The divorce will not happen. Ado about be much nothing. Welcome to daybreak asia, i am haidi lun. Betty and i am betty lou. I love how people have game to that out. People putting bets on as to whether brexit could reverse. In the meantime, a lot of bets on what we will hear tomorrow from the fed. That is the market staying relatively calm or at least not moving much before the fed news conference. The dow up 40 points. Still has the slight bullish tent. Level, above that 2500 1 10 of 1 . The same for the nasdaq. A slightly higher open in asia. Haidi mostly calm, volatility slumping. We keep talking about these indices pushing into the record highs. We saw that again with the s p. Bound,s of being range this is the tightest range for the s p we have seen in decades. Not a lot of motivation, strong motivation ahead of the fed, the boj. Kiwis head tohe the polls this weekend. We saw the kiwi dollar one of the strongest to gainers among the slumping greenback overnight. 25 . Stralia up the aussie dollar kicking up above . 80. Best performance against the u. S. Dollar. Chicagonikkei futures, a little weakness. But what a strong comeback from the monday holiday. Japanese stocks closing up by 2 . The yen holding to that weakness at about 111. Betty lets get back to one of our top stories. President trump went on the attack in his first address to the united nations. He threatened to destroy north korea, saying the u. S. Is ready and able to protect itself and allies, and would respond with overwhelming force if attacked. President trump the United States has great strength and patience. But if it is forced to defend itself or its allies, we will have no choice but to totally destroy north korea. Betty i want to bring in our Bloomberg National security editor, bill fairey, who is in new york covering the u. N. Meeting. You are in the room or new people in the room. What was the reception like to that speech . Bill it was classic trump, for those of us accustomed to hearing him. It was at the united nations, which was created in the axis of world war ii, toward building peace between countries. It was tough language from the president. At times in the audience as he laid out a tough agenda on north korea, iran, venezuela, he even singled out. Left the North Koreans before his speeches. Bill they had one of the best seats in the house. They do lottery seating, they were in the first row off to the right. But they left after one of the opening speeches and were not there to hear him go off on his attacks about kim jonguns behavior. Betty now that he has made his speech, what is the goal for the rest of the week . Did he achieve what he wanted to do be today . He is pleased with how the speech went. The administration has done what it wants on north korea at this point. It wants to see the sanctions take a bite and make sure china is enforcing its side of the bargain. The president seems to be turning his attention to iran. Tomorrow, Rex Tillerson will be your leading a meeting of ministers that are involved in iran deal. They want to find a way to change the agreement. So far, even among u. S. Allies, there is not much entrance. Haidi this was a highly anticipated appearance before the international stage. How did the president s speech go down . Bill he did stick to script. That was a change from some of the rallies we are used to seeing the president speak at. There was a little bit of shock at the tone. Even among european allies there was a little bit of a sense he was boxing them into a corner on the iran deal. Beside the u. S. , all the european allies, china, and russia, feel is going well. Iran is meeting its commitments under the deal. Trump has long been opposed to it is and is trying to find a way to put iran in noncompliance. U. S. Allies are not interested in going that far at this point. It was interesting, key players were absent china, mexico, germany. Bill and russia, as well. President putin has never been a big fan of the unga the unga. Has the Party Meetings later this year and is focused on that. Chancellor merkel has elections coming up, so she missed it. Even the u. K. Prime minister who was in new york did not make it to the u. N. Building for trumps speech. She was meeting with investors, and that is pretty important for her, as the brexit negotiations go on. But it was read as a snub of the u. S. President. Us,y thank you for joining our National Security editor. The Senate Intelligence committee expects facebook and possibly twitter to face a public hearing on russias alleged use of social media to influence the u. S. President ial election. The chairman says the timing and scope are still being me being decided. There were fake russian accounts. But they say there has been less coming. Reports from london show the u. K. Is prepared to offer the equivalent of 24 billion for its divorce to the European Union. That is a figure theresa may has agreed on. Some in her party say the u. K. Owes nothing. They say the u. K. Must abide by commitments made in previous years, and the bill could top 100 million. At least 94 people have been killed by a powerful earthquake in mexico. The 7. 2 earthquake struck near mexico city, halting trading on the stock exchange. Investors sold assets. It is mexicos second major quake this month and came on the anniversary of one in 1985 that killed 5000 people. 200 milliona new plant in china, hoping to boost coming the biggest in the world. Planes a roll out two month. They are home to a plant that produces planes. Boeing estimates china will order more than 1 trillion in new jets in the next 20 years. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Haidi jessica, i will take it from here. Another day of records. Investors, aonal pretty loaded end of the week when it comes to risk events. Of its starting day two latest business meeting. Keenan with us for a closer look at the u. S. Market closed. We are talking about weather events. Su we could see more forces in the wednesday session. Green across the screen. Market isalm as the pretty much waiting on the fed and other elements. If we go into the most active source, stocks grabbing the spotlight, you see earnings. Deal to entering into a make their checking paperless for clients. Autozoneand disappointing earnings. Especially best buy. We know retailers continue to be under pressure. Autozone, the auto market has presented problems. Lets take a look at the Bigger Picture for the s p 500. Going to chart g btv 5079, if you have the bloomberg at home. No retreat come on, no surrender, to borrow from bruce springsteen. These red dots are the 5 correction. We have not had one since then. For means we could be due one. Betty we also learned about toys r Us Bankruptcy filing. Exposure. Nly a lot of we will get into that. The real surprise was how rapid the collapse for toys r us was. Details emerge said they were trying to do a restructuring outofcourt, and word leaked to the press, it spooked creditors and suppliers. Suppliers halted shipments. Creditors held out for perhaps a sweeter deal. And toys r us was a forced to file. Down. E renato rivals like metallica and hasbro were up in todays market. They have less exposure to amazon and builds their own online in a better way than toys r us. It seems a very isolated situation. Many analysts saying it does sound an alarm that perhaps the credit cracks are becoming more visible. Su keenan on the markets. Silicon valley taking on trump over his immigration policies. We will speak to a tech entrepreneur later this hour. Haidi bank of America Merrill lynch on whether investors should get wound up over the feds unwinding. This is bloomberg. Haidi we are counting down to asias first major market open across the region. Japanese futures, a little downside after yesterday. Almost 2 jump in the nikkei as japanese investors play catchup. This is daybreak asia. I am haidi lun in singapore. Betty i am betty liu in new york. The Federal Reserve not expected to raise its key rate. The focus returns to what it might mean about future rate hikes, via the dotplot. Kathleen hays has a look at that. Su they have been upset kathleen they have been upset thing over dotplots. The fed has a summary of Economic Projections that gets updated every three months. How they get this, it each fmoc member makes forecast for deeply, unemployment, and inflation. In this snapshot, what they see leads them to predict the rate hikes for the next three years. By changing the dot, it can send dovish or hawkish signals. Lets look at the chart. The median, eight dots. This implies one more rate hike this year and it can move to 2018, the median is smaller. But, five, that could take it up to 1. 25. Even more looking for more rate hikes. Dotom line, even a couple changes down or up could change the markets. Bloomberg intelligence is looking for that fmoc to lower. It means they can anticipate tighter later mark labor markets. They do not have to feel too much pressure to raise in place in. Line, new faces on the board of governors, do future dot plots really matter . It puts a slightly different spin. Betty what are we looking for in the Balance Sheet announcement . Kathleen the Balance Sheet announcement is so much more straightforward. Fed officials jim bullard and others have said, i think we should announce the start date in september, and start the runoff in october. Also in june, they laid out a plan. You stop producing the proceeds of the bonds when they mature, and you do it gradually. And raisen a month, the cap 10 million every three 10 billion every three months. You stop when the cap reaches 50 billion. They say it is so simple and well telegraphed, it will not rock votes or move markets. Bloomberg news looking at the old long base in treasuries, still robust. In bonds have gotten scared and are backing off from this. The Balance Sheet is pretty straightforward. Do not expect too many surprises there. Press conference was huge. You know what i would like to know . Janet yellen, can you back raising Interest Rates in december if if it it has not moved . Haidi absolutely. When she be more inclined to do that if she knows she will be sidestepping and potentially replaced by someone far more dovish . Lets get into this fed meeting as day two gets underway. K of America Merrill lynch as interesting as watching paint dry. To go from extraordinary Monetary Policy to tightening, you would expect unexpected volatility. That is right, the fed has never done this before in the history of central banks. We do not have too many examples of a Major Central Bank beginning to unwind a significant portion of its Balance Sheet. There is a lot we do not know about how this process will unfold. It is pretty clear and straightforward. It will start gradually. We heard 6 billion in treasuries, 4 billion in mortgages. That will cumin lead over time. We are looking at a potential 1. 4 trillion reduction, if all goes well. That is a lot of supply in the market and new paper for investors. We do think that will accumulate and have sizable impact on the market. It will not happen at day one, but over time it will matter. Rates,the dot plot and you are seeing that as a nonevent this month. Mark our baseline is for no change in the dots. It would be a surprise to see them shift upwards. There are risks they could potentially move lower. We do not think we will see that in the 2017 dot. They do want optionality of hiking in december. Where we do think we could see adjustment is in the path of rate hikes. The fed has penciled in three rate hikes in 2018. We do think we could see the 2019 dot shift lower to indicate slower pace of policy normalization. This is true given the fed will come out and include 2020 projections in this set of sep release. We think they will show they are above their longer run with those 2020 estimates. There could be potential downward shift in the 2019 dot, that means the fed will be more gradual and slower than perhaps with a previously communicated. Haidi you guys expect to the language when it comes to inflation to be more up the this time around. Does janet yellen move in december, even if core inflation does not move that much . Impetus to do that if she knows she might be replaced by someone who was going to be more dovish . Mark i think it will be hard to find someone more dovish than janet yellen. I do not know that that would necessarily be the case. I think she will continue to be guided by the data. The fed was encouraged by last weeks cpi report, that they finally broke the string of weaker than expected inflation. If inflation does not appear to stabilize, we believe the fed would like to go. Primarily because their models, at least the phillips curve, would show inflation pick up, given how tight the labor market is. She is not going to want to force this hike. Although i think it would be a nice bookend to her tenure if she is not renominated or ends up resigning in february. She wouldve put the Balance Sheet in play and raised rates back to neutral. Betty puts a nice bow on top of this. I am curious what you think, how Asset Classes are going to react to this qt we are expecting. I want to pull up a chart, g btv 9516. It shows you how close the s p has tracked. Money, the Balance Sheet, and the increase in it. Lately it has taken off and is on momentum. The fed has backed off on adding much more. Given this unwind, how do you think that will affect assets like stocks . Mark that is a great question. Certainly we think it will be a headwind. If you have Monetary Policy gradually drawn back, that will be a headwind for risk assets, generally. You do have the ecb expanding its Balance Sheet. We think they will slow expansion over the coming months. You have the bank of japan still highly expansionary. The fact the fed to be looking servee back, could Interest Rates over time. That means you will discount u. S. Dividends at a higher rate than you otherwise would have. That should put slowing pressure on some of the elements we have seen in risk assets. Betty thank you so much, mark from bank of America Merrill lynch, head of u. S. Short rates strategy. You can get that story in todays edition of daybreak. Subscribers go to dayb. It is also available on mobile. This is bloomberg. Haidi a quick check of the latest business flash headlines. Talks ofd tmobile in a merger that could give door to Telecom Merger control. Deal,k for stock negotiations are some away apart. The tmobile chief john ledger would be placed income in control of both operations of a deal is struck. They say a merger makes sense, but there are other possibilities. At the same time, we have another company as a possibility, that we may consider to do it. We have not decided one or the other. We are looking at them in parallel. Haidi the nikkei news says Western Digital has made a new bid for toshibas chip unit, reducing its own role, and reducing that of the government and incj. It puts him back in front of the bain capital consortium. The board is due to meet. It is not sure if a final decision will be reached. Hedge funds that that against china are having it tough time as the u. N. Surges, the mainland stocks rally. 13 obal macro fund was down down 13 since august. They are saying the biggest credit bubble in the world is still poised to burst. Following china bear, down 80 through august. Next, we speak to a man who has funded over 1400 companies, including airbnb. We talk about investing in startups and the next big thing. This is bloomberg. Haidi it is 9 30 a. M. Wednesday morning in sydney. A pretty gloomy day. Markets are 30 minutes away from the regions first major market open. A persistent lead from wall street, despite the major indices being ahead of the fed. Betty a pretty tight range. It is 7 30 p. M. Tuesday evening. A lot of rain today, but looks like a glorious evening. Markets closing higher. But not a lot of Moovit Movement ahead of the fed meeting. I am betty liu in new york. Haidi i am haidi lun in singapore. You are watching daybreak asia. Lets get to first word news with jessica summers. President trump has threatened to destroy north korea, saying kim jongun is on a Suicide Mission. Making his maiden address to the united nations, he says the u. S. Is ready to protect itself and allies and would respond with overwhelming force. He described it kim as rocket man, and said would not be required. President trump rocket man is on a Suicide Mission for himself and for his regime. The United States is ready, willing, and able. But hopefully, this will not be necessary. Jessica Hurricane Maria has strengthened to a category five that barreled across the eastern caribbean. It is bringing gusts of 165 kilometers an hour. Just weeks after Hurricane Irma caused widespread destruction. Harvey costma and an estimated 140 billion dollars. This makes it the second most costly since 1980. Ford is to cut production at five north american plants before the end of the year to keep inventory in check as u. S. Auto sales decline for the first time in eight years. Stoppages will happen at another plant in mexico, michigan, and kansas city. They say they must match output with demand. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Betty the Trump Administration is being sued over its decision to delay and likely resend and obamaera initiative to encourage foreign entrepreneurs to build their businesses in the u. S. An ownership stake in the u. S. They can stay in the u. S. For up to 30 months. That is now in jeopardy. A Comp