Shery and a rocky road ahead for china. The worlds top auto market heads for an unprecedented second Straight Year of failed declines. Comingnd south korea online. Here is what to watch. Sophie stocks open higher with nikkei and topics opening with two. 2 . Data earlier this week showing a pickup in business spending and reduced prices. The yen looking steady after jay powells speech which reinforced the dollar has a negative bias. Which assets will benefit most from the feds 2020 outlook . We will check in on the open in seoul. 7 . Ospi up we have aussie shares moving to the downside with a risk on move this morning. Futures are also gaining ground. It lets check in on currencies this morning. The aussie dollar bumping its timeagain for a sixth moving below 68. 80. And the british pound back up above 132 above 1. 32. More on u. K. Politics now, heres a check of first word news. U. K. Votes later thursday in an election that will defined the relationship with the eu for years to come. Brexit has been the central issue in the campaign with Prime MinisterBoris Johnson insisting the contentious divorce will ify happen quickly conservatives earn a strong victory. Uncertainty has left several leaders. Saudi aramco advising 10 and taking the market valuations almost 1. 9 trillion. The goal is a 2 trillion valuation and its within reach. Are thet and apple countrys Biggest Companies along with aramco. Aviation regulators say approval to fly is not imminent. The plane has been out of action since march after two fatal crashes linked to the faulty altitude sensor. Boeing was hoping the faa would approve Software Updates before the end of the year allowing the max back into the skies. Will be returned to service when safety issues have been addressed, pilots have received all the training they need to safely operate the aircraft. This process is not guided by a calendar or schedule. And the Space Company owned by jeff bezos has another success launching and landing the same rocket for the sixth time. Texas. Off in west it reached a peak altitude of 140 kilometers above the official threshold of space with the new rocket coming in to head just ahead of the capsule. Global news 24 hours a day on powered byquick take more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Asian markets have the chance to react to the feds Rate Decision. Jay powell indicating there is no policy change. Robust. Economy remains we have our guest in hong kong and local head of east asia. We also welcome the principal Global Investor of chief global economist. With you. Start off we did not see a great delivery action in u. S. Equity markets as the fed chair was speaking. Do you expect to see much of an impact in asian markets . Not really. As he said, it has been well priced. As you said, it has been well priced. Policy will give time and space for Asian Central banks to reengage and recalibrate their policies. I expect a number of them will want to ease. But into 2020, it will mean weaker asian currencies. Bob, i want to bring you into this point. In at this point. To what degree is the feds decision going to ease pressure on some of asias Central Banks to take action . Bob i think that is exactly what has happened. Cutsu look at the three the fed has had so far this year , it certainly allowed in india and some other countries, it allowed them to be much more accommodating. And i think all of that process of accommodation has certainly helped the Global Economy. We are seeing better numbers in china. We are seeing better data in the united states. I think europe and japan are lagging a little bit but we are starting to see a small bounce in europe. And we ultimately will in japan. What the fed has done is precisely right at the right time. Were you surprised at the unanimous nature of this boat given how divided the committee has been previously . They certainly have been divided. I think this was the first unanimous vote in some time. It is pretty clear that now that the fed is at this level and things picking up, it certainly was the right move to be more accommodative. Theythat real aboutface did in january, the dollar is also weakened and it. Weakened a bit. And certainly for emerging economies. To the point about emerging markets, this chart on the bloomberg shows the minimum dot is at current rate levels. Not a single Committee Member projecting a rate cut. Does this decision today make things a bit more hawkish relative to pricing as we move to 2020 . Cliff again, probably not really. What happened with treasury yields overnight is that they fell of you a few basis points. The market is taking off some Short Covering in treasuries. It meant that they were more hawkish and became less hawkish as the day went on. My mind question in right now across a number of Asian Countries and even in industrial countries is, what is Monetary Policy doing . This willknow that ultimately have a stimulus effect . Torket tends to street treat every stimulus package with a tickertape parade. I wonder, sometimes. Irtainly in chinas case, dont think that Monetary Policy has much stimulative effect here stimulative effect. Paul i know youre concerned about the growing debt problem in the past. Is that concern rising for you . Cliff it is. We put it back on the front burner a couple months ago. And we expect a pretty steady stream. Not a flood, but a stream of credit default events as we go to the new year. Emerging markets have Something Like around 4. 7 or 4. 8 trillion something around 4. 7 trillion or 4. 8 trillion in maturities. We are expecting a period of em indigestion as we try to get through this. Paul you mentioned at the beginning that the feds decision wasnt much of a catalyst for asian markets. Is the big catalyst really going to be trade . Particularly this phase one deal . What are your expectations for that . Oddf something a little that we are increasingly beginning to think is that even if we get a phase one deal, we might still be in a trade war after all this is over. The disagreement over phase one is basically about how much ag does china purchase . And how many rollbacks the u. S. Does. If there is disagreement at this late stage in the negotiations, that should be taken as a sign that there will be disagreement after phase one is announced. Trumpmmitments of the administration the commitments that the Trump Administration wants from china may not be physically deliverable over the next couple of years. That will be a tipping point. Shery talk about the impact of the trade tensions. The gtb charts are showing the recession probability has fallen below 30 which has been the. Evel what happens if the trade one phase to a falls apart . Leave the fed to stance on hold without further cuts . Bob i think the fed will stay on hold. If the phase one deal falls add someat will uncertainty. But as cliff mentioned, this conflict is not going to go away. Even with the phase one deal on ag products and a little bit of tariff cuts. The conflict is going to stay. There will certainly be some uncertainties as we go forward. Is,as important as trade some of the underlying fundamentals are really more important and coming to the fore right now. We are seeing a little better economic momentum in china. As you look at business surveys, car sales have improved a little bit. Electricity production and a the uniteder data in states i think is coming from some underlying economic fundamentals that are less related to trade uncertainty or trade problems than some of the headlines seem to indicate. Even if there is failure with the current deal or if it is put off until next year, i think that we will see some positive momentum. Things pick up a bit as we get to 2020. Shery what about positive momentum when it comes to the markets in china . We have seen the rally of the shanghai composite but underperforming the s p 500. If you dont see the pboc put forth this big measure for supporting the economy, can there be momentum to the upside . Again, we are still cautious on chinese equities. What is happening right now is that the government appears to have really taken off all the on fiscal policy. If you look at the money market commentary day by day, there is a lot of government deposits adding to onshore liquidity. Ismeans Government Spending spending on infrastructure. The chinese economy is that this is a runner that keeps getting tired because of the debt load. While we can expect maybe a couple months of pickup, just like any runner can run faster for a little while, we think this will slow down again. It will get tired again as we head into the new year. I think the chinese equity market has been quite rational this year because it knows about the underlying problems and it knows about the limitations. Shery thank you so much for usg bankghts, in Global MarketsResearch Head of east asia. Bob is sticking around. We will talk about japans economy after posting the biggest fall in machine orders in months. This is bloomberg. Paul this is daybreak asia. Shery im shery ahn in new york. More on the news out of japan, machine orders plunging 6 on the month. It would be the biggest fall since july. The fourth consecutive month of declines. The expectation was for a rebound. We are also getting on friday Industrial Production data in the bojs survey. Lets ringback the chief global economist. Thank you for sticking around. Talk about japan because the economy is very much under pressure at the moment. We have seen the fiscal measures , the package of 121 billion coming from the japanese government. How much will this help . Bob i think the fiscal package will certainly help. You have to keep in mind that a lot of macroeconomic data in japan is pretty volatile. We saw that with thirdquarter gdp when it went from seasonally adjusted annual rate to. 4 to 1. 8 . Is of the key drivers investment. Japan,look forward for keep in mind it is part of the Global Economy. Think about what the Global Economy is doing. I mentioned in the prior block that i think we are seeing more momentum out of china and out of the u. S. Expecting, for several months now, the u. S. And Global Economy to pick up a bit as we go into 2020. We are also seeing a little better data out of southeast Asian Countries. South korea, taiwan, singapore. Technology orders tend to be a leading segment of what is going on in the world. I think japan, in part, is being hit by the impact of the value added tax hike at the first of october. It is probably part of why the Third Quarter was so big. That means thirdquarter gdp will not be great. Trough of Economic Growth in japan, probably, in the First Quarter. And with the rest of the world picking up, that would be my view that japan, while lagging, will feed into that pickup as 2020 progresses. Shery japan has been the stubbornly low Inflation Numbers. This chart on the bloomberg consistently below the 2 inflation target. Now that we have more support coming from fiscal measures and a pickup up in the Global Economy, how much more will this mean for the bank of japan . Bob i think it will certainly help. I think you have to keep the longterm view and perspective for japan. Years, decades really, japan saw fairly significant deflation. Andnow with a slow economy tough times in japan, there is not deflation. There is some positive inflation. It is certainly below the banks target. But even at half a percent but even at. 5 , it is different from the price decreases we have seen in japan for quite some time. I think the boj needs to recognize that some things have changed. I think this is a positive move. Is certainlyus trying to reverse some of the problems that were started by the hike in the value added tax. But i think there is progress on the inflation goal. Ultimately, i think the bank will be successful in having inflation just move up slowly, gradually. It will move up. Keeping with the theme of cautious optimism, we have seen some rises in the copper price, the iron ore price, oil nudging up with progress on the trade front. When it comes to Global Growth, youre wildly optimistic mildly optimistic. Can you clarify mild for us . Bob Global Growth has been in a slowdown for almost two years. It began in china in late 2017 and early 2018 when they tried to slow the growth of debt and ease their pollution problems. As china grows slow, we see growth slow in countries that sell into china. I think things are picking up. A mild we could see pickup in growth. This is really the third midcycle slowdown. Rebound is the third wave of rebound. I think chinas stimulus is really kind of timid. This is toward the end of the cycle. Optimisticcautiously for 2020, we could run into some in 2021. In the u. S. Paul i consider it to be rather curious news out of the working conference this week, trying to deemphasize growth, you have double the size of the economy. How do you square that circle . Im not sure you do. Clearly growth is slowing as the prior guest had mentioned. It will continue to slow. China has larger debt problems. Creditll not allow the spigot to expand as they have in the past. Force starting to shrink. ,ith a shrinking population authorities have to recognize that growth is going to slow. I think that is simply a recognition of fact. They are going to double the size of the economy. That can happen, but it will certainly take more time than they have suggested in the past. One piece of good news we got on the trade front is from south korea. The export numbers for the first 10 days of this month rebounding almost 8 on year. South korean exports had been falling for 10 months or so. Is this the beginning of a turnaround in the trade flows around asia . Bob i think it is. While the export numbers out of china with the most recent data were not great, if you look at chinas imports, they have been improving. That is just another piece of data that suggests china is picking up. We have seen Better Business surveys in south korea, singapore, and taiwan. Those countries tend to be the leading edge of what is going on in the world economy. I think that bodes well for this a mildm that we have pickup and Global Growth to come about and continue. Shery great to have you, bob principal Global Investors chief Global Economy. We have plenty to come on daybreak asia. This is bloomberg. Watching daybreak asia. Lets get a check of the latest business headlines. We work is selling off assets after it seeks to raise cash and rework its operation. It is managed by q which helps companies organize tasks and services. The business has been owned for eight months. Investors is said to include the managed by q cofounder. We were the biggest rival in china. Works biggest rival timesharethe first sale could raise about 100 million. Spacesates more than 200 including hong kong, singapore, and new york. Shery the former president of pending ators is now self driving auto start up. He says solo drivers of gas powered vehicles are fundamental problems behind pollution, congestion, and accidents. Coming up next, investors looking ahead to Christine Lagardes talk at the ecb. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Next it is telling you it is a fed is groping in the dark. We are not getting wage acceleration or inflation, so 4 . Is nehru above the fed will try to keep inflation from going even further down. This is a fed tilting toward accommodation because of the risks at the outlook. The next move is probably a cut and probably because of inflation. Investment spending is negative. We have seen factory shipments going negative. I think the biggest part of the economy, Consumer Spending is holding up, yes im it is consistent. It is a different regime. Even if they do start raising rates, they are barely raising rates. This is a far cry from normalization. Consistent,real coherent message. Guests reacting to the fed Rate Decision. Asian stocks rate stocks trading mixed. Steady while the dollar is trading near a onemonth low after the biggest drop for the currency since october. The korean won gaining ground further while the kospi is rising. Trading at a november 27 high with a bullish course on korean stocks building this week. Credit suisse raise the target on earnings stabilizing by tech. Nomura favoring ship makers next year. Ozzie shares are the clear outlier. With00 off half a percent banks leading the draw. One of those laggards is under pressure as it faces shareholder higher today. You had the chairman apologizing. Earlier, japan display gaining ground. Now, just a little change. Paul thanks very much for that. Discuss now that we have the Federal Reserve out of the way. The next big bank focus will be ecb. Christine lagarde heading up her first meeting as president on thursday, grappling with an economy that needs more stimulus. Kathleen, how telling will this meeting be on lagardes thinking and also plans for the ecb . Kathleen i think a lot of people are thinking she will not come out of the gate for force because she is too sappy for that. Remember, when she testified, spoke the European Parliament when she was getting ready to be approved a