At the same time, debt to income at record highs, largely on account of runaway property markets, how much households are leveraged. Will bekeeps up, there a problem when it comes to consumption and retail sales. For those reasons, the rba is expected to sit on its hands. Options at the moment, just wait and see future data. The composite index coming in way better than anticipated. Reflecting what happens to the manufacturing data in official and nonofficial iep. Looking forward to trade numbers out of china, and fx reserves. Its about the yen, gold, and markets generally. What we see with north korean tensions, what do we have . Last time we checked, gold was maintaining gains. Investors assessed these risks. We have havens picking up on momentum. Gold up about 2 10 of a percent, per ounce level. The dollar yen trading at 109. 54. The yen gaining ground. That is putting pressure on stocks in tokyo, leading the drop in asia along with shares you look at the hang seng. Trim somewhat, but up about a 10th of a percent. We have stocks in shanghai remaining under pressure, following the latest pmi numbers coming in higher. Interestingg moves when it comes to the yuan onshore rate swinging. The offshore rate is still in the doldrums. The aussie is jumping about half a percent after the latest data showed net exports were expected to contribute more to australias gdp than forecast. The aussie is leading gains dollar. The the euro is hovering around 119. The price action for the common currency indicating traders think the upside is here to stay 120the euro, and that remains the ecbs level of resistance for now. The asianover to space. The Chinese Dollar is leading, followed by the philippine peso snapping a fiveday drop, following the latest inflation data for august coming in better than expected. Riseorean won is on the recovering some of mondays losses, retreating from a twoweek low. While the onshore yuan has resumed gains for an eighth day, the offshore rate still on the back foot, although raising its earlier drop. Slightly stronger fixed to that. Thank you for that. Lets get you caught up with first word news. Haslinda amin has the headlines in singapore. Bitcoin tumbled the most in two and a half years after china tells banks that initial plan offerings are legal. The pboc has asked for all fundraising to be halted immediately, and says there will be harsh punishment for any offerings in the future, as well as for once already completed. Bitcoin fell by more than 14 on monday, the most since january 2015. Ted technologies of dubai is set to buy Rockwell Collins for 23 billion. The deal is 140 per share in cash and united stock. United technologies says it is funding the cash portion through that assurances and cash on hand. One of the biggest deals in aviation history is expected to close by the Third Quarter of 2018. The u. S. House of representatives will vote wednesday on a Hurricane Harvey that will contain language aimed at staving off a default on government debt. Republican leaders are for now the bowing to the demands of the and conservative members, wont combined registration, which would raise the u. S. Debt ceiling. The bill would provide almost 8 billion in aid. And mexican president have pledged to defend multilateral free trade after meeting on the sidelines of the summit in china. Told xipena nieto jinping that nafta had promoted growth, competition, and prosperity in north america. However, bloomberg is told the latest round of talks is nearing conclusion without any major breakthroughs or new agreements. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im haslinda amin, this is bloomberg. Rishaad lets revisit north korea. Lifeline may be at risk as tensions escalate after its latest nuclear test. Trump calling for the highest possible sanctions. Here is our chief asia economics correspondent. China is north koreas most important ally. Why hasnt it acted so far . Reporter one of the reasons is it does not want to do anything unsettledtens the regime in pyongyang. It is not in chinas interest to border, ores on its to do anything that creates a situation where the u. S. Can extend its influence on the north korean insula. They are the biggest supplier of crude oil to north korea. China could turn off the energy source, but it would trigger an issue of instability. Rishaad would it make any difference . What would Oil Sanctions or embargo, what would be the real impact . Reporter it is a very interesting debate. There are those who say that this would hinder the whole nuclear program. It could take away chinas biggest source of leverage and removed them from the equation. It could not impede on their abilities, because they do have a stockpile. Even a partial ban isnt necessarily the pen essay is people think it is. Anacea people think it is. Haidi the u. S. Ambassador requesting more sanctions, what would that even look like . Reporter this is where we start going into blanket economic sanctions. One view is that you could target all exports of north korea, the most recent u. N. Sanctions, agreed to say goodbye to about a third of the billion dollars in exports. They didnt touch areas like textiles, which is a vitally important source for north korea. You could go down that route. You could tackle guestworkers in china. You could put a block on that, and target those who trade with north korea as well. Ultimately, that would be considered to be a severe impact on the north korean economy. If we go back to where we were beginning, has. Thats the problem a lot of economics economists say, that the sanctions only worked to a point. Damageand the collateral as well, so many angles to look at this between seoul and beijing. If washington was to sanction chinese companies, the implication for that, even systemically, huge risks we are looking at. Reporter significant risks. War tends to escalate significantly. Had warningsdy from mr. Trump that he will cut trade off with anyone who does business with north korea. China has responded forcefully to that. This indicates companies would be caught in the middle. The consequences of the kind of a trade war initiated just to punish north korea would almost certainly spill over into neighboring economies of south korea, japan, and china, as well as other western countries that do business. Haidi hugely interconnected. We will continue to watch this story. Thel ahead this hour, fallout from chinas crackdown on cryptocurrencies and a ban on all initial coin offerings. Rishaad next, we talked to tohru sasaki, the head of the japan market at j. P. Morgan chase. Rishaad a quick check of the latest business headlines. Toshiba issaying discussing details of a contract with western digital, as it seeks a decision on the sale of its chip is next. Toshiba said last week it remained in talks with three groups, including western. Igital asahi says some of the company is wary of selling to the u. S. Company, but lenders are pressuring them for a decision. Blackstone is said to have shelved plans to sell off all or part of its Australian Retail interest. Sources say blackstone had 10 shopping centers, including individual properties and other assets. The portfolio includes centers in sydney and melbourne and is said to be worth about 2. 4 billion. Hanergys former chairman barred from serving as a director in hong kong for eight years. In misconductd related to the running of the former solar giant. For other executives were banned. He became chinas wrist before stocksr fell 47 in one day. Guest saysnext tensions over north korea could heighten as we approach their foundation day. Lets go to tohru sasaki, the j. P. Morgan chase head of Japan Research joining us in tokyo. Great to have you on. It is interesting. We keep seeing this cycle of the classic risk off trade, people buying into the yen and gold, and then it fading. Heightenedurrent and episode of saber rattling out of like there, it seems has not been more of an extreme reaction. Why is that . I think the market is still skeptical about the conflict. Market starts feeling the tension is heightened, but the market Still Believes there will not be a Serious Movement between north once and the u. S. , so there is Something Like a military conflict happening, the market will react more dramatically. So far, most of the Market Participants are still skeptical about tension. Haidi do you think that resistance is just about where short of the moment, waiting to see what the fed does, how that plays out for the rest of the year . Also, what the ecb does later this week as well. The yen is gradually going lower if we dont think about north korean tensions. It will be gradual. The market has already priced in a certain level of rate hike. The dollar continues to be the weak currency. The dollaryen topside will be limited, and then a gradual downside. The dollar yen has a gradual downside risk. Haidi what about across other classes . Asset in the last hour or so, the japanese finance minister saying they are concerned watching the effects of the north korean situation when it comes to japanese stocks and the stock market. Clearly, the currency as well. At what point do you see serious concerns about equities, as well as something that might need intervention when it comes to the yen . Course in any kind of way, if tension is heightened, the yen is likely to appreciate more, which will be negative on the nikkei. The nikkei goes lower, the yen goes lower, the tension is heightened. I cant say what kind of tension, but they markets are concerned about that this week. It will be difficult for investors to go short the yen or long on the nikkei this week. A wealth ofhave had japanese data, which is surprising to some extent, to the upside. Would you say that abenomics is working . Would you say the japanese economy has turned the corner . The japanese economy has been doing well so far in the past several years. It is partly because of abenomics, but partly because of the Global Economic growth. Economic growth. The Global Economy has been doing very well in the past four years, which is coincidentally the same year of abenomics. The economy is doing well, probably supported by the weaker yen. If the dollaryen goes lower, it will be a negative impact on the japanese economy. Still, if you look at the , the average budget rate by the manufacturing of a aboutse company, it is ¥108. The current level is still favorable for the japanese manufacturers. Even if the dollaryen goes the heightenedf tension by north korea, the crucial level in dollaryen is still far away. Rishaad im going to bring up a chart of the yen. If you can bring up my terminal, you can see whats happening. We have just seen a move, the spike showing the yen strength. It is down to apparently an icbm being moved and location in preparation for a test. These are reports coming through from north korea that pyongyang itsstarted moving Intercontinental Ballistic Missile for a possible launch before saturday,. This perplexes me. Why is the yen seen as a haven when it could be that its host country could be a target of attack . Yes. Thebasically in a situation whn the market is risk on, participants are taking risk, yen becomes a funding currency. Investors are selling yen and buying highyield currency, or selling yen. Under the situation, what investors will have to do is close. That means they have to buyback yen. Thats why they yen tends to appreciate. Also, japanese investors have been accumulating a large amount of falling assets. Basically, the japanese people have this position. Must something happens and people are in trouble, but we need is cash. So thatsd to close, why there is falling securities and buying back. Yen thats why the yen tends to appreciate in this kind of situation. Yes, it seems on the surface completely counterintuitive, particularly when the threat is targeting japan. Correlation between Japanese Equities and the yen, do you expect that to be continuing . Historically, the market has been sensitive to yen movements, but we have sort of scene that effect somewhat fade this year. The coordination between dollaryen and the nikkei has been a little weaker this year this is partly due to. Years movement being led by the dollar. The dollar has been weak. Thats why the dollaryen goes lower. But the nikkei did not catch up much. They yen is also weak. If you look at the euroyen, it has been appreciating this year. If you look at the debt japanese exporters, many euroyen. Have this years dollar year decline is not dollar weakness. Thats one of the rea reasons why. If the situation continues, the court will be weaker and weaker. So much, tohruu sasaki, j. P. Morgan chase head of Japan Markets Research in tokyo. Next, the resignation of taiwans premier could provide the president with an opportunity ahead of next years election. We are in taipei, next. This is bloomberg. Rishaad taiwans president will hold a briefing later today after approving the resignation of the premier. Lets go to our bureau chief. What is the significance of this recessional reshuffle . Reporter in many ways, this marks the end of the first phase her presidency. She has been in power for just over one year now. The key hallmarks of her presidency so far have been a number of reform efforts, including labor, reforms in pension, Infrastructure Spending, and tax reform. , thelast week administration announced its plans for tax reform, so it was decided this would be a good time for a change of government. Of course, not all of these policy initiatives have been universally popular. Elicited strong reactions from the public in taiwan. Chief among them, labor reform. The hope being that by changing the head of the administration expectedng in what is to be the mayor of time and city hes verycity, popular, so they hope to put a more popular face on the administration and set the party up for a stronger showing in local elections at the end of next year. Haidi the Economic Outlook for taiwan remains pretty strong thanks to this export rebound across asia. Is it sustainable for policymakers . What do they have to do . Reporter yes, taiwan has seen a rebound in growth since the end year, and as you mentioned, this is predominantly driven by rebound in global growth. Taiwan obviously is a predominately export dependent nation. The question is, what can policymakers do to support this . One of those is the Infrastructure Spending bill. That has now been pushed through. That is more than 100 billion taiwan dollars in spending the government will put towards improving railways, building up their digital infrastructure, boosting wind power. They hope over the coming fears that it will be the main driver for Economic Growth in taiwan. Di i was a pleasure always a pleasure. Coming up, donald trump agrees to sell south korea arms worth billions of dollars. We will take an assessment of the probability of war. This is bloomberg. The u. S. Ambassador to the United Nations says north korea is begging for war with its latest test. Nikki haley called for the strongest possible sanctions on the regime, telling the Security Council that the u. S. Wants a september 11 vote on new measures. President trump spoke with the south korean president moon to pressure the north with all means at their disposal. Not bestakes could higher. The urgency is now. 24 years of half measures and failed talks is enough. A senior european lawmaker has hinted september 21 may be the day theresa may gives the much anticipated brexit speech, daten official says the given by the coordinator is wrong. To give a speech on brexit with negotiations stalling and the government having lost its parliamentary majority. Mechanism to provide emergency funds to lenders following the bailout of one of the countrys biggest private banks. Lenders with liquidity problems. An turn to the new facility one of russias biggest private banks had to be rescued last week after a Credit Rating cut triggered a run on deposits. The head of the worlds secondbiggest Online Travel agency said she is open to bricsition targets in countries. She was speaking to bloomberg at the brics summit. We are very disciplined in terms of investment strategy. One isriteria, the first that it has to be closely related to travel. Verticals, we the always invest in number one, not number three or number four. And the third criteria is they were asians need to be reasonable. If they fit those criteria exactly. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. With this headline, this avement of the icbm for possible launch sometime before saturday according to local , you are seeing this starker risk off reaction. Laying out is this a reminder of how sensitive markets are . Well, this is something, isnt it . We sold the move in the yen, the first thing that alerted us, a quick jump in price, and that meant something is going on on the korean peninsula. Gold is well bid too. Sophie lets look at what is happening with the yen. Earlier, it jumped to an intraday high. That followed reports that pyongyang may launch an icbm before saturday. We are seeing pressure on stocks in tokyo. The nikkei two to 5 . Space a look at the haven with the yen, gold higher, up. 2 , and treasury yields also in focus, the 10 year treasury yield lost three basis points, moving closer to 2. 13 on the latest news out of north korea. We do have movement in the currency space, the dollar set for a fourth day of losses. The aussie tracking closer to . 80 before the iba decision. Of the rba decision. We are seeing diversions in the renminbi space after the latest Caixin Services data. Sliding,ore yuan snapping a 14 day rally, losing. 2 this morning. Easing the earlier tumble. Gaining, retreating from a to wake low, while korean stocks remain under pressure. Korean equities valuations, stocks trading at a record discount to emerging market peers. You can see that with the pe ratio on this chart. Decline. Led to this have to askll themselves if the riskreward so longf is worthwhile, as korea can deliver on the economic front and Companies Growth potential. Rishaad thank you for that. Taking a look at live pictures of president xi jinping speaking, where he has this leaders forum. That