A threeday look at futures, dollarchina. You have sterling on the back foot, relative renewed optimism over brexit and you have dollaryen on offer. On the back of this return into the risk appetite. Donald trump making another comment on top of on top of him saying the talks went well about an hour back, he also said the chinese are very nice. That has driven dollarchina up. U. S. Futures, 29. 50 into the open. Look at the equity markets, the shanghai composite, topix index, decenthave asx session, volumes coming back but not quite to the recent averages. Quickly, look at the bond market. Will talk about a reposition out of sri lanka but that is what you need to know. You haveear yield, japan, australia, the u. S. , and what youve seen in gilts. 13 basis points, secondbiggest in absolute value, biggest jump since referendum in percentage turns, biggest jump on record. We will see if this continues. Are we setting ourselves up for disappointment . Puttinghway to brexit, yield on a staircase to heaven. We believe that there for now in terms of markets. Su keenan is with us in new york and has an update to your first word news. The u. K. Is a step closer to agreeing a new brexit deal after talks between Prime Minister johnson and his irish counterpart. Sterling jumped the most in as we heard the two sides could see what he calls a pathway to a potential agreement with the eu. He said he believed his deal is deadlineat the brexit at the end of the month. Had a good meeting today with the Prime Minister and our teams together. Very positive and very promising. I am absolutely convinced ireland and britain want an agreement in the interest of britain and ireland and the European Union as a whole and i see a pathway toward an agreement in the coming weeks. Notes from last month ecb members ofwed some aregoverning council floating deeper rate cuts in exchange for dropping the idea of resuming bond purchases. Others needed convincing about lowering rates at all amid concern about adverse effects. To japan, japan has canceled 14 international and domestic flights as the typhoon continues its path for the tokyo area. It has canceled hundreds more flights on saturday with rival ana grounding 112 international services. The typhoon is set to make landfall saturday afternoon. You can track its path on our terminal function at hurr go. The nba is breathing a sigh of relief after a highquality, low stress exhibition game in shanghai. Brooklyn beat los angeles in front of a sellout crowd, giving only the some respite after a week of law sponsors. Tweet supporting the protest in hong kong has ruptured ties to china and a facing criticism in the u. S. Regarding its attitude over freedom of speech. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Trade talks wrapped up in washington with initial signs pointing to a positive day one in the meeting that extended into the afternoon and will continue friday. We just completed a negotiation with china. We are doing very well. Were having another one tomorrow. Im meeting with the vice premier and the white house. I think it is going really well, i will say. I think it is going really well. David really well. What does it mean . Selina wang is about to tell us. How can i take the really well in terms of measuring progress made so far . Selina i think we should not ght to hisch wei comments but the fact that he is meeting with the vice premier friday. That is a sign there must be some progress being made. Otherwise, he would not agree to meet with donald trump. Despite the escalating rhetoric around visa restrictions, itcklist, hong kong issues, seems both sides are more willing to make some concessions to meet recheck partial reach a partial deal that wouldnt mean core recession concessions for china more agricultural purchases but no giving in on major sticking points about domestic and industrial policies. There have been reports the u. S. Has reportedly allowed some u. S. Companies to start reselling to huawei when it comes to nonsensitive supplies. Tona has also asked the u. S. Remove sanctions on its largest shipping company, cosco, which had been accused of carrying iranian oil. We have been here before. Trump does want a broad trade deal. We could still see trump come back with more tariffs in hopes of china reaching a bigger deal. Yvonne the reporting yesterday was the currency pack could be added into this minideal. What are the implications of that . Pact came toe fruition, it would result in a deescalation of tariffs. It would result in a suspension of tariffs next week. That said, this currency pact probably wouldnt substantially change chinas Current Exchange rate policy. Not agreeg china will to anything that would significantly strengthen the yen given the weakening economy and that best, it would result in a more stable yen and it would be an informed policy. Informal policy. Analysts said this would resemble what the u. S. Has agreed to with mexico and china, and transparency agreements in the g20 commitment. Yvonne selina wang, our china correspondent with the latest on trade out of beijing. In a representative from a firm with 5 billion annually. A pretty steep selloff when it comes to bonds. There is so much optimism leading to talks right now. Are you as optimistic . Oni think the key issue is the trade talks, we have heard different narratives and there is a lack of specifics. Today, we see trump thinking the deal is going really well. How about next week . How about tomorrow . That is the key issue. Of,thing we are sure uncertainty remains a certain tv. Thinkthat backdrop, we do it is good to have safe haven investments like u. S. Treasury and government bonds. Yvonne what you are saying is ill take this opportunity to buy . Jenny i tend to think that. Adding duration here might be a good option. We were just talking to debt isp that said still attractive because if you look at the rest of the majors, we are negative yielding that. Do you stay in the u. S. And will that boost more attractiveness for the dollar or do you look on the risky side of things and had to asia . Jenny asia is attractive with other em in the world, far from negative territory from the ritz perspective, a ticket rates perspective. Particularly china. Remainsthe 10 year attractive and indonesia is also very attractive and we think the Asian Central bank has enough optionality to support policy is needed. David you do oversee a couple of funds. Where are you seeing the most inflows and what are you in devising advising your clients within fixed income . Ours strong inflows into and we think there is a simple strategy for investors. You have both income from duration and credit spread, and in a world with a lot of uncertainty and volatility, you probably want something that gives you stable income. Yvonne asia dollar bonds have had a pretty good run this year, particularly the junk bond market. Some say the selloff in august was a chance to buy on these dips. Are you seeing the same thing . Jenny we need to be where the credit cycle has changed, particularly in china, which means defaults will pick up. It doesnt necessarily mean that. There is no opportunity in the junk bond market. You just need to pick up your spot. Yvonne where on the curve . Jenny some chinese property names are not that. It is quite cheap and indonesia, high yield is also the. David lots more coming up. Jenny zeng will be staying with us. We will talk about china opportunities. If you have questions, send them to our tv. Also coming in the program, retail detail. Jefferies analyst Michael Allen for his outlook on japanese retailers, especially as we head into earnings season after the sales tax hike. Next, how chinese banks are returning to the debt market in a big way. We will assess the threat to the economy next. This is bloomberg. This is bloomberg. Most businesses i talked to want to stay nimble and realize there could be new policy pronouncement at any time and with that uncertainty, they are not cutting back their business, but they are putting new projects on hold. The other thing the are doing is watching carefully if there is a broader slowing. As you get into 2020, questions abound around trade and economic pressures, i think youll see more on the International Side of business than the domestic side of our business. Weve seen softness in china and asia as well as europe. Some of the traffic has come down and part of that is currency effects. Chinas trade deficit is running double digits on a combined basis and now the current account is zero and lower. From a secular perspective, so china is running out of dollars. China needs an interim trade deal as bad as trumps friend and see needs one. Yvonne that was kyle bass highlighting liquidity concerns and the chinese economy. This brings mainland banks into focus. They are boosting capital at a 100rd pace, raising about 37 billion through onshore and offshore debt offerings so far this year. That is more than the prior two years combined according to data compiled by bloomberg. David jenny zeng is still with us, alliancebernstein cohead of asia fixed income. Does that continue or are we done in fundraising . Dara chinese banks have a long way to go to boost their capital ratio but this is a smart thing fewo and this is probably countries that recapitalize their banks before a crisis happened. David because of policy. What type of yields would you get . How do you look at that as a risk perspective . They are commercial enterprises but also policy tools. Jenny we need to look at chinese banks in a different way when looking at other u. S. Banks. The big four chinese banks are stateowned. They are trading 4 to 5 , that kind of level. Compared to u. S. Banks, european banks, they probably score not that cheap. However, if you take that state ownership and support behind that, we think it is ok. Yvonne how do you see this flood of bond issuance plane to the bond market . Play into this bond market . How are you seeing that in terms of where yields go . They this year so far, chinese banks supply has been underwhelming rather than overwhelming. Years, chineseus banks have been low issuance in the u. S. Dollar bond markets but this year, we see the supply is lower than expected. David the economy is slowing. When you look at china, it is slowing and in hong kong, the economy is under trouble. Any signs from both those things ins credit spreads . Is it coming out . Jenny credit spreads have had pretty good performance so far. We are getting into a different credit cycle and will need to be nimble about what type of credit risks you are taking. For example, we see defaults picking up in china. Offshore, there are more events happening in the offshore dollar market. Those are the areas more export driven or cash tight companies. They are running a stretched allen street sheet balanced sheet. That is where you run into problems. Be careful of names like that but at the same time, consumptionbased industries are doing ok. Yvonne do the fundamentals suggest there to be a weaker renminbi . Some say with the currency pact, if it fits in with the trade deal, that could mean stronger nimby. Jenny renminbi. Jenny the key driver between the rmb has been the trade talks. There are onshore factors that get into that. We need to see how the trade talks play out. Having said that, i think we will see a lot of uncertainty. It remains high, so it is hard to see where the rmb is going to go. I think the pboc has the tools to manage it. David the most important indicator for you is the fed. If we get a trade deal, does that affect how many cuts the fed might be willing to deliver . There is debate how long the easing cycle will currently last, no deal at the moment. We still expect the fed to cut in october and december for the rest of the year. In the u. S. , the job data remain solid. Wage growth is limited. Inflation is limited. Job data is usually backward so the question that matters most is how long the strength in the job market can sustain, and if we do have more optimistic readout from the trade talks, does that really change the fundamentals of the economy . Does that change the slowdown weve seen evidenced in other parts of the global economy. Thats a different question. Jenny you are still neutral on the dollar. Weve seen the fed cut twice. How long before it changes your mind on where the dollar goes . Jenny the fed has to change its course for us to have a different dollar view. We dont see that. Thats very low probability at the moment. David quickly, to pick up on the fundamental weston. Question. If markets reflate, does that force the fed to stop what they are doing . Jenny the fed is looking at multiple factors. Not only one trade talk. The trade talk whatever the trade result is going to be, this week or next week, that a shortterm. We need to see the impact that trade has on the overall economy. Yvonne jenny zeng, alliancebernstein, thank you. Latest lines from president inmp at the Campaign Rally minneapolis, talking about the middle east and saying it is less stable, less secure after war and the u. S. , we are slowly, carefully getting out of the mideast, that after the flipflop on turkey. David turkey, he says is carrying out a tough campaign against the kurds. A lot of lines coming through from the u. S. President. Apple, crumbling under pressure from beijing. Tim cook, defending the decision to pull a tracking app amid protests taking place in hong kong. That is next. You are watching bloomberg. Yvonne more lines coming through from the Campaign Rally in minneapolis of President Trump. Friday, that is when President Trump says he will meet with the china vice premier. This is after we heard about gay one talks looking positive. I want to clarify, it is not the midwest but the mideast President Trump says the u. S. Is retreating from and saying the middle east is getting less safe. David we now have a time to look forward to. Longerterm, pulling the military out of the east. Lets talk about apple, defending made a decision to remove a controversial mapping app in hong kong. The ceo has released a memo saying the Company Received credible information from authorities indicating the software was being used maliciously to attack police. Our Bloomberg Asia tech executive managing editor out of tokyo. Key takeaway, what do we need to talk about . As you say, apple pulled this app from the app store. It is truly the way they removed it that is controversial because first they had pulled it and then reinstated it a few days. It was being used and then they came under heavy fire from the communist partys flagship newspaper, the peoples daily, which accuse them of being reckless in providing the technology. The technology lets people use the app to see where activities happening in hong kong, including seeing where the police are. The reason apple is giving for removing the app is people protesters have been using the app to find out where the police are and in some places attack the police. They say that violates the rules. That is the justification tim cook gave after speaking with authorities. The alternative is also true, people can use it to avoid the police and protesters are pushing back over this, the developer of the app has also said they disagree with apples decision here. Yvonne does this set a bad precedent . How might other apps in the store be affected now . It is an example of how companies are wrestling with this controversial awareness stand with hong kong and the protests and how they navigate this sensitive terrain. In the case of apple, there is also a song they had in the app store that came under fire where it was a song viewed as supportive of protesters. That was another issue the peoples daily took up. The nba, also game developer blizzard has come under fire because one of their gamers spoke after return in a post game interview and talked about some of the slogans the hong kong protesters are using. He was suspended for a year, his prize money taken away. These companies are having a difficult time navigating how to go through this sensitive terrain. Elstrom, tech editor live in tokyo. We are headed into the lunch break. Retailers, doing well, most of them. We will debrief you with earnings and jeffries joins us to talk about where retailers go from here. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its 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. Call, click, or visit a store today. Su king 29 in hong kong and shanghai, 10 29 in the u. S. Im su keenan with the first word headlines. President trump says trade talks in washington went open very well. This after a threemonth pause. The president also said he will host chinese fives premiere at the white house. He did cast some doubt on whether some type of agreement can be reached, tweeting earlier that china wants to make a deal, but do i . Deal wewe get a trade are happy with, but china might see the u. S. Is such an unreliable partner that it may structure us out of this market anyway. That would be a shame. Su the latest on turkey and syria. The Un Security Council has held a closeddoor meeting on turkeys incursion into syria amid widening criticism of the military operation. The european ambassadors called on turkey to stop the attacks while the u. S. Envoy refrained from joining the criticism. The turkish president is threatening to send millions of refugees to europe if his country comes under undue pressure. Bankrupt utility pg e suffered another bad day as a court ruling threatened to put its fate in the hands of outside creditors and potentially send it to zero. Shares plummeted by more than 30 after pg e was stripped of it exclusive control over its bankruptcy restructuring process. The company has now restored power to about one third of customers in Northern California but says it expects to cut electricity again to avoid potentially starting a wildfire. Almost 1 5as found of the countrys Palm Oil Plantations are illegal. 19 of the operations are working without official permits and authorities are trying to identify the owners. This finding comes after the state auditor reported the other 81 of the indonesian plantations are breaking state regulations. Global news 24 hours a day, onair and online on tictoc and twitter, powered by more than 27