If she could. The latest. And counting the cost. We had to miami where Hurricane Dorian is capable of causing billions of dollars in losses. Newseen we have breaking out of south korea. Looking at the inflation numbers. Yearoveryear is flat. 0. 6 in july. Forecast to be up 0. 2. This is now the lowest inflation rate yearoveryear for korea on record. Pointing out they are missing falling into deflation for the first time. If you look at the core cpi, it is up 0. 9 . It takes out food and energy. Energy has been under pressure. If you are at the bank of korea looking at this, you have to think this could raise pressure for the bank do something at their next meeting. Gdp coming in for the Second Quarter at percent. Prior, 1. 1 . A small difference, not superstrong. Yearoveryear, 2 . Probably considered enough for the bank of korea for now. That number will catch a lot of attention. We will see how markets react. Lets look across asian market. You can see the red on my board. Asian trading, set to have more pain. A trifecta of bad news. U. S. China trade relations continue to deteriorate. Bloomberg reports there are doubts whether the sides will be able to meet. Also, continuing unrest in hong kong with officials calling it a catastrophe. Weak pmi data across the world. All sending a gloomy reminder about the effects of the u. S. China trade. The nikkei is leading the losses. Expanding on what kathleen was talking about in terms of south korean inflation data, it was the lowest on record. Rate. D line is the 2 bank of korea is targeting and for a while it has been far below it. You can see the blue line, cpi yearoveryear. The expectation is it was 2 10 of 1 , far lower than the line and what would have been the lowest since the financial crisis 20 years ago. But we got the lowest on record. Lets check in on the first word news with tom mackenzie. Tom paul lets talk about brexit. Boris johnson threatening a snap election if mps rebel. Opposition will present legislation to force johnson to delay brexit if a deal is reached. Uncertainty heading to the u. K. I want everybody to know under no circumstances in which i will ask brussels to delay. We are leaving october 31. Accept going back on our promises were scrubbing the referendum. Has Hurricane Dorian killed five people in the bahamas and has slowed down and is still a highly dangerous storms it heads toward the u. S. The storm will cost 25 billion dollars of losses for insurers, the most expensive Natural Disaster in two years. It could be raised to 40 billion, depending on how hard it hits florida. Argentina talked with the imf about raising Monetary Policy for the month after one day after the government reimposing currency controls in efforts to contain the rising financial crisis. Only the quarterly target is binding for the imf trade program. Kathleen u. S. And china are said to be struggling to agree on schedule for planned trade talks. The impasse comes after the white house rejected a request from beijing. Ek will bank joins us while bank joins us. Where are we now . I feel bad for coming on to your program and starting everyones morning by making their coffee sour. As we said yesterday, they are having trouble getting to the table. Bloomberg reporting moving futures market suggests not only are they having trouble, they have not agreed on a date in september for negotiators to meet in washington. To do it. L planned it has not been called off, but no data set. Been setalso not contours of the discussion, what would be on the table. What are they trying to get to . China wanted some u. S. Tariff escalations stalled. That did not happen over the weekend. The u. S. Slapped on the september 1 tariffs as planned. So we are in a stalemate. It is not a break. But it is a pause. We have more contours of this and it turns out the difficulty is we are not sure what we will talk about where when we will talk about it. Kathleen it seems like everything is fine with the plane, except the wings fell off. [laughter] market, stock futures in the u. S. Responding for the holiday weekend. What does this mean for currencies and equities . Saw the move in the s p futures downward. This is the that end of labor day. We are starting to get into september, historically a slower month. But everyone gets back and volume picks up and you start to see people seriously engaging again. The summer is over and we were back to business. If this turns around and people a datek to the table, if is finalized, people with the it as a big movement forward. A small tariff escalations expected at the end of october. If something were to happen to say that would not take effect, that would be big news. Right now, the white house and loggerheadsre at with the contours of how to meet, never mind what to meet about. Paul if there is a lesson i have learned it is that no matter how bad things are, they can always get worse. This coming from President Trump last week. Approve the relationship with china, lets not do business together, i dont want to do business. So are the chinese digging in . I think the chinese side is digging in for the long haul. There is a new normal people are trying to become accustomed to. Language had bellicose that gets replaced by a nice language and happy talk when he and china meet. So it is a roller coaster. He has said some really harsh things about whether or not company should do business in china at all. He wants people to start thinking about how they can manufacture goods in the United States instead and pull out. That is inflammatory rhetoric. I dont know that people are necessarily taking the president literally when he says these things. You do not cgm and others pulling out their supply you do not see gm and others pulling out their supply lines. There is a sense that people are having to figure out about how to deal with the fact that this is kind of where we are. And this is where we have been the last several months. There is nothing to suggest it is not where we will be for several months to go. It becomes a proven exercise to plan for that to be the same. Wallbank in singapore, thank you. Hong kong has used the word tariff in regards to the growing unrest. City leaders have not ruled out the possibility of invoking Emergency Powers to tamp down the violence. Stephen engle joins us. What is the latest . Secretary,e chief the deputy to carry laying carrie lam use the term terror and it is reminiscent of what the chinese officials in Hong Kong Affairs office said august 12 and 13th when we had the sit in and disruptions at the airport. They said demonstrations resembled acts of terrorism. This has remicade ramifications if they are appearing upping rhetoric calling this a terrorist activity. Then you start justifying emergency power acts or options the government has come above hong kong and chinese. Lam did notarrie rule out invoking emergency regulations. It was enacted by the british in 1922 but last used in 1967 to quell riots. It gives police sweeping powers to arrest and the ability to rigorously search property. They can censor publications and shut down the internet. Grant such ability. Wordu start using the terrorism, you could Start Talking about article 18 of the if a law, which states state of emergency is declared by hong kong, chinese authorities could implement national law in hong kong, which could have all kinds of ramifications, including the potential use of soldiers from across the border. The ones not in hong kong already. Kathleen that would be some actions. What are the words from the chinese so far . They are getting more strident and tougher. A press conference later from beijing. The news agency sunday, when things were hitting the fan this weekend, they warned the end is coming for those attempting to disrupt hong kong and antagonize china. Attempts to underline the mainland are bound to fail. We heard from officials in china late yesterday saying protesting has evolved into extreme violence. And are a for carrie lam Hong Kong Police to control unrest. Option would be china taking control and taking over and resolving this. Ise are saying carrie lam taking marching orders from beijing. I cannot substantiate that. That is what many are saying. Thank you so much. Still ahead, Hurricane Dorian weekends after battering weakens slightly after battering the bahamas. Where it might go next. Kathleen we are counting down to asias first major market opening this morning. Japanese futures, lets look at the dollaryen. Hit as high as 104. This is a concern for the boj as they get ready for their meeting in a few weeks because the , people are beginning to wonder if the boj might have stimulus. Ense of nikkei futures are lower. Equity markets around the world trump andned that have thenot begin to agenda of what they will talk about at the meeting supposed to happen sometime in september. One more reason to see the red. Paul our next guest says global Central Banks are in cutting mode. Oining us is Steve Goldman you are not alone in your attitude. Jp morgan, bank of the more bank of america, say it is time to buy stocks. Since 2010r story where generally, you got paid to take risk in the environment. Paul how much of the action we are seeing on equity markets is due to that, the feds offering easy money . It is a large portion of the gains in equities. Kathleen how much does it have to do with the fact that yields continue to drop . Is now 17 trillion around the world. Bond looks like a three month bill looked years ago. Or equities a big driver . That is the story. Today if you are european or japanese investor, you have paid to keep your money in cash. That has forced investors out of european and japanese bond assets. Into riskier u. S. Bond yields have approached new record lows. That is the story we have seen over the last 10 years. It is accelerating today because Central Banks are still in cutting mode. Kathleen are you saying you would be wise to invest in equities . Which countries . Where do you find the biggest bang for your buck with the less risk . I am a bond manager and it is rare to hear one say you should invest in equities. But i think in this environment, you have to go into equities. Where do they look better around the world . Earnings quality is very high. U. S. Isth story in the still positive. You have a trade and uncertainty. But i like u. S. And australia markets more than european markets, where it is hard to see value in you have a lot of geopolitical risk, talking about the italy coalition, brexit, the banking problem in europe. It woulde world, rather be in u. S. Or australian equities. Paul there is a counterintuitive play going on. The worst the trade war gets, more if you think about what trump has said over the last month, he is getting ready to lay blame on anything but his economic policy. What we have heard so far is that it is chinas problem. They are the enemies of the u. S. And the reason why growth slows in the u. S. Rather than the trade war and economic policy. That thee in my view trade war is a massive negative for Global Business because of the integration of supply chains around the world. He is looking to place the blame elsewhere. Amongst his base, he has managed to do it so far. His poll numbers are similar to where obama was at this time during his term. My guess is that will continue. Paul you are more of a bond guy. But look at the chart. The world that keeps jumping up. I think investors need to get used to lower in lower yield. In japan and europe, negative yielding territory. U. S. Treasury still looks good. But we have a ways to go downward in yields. Quite a call. We will see what happens next. We appreciate your insight. Us. K you again for joining you can get a roundup of the stories you need to know in our days edition of daybreak. On tv or on the mobile app. You can customize your settings to get news only on the industries you are following carefully. This is bloomberg. Paul lets get a check of the latest headlines. The founder of lululemon has made over 30 million in three months. Dennis wilson stakes in chinas biggest sportswear maker has gained 32 after strong earnings last week. That is 70 for the year. Blue orca accounted Kathleen Facebook is considering publicly showing the number of likes and the effort to lower the competitive nature of social media. The project was confirmed by facebook. In the test, only the poster would be able to see the like count. Moneycargill is raising for emerging markets. Fund would focus on india and china and we are told it raised 150 million so far. Capital raising comes at a challenging time with hedge funds predicting a wave. Still to come, Hurricane Dorian joins the trade war. We will have a competitive commodities wrap in a moment. Stay with us. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. This is daybreak asia. Iran is warning is prepared send a warning to deal if europe does not come up with new terms by the end of this week. Deadline,et a friday for germany france and u. K. Amid signs that the u. S. Sanctions are still hurting the oil market. For the nextpared coming days. The u. S. And china are struggling to agree a schedule for new trade talks this month after washington rejected beijings request that the latest tariffs be delayed. This despite President Trumps of attempts to convince markets that things are on track. The two sides are yet to agree on the basic terms of reengagement. Chinese state media says they are ready to weather the tension. Say carrie lam would sayingit if she could, there is only a limited window to resolve the unrest gripping the city. She said she would apologize and resign if she had a choice. She is expected to comment on the unrest on tuesday. Italy is a step closer to a new government after Grassroots Party members approve the coalition between the democrats and fivestar movement. 69 of Democrat Members said they are in favor of the plan, while 51 percent of fivestar members back to the idea. Prime minister Giuseppe Conte is a deformity government, though it is not clear which roles of fivestar politicians will fail. Reports from japan to the government is planning a new police unit on irelands dispute with china. Nhk says members of the operation will tackle any unauthorized landings on the island, which is disputed. Ties between china and japan have deteriorated to there was for the decades after the other after 2012. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. O i am tom mackenzie. This is bloomberg. Kathleen we are half an hour away from the opening. Selena, what is on your radar screen . Starting out with stocks i am watching in south korea. They woo pharmaceutical, that company was upgraded to buy. ,ts price target was raised applying a 29 increase from its last close. Buy with anserted to price target of 70,001 70,000 won. Considering a joint bid of rcn airlines. Ines. Is asiana airl theyre looking to form a consortium. Japan, jfe, its to buy cogen power from tata steel. Employ nearly 300 foot people. Is making ceramic filters for 5g basic systems. Nomura holdings will be establishing a joint venture with trading securities using blockchain technology. The adventure will be providing consulting and i. T. Services. Bought back ¥18. 5 billion of shares in august. Paul lets get some more and what we should be watching as trade gets underway. Not a great start to september, this despite stocks in asia getting cheaper. Thats right. Not People Holding much hope for this month. Things can turn around very quickly with trade. The strategists here in asia are overconfident that will happen and it will be out anytime soon. The estimated pricetobook ratio is trading below the fiveyear average. Its interesting. They point out september is the where many of the main exchanges have had negative mean returns. Seeing here in asia, cuts are being weighed on the risk we are seeing in hong kong. Taiwan andts like south korea are very sensitive to a slowdown in Global Growth. Interestingly enough, the different a different story in the u. S. Jp morgan are telling people to buy stocks based on positive technicals and monetary easing we are seeing from Central Banks. They believe that is going to outweigh this episode we are seeing with trade. A similar call to bank of america, which last week, they said they like risk assets going into 2019. Kathleen putting a lot of faith in Central Bank Rate cuts. With on to asias highest yielding bond markets, the worst returns in august. What happened . Thats right. India and indonesia gave negative returns to investors, despite yields of 3 . Thats because investors have been shining these less creditworthy markets amid concerns of a slowdown in Global Growth and also the trade tensions. Just to give you an idea, indonesia bonds headed investors lower returns. Indias bonds fared quite poorly. We see these concerns about a slowdown in global expansion. That will weigh on emergingmarket currencies and all these highyielding bond markets like indonesia, a test will come this week after cpi numbers,. We will also have indonesia later this week. Kathleen thanks very much. Hitting 0. 2. The lowest since the financial crisis on their inflation numbers. Speaking of charts, you can test them out, they are at gtv under bloomberg terminal. Unto Hurricane Dorian that is bashing the bahamas and causing massive damage. Jonathan levins tracking this storm. He is joining us on the line. This was so devastating. Where is it now and what is the latest status report . It has apparently stopped dead in its tracks right out there in the caribbean.