Steve mnuchin says the u. S. And china have made significant progress ahead of new trade talks next month. Iran will also be eight on the agenda. Be on the agenda. And the alibaba cofounder steps down. Kathleen lets take a quick look at how u. S. Stocks ended the session. Lets go write down because the Dow Jones Industrial average up about. 1 . Health care stocks helped boost it. Closed minutely lower. It got within one point 6 of its alltime high. Despite the trade war a lot of people are still buying stocks. Nasdaq down about. 2 . Stock futures pointing higher. Moodys got fords credit rating. We will hear more on that is that progresses. Now i want to get right to sophie to find out how things are shaping up for asian markets. Sophie early in the session and looks like rick sentiment may be stabilizing. Stocks could be heading for a mixed start. Bonds under pressure tracking the overnight moves we saw in treasury. Kiwi 10 year. We are seeing that move lower with yields moving for basis points. Declining steadily even as north korea has more weapons. Caution ahead of the fed position next weekend. We have the ecb meeting this thursday as well to consider. Checking in on sterling, just Holding Onto Gains near a july high. Most of the losses we have seen since Boris Johnson came to power, and of course brexit headlines very much in focus as johnson is trying to secure an early election. Bear in mind today Indian Markets are closed this tuesday. Paul lets check in with the first word news with jessica summers. Sales in china fell for the 14th time in 15 months with deliveries down almost 10 to 1. 6 million. Manufacturers arent reeling from the longest downturn in three decades with no sign of an end. A similar gloomy picture in india where car sales saw their biggest monthly drop on record in august. Overall deliveries plunged more than 40 while passenger vehicle sales fell by one third. Exports rebounded more than expected in august. The protracted trade war accelerated the relocation of manufacturing plants to taiwan and a new iphone launch cycle lifted demand for smartphones. Overseas shipments rose 2. 6 last month compared to a contraction of. 5 in july. Imports felt 2. 7 , leaving a trade surplus of about 6 billion u. S. And north korea says it is willing to resume Nuclear Talks with the u. S. , but that washington must come to the table with what pyongyang calls acceptable new proposals. Observers say north korea wants the u. S. To offer security guarantees and also extensive relief from crippling sanctions. There has been no official response from washington, but the administration has recently said it is ready to resume talks. And smallCap Investors remain bullish in china. The china index gamed gained and entering a bull market for the second time this year. Investors have been particularly keen on tech stocks amid optimism of further easing from the pboc and a trade deal between china and the u. S. Global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im jessica summers. This is bloomberg. Paul thank you very much. We have had some ongoing debate in the house of commons in westminster today on the future of brexit, but more presently Boris Johnsons latest efforts to force a snap election. Seems like that debate is going to be in vain, however. Boris johnson saying he will not seek an extension to brexit. However, a bill has been passed ruling out a no deal brexit on october 31. The Opposition LeaderJeremy Corbyn saying the government has no mandate to leave without a deal. Lets get the latest from london with our u. K. Government editor tim ross. Tim, with this debate going on in parliament at the moment, Boris Johnson is very unlikely to get the majority he needs to force a snap all. So is this just more brexit theater . Tim it looks like, as you say, it will be a losing battle for johnson. If he loses this vote i think it will be six out of six he has lost in the last week or so, which is a bad record. But he is not giving up. He is going to have to try to keep piling on to get that election, otherwise there is really no way he will be able to do anything. You will remember that he throughout 21 conservative mps last week after they refused to follow his orders on brexit. So he has no majority. A long way short of majority. If he wants another majority will have to have another election. Wasnt there a dutch official who smilingly, jokingly likened the former Prime Minister, theresa may, of the knight in the holy grail, the monty python movie where he keeps getting up and saying i am fine. Is Boris Johnson starting to look like that . Tim Boris Johnson is sitting there on the bench slumped into his seat, his arms folded, shaking his head somewhat grumpily. Stand uphappy as mps around him and say they will not vote for his plan. It has been a bad week for the Prime Minister, no doubt about it. Hes lost one cabinet minister her left the party in protest. Weekis own brother last even left the government, saying he could not cope with the Prime Ministers approach. He cannot even keep his family on board, which is a pretty bad look. Sooner or later something will have to give. One thing is clear, is that all parties seem to say they want an election now. So there will be one at one point. It is just a matter of one. Kathleen thank you, tim. It is quite a complicated story to follow. Now we are going to get on the china, because factory prices are expected to fall even further into deflation while consumer places prices are easing. Fornumbers to watch, and our china correspondent Tom Mackenzie joins us from beijing. Tom, what are we expecting . Top line forecast for cpi and ppi out and around 9 30 local time are these. Consumer prices are expected to fall just marginally from the month of july to august. 2. 7 is expected in terms of cpi. Vs. 2. 8 in july. That is the year on year figure. Part of that, wholesale prices for pork are up about 50 from july. A big pickup import prices. But because pork is a smaller it is nothe market, expected to have as much of an impact as some might expect. Demand from consumers overall is expected to be weak because of the weaker economy. That is the number we are expecting in terms of consumer prices. Producer prices, we expect those to fall almost 1 . For, a contraction of 0. 9 august versus 0. 3 in july. Further deflation for chinas industrial sector, largely as a result of weaker Commodity Prices. Things like steel, rebar, Softer Oil Prices compared to a year before. That is dragging down the prices. The concern that this will drag on corporate profit, make it harder for companies to pay down debt. That is firmly in focus as well. So, those are the lines we are accepting. Cpi and ppi out around 9 30 local time, both expected to fall. Paul just getting back to those pork prices, how concerned are chinas policymakers about this . Tom they are increasingly concerned about this. We heard from chinas vice premier who lambasted local officials for what he said was something of a coverup, not giving enough information to top officials in beijing about the extent of the problem. We actually see officials across the country announcing various different measures to get this under control. Swine fever has just submitted the whole population here. Pork is a staple for chinese consumers. The major issue, we see things like price caps put in place, a call for subsidies for farmers, we have seen the bank told to ensure they are not calling in loans to chinas farmers as well. Sayinghave seen some they are going to release frozen stockpiles of pork over the holiday to try and depress the prices. Going back to the vice premier, he said overall across the full year 2019 they will be a shortage of about 10 Million Pounds of pork. Others have said that could be underestimating it. Some say it could be three times that level. And not a major issue, expected to be resolved anytime soon. There is a question mark whether or not trying to get pig farmers to increase output will actually be the right solution, given the disease continues to sweep across the country. Paul china correspondent Tom Mackenzie in beijing. Thank you for joining us. Now for a closer look at chinas economy and Global Economic picture. Before the former Federal Reserve governor joins us from hong kong. Randall, thank you for joining us today. Just want to start with the trade question around china. Looks like we are going to have talks in october. Treasury secretary Steven Mnuchin sounding notes of optimism, but if history is any guide, an optimistic Steven Mnuchin doesnt really mean anything, doesnt . Randall it will be continuing back and forth on this. We will try to have some talks, there will be some issue that comes up, then we will pull back. I do not really see a resolution in sight, because i think there are more fungal fundamental issues, like soybeans and automobiles. It is about the intellectual property regime and legal regime. I do not see how the u. S. Will ever be satisfied that china has really moved the regime to where they are comfortable with. Paul can you see that there might be a potential path forward through all this . Sort of an your mental approach dealing with these smaller issues, and perhaps even easing the tariffs that are expected to come in december on Consumer Electronics . Could that be a small way to dial down the tension on this . Randall i think that is exactly the sort of thing we will see. We will see some tariffs coming off, other tariffs coming on, maybe or maybe not implemented. But i think this will go on for a long time. I do not think there will be a full resolution. It is a bigger issue that i do not see the resolution coming anytime in the next few years. Kathleen it is great to see you, and i know you have been over the years traveling frequently to asia. Now, when we look at china itself, i think i got an order in quick enough to show when on the latest charts on chinas imports and exports. What was a big deal was the fact it was actually down, exports were actually down on the month. Shipments to the u. S. Were down 15 . Shipments,ts, 15 on and 5. 6 drop even on imports. Clearly they trade war is taking a bite out of chinese growth. How bad do you think it is going to get . Chartl and i think that is very good at showing that this is having a big effect on china, but i think the effect on the u. S. Is much smaller because trade is a percentage of gdp, and it is much greater for china than it is for the u. S. This is precisely why the president has chosen this is one of the instruments where he believes he can inflict relatively more pain on china they now the u. S. Certainly than on the u. S. Overall it has a relatively minor effect on u. S. Gdp and a much bigger effect on chinese gdp. Kathleen of course chinese gdp, some are saying it looks like chinese growth will not be enough to stay above 6 . Before they wanted above 7 and it keeps getting weaker. I have a chart up now looking at the rrr cut announced friday. Pointing out of course that there are different rrr rates. Major banks, smaller banks, and commercial banks. Commercial banks now down to about 8 . When you look at chinese Monetary Policy, when you look at what they are doing, does china have the capacity now to slowdown, to put a because there are a lot of countries and companies that slowdown too. They not only export, but they buy stuff from other countries. Randall particularly emerging Market Countries around the world where slowdown in china has enormous impact on Commodity Prices and exports into china. And so i think that is a very important issue. It is funny that we are having a similar debate for the Central Banks in the west. Do they have the ammunition to be able to prevent a slowdown . These questions are starting to come for china, because china is clearly easing, the central bank is clearly easing, trying to provide support against the slowing issues of trade, the slowing consumption within china. They have some instruments, but the central bank will never be enough if there is a real, major slowdown. Paul we are just getting a question from a viewer on our instant messaging platform, asking what geopolitical circumstances would push a deal on trade. Reading between the lines, i am wondering if it is that slowdown you mentioned. Randall clearly that is going to change the dynamic for both the u. S. And for china, because it will depend on where the Economic Situation is in the two countries. But i think President Trump is willing to beat some bear some pain in the short run for what he believes is longterm gain of changing the regime in china. I think he will be willing to tolerate that, and so well have to see how these things work out. How much tolerance the president will have, and how much pain he believes he can inflict on china, and then how that affects the internal dynamics. Paul all right. Randy is with us for the whole hour, so keep it right here. Morehead on bloomberg. Kathleen this is daybreak asia. I am Kathleen Hays in new york. Paul and im paul allen in sydney. What to watch in the markets this morning. Sophie bonds will be very much in focus, given the mood we saw in treasuries overnight. We are seeing aussie and kiwi notes head lower this morning. The aussie 10 year yield up by about five basis points. This apparently sparked by news that germany may consider fiscal stimulus. We have course are counting down to the ecb meeting on thursday, and that may be a watershed moment for traders. The question is if it will be a renewed move to lower rates, or will we see other forms of stimulus . Jump into the terminal as we see yields gain ground, putting a dent in the pile of negative yielding paper, pushing the total value between 16 trillion. Last week we saw the biggest drop in market value since they began compiling that data. Kathleen thank you so much. I want to bring in the latest news. The u. K. Parliament is starting its vote on an early general election motion. Its hard to say how it is. It is chaotic. We are watching for confirmation of how that bill comes out, but this is a big day and night for the parliament, for how Boris Johnson can or cannot move ahead with his plan to pursue, or at least settle for no deal brexit if he cannot get the real deal. We will have more of that if we when the news breaks. Lets get to the fed. We are going to put you back at that table, around that big conference table. The meeting is next week. On the one hand we have the president of the st. Louis fed, he has argued for a 50 basis point rate cut. Now on the other hand, you have the economyed, looks solid. In the middle seems to be jay powell. The market is strong but he is worried about trade uncertainty. If you were there, what would your position be and what would you vote for . Randall i would focus primarily on inflation and inflation goals. And so, i think back in december when they raised rates they thought the economy would continue on a reasonably good path, which it has, but they thought it would help inflation and export and Inflation Expectations move to the 2 goal. It has not. So i think it would be reasonable to be considering not cuts now, because the economy overall is broadly involved where they expected, evolved to where they expected but inflation has not. You dont want to be like japan where you are so far behind the curve where you break credibility. Cutting now when information inflation is a little below its goal probably makes sense. Kathleen what about the yield curve . With this big move we had in bonds, if we had some bayer steepening as traders , still, the curve has been inverted. That is why the camp jim bullard is part of, the fed has lost control of the bond markets and yield curve. That is why a 50 basis point cut is necessary to get ahead of the market. Do you see any agreement in you with that argument . Randall i would not go quite as far as jim was going. Unpack try to impact why it is so flat. It is probably about very low Inflation Expectations. We see those moving down. The new York Fed Survey that came out earlier this week showed individuals are having lower Inflation Expectations. Market measures of Inflation Expectations are very low. At least from my perspective i fire were still in the fed, that would be concerning for me because of the markets are saying we dont believe youre going to make your goal, we are worried you are like japan, so i would want to make sure to stay ahead of that. I do not think that would give me enough wherewithal to say lets move 50, but i do not think moving down now would make sense, given that the markets seem to be concerned about whether we will make our 2 target. Paul i could not help but notice you mentioned japan a couple times now. Is that country perhaps a rather chilling case study for Central Banks around the developed world, that the usual stuff is not working anymore . Whether it comes to controlling the yield curve, sparing inflation, or anything at all . Is Monetary Policy reaching the end of the line . Randall i think it does worry people, and i think reasonably. Elected, he has a whatever it takes movement. But it has fallen off. They have really tried. They have a Balance Sheet more than 100 of gdp. They buy equities, they buy pretty much anything that is not nailed down, and even a few that are. They have not been successful in doing that. Thats an important lesson that these tools diminish, and if you allow inflation