, but that is a much more difficult issue for

the local government and beijing to reconcile, as they wouldn't necessarily want somebody who is against the rule of beijing as the chief executive. going forward in the more immediate term as far as controlling unrest, so far the efforts by the government, what they have done including the --emask ban, have not combed calmed and have instead enraged a hard-core element here. lam22 ordinance the carrie invoked on friday, at least part of it, can have much more sweeping powers given to the chief executive at her disposal. she could impose a curfew much like the british did in 1967 when there was a leftist revolt and riot and hong kong. the british invoked emergency powers and there was a curfew. but imposing a curfew would be extremely difficult, and enforcing one, because protesters have adopted a

campaign where they can pop up anywhere. to have a hong kong wide curfew, martial law, which would be extremely difficult to enforce and would have legal ramifications as well. there's always the big threat as well of the beijing authorities unleashing some of the military assets here. that is not out of the question. there are still some steps the government could take to quell the unrest. paul: our chief north asia correspondent stephen engle in hong kong. let's check in on the first word news with su keenan. ,u: we start with portugal their socialist prime minister has won a second term, gaining more seats in parliament but still falling short of an absolute majority. the result will likely make it easier for him to push future legislation through parliament. portugal's economy has grown from five -- for five consecutive years and sinceoyment has halved their bailout in 2011.

esther george says she dissented against rate cuts at the last two fomc meetings but would support another cut if there was a stronger slowdown. she says the u.s. economies moderation is in line with her outlook for the medium-term and a change of policy would be appropriate if the data showed a broad weakening. u.s. payroll numbers are showing a worrying sign. job losses in manufacturing. total employment at factories contracted by about 2000 jobs last month. economists had been expecting a gain of 3000. the figures are the latest indication of the beating u.s. manufacturing is taking amid the global slowdown and president trump's trade war with china. two brexit, reports from london say prime minister boris johnson will refuse to resign over brexit. he is prepared to challenge the queen to fire him if he fails to win a new deal with the eu.

the sunday times is reporting johnson will not step down if his plan is rejected by brussels and will not suck down -- step down if he loses a vote of confidence in parliament. to preventoted brexit in the event of a no deal brexit. north korea and the u.s. had very different versions about the success of nuclear talks in stockholm over the weekend. the first meeting for eight months was described as good discussions by washington, while pyongyang said negotiations did not make expectations and broke down. this comes after a string of north korea missile launches, including the firing of a submarine based ballistic weapon on wednesday. 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. i'm su keenan. this is bloomberg. paul: thanks very much. still to come, the u.s. and

north korea with talks in sweden but they can't even agree on how it went. we will speak to a former south korean ambassador to the yuan -- u.n. kathleen: but first, our next guest's skepticism for a fed cut. he takes us into the danger zone, next. this is bloomberg. ♪

♪ kathleen: this is "daybreak: asia," i am kathleen hays in new york. paul: i am paul allen in sydney. trading will likely be muted in asia today, hong kong and china markets are shut. it is a public holiday in australia but there is trading. is saying equity markets are looking like they are running on vapors. he is a senior market analyst

and joins us from singapore. we have seen a lot of fed easing going on. is that all agree markets have got going for them? what is going to drive the bull run longer? jeffrey: i think you've hit the nail on the head. equity markets have been pushed somewhat artificially higher by the fallen bond yields globally and the race to the bottom by central banks over the course of 2019. i think we are starting to run short of fuel, if you like, to continue this rally. the bond markets signaling that the global economy, despite the trade war, was going to slowdown in 2019 and into 2020 anyway. paul: with that in mind, how important is this earnings season? could that be a potential catalyst to reassure markets? jeffrey: i think that's the best we can hope for, to be honest.

the earnings are coming in on target, so to speak, and it will reassure the markets, but if we the downside, naysayers will be out in force saying the global recession is on the horizon. i don't know if i agree with the word recession, i prefer to say slowdown at that stage, but i think the most we can hope for is they provide reassurance rather than [indiscernible] kathleen: i enjoyed reading some lines in your latest report where you say the rally looked forst, hope versus reality, and a more adult picture can be gleaned from the bond markets. in the world of these equity guys, the bond guys always figure we are the sober ones. and in the bond market, the benchmark 10 years, not at the recent lows but fairly low. do you think that continues?

is there a message there? from theyeah, i think very start of the year, we saw bond markets tracking lower, including the u.s. one come up the trade war even got started. i do feel the world is on an eating -- easing trajectory. the u.s. was the only major economy to partially normalize their rates before this latest slowdown occurred. marketel that the bond yields will continue, particularly in the u.s., although that will continue to give strength to the dollar overall because there will be a guild carry there. were going to see bond markets trade lower again. -- we are going to see bond markets trade lower again. kathleen: we saw the senate reserve bank of india cut the reserve rate 25 basis points.

still low in australia. rba cuts rates and people are looking for at least one more. summary central banks have already cut, maybe they are getting ready to do so again. do you expect that to continue, and if so, where do you make money? jeffrey: i think you can still be long bonds, to be honest. i think the best value is in the u.s. bond market even though the yields have dropped a lot. as i said, that has partially normalized rates and there is more room. the fed has more gas in the tank to affect easing than the rest of the world. when i look around the rest of the developed world, i think we are hitting the limits of monetary policy, because i think we are at record lows in so many countries around the world in the developed market. how much more can i go and how effective will it be? they never really managed to equalize or normalize rates after the global financial crisis and if you look at europe, i think they are between

a rock and a hard place. only fiscal policy can ride to the rescue of the european union at the moment. paul: in terms of gas in the tank, let's talk about that literally and the oil price, in this environment of global economic malaise, it doesn't seem to matter what opec-plus does in terms of production cuts. do you see it continuing to trend down? jeffrey: i must say i was quite surprised at how quickly the risk premium was forgotten after the saudi arabian attacks in the oil markets. i thought we would see a built in risk premium going forward, but two weeks later, nobody is talking about it anymore. saudi arabia is restoring production faster than expected. if the world slows down into 2020 as i suspect, it should by default mean a lower rate of oil consumption. i really don't think, short of

massive shutdowns in the shale industry in the u.s., that there is anyway oil can sustain a meaningful rally. in we see a blow up in the middle east, which could happen, no doubt about that. iness we see a big slowdown shale production, i think oil will be naturally capped, brent crude around $70, i can't see it sustaining more than that for any amount of time. kathleen: thank you so much for joining us. you can get around up of the stories you need to know to get your day going in today's issue of daybreak. bloomberg subscribers, go to dayb . you can customize your settings so you only get news on the industries and assets you really care about. it is nifty, check it out. this is bloomberg. ♪

paul: this is "daybreak: asia," i am paul allen in sydney. kathleen: i'm kathleen hays in new york. president trump may face another whistleblower as the impeachment drama grinds on. let's see what needs to happen in the official process. the house nancy pelosi announced an official impeachment inquiry against president trump on september 24. pelosi said she is directing six committees already investigating trump to proceed with their probes under the umbrella of the formal impeachment process. one of the committees would bring forward articles of impeachment to a floor vote. house members can also present their own impeachment articles without a committee. articles of impeachment have to be adopted by a simple majority, at which point the president would become impeached. however, it would be up to the senate to remove the president from office. majority leader mitch mcconnell

said it is mandatory to hold a senate trial if the president is impeached by the house. senators would become the jury with house members at as prosecutors and chief justice john roberts presiding. a two thirds majority in the senate would be needed to convict the president. if that happened, the president would be removed from office but could run for office again. ofl: let's get a quick check the latest business flash headlines. apple has changed its mind and approved a controversial app that shows police deployment in hong kong. it is called hk map. live and is immobile version of a website the developer says helps users avoid additionally dangerous parts of the city. it was initially rejected by the app store because apple felt it encouraged illegal activity. it has been cleared for sale in hong kong. kathleen: reports in the u.k. say hong kong -- will raise its bid for the usc in the coming day after winning additional

from shareholders. , butnitial offer valued were told they needed to offer between 90 and 100 pounds to be taken seriously. is pledging -- as the consumer goods industry comes under criticism about the environmental impact of throwaway packaging. it will reduce its use of press -- plastic by 1000 tons per year while stepping up recycling. food and beverage companies are increasingly under fire as waste plastic increases. let's get a check on how markets are trading around the region. we have the nikkei currently off by one for the 1%, but elsewhere higher. the kospi higher, and new zealand has been going a couple of hours and up by half of 1%. in australia, the asx is trading. most of the country is enjoying

a public holiday. right now, up for tens of 1% after we saw u.s. equities closing higher on the back of a reasonable jobs report. more to come on "daybreak: asia ." this is bloomberg. ♪

su: multiple demonstrations across hong kong turned into clashes with police as protesters set fires and damaged train stations, banks, and businesses. in china, the country is signaling it is reluctant to agree to a broad trade deal, this ahead of talks this week in washington. sources close to the negotiation

say senior officials in beijing have told the u.s. that the range of topics they are willing to discuss has narrowed. we are told the vice premier says the offer he will carry to washington will not include any commitments toward industrial policy or ip. in japan, a new poll suggests only three quarters of respondents are unhappy about the recent increase in sales tax. -- says saves about about 71% of people are concerned about the impact on the economy after the tax went up this month. the increase has been a key part policy, afters his government fell almost 2.5% down to 53%. and china's foreign currency holdings dipped in september with official figures from the pboc falling below estimates in -- to just over $3 trillion. china boosted its gold reserves

to almost 63 million ounces with a current value of $93 billion. the india reserve bank says it will ease for as long as is necessary, after lowering interest rates for a fifth time to support the slowing economy. -- the.i. cut the mark benchmark rate by 25 points, in line with the majority view in a bloomberg survey. the governor echoed comments from ecb president mario draghi, saying he will keep an accommodative policy for as long as required. 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. i am su keenan. this is bloomberg. paul: thank you very much. let's get a market check with selina wang in beijing. asia stocks are opening

mixed and muted, but there is better trading considering hong kong and mainland markets are closed and australia is on holiday but with market still trading. asia stocks are somewhat benefiting from the better than expected u.s. employment data, which did push u.s. stocks higher on friday. were seeing asia stocks catch some of the tailwind but the nikkei is turning lower following a 1.5% fall last week. investors turning their focused now to the latest trade headlines, showing that quashing any hopes of a deal in the near term future given that china is looking to limit the scope of the trade negotiation. we are seeing the asx 200 and nzx 50 in the green. the kospi has the communication sector leading gains. information the technology sector gaining more than 1.2%. we are seeing more of a risk off sentiment in the currency market with the yen strengthening to a one month high, more than 2/10

of a percent. there is a rush to havens. the australian dollar and new zealand dollar coming under pressure. i want to highlight the new zealand dollar in particular, which has tumbled about 7% from its july high. you can see on this chart, it's on a downward trend since 2018, amid new zealand's worsening company confidence, slowing economic growth, we could job creation, and the pressure from the u.s.-china trade war. that did lead the reserve bank of new zealand to slash its benchmark to 1% and a signal further easing could be possible. this relentless bad news has pummeled the kiwi, the currency earlier falling to a four-month low and we are seeing it pair about -- back some of the losses. but the kiwi is seen to fall even further, 59 says to the dollar, by march 31. those are levels not seen since

may 2009. netrage funds are holding a 12,050 three contracts betting on further losses for the current season. kathleen: we will get more insight into the markets now with our strategist in singapore. jobs report on friday. not weak enough to say oh boy, a recession is on the doorstep, but not strong enough to make people think the fed probably won't cut rates again. where does this leave everybody? other central banks looking to cut more at some point. what rises to the top for you? i don't think the market is pulling away from the idea that the fed has got several more rate cuts to come. i think when you step back from the details of the jobs data, what people are taking away from this is the fact that it is almost an ideal scenario for

equities. the labor market is slowing but not slowing so quickly that it suggests the u.s. economy is about to go into a hard landing, which some people had feared. it suggests a gradual slowing of the economy. that is enough to keep the fed's finger on the rate cut button so we expect further cuts to come. there will be nothing to dissuade people in the market that this will be a long series of rate reductions from the u.s. fed. that is the positive in the background. slightly so disappointing numbers but not so bad on the jobs from. we had some data last week that was softer. if you take them together into the words from rome powell, it looks like -- from jay powell, it looks like the central bank is leaning toward further easing at a gradual pace. that is generally going to be good for financial markets in the u.s. it takes away the fear that they are about to jump off a cliff in terms of the economy weakening.

that is a good thing. of course, what we have seen with the word on the trade situation over the weekend, china possibly focused more narrowly, that brings a complication into it, but the fed will do its part to try and ensure that in the background at least, conditions are pretty good for the equity market. kathleen: so the fed is going to do its part, many central banks are signaling that as well. what if nothing really happens in these trade negotiations, and boosts the tariffs on october 13? the does seem to be a risk there, we've seen manufacturing falling to various degrees around the world. what does that mean for markets? as far as traders are concerned, they have extremely low expectations for what comes out of the talks.

in asia, they really don't expect much in the way of serious progress in the talks next week. the bar is very low for anything positive to happen. having said that, things could get even worse. donald trump could react with something even more drew coney an against china, with more tariffs, or going in a direction people are not prepared for, targeting something not yet on the table or obvious to the market. i think as far as traders are concerned, don't really expect too much, and that is reflected in the fact that if you look at the way the chinese yuan is trading, it is still pretty soft, even though there hasn't been too much dialogue on the trade. were still looking toward the high-end of the range we are seeing this year, so no great optimism coming. that theeflects chinese economy is getting slower as well.

it will take a lot to shock markets from here, but certainly you can't rule out the fact that if donald trump is unhappy with the way negotiations go, he could put it in a new direction and markets are not fully pricing that in. what is priced and is really good news. there is room for markets to pop higher if we get an unexpected surprise. paul: what is priced in when it comes to the british? that's a difficult one to predict, the critical date of october 31 drawing near. mark: it's remarkable that here we are, just over three weeks ago, and basically every scenario is still on the table as it was three years ago really. also the latest things we are hearing from boris johnson in his latest newspaper report he wrote, he is sounding fairly belligerent. he wants to continue with the risk of a no deal brexit, which is probably not fully priced into the foreign exchange market

, the pound would probably have some downside if the u.k. really were to leave without a deal. the pound could weaken further. u.k. interest rates as defined u.k., bond yields in the they could fall further as well. if there is some kind of compromise that comes together, the its room for the pound to rally a bit. we could be looking at 130 or higher with the pound against the dollar, that would be a relief. but a lot of people are finding it too confusing and they don't even want to trade the pound or u.k. interest rates because they are too many things flying around. the deadline is so close. it is quite understandable that people want to sit back and wait until they have a more precise definition of where the eu and u.k. are going on this. a lot of people will just hang on until near the deadline to see what direction we are going in. we could see a lot of volatility after october 31 in either

direction. the pound could get stronger or weaker. it will be a busy start in november. field ink tran singapore, thank you for joining us. you can follow more on this story and all of the day's trading on our markets life drug -- blog. to get a market run down in one click and there is commentary and analysis from our expert editors. you can find out what is affecting your investments right now. out its opening bid for trade talks with the u.s. this week and it seems a broad trade deal is off the table. have indicatedls the topics they are willing to discuss has narrowed considerably. larry kudlow spoke to us before these alleged developments. week, monday and tuesday if i have this right, there will be no additional

conferences, negotiations at the deputies level. thursday and friday of next week , at the principal's level. everything is on the table. we would love to go back to where we were in may, we were a lot closer. all of the issues, the commodities, the tariffs, the ownership, the forced transfer of technology, the ip theft, the cyber hacking, all of that will be on the table, and china has been vying -- been buying some commodities. that is a goodwill gesture. let's keep an open mind. i don't want to forecast, i'm just saying this is a good thing going into the negotiations. october 15, what you need to see from the chinese to prevent tariffs from going up? >> these are calls that would be made by the president. we have a very strong negotiating team, as you know.

ambassador lighthizer, secretary mnuchin. no productions -- predictions, i don't do that. coming into this, china has been buying some commodities. a small amount but perhaps a good sign. we postponed our next tariff dates as a goodwill measure. you never know. be some positive surprises coming out of these talks, ok? i'm not predicting, i am just saying don't rule that out. there could be some positive surprises. a final question, the president in the last 24 hours said china should start an investigation into the bidens. if you going to trade talks and the chinese ask you about the comment, how do you explain it? >> i have not spoken to the president on that.

it doesn't really sound like that will have much of an impact, if anything, on the china trade talks. i do know that we continue to monitor the hong kong freedom and democracy movement, which the u.s. supports very strongly. that could impinge on those talks. to ask say -- you'd have the president about the issue of china looking at corruption matters. but you can assurance it won't be part of the discussions next week. >> jonathan, sometimes i can assure you of anything, but i would say my own expectation is that is not going to be front and center when lighthizer and mnuchin speak with the vice premier. look, let's go back to this. i think in the last month, there has been a softening in the psychology of the trade talks on both sides.

i think china needs a deal. president trump has said he will make a deal provided it is a good deal that will defend american interest. kathleen: white house advisor larry kudlow. next, the u.s. and north korea differ on their first talks and eight months. we will talk to a former yuan investor. this is bloomberg. ♪

paul: this is "daybreak: asia," i am paul allen in sydney. kathleen: i'm kathleen hays in new york. usn north korea have -- the u.s. and north korea have wrapped up talks in stockholm who'd north korea says negotiations broke down and criticizes u.s. for

arriving empty-handed. washington insists the talks did not break down and another round will be held soon. someone familiar with the diplomacy required is a former ambassador to the un. we are happy to have you. what do you make of this, north korea saying these are sickening negotiations they don't want to repeat. but on the other hand, they would love to have investment in their country and raise it to the level of south korea. people say it will never happen because they won't give up the nukes. what do you think? joon: depending on what north korea's real intention is, which is always hard to read, i think we could have at least two interpretations. one, north korea is willing to

least denuclearization at to get around sanctions, and then they might be playing their favorite game, brinksmanship. they want to sell at the right price. , theyeed negotiations need to be bluffing and calling high-priced first. alternatively, they are not ready to give up their nukes. advantage of take president trump's political nouirements, such as long-range missile tests. they can meet them but they don't want to give up their nukes eventually. in which case, we are in bigler -- bigger trouble. then,en: what do you make because bigger trouble, we could talk about the submarine launched ballistic level --

ballistic missile. the pentagon said the

without a lifting of or using -- or easing of the sanctions, his ruling might be threatened and they might go for denuclearization. on the other hand, as you said, they've in developing nuclear capability the last 30 years. why would they give them up at this point? especially when president trump is always requiring they stop long-range missile test. they can meet them. they might be trying to take advantage of his political considerations. paul: in terms of the economic pressure on north korea, would you say it has eased in 2019 or increased? you mean the economic sanctions should be increased? paul: has the pressure on north korea eased or increased over

the year? joon: the sanctions has been in place for the last at least three years. probably the toughest sanctions the united nations have ever imposed on any country, and the united states has its own unilateral sanctions which also work. there might be some loopholes but overall, north korea cannot developmentconomic under these kinds of sanctions. the u.s.nk administration knows that sanctions will be in place as long as there are threats from nuclear capabilities from north korea. eventually, it will be a trade between complete denuclearization and complete lifting of sanctions.

debated --are divided as to how we can reach the destination. paul: south korea's former ambassador to the yuan -- the u.n., thank you for joining us. you can always find in-depth analysis and the days big newsmakers on bloomberg radio. now broadcasting live from our new studio in hong kong. you can tune into daybreak asia from 6:00 a.m. hong kong time, 9:00 a.m. in sydney and download the app, bloomberg radio press, -- radio plus, or access it at bloomberg.com. ♪

,"ul: this is "daybreak: asia i am paul allen in sydney. kathleen: i'm kathleen hays in new york. let's get a preview of what to watch and markets this morning. let's get back to selina wang. selina: this chart issuing the monthly change of hong kong dollars, showing the dollar deposits declined by the most since may 2018 amid the ongoing protests, as you can see from the line to the may 2018 red bar. local currency deposits in august fell by 1.6% from a month earlier. the hong kong monetary authority did say that partially was because of a dearth of initial public offerings, but all of the bad news from hong kong has been good news for singapore, with goldman sachs estimating that

the maximum outflow of hong kong dollars worth $4 billion has been going to singapore since august, suggesting singapore's role as an alternative financial institution has been growing amid the mounting turmoil in hong kong. we have plenty more ahead, that is all from "daybreak: asia," but stay tuned for "china open." this is bloomberg. ♪

>> it is 9:00 a.m. welcome to bloomberg markets china open. i'm tom mackenzie. yvonne: we are facing and muted trading day with hong kong and mainland markets closed. david: let's get your top stories. china dials back expectations for a trade breakthrough this week. we list of topics on the agenda in d.c. has narrowed substantially. yvonne: more pressure on the president. donald trump may face a second whistleblower as the impeachment drama moves on. hong kong recoils from one of its more violent weekends yet as protesters turned to vandalism in