President trump warns he will smash the turkish economy. Hong kong calms down after a long and difficult weekend. Leadership in beijing should meet protesters. Get you across some breaking news out of south korea right now. This is the current account balance for the month of august, and it is coming in, contacting on the july figure. Billion. In july, it was 6. 9 billion. We have seen rather disappointing export numbers out of south korea, but however, the current account remains in surplus after the chart, dipping into deficit back in may last year. It is trending a little down. The trade war is weighing on career. The current account balance for the month of august, 5. 265 william dollars. Chari. 5. 265 billion dollars. Shery the Trump Administration put 28 chinese entities on a new trade blacklist. The s p 500 was down. 5 in the regular session. Major indices ended in the red and they were fluctuating between gains throughout the session but we had energy and Consumer Staples leaving the clients. We saw oil giving up the biggest gains in more than two weeks. It is not just because of conflicting signals, but also geopolitical stability. Take a look at how futures are trading across asia. Kiwi stops at the moment are down. 1 . This after two sessions of gains and the asx 200 at the moment, futures unchanged. Nikkei futures and kospi futures unchanged, but we will continue watching what the markets do. We saw the japanese yen strength and a little bit after weakening on news of chinas willingness for a partial trade deal but president from now saying he wants a complete deal. Lets get the first word news with critical data. Ritika gupta. Trump warneddent he would obliterate the turkish economy if the military oversteps an unspecified line in syria. The president sparked criticism by allowing turkey to cross the. Order before backtracking the white house is adding to the confusion by saying he did not authorized military action against the kurds. Is hong kong subway system back to normal on tuesday after a long weekend of protests left several stations badly damaged your exam will remain closed and all trains badly damaged. All stations will remain closed. President trump warned china that trade talks would suffer if anything bad happens to the protesters. Pres. Trump i would just like to see a humane deal be worked out, and i think president xi has the ability to do it. I sort of said that i think he is a very convincing man and if he met with some of the leaders, that could be one problem. You do not seem to have a specific leader. Index says china is expanding at a pace close to what official figures claim. Although the growth is likely more volatile than the numbers indicate. The china cyclical Activity Tracker uses eight indicators including retail sales and exports to estimate how growth deviates from the underlying trend. China is slowing but is not about to collapse. The world bank is joining the growing list of institutions warning about Global Growth. It says the outlook is worsening thanks to the downturn in europe. The wider trade tensions and the uncertainty surrounding brexit. The president says the World Economy looks even weaker than in the world banks two forecast of 2. 6 growth this year. 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. I am ritika gupta. This is bloomberg. Paul thanks. The Trump Administration has blacklisted eight Chinese Tech Companies, accusing them of Human Rights Violations. The move came just as u. S. And chinese negotiators began preparations for trade talks for later this week. We have two of our trade experts on opposite sides of the globe. Tom mackenzie in beijing and Sarah Mcgregor in los angeles. Lets start with you. What exactly has the Trump Administration done to restrict business around these companies . Administrationp took a similar move today as it did against a company like huawei, where it put it on a blacklist. U. S. Companies are barred from doing business with these Chinese Companies. There are a lot of american suppliers in california who deal with these Chinese Companies. Some of thed from people in Silicon Valley that it does hurt the u. S. Companies as well, and so, with this action today, that really became a bit of a surprise because it was put on the back burner. The Trump Administration theseced blacklisted from companies are surveillance firms, ai firms, over Human Rights Violations. Paul so tom, what do we know about these companies . They are involved in surveillance. What do they do and why do they matter . Tom these are Major Companies here in china, but also, internationally as well. They attack, the two of them, for one third of the Global Market for surveillance cameras and equipment, and then you have the ai companies, which by some metrics is the most valuable ai start up in the world, and then you have another that is focused on Voice Recognition. It has been named by beijing the last few years as a National Champion. These are the kind of companies we are talking about. The ai,he software, facial and Voice Recognition primarily as well. They are saying they are implicated for these companies and what they described as Human Rights Violations and repression and domestic i should say tension in shenzhen, where according to the united nations, there are up to one Million People held in the master tension camps, mass detention camps. They are helping to put in place this surveillance state essentially and helping to enforce this mass detention of muslims in the region. Shery this comes at a time when the vice premier is going to washington. Will these latest moves be kept separate from trade talks, and is that even possible . Tom that is the key question, isnt it, is whether or not this was a coordinated attempt by the ministry, the department of commerce in the u. S. , with those leading the trade negotiations or whether this was a separate action, and that the a key question for the tiny side is whether they start to interpret this again as a broader push by the u. S. Simply to check chinas rise that it is far more than just trying to level the balance, butte the trade, the balance be it the trade. That is a concern from hawks in beijing. This move by the u. S. May feed into that perception. In terms of whether or not we get any action on the deal, there have been reported by bloomberg suggesting that china was going to narrow the scope of discussions, and again, it does seem to add to the risks around these talks and whether or not they can actually achieve anything. President trump came out and said he wants to get a comprehensive deal, a 100 deal with china, and he voiced moderate optimism that he thought something could come out of these trade, but it does seem to make it much more complicated now that you have this blacklist on an additional eight companies as well as the issues around huawei, which will remain unresolved, which chinese officials want to get sorted as well before they move on with these trade discussions. Shery a complete deal is not necessarily what the president gauck 20 signed the u. S. Japan trade deal. Trumpo president signed the u. S. Trade deal. What we know so far . Sarah i think it will be harder for the Trump Administration to sell a half deal with china as a win for the u. S. Concessions some for farmers if china agrees to buy more agricultural goods. That has been important for trump and it will continue to be heading into the 2020 elections, but i think with japan, there was not as much of a spotlight on those talks. Reported what we have china is not willing to come to the table to talk about industrial policy and state subsidies, which are two of the biggest issues the Trump Administration wants to tackle at the heart of this tariff war to begin with, so we see ourselves on even worse footing with this latest action today taken by the Commerce Department with the blacklisting of Chinese Companies. Thank youah mcgregor, and Tom Mackenzie. Still ahead, samsung has valued more than 20 this year on hopes of a pickup for semiconductors. We are counting down to the result later this hour. Paul but up next, u. S. Stocks fall on light volume as revived trade talks approach. We talk with Andrew Milligan of Standard Life investments. This is bloomberg. Paul this is daybreak asia. I am paul allen in sydney. Shery i am shery ahn in new york. Lets dive back into the conflicting forces causing u. S. Stocks to swing. China is ready to make a deal to concerns that the trade agenda will be limited and news of the blacklisting of more chinese tech firms. Su keenan has the action. The blacklisting happened after the close but investors have a lot to digest at the moment. Su when you look at the conflicting geopolitical portions, you can add in the trump tweets about turkey. It is hard to know which force will prevail on the market. Lets take a look at the market snapshot. You will notice again that tech, which led the way higher when stocks were out, actually was a drag and Energy Stocks also lower. Energy having a bit of a drive. The dollar gained, treasury slipped, and lets go into the bloomberg. It decided to freeze its pension plan for 20,000 employees, and in the process, we will go into the bloomberg right now. It is cutting 8 billion from the pension deficit. Notice the debt meanwhile making a bit of a comeback as the stock has been under pressure. We saw the stock to cap tick up. Remember all the ipos, recent ipos, being thrown out with the bathwater. Take a look at how they are coming back. They are taking off the week again strong. Got dragged down and are coming back in the Cybersecurity Software space. 6 . Ce biotech down that debuted recently. It was up some 30 . And this is another one that was day, and we are seeing those trade. E trade, which got thrown out last week, with all of the news about cutting fees, also came back in a big way on an upgrade, saying even though its revenue may be down, because of the fees, it has a very good following that keeps it in the running. Lets talk about commodities. We had oil giving back earlier gains. Some investors think that maybe it is the endoftheline for gold as well. What is the story there . Su commodities seem to closely track what is going on with trade. Oil surrendering earlier gains. Take a look at gold, we are you are seeing gold in the past month dancing 4 from a sixyear high. They of the gold bugs are thinking the mojo has been lost. Rebounded from 8000, so again, in some ways, they are operating on the sentiment that the trade talks resuming is good but there continues to be a lot of uncertainty affecting these commodities. Thank you very, much, so thats good to our first guest now this hour. Andrew milligan is head of global strategy with Standard Life investments. He is usually based in edinburgh. Today, he is joining us from tokyo. Muchay that bonds pretty got a recession priced in, but equities are looking more towards a slow growth story, so which of those two is right . Berew well, markets can like that for some time. It isnk, on balance, still likely that equities over time will make better progress. Bonds placed in a bit too much bad news. That is going to need some changes to the political outlook, especially between the u. S. And china, but other parts of the world as well. That is not likely to happen quickly. Range trading for markets is the order of the day for some time. Easingor equities, fed and other central bank easing is all they have got at the moment absent a resolution to the trade war and an environment of slowing Global Growth. Moneyidence of the easy from Central Banks being put together productively in terms of capex . Andrew not on the Capital Spending side. And i think many investors will be waiting for the meeting later and does that cause some changes . We are beginning to see investment being put to work in terms of moving material out of china and into vietnam. Forward, theing u. S. Earnings season starts soon. Expectations are for modestly negative growth. It ends up modestly positive. Are buybacks will start to to can as well. We will have earnings news, which we think should preside a floor to the market and the potential upside. Shery how about emerging markets . We continue to see this hunt for yields turned to the ems. Andrew yes, we do like emerging markets. Ony are slightly better valuation ground, and of course, we are in an environment currently where even if the dollar is creeping higher on a tradeweighted basis, they are able to make rate cuts. The reserve bank of india the other day. Emerging market debt is one of our most overweight positions at present. Emerging markets generally, yes. More selective in terms of equities. It is an attractive part of our portfolio at present. Wel we have heard shery have heard the valuation reasons for them favoring japanese stocks yet the gtv chart on the bloomberg showing that a Bloomberg Survey sees analysts with more yen out performance. So how do you measure those two up and what will this mean for Japanese Equities . Andrew we do like Japanese Equities again. U. S. Emerging and japanese are our most favorite markets. The fundamental drivers are very clear. Profits growth at present compared with the Dividend Growth and governance changes taking place. We wait to see whether or not the sales tax will crimp that in the shortterm. So it is a favorite part, but we absolutely take the case that the possible yen strength it must be said that the yen you mentioned gold earlier. Those are classic parts of many investor portfolios as a safe haven and diversifier. On balance, we do like Japanese Equities, but it is only overweight. We have the possibility of a yen spike, if there is some bad news for the World Economy. On those days, investors are not rushing back into safe haven assets so it cannot be a heavy overweight in portfolios. The yen, hows of much stronger do you see it getting and at what point does it invite intervention from the boj . I think your last point is absolutely right. I dont think the bank of japan or the European Central bank can cut Interest Rates much further. Are well aware of the dangers for the Banking System and the underperformance. Qe by the are into bank of japan. Whether it is at the meeting think thereonth, i are undue periods of yen strength. The Exchange Rate moving too quickly over to short a period of time, moving too far away from whatever their values suggest. The bank of japan has plenty of firepower to do that. Boj standing the pat because the economy is going relatively well and inflation is at least moderately in positive territory. We are waiting to see if it needs to act on the currency. They we continue to see debate, whether monetary easing is becoming stretched. How much could fiscal stimulus help Global Growth . I think itandrew could help a lot. The problem is that in not many countries are we actually seeing the debate picking up. In my country, the united kingdom, there is a busy war taking place between the various parties as to how much an increase in Capital Spending is. If we go to europe, it is quite small. The debate is building up in germany. I think we would need the green party possibly to Enter Parliament and then much more expenditure on climate change. China is doing a small amount to keep the economy afloat, but you have to stay wary of relying too much on the construction boom. Japan is trying to offset some of the consumer tax increases. It is patchy. Going into 2021, we would expect that pendulum to swing much more. We need higher unemployment in many countries to encourage the government to do more on the fiscal side. We are caught in this transfer of the batch on between the monetary and fiscal policy tools. It looks to be slow progress and that is why we are all expecting relatively muted Economic Growth and stable flatlining, range trading equity markets, for a little while longer. Shery thank you so much for your time today, Andrew Milligan, Aberdeen Standard Investments head of global strategy. Dont forget, if you are away from the screen, you can find analysis on Bloomberg Radio, now broadcasting live from our brandnew studio in hong kong. You can download the app, Bloomberg Radio plus, or listen via bloombergradio. Com. I just want to get your cross and alert on the bloomberg at the moment. Morgan stanley seeing the Iron Ore Price sinking to 70 a ton by 2020 as the market loosens. Iron ore currently trading a little above 92 a ton. It was last at that 70 level back in december of last year, so iron ore seeing that market loosening as china steel output drops. 70 a ton by the end of the year. Of course, they will be