paul: good morning. we are under an hour away from market open in japan and south korea. shery: good evening from new york. i am shery ahn. sophie: and i am sophie kamaruddin in hong kong. welcome to "daybreak: asia." paul: our top stories, trade talks under pressure for revived negotiations may suffer as the trump administration slaps travel bans on chinese officials. the fed chief opens the door to rate cuts as he reveals a new

appetite for treasuries. jay powell insists it is not the return of qe. tension sores in the middle east. turkey says its forces will move into syria at any moment. shery: let's get you started with a check of the markets. u.s. futures under pressure, fell.1% after the s&p 500 for two consecutive sessions. semiconductors taking the biggest hit, they fell the most in about six weeks. we have trade headlines sparking concern about tensions intensifying between the u.s. and china. that is upsetting some of the comments coming from fed chair powell, who left the door open for rate cuts. the dow lost more than 300 points while the nasdaq fell 1.7%. let's see how we are setting up in asia. sophie: australian markets have lower, asx 200 opening snapping a three-day gain.

bhp shares among the biggest laggards. studyssie dollar trading after overnight gyrations on the trade brinkmanship. confidence numbers for october are due in a half-hour. nikkei futures pointing to a lackluster start. south korea is off-line for a holiday, so chipmakers in seoul will be sitting out of the potential pressure on asian semiconductor stocks after the moves on wall street. let's check on the yen. against theund 1.07 greenback after fluctuating overnight. the offshore yuan is holding losses after weakening the most in five weeks on tuesday. ozzie bond yields, we see them resume declines to record lows. let's get to a rapidly

developing story. turkey says its forces will cross into syria shortly, sending tensions soaring. let's get back to white house editor josh gollu in washington. there is not a great deal of unity in washington on this decision. josh: that's exactly right. decision that president trump made to pull troops out of northern syria is at the heart of that, because the u.s. has long been opposed to turkey's plan to go into northern syria , who theyn the kurds see as a national security threat. there has long been tensions between kurdish minorities, stateless people, and the turkish government. this is a decision that in the u.s. has been politically

divisive, but there has been a log of unity as well, something democrats and republicans have been behind because they understand the strategic importance of that region, but also that the kurds in northern syria have fought u.s. troops wars.t isis and in other this is something that has turned republican lawmakers sour on president trump, and it is also something that has not had any unanimity in his own administration. officials at the state department, the department of defense have long opposed a rapid withdrawal of forces. one of the reason is that -- one of the reasons is these people have fought alongside u.s. troops and the signal that could send in the future to other allies as to the u.s.'s commitment to standing by people.

shery: on those conflicting signals from the white house, did the president endorse this incursion into syria by turkey, or didn't he? josh: that's a great question. the president said tuesday he did not endorse an incursion. he just said they wouldn't stand in the way. speak and diplomatic also in the context of u.s. troops having been there in part to prevent this kind about,, it's clear that turkey appears to consider that as much of an endorsement as they need to go in. i don't think many people are saying president trump ever wanted turkey to go in, but the idea he would not stand in the way and remove u.s. troops from an extremely strong

signal for erdogan. paul: white house editor josh gallu, thanks for joining us. let's check the first word news. says he willell resume buying treasury ofurities to avoid a repeat recent turmoil in money markets, while leaving options open on interest rates. he indicated the purchases would be made up of treasury bills and stressed it should not be seen as a return of crisis era qe. three month yields fell on his comments while the dollar rose. >> i want to emphasize that the growth of our balance sheet should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. neither the recent technical issues nor the purchases of treasury bills should materially alter the monetary policy.

>> the philippine central bank governor says he has likely finished cutting rates for this year but could still use policy by reducing the funds lenders must hold in reserve. scheduled policy meetings before the end of the year. last month it lowered the overnight borrowing rate to 4%, the third rate cut this year as the economy grows at its lowest pace since 2015. despite a record year for migrants being taken into custody in the u.s., the number of people apprehended on the mexico border has fallen for the fourth month in a row. in september,s ofn 65% from a's peak 154,000. the total number of migrants in border detention facilities has justn from a's 90,000 to 4000. tanner earnings surged on the

benchmark route as recent u.s. sanctions on chinese companies raise costs. the rate for ships hauling cargo of middle east oil to china climbed more than 15% to $113,000 a day. that's the highest level in two and a half years. 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. this is bloomberg. paul? administration is slapping visa bands on chinese officials linked to the mass detention of muslims. it is the latest in a series of u.s. steps to pressure beijing as trade talks resume. let's bring in our senior trade editor and our china correspondent, tom mackenzie. coming ons travel ban top of the blacklist, you have

got to wonder what the u.s. plan is heading into these trade talks. sarah: there is a very dark cloud hanging over the trade talks supposed to take place thursday and friday in washington, the first high-level talks since late july. in between, there has been escalation of tariffs, the u.s. has signed a limited trade agreement with japan. a lot of developments. also the eu case that was decided at the wto, so the u.s. is going to put tariffs on europe. there has been a mix of things happening. ahead of these trade talks, things were looking like the u.s. would go for a mini deal, maybe there would be progress, and these actions throw a wrench in that plan. shery: after every u.s. trade action, we have seen beijing react in a more measured way. what have we heard so far? forceful comments

from foreign ministry officials yesterday in beijing, saying they would retaliate against this decision to blacklist eight chinese companies. that may involve nontariff barriers, it may involve them publishing their unreliable entities list that would restrict access of some u.s. companies to the chinese market. shouldso said the u.s. stop interfering in china's internal affairs, talking about these human rates -- human rights violations that the u.s. is pointing to as a justification for the blacklist, but also this visa ban. chin zhang is in the far eastern region of china, and it is there that according to the united nations china is holding up to one million muslims. china says this is all an attempt by them to tackle

radical islam in that region. they have faced pressure from say thisd nations, who is a gross human rights violation. mike pompeo said it was the stain of the century. china saying this is about trying to tackle radical islam. attempt, opening up a new front on human rights violations from the west side as they attempt to pressure china. shery: washington may not be done when it, to pressuring beijing. we are hearing we could see restrictions on portfolio flows into china. what do we know? sarah: two of our trade reporters at bloomberg broke the news a week and a half ago that the u.s. is looking at investment restrictions on china. what we reported today is they have narrowed that discussion to u.s. pension funds and trying to

limit their exposure to chinese companies, whether through indexes or other means. this shows the trump administration is really getting serious about new ways to put pressure on china. by doing this, they are opening a new front. capital controls on china would be another level, entering the financial services realm. we have been talking about human rights, wrapping that up into the trade talks. there is a whole hornets nest that i think it is going to be hard to imagine how they will find common ground over the next two days, the able to look each other in the eye and really have faith they can negotiate a trade deal. paul: senior trade editor sarah mcgregor and china correspondent tom mackenzie. still to come, the white house goes on the offense and president trump won't participate in the house impeachment inquiry. shery: next, from the trade war

to brexit and hong kong, we discussed the big geopolitical threats with stephanie kelly from aberdeen standard. this is bloomberg. ♪

>> we are going to be talking about trade peace, not trade war. everybody is the loser in a trade war, therefore everybody would be a winner in trade peace. lossake it clear that that may be higher on some countries and lower on some others, but everybody is impacted. the new imfwas managing director, giving a downbeat picture of the world economy if the trade war drags on longer. our next guest says any resolution hinges on president trump deciding if they win is taking on china -- if they win

is taking on china, or making a compromise deal. stephanie kelly is a senior political economist with aberdeen standard investments. she joins us from tokyo. thank you for being with us. i wonder how much is dependent on president trump, given that the hawks seem to be in the driving seat in washington, whether in the white house or congress. stephanie: i think that is a pretty good point. the main issue we see and what we have seen in the last couple of days is there was a hope at one point that good tariffs could retain this very specific area outside of foreign policy, and what we have seen in the last couple of months is an increase in linkage between not just goods trade, but intellectual property, security, and now a foreign policy intervention on human rights. what that says for me is in away

president trump is trying to decide the extent to which to push china and how much he might be able to give back to secure the kind of trade deal he has spoken about, which is more than the chinese have suggested, more than a limited goods deal, and speaks to wider structural issues between the u.s. and china. shery: have you sensed any change in tone coming from beijing when it comes to the trade talks at what they could be willing to compromise on? stephanie: i think china and some ways has been steadfast, particularly since last summer and the hardening of this dance we saw at that point -- hardening of the stance we saw. they are willing to negotiate, keen to negotiate a damaged limitation strategy. the extent to which they are willing to transform their industrial policy has not changed. looking to, they are

do this more limited trade deal, add that is the important thing, that on the chinese side they have been clear. they want to keep negotiating and if they can put off the tariffs that have been announced but not implemented, but in terms of building the deal, the deal china is talking about is different than the deal trump has spoken about. paul: what is your reading of the u.s. strategy? the chinese are talking on pragmatic terms, while the u.s. wants a grand bargain and simultaneously opens multiple cans of worms. what's the strategy here? stephanie: as i said in the opening comments, the way i described this is president trump is trying to decide what a win is for him looking towards the 2020 election. his voter base is supportive of taking on china, so the extent

to which a win is being tough on china, engaging, but being specific and stern in terms of his demands, but over time, what we are looking for is are there any signs that the negative implications from the trade war are leaking into elements that voters might care about? crucially, that's the labor market. there is potentially a tipping point at which if this economic stress becomes so severe, eventually the trade war is affecting jobs, that's the world in which the balance may be tilted so that getting a deal becomes a win for trump. i think january through june and onwards will be the time we start to see a lectionary and -- start to see electioneering, but when we speak to people familiar with trump, they say he has not decided which of those things is a win. paul: another of president

trump's favorite measures of success is the performance of the s&p and what that means for pension funds. the impeachment drama starting to cast a shadow. is that perhaps part of the chinese strategy, waited out and maybe the president will start needing a deal as much as they do? stephanie: this is the point often made about china. they don't base election cycles in the way the united states does on the 12 to 18 month time horizon. it is president trump and the republican party facing reelection. there is a strong argument for waiting it out. and minimizing the damage in the meantime and hoping that over time what becomes a win is that deal. in so doing, maybe china can build a smaller deal that is more appealing to them in terms of a compromise, without changing everything to do with intellectual property and

technology transfers, as well as engaging in cybersecurity questions that china does not want to engage on. paul: stephanie kelly stays with us. we have much more ahead. this is bloomberg. ♪

shery: this is "daybreak: asia." i am shery ahn in new york. paul: and i am paul allen in sydney. the u.k. has stepped up preparations for a no deal brexit as negotiations with the eu head towards a breakdown. boris johnson told angela merkel that an agreement was impossible if the eu demands northern ireland stays in the customs union. still with us is stephanie kelly in tokyo. you have said the u.k. and eu were never realistically going to get to a deal. the pbc's reporting sources at number 10 say a deal is not essentially impossible.

are we going to get a hard brexit on october 31? asphanie: i think insofar the likelihood of an actual deal, you can never say never. there are incentives for both sides, so i would not say it is impossible. however, the majority of the probability if you are wargaming this out is the likelihood of an extension. in the united kingdom, there is legislation that dictates if there is no deal by the 19th of october, we will have an extension until the end of january and boris johnson has to request that. the risk of no deal in the short-term remains present, but relatively low, and an extension is the most likely. i would expect the next couple of weeks to be very noisy, even if that noise is to facilitate eventually getting to a deal, which is difficult because it seems as though the eu and u.k.

are looking at these talks in cross purposes. paul: in terms of the impact of a no deal brexit, what do you think of the thoughts of pimco's ceo? he says crashing out is preferable to another two years of doing nothing. stephanie: we wouldn't share that view. the reality is the period of uncertainty has been problematic for business investment and business uncertainty, but the countervailing effect of the weak sterling in terms of experts -- exports, the reality , you a no deal environment are talking about complete uncertainty for a period. there may be a short period at the beginning where market sentiment is very weak and you have some continuing agreements, but they will wear out. a no deal occurs because the two

sides agree they cannot agree anything else and this is more appealing than continuing to extend. i think that is a very severe environment. we would pencil in a recession for the united kingdom in 2020 if there is no deal. shery: we are headed to the eu summit next week. have we sensed any more concessions or signs of concessions from european leaders as they continue to negotiate? stephanie: there have not really been signs of true conception. --s is -- true conception true concession. this is where the signs of engaging seem to be taking place. on the eu side, they see questions about customs and the market as legal, technical questions for which they want legal answers. on the u.k. side, it is seen as a political negotiation where

you can negotiate a political solution. with regards to the current plan, the eu issued a rebuke with six or seven points of why they cannot agree to the customs checks that the u.k. have provided. the single market concessions the u.k. is looking for. i think in some areas, there would be a potential softening, but customs legislation, single market legislation, the eu does not feel inclined to change its legislation for one country. when you are a grouping of twentysomething countries, if you give way to one country in terms of changing legislation, you incentivize others. brussels is mindful of the risk that this experience creates for engaging with other members. paul: aberdeen standard investments senior political economist stephanie kelly, thanks for joining us. , jay powell go shopping for u.s. treasuries

again. we assess his latest plan to avoid money market turmoil. this is bloomberg. ♪

paul: welcome back to "daybreak: asia." we are just getting some breaking news on the bloomberg. consumer confidence for australian for october, a big drop, down 5.5%. the reading now 92.8. anything below 100 reflects a bad result. 92.8 for october, down 5.5% from the previous month. on the markets, we are seeing the s&p a bigger problem. the asx off more than 1% now.

all sectors on the aussie market weaker. let's check in on the first word news. >> china is signaling it will hit back at the u.s. decision to blacklist companies over alleged human rights violations against athletic muslims. the foreign -- against ethnic muslims. the foreign ministry said to stay tuned about a response. the issue comes as the sides prepared to revive trade talks, with china indicating it would prefer a narrow agreement over a sweeping deal. >> [translated] china will continue to take strong measures to safeguard its sovereignty, security, and development interests. as for the retaliation, are you looking forward to it? please pay attention. >> turkey says military forces well cross into syria at the start of its incursion into kurdish forces. the buildup comes after president trump indicated the u.s. would not oppose the

cross-border operation against longtime american allies. turkey says it will move into syria to take control of an area from kurdish fighters that it considers terrorists. the brexit blame game is heating up with a no deal divorce looking likely. sterling fell after boris spoke to chancellor merkel and accused her of making a new deal impossible. sources tell us that merkel insisted northern ireland must remain in the eu customs union. johnson says the eu's refusal to explore his plan pave the way to a hard split in three weeks time. 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. this is bloomberg. shery: thank you. australia markets have been trading for half an hour now. how are we looking? sophie: we are looking to the downside, aussie shares off by

1% after a three-day rise. all sectors in the red. the aussie dollar study. a slight drop earlier even as consumer confidence fell in october. bonds are tracking the overnight rise in treasury, pushing three and 10 year yields to fresh lows. some movers, this one jumping 40% to a record high after the u.s. fbi -- u.s. fda approved it to treat skin damage. light sensor is under pressure, dropping 7% after the company gave its fiscal year update, profit falling below a year ago. let's check in on what is going on with the lira. 13 47 in the library. the lira is a touch weaker, but not reacting much to turkey

announcing its military well cross the border shortly. the cost of hedging against the lira does remain elevated after the biggest two day job in almost five months. quickly i want to highlight this. i want to mention another blow to the nba and the fallout with chinese partners over hong kong. china's second largest dairy company has said it is cutting all commercial ties with the basketball league, another headache for the nba china ceo. the two did have a long-standing partnership since 2007 with a multimillion dollar deal covering media, educational programs, nba-branded products. shery: fed chairman jay powell is keeping rate cut hopes alive, focusing on threats from the global economy. he also confirms they will start buying bonds again to avoid more turmoil in money markets. kathleen hays is here with a recap. our markets right?

in expecting another rate cut this month? -- our markets right expecting another rate cut this month? kathleen hays just three weeks away from the meeting. still looking for something like an 80% chance that happens. jay powell did not make it look like a slamdunk. he was speaking to the annual meeting for business economics in denver, colorado. ,t was a big picture speech talking about measuring tightness in labor markets. at the very end, he talked about what data dependence means now. he started talking about the u.s. economy in positive terms. job gains, strong labor market, rising wages. he went on to say, it is global risks that are rising, or risks rising from global development. you can thank trade, brexit, and more. it seems clear the door is open

to the october cut, although some people think maybe depending on the consensus from the fomc there is a chance they won't. listen to jay powell, make up your own mind. >> policy is not on a cruise set course. the next meeting is several weeks away and we will be carefully monitoring information. we will be data-dependent, assessing the outlook and risks on a meeting by meeting basis. we will act as appropriate. kathleen: jay powell also said he wants to do whatever it takes to sustain economic expansion. that would also seem to be ahead for a rate cut -- a hint for a rate cut at the end of the month. and the announcement that fed -- that the fed will start buying bonds again soon. qe,ade it clear it is not not going to affect monetary policy. at one point, he said, did i say

it already? it is not qe. he drove back home pretty hard. paul: jay powell being very explicit about that, it is not qe. the trade war also top of mind. that's an opinion he shares with the new head of the imf. what did she say? turneen: her first major taking over the position heading up the international monetary warning thater 1, there are rising risks, that the global economy weakness could spread. she notes everyone loses in a trade war and she, like jay powell, sees uncertainty hitting the global economy, driven by trade, brexit, geopolitical tensions. >> there is also, in my view, a risk of complacency. we are decelerating, we are not

and it is not that now,and yet unless we act potential morea massive slowdown. kathleen: that is certainly a warning you can't ignore. she also said when the imf issues its economic outlook report for next year -- remember, the international monetary fund world bank meetings will be all week in washington -- that they will be cutting their 2019 and 2020 economic growth forecasts. it will be the fourth time since october of last year. paul: global economics and policy editor kathleen hays, thanks for joining us. pimco has been weighing in on potential threats to the global economy. ceo manny roman says a hard

brexit better than being in limbo and a trade war could push the u.s. into recession. he spoke exclusively with john micklethwait. >> the big picture is very simple. you have a trade war with china, and we don't think it gets fixed in the near future. i think the best parallel is the cold war in the 1950's, where there will be improvements, there will be ups and downs. john: you do see two economies emerging. the division between the two. , twou see two internets supply chains, more regional economy? >> more regional and also a global fight for some of the sectors. you think the u.s. is going to slow down. one of the main themes is the first half of 2020 will be slow in the u.s. you see gdp dip to 1% or something.

if the rhetoric on the trade war gets worse, you may even be in recession simply because the consumer will lose faith in what is happening. john: what are you more scared of out of brexit or jeremy corbyn? >> thank you for this question. [laughter] john: i am not saying you cannot get both. [laughter] on labornk a full government would obviously be very bad for risky assets. me of 1981 when the socialists in france, within a year they had to do a 180. i think with the core belief that i came to think, the government is not very good at running things. it does not matter how bad other people are, the government is

never very good. you thingorbyn -- corbyn would come in and run into trouble? >>'s program is quite extreme. john: do you think that is worth sam -- that is worse than brexit? you buy a lot of government bonds. >> we do, we like the u.k. we think even in a brexit scenario, they are fine. john: a hard brexit? >> they are fine. what you need is resolution at this stage. i think we are in limbo and being in limbo is not a good thing. you have a situation where between the politics, the government, the house, the voters, it is so fragmented and i don't have to tell you this, that you need a way to get to an outcome. even if it is a hard brexit, it

is better than having two more years where nothing gets decided. roman pimco ceo manny speaking with john micklethwait. coming up, the nba remains in the spotlight as we see china's anger over hong kong. we ask if the league will be able to hold onto its fans and the mainland. this is bloomberg. ♪

shery: this is "daybreak: asia." i am shery ahn in new york. paul: i am paul allen in sydney. the rift between china and the nba has grown wider. china menu derry has cut all commercial ties with the nba and tencent says they will halt carrying preseason games in the mainland. the defections follow a comment about the hong kong protest

tweeted by the houston rockets general manager. nba commissioner adam silver says he can't tell people what they can or can't say. >> it is not something we expected. butink it is unfortunate, if that is the consequences of us adhering to our values, we feel it is critically important that we adhere to those values. paul: for a closer look at what's at stake, we turn to rick burton, professor of sports management at syracuse university. thanks for joining us. this is tricky for the nba. what do they do here? they are really risking all they have built up. how do they stay on the right side of china? rick: it is indeed tricky. the commissioner is meant to protect not only the interests of the owners, which is who he reports to, but also the

reputation of the game itself. in this case, as an american-based league, the commissioner has to protect the individual's right to freedom of speech. on the other hand, the business ramifications of china are very significant for a league of that size. paul: what is at stake for the nba here? give us a sense of what they stand to lose. rick: there is a number of factors in play. they undoubtedly have chinese sponsors. hey through of them are contemplating -- a few of them are contemplating terminating their agreements or already have. and you have american sponsors of the nba that do business in china and are wondering how much further the fallout will go. you have chinese citizens that buy the merchandise. there are a number of factors,

but this is a decision that is somewhere between tens of millions and hundreds of millions of dollars, at least in the short term, possibly much more in the long term. shery: how important was this week? we are expecting a series of exhibition games in the region as well. rick: i think the games will go nba is goingnk the to have some very difficult meetings, as china makes it clear to the nba that if you are looking to partner with us in the future and this is how your people talk about our country, we are going to take that into consideration as to how we do business going forward. it does put adam silver in a tricky situation. i think people imagine they would like to be the commissioner of a sports league, but they probably would never want to deal with the choices they have to deal with.

shery: we have seen the nba trying to distance itself from that tweet sent by the general manager of the houston rockets. that was really not well received in washington from politicians, including senator ted cruz and beto o'rourke, criticizing the nba. how difficult will it be for the nba to manage those expectations from beijing and also washington? rick: very difficult. i imagine adam silver is going to try to play it straight -- play it with a straight bat, pardon the cricket term. i think the choices figuring out how much pain he can wear and where he can wear it. i think he may imagine this could blow over in the united states faster than it would in china, and i could imagine he would believe that the chinese

market's future potential is much greater than the u.s.. that is hard for an american to hear, but the reality is he probably would believe he has a greater ability to control the fallout in the united states, where there may be a tendency to forgive and forget or to get caught up in the start of the season, but not really be able to play it in china, where he has a much longer future in terms of what he has to be protecting. morey, whose tweet kicked this off, he is not the first to get in trouble tweeting something and he is not going to be the last. does the nba need a stronger policy around tweeting? rick: you would like to thank people would not say things that were controversial, but that is not the case. the commissioner can't tell

americans what they can and can't say. adam silver has gone on record saying as much. in private, you will see the ownerships actually issue statements to their general requestingd players that they really be very considerate in what they are posting on social media, because the reality is there is a lot of damage that can come out of one misstatement. shery: we have seen the cofounder of alibaba try to explain china's anger to western audiences, saying the issue over hong kong protests are seen as a separatist movement in china. he is also the owner of the brooklyn nets. could there be some teams that would benefit from chinese fans falling out of love with the rockets? rick: i think so, but i don't

think any team is going to in a predatory way try to take the place of the rockets. the rockets have had a long history with china because of yao ming. there have been a few other teams that briefly had chinese players, but i would not see that happening. i think what you will have is the nba trying to mediate between its team operators and a country that is incredibly important to the league. shery: thank you so much for joining us. rick burton, syracuse university professor of sports management. there is more on the nba china controversy. later, the president and coo of the golden state warriors joins us at 6:30 tonight hong kong time. ,f you are away from a screen you can find in-depth analysis on bloomberg radio, broadcasting live from our brand-new studio in hong kong.

listen via the app bloomberg radio plus or bloombergradio.com. this is bloomberg. ♪

shery: this is "daybreak: asia." i am shery ahn in new york. paul: i am paul allen in sydney. let's get a check of the business flash headlines. the leadership struggle at nissan has ended in an uneasy compromise with the top leaders being given leadership roles. the head of the china joint venture is the new ceo. he will work alongside the coo and his deputy. they say -- nissan says the collective leadership will ensure no one person can dominate decision-making. shery: struggling california utility pg&e is preparing to cut power to 8000 people in the north of the state as strong winds prop fears of wildfires.

rural areas and cities will be hit, but pg&e says silicon valley will be spared. filed for bankruptcy in january, facing $30 billion in liability after its equipment was blamed for deadly fires. paul: paypal will report a $228 million loss on investments before taxes in the third quarter, driven by a bad bet on uber before it went public. paypal says the investment for $500 million and the ipo price has slumped more than a third. levi strauss's third-quarter profit and sales topped estimates as revenue and the home market fell amidst a crowded denim sector. -- the share compared with the

average projection of $.28. denim is enjoying a resurgence and the market is crowded, but the latest results show levi is holding ground. markets open at the top of the hour. south korea is closed for a public holiday. let's turn to sophie for what to watch. sophie: nikkei futures are pointing to losses of more than 1%. the asx 200 falling 1.1% this morning with all sectors in the red. the yen inching slightly higher, around 107 per dollar as the risk off sentiment seems to be building ahead of thursday's u.s.-china trade watch. thiss to watch in tokyo, one after a deal to buy an american skincare brand. bloomberg intelligence expects the deal could curb their losses in the u.s. and they see potential to expand into china.

this one is on the radar after reports top executives plan to resign. japanese retail earnings are upon us. cut itsretail has guidance, beating estimates. sony announced it will launch the playstation 5 for the 2020 holiday season. shery: let's get a check on the markets. we are seeing downside pressure for markets across asia, qe stocks falling .7% after the kiwi dollar strengthened. we have heard from the finance minister saying new zealand's budget surplus means the government is in a strong position for the next year. take a look at the asx 200, every sector in the red with tech and energy leading the declines. nikkei futures also down 1.2%. paul: coming up in the next hour, mizuho bank's vishnu

varathan warns recession risks are looming and will intensify in 2020. market open and japan next. this is bloomberg. ♪

paul: good morning. i'm paul allen in sydney. shery: good evening from new york. i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories, trade talks under pressure. revived negotiations may suffer as the trump administration slaps travel bans on chinese officials. the fed chief opens the door to raid -- rate cuts. they insisted is not the

research -- the return of qe. shery: the u.k. tells germany the eu's unwillingness to unwillingness to engage makes a new deal all but impossible. japan coming all -- online although korea is on holiday. offline, but korea in tokyo, downside pressure for the nikkei 225, off 1.2%. topics tracking a drop. the yen is trading firmer, breaching the 107 handle with trade concerns reignited. mission makes its way, the trip may be cut short by one night. in's check in on the mood sydney. aussie stocks off by 1%, snapping a three-day gain and bond yields slipping to fresh lows. we got a reading this morning from westpac showing australian

consumers are at their gloomiest in more than four years. the index sliding 5.5% in october. l evans says that result will be of concern to the rba given how they have been unable to inspire consumer confidence. paul: let's check in on first word news. >> fed chairman jerome powell says he will resume buying treasury securities to avoid a repeat of recent turmoil in money markets. while leaving his options open on interest rates. he indicated the purchases would be made off treasury bills unstressed it should be seen as a return of crisis-era qe. fell and theields dollar rose. >> i want to emphasize the growth of our balance sheet for reserve management purposes shouldn't be concerned -- confused with large-scale asset programs we deployed after the financial crisis. neither the recent technical

issues nor the purchases of treasury bills we are contemplating to resolve them should materially alter the stance of monetary policy. >> he says military forces -- military forces from turkey will cross the border in syria after trump indicated the u.s. would longtime allies. turkey said it will take control of an area from kurdish fighters as it -- that it continues -- considers to be terrorists. the brexit lame game heating up with a no deal divorce looking increasingly likely. boris johnson spoke to chancellor merkel and accused her of making a new deal impossible. sources say merkel insists northern ireland must remain in the eu estimate union. johnson says the eu's refusal paves the way for a hard split in three weeks. year for record

migrants being taken into custody in the u.s., the number of people apprehended at the mexican border has fallen for the fourth month in a row. border offices dealt with 52,000 migrants in december, down 65% from may's peak. the total number of migrants held in detention facilities has 19,000 to just's 4000. global news 24 hours per day, on air and on to talk on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. the trump administration, slapping visa bans on chinese officials linked to the mass detention of muslims. the latest in a series of u.s. steps to pressure beijing as trade talks resume in washington. let's bring in tom mackenzie in beijing. we are talking about visa bans and potential restrictions on

portfolio flows into china. washington seems to be upping the ante ahead of trade talks. they seem to be pulling out all the stops to pressure china on the human rights side over concerns about what they say are violations and abuses of human .ights in shin zhang with the ban on travel, they say these officials are linked to the detention camps, which hold about the u.n. china says this is part of the plan to tackle radical islam in the region but the u.n. and the stateof the secretary of consider it human rights abuses in that region. we have had the visa moves by the u.s. and the travel ban, and that follows the blacklisting of companies the u.s. says is involved and are implicated in some of the human rights violations. we know there are discussions on the way in washington about

trying to restrict portfolios and the exposure to chinese -- those conversations are ongoing. you are right to say the pressure is mounting on china ahead of the talks that are expected to take place thursday and friday in washington. paul: the pressure is mounting on china in terms of retaliation . it is unlikely china will sit back and do nothing. stay tuned, is the message. what might we expect? tom: we heard from officials from the foreign ministry yesterday, hitting back with some pretty strongly worded comments in terms of the blacklisting from the u.s. and they would retaliate. we should stay tuned and they may take measures, nontariff measures and we should look to those and try to restrict activities of u.s. companies operating in china. that will be a concern for corporate lobby groups and companies with exposure to the

chinese market. they may speed up the publishing of this unreliable and it is list that could restrict access to the chinese market for some entities list that could restrict access to the chinese market for some firms. the fallout is broad, broader than just the question of trade. we are seeing the mda being wrapped up in this and we heard from the commissioner of the national basketball -- the nba being wrapped up in this and we adam the commissioner, silver, pushing back against the pushback they faced in china, saying he wouldn't apologize for that week from the general manager of the houston rockets and saying he wouldn't restrict the speech, the freedom of speech of those who work for the nba. take a listen to adam silver. >> it is not something we expected to happen. i think it is unfortunate, but consequences of us adhering to our values, we

still feel it is critically important we adhere to those values. has 800 million viewers in the chinese market, but they have already seen a number of sponsorship deals ended. state tv is not showing some preseason games. cut off its streaming service of nba games. a big financial hit potentially for the nba, and the comments won't diffuse the situation. this will be ongoing. companies, foreign companies that have exposure to china have to tow the line or they will face this kind of pushback. but in terms of the u.s.-china relationship, the broader question is, you are seeing pressure points across a number of fronts, not just tariffs and trade but national security, human rights and culture wars. paul: tom mackenzie, thanks for joining us. for more to watch, we have strategist matt cranfield.

we have been hearing about the u.s. moves towards china. what impact can we expect on markets and the yuan? can see the response of wall street overnight. it was a pretty bad day for equities across the board come all the indices were down. and quite significantly, as well. a weaker yuan, and the offshore market, the cnh was up to 7.16 at one stage. that will be reflected in markets in asia. the back and forth between the two sides over these issues is unsettling for investors, and they immediately go for the most defensive places. we will probably see a pretty weak start across asia. the pboc will have an opportunity to calm things down when they do the daily fixing of the yuan. they will probably set it not far from where they have set it for several days now. yet, the market will be looking for further yuan weakness.

we could be pushing towards this 720 area in the offshore yuan. we got close a few weeks ago. there seems to be, the pboc doesn't seem to be ready to allow the dollar to rise any .urther than 720 for now it will be important to see how they respond should the markets edge that way, but a high degree of nervousness. we would expect to see a risk off day across asia unless we get a soothing comment coming out from the chinese side during the day's activity. shery: the trade headlines overshadowed chairman powell's speech today. we know at this point if there will be any impact on asset pricing outside of the funding markets? mark: certainly. this kind of thing, he may not want to call it qe but it will be hard to persuade investors

that that is not what is going on when the biggest central bank, the most important central bank in the world starts buying u.s. securities again. that is how people will read it. what investors will think is, once central banks around the world have started on a securities buying program, they tend to stay with it for a long time. reading into qe is easy, getting out is difficult. investors will start thinking not only has the fed started to reduce interest rates, it will now be buying more securities. this is beginning to look like the time after the global financial crisis in 2008-2 thousand nine. we saw how low u.s. yields can go during such an environment. we have the treasury yield around -- there is plenty of downside if the fed continues to buy securities. they may not buy in the same quantities as they did a decade ago, but the fact that they will restart on this will give a backbone to risk sentiment.

you have to offset this with what is happening in china. in terms of the big impulse for the bond yields, it has an impulse for the dollar as well. it will generally make the dollar a bit softer against major currencies when people are confident that the fed will stay there pushing yields down for a long time. that looks like we will get a long period of the same involved in markets, which will put it -- a downward pressure on yields and probably the u.s. dollar. paul: thanks for joining us. you can follow more on that story and today's trading on our markets live blog. find that on the bloomberg. you can get a market run down, and there is commentary and analysis from our expert editors so you can find out what is affecting your investments right now. us --to come, mizuho bank mizuho bank's vishnu verizon joins us. qatar'sn exclusive with

minister on the impacts of aramco and the trade war. this is bloomberg.

♪ this is daybreak asia. i'm paul allen in sydney. shery: i'm shery on in new york. trade tensions continue to rise. global recession risks are growing. they are self-inflicted. ishnu. greats v having you with us. we are seeing synchronized manufacturing slumps around the world. growth recover and pick up at a time when exports are slumping because of the ongoing trade war? that remains the predicament. --happen in a very terrible a fairy tale world without a trade war.

we would have anticipated the semiconductor cycle should have bottomed out in 2019. in 2020, we should have seen a inkup in exports and manufacturing. that is not the case. with the tariffs being mounted and more cascading impact coming happen, what will really is i think exports return even lower and manufacturing slowdowns could be sharper in 2020. really, it is difficult to call the trajectory, because it will depend on the precise tariffs that are being announced in the measures, the broader measures and retaliatory measures that come through. shery: we are already seeing reaction in the markets. we saw semiconductors take the biggest hit in six weeks in the u.s. given how the trade war seems to be broadening to attack war, what will the implications be for the supply chains in asia? remains the odd

thing. on one hand, you have samsung saying they see a bit of a bottoming coming through, then when you see an expansion in the u.s.-china conflict going into the tech arena, very quickly we realize the global economy is on a knife's edge. it is between a bottoming and a aump, in a doubt -- and double-dip type slump. it looks like the manufacturing supply chain will be impacted pretty hard in the likes of korea, taiwan, and singapore. if it broadens into a bigger risk, it is difficult to pick any relative in asia. the region continues to be export dependent and that hasn't changed. paul: you describe economies being on a knife's edge and resection risk is something we discussed frequently. is somethingrisk we discussed frequently. take a look at this chart on the bloomberg terminal, one that seems, one shoe that seems to be

firmly on the foot is oil prices. recessions generally correlate with a big spike. what are we to take away from this? if oil is cheap, we will be ok? i really like your take on that. that really reflects how complex and nuanced this is. typically, we get high oil prices that tend to correlate with a recession because you either get a geopolitical risk on oil shock that since the economy spiraling in. the trouble is, we are already on shaky footing with a bad knee and will prices will reflect to things -- two things. you see it getting bumpy every now and then, and you have the other end of it where demand is lower. the unprecedented amount of shale output from the u.s., oil has become more of an unreliable

thing at this juncture. oil follows in this case, the manufacturing downturn rather ,han leading a global recession and that is my best guess on oil. paul: with so much uncertainty around, you expect to see ongoing demand. what is your price outlook for the yen and gold? for various reasons, we view onretty outlandish the yen, depending on which angle you want to take. we see the dollar-yen taking a crack at 100 into the second half of next year. i think that would be to the frustration of the boj. the confluence affected, including risk off, could see the yen hitting that base. gold is still going to be dependent on the actual brand of risk. anything that is geopolitical

will see gold going higher. that could see it heading to 1800. below 1600 doesn't look too far from here and not out of reach. shery: despite the trade tensions between the u.s. and into, we see investments china are holding up. this chart on the bloomberg showing foreigners are still .irectly investing into china , will weof this change see rhetoric on restrictions on portfolio flows into china where toestors will be too scared touch anything china related? how many -- how detrimental would that be to the chinese economy gekko -- chinese economy? vishnu: how detrimental it could be, that would be very detrimental it is to get to that stage, i think the restrictions and sanctions on china have to be extreme.

typically we would not see this between two of the largest economies in the world. that would be a very dire global situation. in china's case, you would see 5% growth coming through as a and fbi related flows start fizzle. china's main concern from such measures could be capital stability, and that would have an impact on women be stability -- renminbi stability. shery: thank you so much. if you are away from a screen, you can find in-depth analysis and big newsmakers on bloomberg radio, broadcasting live from our new studio in hong kong. mobile appsgh our or bloombergradio.com. this is bloomberg. ♪

paul: this is daybreak asia.

i'm paul allen in sydney. shery: i'm shery ahn in new york. big energy players like exxon mobil, shell, and conoco phillips submitting bids to expand part of the world's natural -- largest natural gas field. qatar's energy minister spoke to us. >> we don't like to see any facilities harmed anywhere in the world. oil and gas facilities are strategic assets that are important for all countries and for the supply of liquids and gas around the world. toof course, it was shocking see an attack on an oil and gas facility, and hopefully that is the last one. >> prices haven't stayed elevated. is there too much oil in the market? >> when you look at the oil market and you look at iran has curtailed production, you look

at venezuela, libya, it is surprising that 5 million barrels going off the market from the biggest producer really outside the u.s. is really a huge shock that should have taken prices much higher. it seems the market is very used to geopolitical risk, and there is abundant supply. >> we have recessionary fears coming from europe and asia. we have the trade war which has stifled energy. qatarink -- do you think is a winner or loser in energy given that the chinese may be less likely to buy energy from the u.s.? >> short-term, you could take that kind of approach but long-term, you need to see a liberalized world where economies can flow around the world, and prosper around the world. and for us, free trade is the best thing for a commodity that

is such an important commodity for all countries. oil and gas should flow freely. we don't think that should come into trade wars. what is happening between china and the u.s. long-term will affect the market and hopefully they will resolve issues soon. >> everyone in the energy world wants to know what is going on with your northfield expansion plans. this is huge for qatar. have you picked any companies yet aware are you on that? >> we are on track. there's just one final, a few onshore contracts that will really be given out by the end of this year. first quarter will be, we will the contractsll for construction to start production in 2024. we have a select few that we have invited to give us bids to enter into about 30% -- >> 10 you name names? >> all the big players in cutter

have been invited -- in qatar have been invited, exxon, shell and others have been invited. conoco phillips has been invited. we have also invited a few others. these will compete to give us the best proposal, to show us an added value. we don't need the finances, we have the project fully running and we have the technical capability to do it. paul: that is qatar's energy minister speaking exclusively to bloomberg. a quick check on how markets are ,rading, not surprising everything weaker right now. a risk off kind of day, the 1%,ei off three quarters of same story in australia while in new zealand, the index is off 0.5%. equities ahead lower as the back-and-forth between china continues to escalate. travel bans being piled on top

blacklist announced by the u.s. yesterday and trade talks due to begin later this week. still to come, turkey's military poised across the border into syria. what that means for the region and foreign policy. this is bloomberg. ♪ everyone uses their phone differently.

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shery: this is daybreak asia. the first word headlines. china is signaling it will hit back at the u.s. decision to blacklist more companies over alleged human rights violations against ethnic muslims. the foreign ministry told reporters at the briefing to stay tuned when asked about a response. the issue comes as besides prepare to revise trade talks, with china indicating it would prefer a narrow agreement over a sweeping deal. >> china will continue to take strong measures to safeguard its sovereignty am a security, and development interests. as for the retaliation you mentioned, are you looking forward to it?

please pay attention. >> the nba remains on a collision course with china after commissioner adam silver -- free free sperry speech and indicated the league won't back down over a tweet about the protests in hong kong. tencent said they would stop airing and streaming preseason games. silver said the nba won't tell people what they can and can't say. philippine central bank's governor says he is likely finished cutting rates for this year, but could ease policy by reducing the amount of funds lenders must hold in reserve. scheduled policy meetings before the end of the year. last month, it lowered the overnight for an rate by 25 basis points to 4%. the third rate cut this year, as the economy grows at its slowest pace since 2015. -- asgs surged above recent sanctions on chinese

companies raised costs. they fell below 2 million barrel cargo. to china, it climbed to $113,000 per day according to the baltic exchange. that is the highest level into an a half years. global news, 24 hours per day, on air and on tick talk on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: no trading in south korea, which is a way on holiday. here is what to watch another markets. sophie: asian stocks falling with south korea sitting out today but s&p have swung to gains. advantage is the biggest drag on the nikkei 225. the asx is halting arise while aussie bonds are gaining grounds. more pressure may be on the rba to ease.

consumer confidence sank to a low in october. welltly firmer in jgb pulling back a touch in the asia session. let's switch the board to check in on stock movers in tokyo. a japanese glassmaker is falling after cutting its net outlook, citing a loss of 23 billion yen on its north american automotive glass business. another company rising as much -- and over in sydney, flight center slipping the most in six months after its update, seeing first-half profits below what it was a year ago with brexit among the headwinds for the company. another company jumping the most in five years, more than 40% on the fda approving its treatment for patients suffering from skin damage.

turn to rapidly developing stories. turkey says it's forces will cross into syria shortly, fanning tensions on the border. let's bring in derek in singapore. pretty hard to gauge the consequences of this foreign-policy decision from the u.s. to allow this to happen. was it thoroughly thought through? think at this point, there is not much that will stop turkey from doing what it wants, runough they are going to into resistance if they go after the kurdish forces that are there. backed kurdishs. forces. turkey says the trick across the border is planned imminently. we have seen turkish troops amassing on the border for what would be an incursion.

that seems like it is going ahead. on the u.s. side, donald trump has had a couple comments that people thought are kind of over the map, but i think they clearly distill into something and that is that trump is not aligned with a lot of republicans in washington on this. turkey is a nato ally. president trump will host turkey's president or to one -- erdogan at the white house in short order. the president is pretty allied with turkey. he warned the turks not to massacre people but other than that, other than verbal warnings, the white house has made clear it will not stand in turkey's way. shery: this coming at a time when president trump has domestic issues with the impeachment saga continuing in washington. what's the latest on that? it is quite an interesting development. the white house has said they are not going to participate

further in the impeachment inquiries. a series of letters and things going back between the white house and nancy pelosi's office, we just got a response from nancy pelosi right before i came on that basically said this is further evidence of the white house trying to cover up president trump's misdeeds. they say this could be evidence of obstruction, which is one of those charges, if you remember back to the clinton administration. obstruction of justice was one thing republicans tried to get clinton on. this is a further escalation. our colleagues in washington reported the white house is trying to bring on trey gowdy. you would remember his name because he is a republican former congressman who led the benghazi inquiry. interesting move. a longed trey gowdy for time. excellent former prosecutor, one of the sharpest people i ever covered in congress, one of the smartest guys but when he was

running the benghazi probe, he was one of the people that was demanding compliance from the democratic administration. you might remember hillary clinton sitting down for hours and hours on end as the democratic presidential front-runner in a house committee. that was great -- trey gowdy's panel. it is interesting and somewhat ironic, bringing him on now. bank --rek wall wallbank, thanks. brexit is heating up with a no deal looking increasingly likely. sterling fell after boris johnson spoke to angela merkel and accused of -- accused her of making a new deal impossible. a lot of finger-pointing here. where do negotiations stand? are they continuing in any useful form? >> well, the two sides are continuing to talk, but as

donald tusk, the eu council president, accused boris johnson of playing a stupid blame game, it is hard to see that this impasse will be able to be resolved anytime soon. it needs to be soon. there are three weeks left until the brexit deadline. phone call between angela merkel and boris johnson didn't go well. johnson told merkel that it would be impossible for the deal , ife reached if it required the eu continue to require that northern ireland remain in its customs union, and that is what is going to be required from the eu. he later said angela merkel was making it impossible to do a dim, and the germans took a view of that, as did donald tusk. he said boris johnson was the problem. it isare continuing, but

difficult. the irish prime minister and boris johnson did talk and they will meet next week. shery: we are heading towards the eu summit next week. will there be a deal that the prime minister can take the parliament? >> it doesn't look like it. they really haven't come up with anything. they can't get over the northern right now, it and is a blame game. this could be part of johnson's strategy. he likes to take things up to the last minute and maybe then, he will try to come up with some other plan, but right now there isn't anything on the table that makes it look like they can make a deal. boris johnson is now talking what what comes next, and he is saying, his government has a 156 pageh 156 -- report on what they are doing to get ready for a no deal brexit andalso, telling consumers

businesses what they should be doing to get ready. shery: exactly. tell us about what johnson is thinking comes next, given that we are only three weeks away until the brexit deadline. jodi: there is a deadline before that come october 19, which is, parliament passed legislation that says if there is not a deal , a deal has not been reached by october 19, a week from saturday, that they must, boris johnson must go and seek an extension. that is the question. the markets and a lot of businesses are banking on that extension occurring. at the same time, johnson continues his rhetoric, to leave without the deal. this may play out in court. if the 19th comes, as almost everyone expects, without a deal, what happens then and how much will johnson pushed to try to leave without a deal, and will he be successful in that,

given that there is this ?egislation some members of parliament are talking about their legal strategy to force him to seek the extension from the eu. shery: thank you so much. fed chairman jay powell is keeping rate cut hopes alive by focusing on threats for the -- from the global economy. he confirmed he will start buying bonds to avoid a repeat of turmoil in money markets. kathleen hays is here. will there or will there not be a rate cut at the end of the month? >> most economists, it is hard to say. lots of economists, and when we look at futures trading, they see a chance, four out of five, that there will be a cut on october 30. when pat will spoke to the national association of business economics in denver, he did nothing to confirm that, nor did he refute it. .is speech was big picture

how do you measure the tightness of labor markets? what about u.s. productivity? is it sagging as bad as we thought? at the end he talked about data. first, he thought -- he talked about wages are rising, the strong economy. and next, he said, however, the global risks are rising. you can think of the trade war and brexit and all those things he is worried about. door iss open -- the open and he didn't slam it shut. in the end, i think a lot of people figure this is jay powell's way of saying this could happen again. let's listen. >> looking ahead, policy is not on a preset course. the next meeting is several weeks away and we will monitor incoming information. dependent,data assessing the outlook and risks to the outlook on a meeting by meeting basis, taking all of that into account, we will act as appropriate. probably won't be

any big numbers between now and the meeting on october 30 that will change the economic outlook materially. one important thing if you are anybody in u.s. money markets, they are going to start buying bonds again soon. people think that might mean treasury bills. it is not qe. did they already say it? he said it again, it is not qe. aboutlet's talk more those global risks. one of those, the trade war, inflicting damage on the global economy. that is a concern shared by the head of the imf. >> she became head of the imf on october 1. her first major address, and she globalk a lot about threats rising. everyone loses in a trade war. she sees uncertainty hurting the global economy. , -- there iss of

also, in my view, a risk of complacency. we are decelerating. we are not stopping. bad, yet not that unless we act now, we are risking it potential -- a potential, a more massive slowdown. >> she said when the imf issues its economic outlook up the big -- at the bigweek meetings next week, they will downgrade the global -- the growth outlook for 2019 and that will be the fourth time they have done it since october. paul: kathleen, thanks very much. you are away if from a screen, you can find analysis and big newsmakers on the bloomberg radio, broadcasting live from our new studio in hong kong. that can be found on our app or

bloombergradio.com. this is bloomberg. ♪

shery: this is daybreak: asia. i'm shery ahn in new york. paul: i'm paul allen in sydney. chinese guest says companies shouldn't be on u.s. exchanges if they won't submit to the same audit scrutiny as everyone else. chris,iscuss that with author of a book about money and power. chris, you make a compelling companiesor chinese being delisted, but are you surprised the larry kudlow ruled that out? be said at seems to this point is that that is not the primary consideration. we have seen recently overnight that there is further talk of

limiting u.s. pension funds specifically from u.s. government controlled pension funds into chinese stocks. so i think that is firmly on their radar. i don't think those are steps they are taking now, as we have seen with a variety of other steps, for instance the announcement about visa restrictions on ccp officials injiang. i think that is on their to do list. i don't think it is something that will happen in the near future. paul: as the two sides try to step forward,ne two steps back towards some sort of resolution on trade, will the political cost of delisting be too great right now? the, it is is one of not just the political cost, it is the financial cost. there are roughly $1.2 trillion in value of chinese companies listed in the united states, and taking a move like that would be

seriously problematic for those firms and for americans invested in those firms. i think one of the questions they have to answer is, what type of, what would be the steps echoing we heard rumors of something like a three-year phase-in where chinese companies would have three years to become compliant before they would be delisted. steps to lot of the move forward would be, what type of process would that be moving forward? shery: we also had backlash of -- against the nba and the controversy over hong kong. how difficult will it be for these companies to balance their economic needs and also the political restrictions in china? chris: one of the key issues is listed is the companies that are facing these problem, but this is really a beijing problem because beijing has declared all financial records of these companies state

secrets. i actually believe a good number of these companies would actually like to comply. when someen that percentage of chinese companies are faced with either competition or higher regulatory standards, the comply. a lot of the companies that have listed in the united states, i actually believe they would want to comply. there are some that would not, but i think the primary obstacle is not these companies but beijing and their unwillingness to really acknowledge global regulatory standards for accounting and auditing. shery: we have seen beijing take more measures to open up its financial markets. how are we looking in terms of china's need for hard international currency, in other words, the dollar needs at this point? chris: i think that is the primary issue. for instance, just recently, they released balance of payment data and this is the largest

year of net errors and omissions in their capital accounts really this decade. wase was 131, i believe it 131 billion net errors and omissions and that is money that has some how left china that they can't account for. this shows us that capital outflows are increasing. hardugh beijing is working to attempt down on that, i think all indications are, they are dollarorter to the u.s. than we realize. we saw them pull of a $5 billion investable -- investment in an oil field in iran. there are under -- there are other indications, as well. paul: to your original point about the lack of compliance of chinese firms on u.s. indices, what is the worst case scenario for investors? how badly could they be burned? of thethat is one

primary issues that, whether it is the trump administration or timedministration later in that will tackle this has to deal with. you don't want to immediately de-list these companies. that would be problematic for the firms, for u.s. investors. it could be bad. at the same time, i think the regulators are well aware of this and if they moved down this, where they will de-list these companies and give them, a three-year window, two-year window, for your window to say we need to a group -- negotiate this and bring you into compliance before we make a decision to do list and by setting a deadline, they could say this is when we expect it to happen. shery: think you so much for joining us. -- thank you so much for joining us. a roundup of the stories you need to know to get your day going in today's edition of daybreak.

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paul: this is daybreak asia. i'm paul allen in sydney. shery: i'm shery ahn in new york. the latest headlines, the

leadership struggle at nissan has ended with three top contenders being given seem in your -- senior roles. the head of the china joint venture is the new ceo. he will work alongside the new coo and his deputy. nissan says the collective leadership will ensure no one person can dominate decision-making in the future. utility pg&e is preparing to cut power to 8000 people in northern california as strong winds prompt fears of wildfires. many cities will be hit. pg&e says silicon valley will be spared. pg&e filed for bankruptcy in january, facing $30 billion in liabilities after its equipment was blamed for deadly fires. paypal will report a $228 million loss on investments before taxes in the third

quarter, driven in large part by beforehat -- bet on uber it went public. the investment for $500 million at the ipo price has slumped more than one third. another investment in latin american -- in a latin american retailer has dropped 10%. million intog $20 space for a minority speak -- a minority interest in virgin galactic. they are expected to raise $800 million. the virgin galactic says it is targeting hypersonic airline travel to cut transcontinental flights to less than two hours. shery: a preview of what to watch in markets later this morning. sophie: the fifth month of unrest in hong kong. levels. testing support

financials are among the few sectors that are in the black for the year but the appeal is eroding for morgan stanley. other sectors, hong kong developers may move on a daily report that the government is considering more curbs on property sales to nonresidents. the impact may be limited to nonresident first kisses -- purchases. after the shenzhen stock exchange terminated the listing of a biotech firm at the center of a vaccine scandal, the hang seng is down. there is more coming up on bloomberg markets: china open. ♪ everyone uses their phone differently.

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in -- itnot :00 a.m. is 9:00 a.m. in shanghai. yvonne: we are counting down to the open of trade. david: trade talks under pressure. suffer asation may the trump administration's travel ban on chinese officials. yvonne: a new appetite for treasuries. it is not a rerun of qe. on -- the nbaains