And says it will support a slowing economy. Australia fights bushfires on two coasts as the fans flames are fanned. Hottest days since record began. Shery clicks check foraw the dow gaining. 8 the first time surpassing the 28,000 level as we had a broad risk on session. S p 500 being led higher by health care and trade sensitive tech stocks. More positive trait headlines and that helped boost the stock market. Semi conductors, the Philadelphia Semiconductor index at a record high after Applied Materials came out and boosted sales forecasts. Nasdaq also at a record high come up. 7 . Haven assets broadly falling. 10 year yield rising for the first time last week not to mention that the dollar also saw a weekly loss. We will keep a close eye on what happens in hong kong this morning as we are now Hearing Police are ready to storm into the Polytechnic University in hong kong. Lets see how things are shaping up in asia. Sophie hong kong certainly is a focal point this monday morning. We are seeing stocks looking to gain ground. Futures elsewhere broadly higher this monday morning. Strategist seeing some improvements going into 2020. Jeffries sees Current Conditions similar to the aftermath of the 1997 financial crisis. Modestlyts outlook to bullish. Checking in on the calendar for monday, thailands gdp report and exports from singapore for october due. Plus hong kongs jobless rates expected to tick higher in october as the city grapples with a recession amid the ongoing unrest. This monday morning we have a standoff happening at a local university. Paul thank you very much. Lets check in on with the first word news with su keenan. Su we start with saudi arabia, which has agreed to lower its evaluation of energy giant remco into pervak the size of its initial Public Offering to ensure a successful debut on the reads Stock Exchange next month. Aramco will sell just 1. 5 of its stocks, about half what had been initially considered. It is seeking evaluation between 1. 6 and 1. 7 trillion dollars. To the Federal Reserve now, prolonged low Interest Rates could dent bank profits and push lenders into risky actions which could threaten the nations financial stability. The latest twice yearly report of potential threats says cody rose erode lending standards. Last week jay powell suggested low Interest Rates may now be a permanent part of the economic landscape. Two australia and bushfires which continue to rage across much of the eastern part of the country. They are set to worsen as dry, windy weather moves in. Firefighters are already struggling with more than 100 fires in New South Wales and queensland. Local residents have been advised to move out. Four people are known to have been killed and more than 300 homes have been destroyed, with about 2. 5 million acres of farmland burned. And finally, bill gates has regained his crown as the worlds richest man. Or person, for that matter. He moves ahead of jeff bezos at the close of trading on friday, helped in part by a Cloud Computing contract at the pentagon. Microsoft shares gained 4 after ting amazon to the his personal wealth is now 110 billion. Amazon fell 2 at the same time, taking jeff bezos to a mere 108 billion in personal worth. 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 su keenan. This is bloomberg. Hong kong bracing for yet more chaos and disruption after weekend of violence between protesters and police. Lets go to our chief north asia correspondent stephen engle. We are getting reports that police have stormed the Polytechnic University in hong kong after a standoff. What do we know . Stephen we know that the police dogs personalhree operation to clear out the remaining protesters who have set fire to the entrance to the Polytechnic University, which is just across the central harvard harbor tunnel not far away from here. That operation has started. We of course will keep you updated as that progresses. However, police have said they will use Water Cannons and they have used Water Cannons. We have seen protesters use petrol bombs not only against the police over the weekend but also against citizens who came out to clear much of the debris and the bricks they have placed on the main highway leading into this tunnel around Polytechnic University. We have also heard late last week that the number two person in the government, matthew chung, vowing that the government will use more decisive measures. We also got a Facebook Live statement from the police early this morning saying that they will not rule out the use of live ammunition. Live rounds. Thise resistance to dispersal operation at Polytechnic University is met with increased violence. So we are at a very tense standoff right now. You could go any direction obviously. Shery and of course we continue to see the protests spread around hong kong. We have seen this rare move by chinos People Liberation army coming out and helping in the cleanup. Is beijing trying to send a message here . Stephen yeah. It has been highly criticized but also welcomed by this highly polarized society here in hong kong. Thing you had nonuniformed pla soldiers coming out of their barracks to help citizens clear out the rubble and the barricades and the bricks. But others are saying it is a slippery slope. Obviously we are getting a fire engine going by right now as those fires are raging across the harbor at Polytechnic University. The other side of the story is while some people welcome the pla to come out, others are saying this could just be a step soldiers coming out of their barracks in a more decisive and forceful show, if you will. We are simply in uncharted territory right now. In theces did come out summer of 2018 to help a typhoon clear up. However, we have not seen them come out in full uniforms obviously with arms and tanks. That is the worst case scenario, if you will. Paul in the meantime, the Economic Impact of all of this seems to be deepening. Hong kongs jobless numbers, which have been a bastion of strength really, do not look like they are going to be too good next time around. Stephen yeah. We are getting the october unemployment numbers later today i believe. We are expecting a slight tick upwards. It has stilled heady. Unemployment has held steady at 2. 9 since july, but that is a bit of an aberration i believe because if you look at the retail and tourismrelated numbers, they are starting to really tick upwards quite significantly. The estimate is for 3 . From 2. 9 to 3 in this october reading. We also have economists saying in the hospitality and tourismrelated industries it could go as high as 4 by the early part of 2020. The most areas, hardhit areas like in hospitality and retail and in restaurants, they could go as high as 10 by some point in 2020 if this standoff continues. That could bring the headline number up to as high as 4 . We have not seen for percent unemployment here in hong kong since november of 2010. It does not sound like a high number but for hong kong, which prides itself on a very Robust Service sector, it is really starting to hate where it hurts the most in the pocketbook. Paul all right. Stephen engle on the streets of hong kong, thank you for joining us. We will of be following protests throughout the day with our guests, including former head of hong kongs criminal intelligence bureau, the former Democratic Party of hong kong chair will also join us, and hong kong lacko member. The u. S. And chinese trade negotiators held what is described as constructive discussions in a phone call saturday as they look to address each sides core concerns. Our china correspondent Tom Mackenzie joins us from beijing. Constructive, what does this tell us about how close we might be getting to concluding a deal . Tom it certainly seems like we are getting very close to its final stage of phase one. Of course we heard from larry kudlow on thursday of last week saying essentially the same thing which they are edging closer now to being able to get a document in place which they can then put in front of the two president s and sign off on. We know this call happened following kudlows call. Apparently initiated by the u. S. Side. The chinese vice premier in discussions with Steve Mnuchin and lighthizer. And they talked about the central concerns for both sides. We know in the last few weeks they have been working on the details around things like agricultural purchases, commitments from china in terms of time frames and amounts and intellectual property, how to put that framework in place, what will satisfy the u. S. And the chinese side. Make sure there is relief in terms of partial tariff rollback. We know those issues have been discussed the last few weeks. Seems the discussion over the weekend may have move things forward a little bit. It also comes down to the fact that in the final stages, often they are the most contentious, and they are often where they break down. So that is the risk i guess looking at these trade talks. And of course President Trump has not made it clear where he stands in terms of how much progress has been made. We heard from him earlier this month saying he could be willing to put substantial additional tariffs in place on china if they do not get a deal that satisfies him. So the risks continue but it seems like they are making gradual progress at least at this stage. Shery in the meantime if they dont see progress the chinese economy could take another hit. We saw the pboc releasing Third QuarterMonetary Policy report. Anything interesting there . Tom they highlighted the main risk in the trade war is and are they trade concerns and tensions around tariffs. They also highlighted the inflation pressure that they are now facing, that the chinese economy is facing as well. Broadly the pboc said the downward pressures on the economy have continued, are now more significant and intense than they were in august. They are going to deploy what they call countercyclical adjustments to ward off some of that pressure. Treat is in focus but also inflation. He saw Consumer Prices pickup by 2. 8 as a result of higher pork prices. In terms of the Consumer Prices, the pboc says they think those are going to start to alleviate maybe by 2020. They essentially dismissed concerns, saying they were largely down to the base effect. Tools the pboc can deploy to ease pressure on the economy, it was also made clear in this statement from the central bank that their options are rather limited given that they are of course course trying to contain financial risks. We should ask expect another cut the reserve ratios for the banks, but they also stressed again they would take targeted measures to try to ease and support the economy amid these continuing downward pressures. Shery Tom Mackenzie, thank you. Still ahead, saudi arabia cuts its target for aramcos valuation to ensure a successful listing. We will have the latest developments. Paul and investors remain on the hunt for yield. We are joined. This is bloomberg. Pictures of Polytechnic University fires engulfing a part of the University Campus. We have heard police were preparing to clear the remaining months traders from hong kong Polytechnic University. They have warned they could use live ammunition if they see violence. Police have stormed into the university after a standoff, according to media reports. Paul all right. We of course will be bringing you updates from hong kong as we get them. Our next guest is chasing yields as Central Banks cutting Interest Rates is the biggest risk facing investors in the economy right now. Is aliceus from sydney brown. Thank you for joining us. Talk more about those risks. We have record lows across the developed world. Is the search for yield creating an environment of risktaking . Alice absolutely. It is definitely a really difficult environment for investors searching for yield, both focused on generating income for their portfolios to meet daily expenses, particularly because in the Australian Share market we are approaching a record high and valuations are quite stretched. Andthe alternative traditional portfolios is looking at cash profits and rbc the income there is not attractive. We have spent a lot of time looking at other options for attractive income sources and one area we are looking at is fixed Income Securities and diversified global bonds. They provide a bit of flexibility to rotate back into the Australian Share market should conditions improve or valuations also fall back to average levels. Of course yields on global bonds were not looking too good earlier in the year but they have recovered. Is that a trend you expect to see continue . Alice yes. In terms of diversified global bonds, it is really important because they are not an accurate substitute for cash deposit. So we really need to be conscious of the risk that is being taken. That is why it is so important to partner with managers who are conducting Due Diligence in the company. Generally what we are seeing are those companies have quite growth leverage while the increase remains below levels. Shery where do you find quality in the fixed income market . It is in terms of names really important to look overseas. Yields at higher particularly based in the u. S. And also to some extent in europe. If we think about u. S. Companies, we have just come out of the thirdquarter reporting phase. Despite some very low excitations going income this company has surprised in terms of Earnings Growth and provided outlook. Itive earnings shery we have seen the bloomberg recession probability gr drop. Probability higher than 30 has usually been followed by recessions. We are now below that. Still, when it comes to ecodata analysts we keep getting mixed messages. Slump in u. S. Manufacturing and yet betterthanexpected retail sales. What are you focusing on . Alice you raise quite a few good points. Definitely mixed messages coming out but overall it is quite positive. Powellntly heard jerome comment on the u. S. Economy, calling it a star economy and saying there was no reason why that could not continue. That has really been supported by the three Interest Rate cuts this year which have helped american households in terms of feeling confident about job security and cash flow. That has flowed through those positive retail sales we saw. What is driving the u. S. Economy . We believe it is domestic consumption which makes up about two thirds of gdp. And overall given that manufacturing weakness content tends to be contained at the moment we agree the likelihood of recession is low at the moment. Paul you mentioned equities when we began, particularly australia getting a bit pricey. How about u. S. Equities . We have the fed on pause. Is this a test of the markets now . Can the market keep pushing higher, or have we reached the limits . Alice we have seen that u. S. Markets are now at record highs. In terms of valuations they are not as stretched as australia but nonetheless it is cause for investors to be quite selective when they are looking to invest over the states. Seeing the areas we are domestic consumption, areas like health care, technology. One good example benefiting from ecommerce and also digital transactions. Earnings really solid from visa recently. It is a real beneficiary of trends to digital payment. Over 90 of our transactions are digital. But on a global basis it is significantly lower than that. So there is a real path for growth and also a capital like business and it has high profit margins. I suppose that is just one example of seeing selective value in the market. Paul can we get your thoughts on the Monetary Policy reports from the pboc . Sort of signaling a little more stimulus. I think something you were expecting. Specifically what are you expecting to see . Alice in terms of china the moment we know growth is currently sitting at around 6 . That is the lowest in three decades. Also at the lower end of the government target. We are now seeing after very disappointing results from retail sales, industrial some immediate announcements about stimulus. That is really welcome news for and also in the region Australian Businesses are likely to benefit from that. Paul alice browne, thank you so much for joining us today. Just to get you quickly back to what is going on in hong kong, we have live pictures for you from the Hong Kong Polytech university. Fire burning. F police have warned they are preparing to use live ammunition to break up an ongoing protest at the university. Police are storming in. We will keep you updated on that situation as it unfolds. This is bloomberg. This is bloomberg. Shery you are watching daybreak australia. Hp has rejected an unsolicited significantlyte, undervalues the company although it remains open to further talks. Issued a statement hours ago saying it was unanimous. Su keenan has more. Is this the end of the road or will there be more backandforth . Su no. What is fascinating here is even of the wording of the rejection is strong that it was unanimous and too low, they are clearly open to some kind of deal and that is what makes this probably a big story for a lot