The u. S. And china clash again, this time at the virtual u. N. Meeting. U. S. Futures are flat the moment. This after another volatile session. We had stocks rising. One mega cap rebounding. The s p 500 recovering from an early dip prompted by some comments coming from jay powell. Mnuchin spokery in congress today. The dollar touched a one month high. Look at what oil is doing at the moment. Wti is below 40. We are also looking ahead to the asian section. We are suspecting policy changes to come in the november Monetary Policy statement. Large parts of the market expecting the negative rate to take place in the First Quarter of next year. It looks like a modest start to the trading day. Cindy futures are looking positive. Watching the aussie and kiwi dollars. We saw the u. S. Dollar strengthening to the highest in five weeks in the overnight session. Repeating that the u. S. Economy needs more support and has a long road to travel before it will fully recover from the coronavirus fallout. It was another comment that shook markets today. The chicago fed president signaled the policymakers may start raising rates before inflation hit 2 . That sent the dollar higher. Aaron gives his joining us. Those comments added to the support that we have already seen in the dollar in this risk off week. What do you make of those comments and what does not apply for the market . Imply for the market . When we saw the initial no increase until 2020 three, investors were concerned that that might be too late. Lengthy. This was assurance that they may bring up rates. Its not only good for the also something that reassures americans that all is not lost for the next three years. That there is hope particularly for the banks with those low Interest Rates being such a large part of the economy. It can be interpreted good or bad. Street, most of wall takes that as a positive comment. We saw investors coming in dip. G the debt the vix not falling that much. Levelstalking about above 25 or 26. What is that implying . This is a phenomenon that has been pronounced since the beating a september and i have not seen it come down. We are talking about future expected volatility is in a high range. Expectans we can anywhere from one to one and a half percent daily moves the s p 500. Thats a big move. Then when you look at the nasdaq, there is also implied volatility for the nasdaq. That really says tech is going to be all over the place. We are looking at implied moves of up to 2 . Visit part of it is to understand that this is up roller coaster and you have to hold your stomach. Dont whiplash yourself. Dont try to buy or sell. If you are a day trader, these are placed to take advantage of the dips and down days. See likely, we are going to this continued high volatility of the u. S. Markets until november. At least until the u. S. Election. If you have the resources to do that type of daytrading, thats great. In general, most investors dont. Youre better off holding your longterm valuable stocks and understanding its going to be a roller coaster. Assess increased or decreased volatility depending on the election . We get continuity with donald but he also brings more volatility to the equation. Certainly if he wins, at least we know what were going to get for another four years. Is one unknown that is known. Another four years of this different type of president. Or if we get joe biden, then we know we have a congress and president aligned with the senate in between. Also depending on whether the democrats can move up the majority in the senate. Then we have congruity across all three levels of the legislature with one party leading that, then wall street knows what to expect because there will be a lot less roadblocks. Thats not just about the president , its also about whether they can change the. Inority in the senate that will help wall street understand it for going to get stimulus package or if are going to start moving along quickly at a set agenda. We are moving that type of certainty, it will certainly help wall street move along. Are you still convinced by in stop taking place parts of asia where the handling of the virus and the rebound and even the demographics are more favorable . Korea is just this amazing bright spot not only and how its handling the pandemic also their stock market. Are up about 6 september. They are doing very well. A lot of u. S. Investors have limited exposure to a lot of etfs they are still heavily concentrated. Certainly, i think investors can as havingt exposure to china certainly south korea is one of the brighter spots. Unfortunately, because of a lot of the dependency of a lot of the regions on china such as australia and there dependency on cereals and oil, it is still an area that though they are handling the virus well, i dont necessarily see that as one of you look outside the u. S. , it is germany and south korea are your two best bets. Always great to have you with us. Mitchell in karina new york with the headlines. Economicite house advisor larry kudlow says the administration is looking carefully at the proposed tiktok deal as oracle and others try to resolve remaining issues. He says President Trump remains optimistic but the outcome is still uncertain. Kudlow added that the future is about protecting American National security interest. India and china have agreed to lower tension on the himalayan border saying they will halt troop transfers and avoid any move that may trigger flashes. The two sides have held discussions after a series of fatal attacks in recent weeks. Hong kong and singapore were the biggest destinations for Illicit Bank Transactions in asia even after they only saw a fraction of the estimated 2 trillion of potentially laundered money. Italy has closed its borders with france as covid19 cases search. All travelers are hoping to take mandatory virus tests with trucks facing lengthy delays. Global fatalities are approaching one million with the u. K. Saying the country is at a tipping point. Boris johnson has talked of imposing restrictions that could last six months. Global news 24 hours a day on air and on quicktake by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Coming up next, pressure truck and his u. N. Speech called for china to be punished for the coronavirus. Policymakers are set to leave rates at a record low. This is bloomberg. Beijing andbetween washington are on full display at the u. N. General assembly. We must hold accountable the nation which unleashed this played onto the world, china. Virus,iest days of the china locked down travel domestically while allowing flights to leave china and infect the world. Jinping took aboard traditional approach but still pushed back in his prerecorded speech. Virus, we should enhance solidarity. We should follow the guidance of and launch a joint International Response to be the pandemic. Any pull attempt of politicizing or stigmatization the issue should be avoided. Our International Government reporter has been covering the meeting. Who was Donald Trumps speech for . Why it so much of that focus was on china to mark addressed to was the u. N. General assembly, but it is no secret that that speech was aimed squarely at u. S. Voters. The speech mainly dealing with u. N. ,even though at the there are multiple preoccupations such as Climate Change and refugees. Calling china virus accusing china of lying to the world, we have to keep in mind that he is ramping up tensions with beijing. He is portraying himself as when his rival. He is trying to direct deflect some of the blame for the coronavirus. We were talking about how different the u. N. General assembly feels this year and how different new york feels. Seeing thee fireworks between the u. S. And china on the virtual stage. What were the talking points that china stuck to this year . Think china is looking at this as an opportunity to fill a void. ,s trump and the United States is missing from the world stage, china is trying to portray itself as a leader, as a responsible leader. Xi jinping took the opportunity to pledge to go Carbon Neutral before 2060 which was a significant and bold pledge on climate. Clearly, you have china looking at this as a geostrategic opportunity to be the responsible leader, and to fill the void that is being left by the United States at the u. N. And other global organizations. David, our International Government reporter joining us from new york and a different year for this time of the year with the u. N. General assembly handling happening right now. Up next, australia is the latest nation to sign up on the kovacs initiative. This is bloomberg. Say we dontho need this stuff and we should leave people to take their own risks, i say these risks are not our own. Is that your mild cough could be someone elses death knell. Resource. Spare no unless we probably make progress, we should assume that the restrictions i have announced will remain in place for perhaps six months. Shery that was u. K. Prime minister Boris Johnson warning of many more deaths to come after ordering more virus restrictions. Here in the u. S. , the death toll has top 200,000. Months since the first virus case was confirmed in the u. S. And we have more than 200,000 people was in their lives. Will this have any policy implications . It seems that politicians dont want another lockdown. The idea of going back into a lockdown is an anathema for many people in america. We have gotten to the point of exhaustion when it comes to doing things like social distancing, even simple things such as wearing a mask. It is considered politically toxic to ask people to start doing things like no longer going into restaurants to eat. Not getting your haircut. We are really looking at these two separate sides of the coin. The increasing number of cases that are now starting and expected to accelerate and the deaths that are going to come with them versus the political and financial and emotional pain that will come from another lockdown. Shery in the meantime, we continue to see developments, members signing up to the covax facilities. What is the impact of that likely to be . As a general rule, we talk about that in terms of making sure there is enough vaccine for developing countries for low and middle Income Countries which australia is a strong economically vibrant country. Yet they have joined covax because it will benefit them as well as their greater community. In order to get vaccine access, you can go through covax and when the vaccines start to hit and we find out which ones are effective whether it is astrazeneca, pfizer, modano, if you havent gotten a deal already with the company that is successful, joining a covenant like covax is going to get you access to the vaccine for your people. That was our Health Care Reporter with the latest. The u. K. Hospitality industry is warning more restrictions will devastate the sector. The Worlds Largest brewer is hoping that the impact will not be as great. One representative says they will adapt to the new limits. Also talking about restrictions but just at the pubs in the u. K. Will have to close at 10 00, but they are still open. Pubs will learn how to live with social distancing. Were able to put tables outside on sidewalks and the mayors allow that. Trying to forge together partnerships. This is way to bridge through partnerships. Bars toave to allow expand their footprint so they can have customers come in so people can have social activity but with social distancing. We are helping our clients whether the storm. We did what we called a voucher. We could buy vouchers during the lockdown and match it 121. That voucher would be working capital for your pubs during the lockdown. When the pub reopen, you could redeem that voucher with food and drinks at your favorite pub. Connectacilitate and consumers with their favorite restaurants and pubs to help the establishments go through this come to a new normal. Catchphrase has become bringing people together. Do you think you will have to produce less beer in 2021 if you cant bring people together . Know, consumers will find a way. Thats a different story. Restrictions, consumers are smart and they will learn to live with them. And occasions will migrate they will go from the pub to home in a small group. Consumers will find a way. At the end of the day when you think about the human beings, we are a consequence of millions of years of the way our brain is wired, the way we are is human beings. We need physical social interaction. There is only so much that zoom can replace it at some point, people have to be together again. That can be in the home, in the pub, in smaller groups or big groups with small social distancing Wearing Masks all the time. People will always try to go back to what brought us here. Lets now get a quick check of the latest business flash headlines. Nike returning to profit imposing far better revenue than expected. Income was 10. 6 billion in the fourth quarter. Investors had been looking for evidence that the company is weathering the virus slowdown. Streetl slept, but wall was bracing for far worse. Chinese homecoming ipos have raised 2 billion u. S. Dollars in hong kong listings adding to the wave of shares of Mainland Companies already trading in the u. S. The two latest are offering a small discount for their new york close. Theyre heading back to asia amid threats to Capital Access in the u. S. Enjoyingtesla is afterhours trade with their battery event underway. This is bloomberg. Look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Watching daybreak australia. Theegin with the top story, u. S. And china class virtually at the General Assembly as leaders offered prerecorded addresses. President trump renewed his attack on beijing for its and ling of the coronavirus. Xi jinping said the fight against the pandemic should not be politicized and warned no country should gain from anothers problems. In the u. S. , jay powell has repeated the u. S. Economy has a long road to travel before it will recover from the coronavirus fallout. He told lawmakers the economy will need further support adding the virus must be kept under control with policy from all levels of government. Stephen mnuchin said the administration is working on a new relief package. To the administration and congress who have responsibility for this. It is likely more fiscal support will be needed. The Thai Government has backed stimulus measures worth 2 billion to boost consumption and jobs. Ministers recommended three additional holidays this year to encourage domestic travel. The government aims to stimulate spending and raise purchasing power and lower the cost of living. President trump says he will announce his nominee to replace Ruth Bader Ginsburg on the Supreme Court on saturday at 5 00 p. M. The decision to push ahead before the election has drawn criticism. Senate republicans have all but quashed hopes of a delay. The confirmation vote is expected before or after the election. Global news, 24 hours a day, on air and on bloombergs quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. Tesla is fluctuating with the battery day event underway. Elon musk is filling out his vision for the power cells. Joins us from san francisco. Event the format of this and what are the main takeaways . Of youve got lots shareholders in the parking lot of the fremont facility watching elon musk on stage. The take away of the presentation is costcutting. It is something elon has talked about. I fear the battery pack is so central to the economics of electric vehicles. The focus needs to be breaking down the cost of production. You can pass that saving onto the cost of the model and bringing a cheaper model to market. At of the criticisms leveled tesla is theyve never met this target of introducing a model that is cheaper than 35,000. Weve had lots of breakthroughs announced by tesla the last half an hour, getting into the nittygritty. Tesla prions to produce its own has a prototype in fremont. It has used a dry electrode. Opposed to a wet electrode is a simpler process and brings down the cost of creating the battery cell and means less machinery is involved. That is the focus of the presentation. Shares have fluctuated. We are waiting for other things. The point is tesla has worked hard to cut the cost of producing and has a name without the coste of halving of producing batteries. That is the link between the battery innovations, hes getting into the nittygritty of battery materials. What impact in how quickly could we see that on the top and bottom line of the company . Ed share reaction during trading, shares were lower after a tweet where he tempered expectations and said we will not see mass production of the things they are unveiling until 2022. The street consensus was we might see the innovations implemented in actual vehicles by 2021. The point is, and elon reiterated, it is difficult to massproduce batteries like this. The focus right now is on r d and cutting cost. Tesla has a pipeline of products, the battery electric semitruck, the cyber truck pickup, the roadster. All of those require a different level of battery performance. They are so far away in the pipeline. The market is saying they hope for more sooner and will have to wait until someone was on with emily chang. You dont often see battery innovation happen overnight. Youve got to wait. What did we learn about the shanghai production and perhaps some of his partnerships with asian manufacturers like panasonic . Is to have annual capacity or output of one million vehicles out of shanghai. They basically said over the coming months you will see production rampup and capacity increase. Tesla plans to make its own cells. They are in prototype phase. Work withtesla will lg to supply cells outside of the u. S. Panasonic inith reno where tesla makes them into battery packs. What underpins this is a concern that demand for battery cells will outstrip supply. That is the rationale behind this. Tesla will work with its suppliers and look toward making its own. The demand is so great in the future. Ed ludlow there. You can get more on tesla battery day on bloomberg, you can get commentary and analysis from expert editors. Pelosihearing from nancy saying the stopgap funding deal and the treasury secretary mnuchin, we are getting some details about that. We were supposed to get these last week. We had lastminute disputes over the details surrounding farm made. We are hearing from pelosi saying the stopgap funding is within reach. We will get you more details on that deal now being made according to the office of nancy pelosi. New Zealands Central Bank is expected to standpat today. Us coming up next for a preview. This is bloomberg. Of new zealand is on course for 1 . The unprecedented decline seen in the gdp numbers expected to be shortlived, taking some pressure off for now. Lets get this news from Dominic Stevens who spent six years as an advisor. He joins us now. Great to have you. Theres not a great deal expected out of today. Maybe bit more in november. To what extent will they lay the groundwork to what negative rates will look like in the early part of next year . Dominick i think that is right. The reserve bank tends to make large moves infrequently. They do everything they can at once. Just expanded the quantitative easing program. It is unlikely they move again today. The other thing, the data has been on the strong side of expectations. Dohink they are going to that. It means they will not loosen further. One thing they will do, they will remind us they are working on developing a scheme for a negative ocr combined with term lending facilities for banks. In their mind they will implement if necessary. In my mind they will have to because inflation outlook is so low. Fact aithstanding the lot can happen in the external demand picture and inflationary . Ressures, how affect we posed this question to the finance minister. What are the implications for Investor Sentiment when it comes to looking at new zealand overall and the currency . Negative ocrhink a will work to the same as any other cut. There will be a reduction in Mortgage Rates and that will create the main passthrough of policy. We could get 75 basis points and only 30 or 40 on the other trades. That is still 40 basis points lower. As you mentioned, the other in an open lower ocr economy like new zealand is a Lower Exchange rate. It will keep the Exchange Rate lower. Since the ocring was 4 , concern any further reduction would lead to a dearth of investors wanting to put money in new zealand. It never happened. , there was a flood of household deposits coming into the banking system. No problem funding the banks. I am not concerned on that front at all. Have Government Agencies been too pessimistic . For are the implications Monetary Policy . Being toothey are pessimistic. The treasury was forecasting a 24 drop. It was actually 12 . So they were too pessimistic. They probably still are. I think what that means is the fiscal deficits will not be as large as the treasury is forecasting. Markets, means for there is scope for quantitative easing. The hundred billion dollar limit is the maximum. The government would have to issue more bonds to expand qe further. When it comes to inflation pressure, on that front, my view is south of the reserve bank. We will see. I am concerned they are optimistic on the inflation front. That is why i think the negative ocr will be implemented even though the economy is evolving more in line with the more moderate forecast. We have the october general election. Anything we should be watching out for . Dominick not really. It is quiet. Theres not big differences in the parties policies. From a Macro Economic point of view, minor differences between the parties. No major market implications for the short run. It is more who is in power in five or six years. That is when the government will have to choose between taxing more and spending less. As we get into the election, what will the priorities be . Worldeconomies around the are you throw everything and whatever you have left at the problem. How do they deal with the aftermath . Especially if the Growth Drivers like tourism will not be reopened for some time . Dominick what you do is you start moving from emergency first aid and rescue onto redeployment. You start to say the Tourism Sector is in trouble. Is not going to recover in five years fully. Where do we redeploy the resources . What is the next opportunity . What is the next best export . We need to make sure the economic setup is such that redeployment can occur. There are different ideas on how to do that. Line, we are going to face fiscal challenges. We have clearly got an expenditure path which is out of kilter with the revenue path. That needs to be adjusted. Issue that is likely wealth tax. S possibility for additional revenue for government that would also close some loopholes. , greatnick stephens having your thoughts. Looking ahead to the Rate Decision and joining us from auckland. Heres more on that breaking news. Nancy pelosi has released the text of the deal with the republicans and secretary mnuchin on stopgap funds. Remember that had been stalled. Finally we are hearing from Speaker Pelosi they have reached an agreement to add nearly a billion dollars in nutrition assistance for School Children and families as the Government Shutdown expected to take place on october 1 and for the food aid under the deal far made will be added to legislation. This will keep operations december 11. It will be sent to the house for a final vote and it would avoid a Government Shutdown. Kept up hishair demand for more fiscal stimulus when he appeared before a house panel. Stephen mnuchin gave little indication another aid package is going anyway. They do verged on whether to lower the minimum loan size for the Lending Program with Steve Mnuchin embracing the possibility. Erik schatzker spoke with a professor of risk engineering about whether the fed is trying to provide catastrophe insurance. Take a listen. People complaining , i shareinting money that concern. There is something few are seeing. Is a crisis for . Fire there like a forest to detect trends early that should not be there. Two accelerate the evolutionary process. So it should go bust now. Not be put on their owners and employees. Start again. So you fail early. That is a process by which those who need to fail, they can fail early. What the fed has been doing is the reverse. Firms that should not be around and delay that failure. Eventually that will happen. That is not part of the discussion. Rate of the highest bankruptcy. Speaking about the United States. Not lebanon. Forgot i was in a 12thcentury monastery here. , the tech states sector has the highest rate of bankruptcy. Fine. Know,her thing, i dont discussing the election years ago, ifr or five years i told you trump is going to bring socialism to america, you would have never spoken to me again. , donald trump, the First American president to have universal basic income and acquire banks and corporations. The fact it did not overtly buy stocks is irrelevant. They bought paper. That is not socialism. Making sure everybody has an income. That is a central aspect of socialism. Todaye in a strange world. Everything is driven by covid. Aleb fromas nassim t nyu. Tesla shares are falling more than 5 after elon musk made what is probably the biggest announcement of battery day. Tesla planning to produce a 25,000 electric car. Musk saying there is no name at the moment. But saying it will be in production within the next three years. Musk also saying they will not be Combustion Engine cars in the longterm and tesla will make battery cells in berlin. We did see shares falling after the recent rally the last few days. Elon musk optioning the company would unveil something that will not be widely produced, but the battery output is years away. Hat tempered expectations shares in the regular session in the and falling again postmarket session despite the announcement of that 25,000 new ev. Nike is seeing doubledigit gains following a strong earnings report. Profits surging past expectations. Details next. This is bloomberg. Soaring and nike extended trade as quarterly revenue blowing away estimates and sales growth in china helping boost profits. Su keenan is following the after hours action. Giving its competitors a boost. Su nikes big rally pulled even lululemon, along for the ride. Investors wanted to see 19 shakeup the end of it blues. And theysurprise loss did not disappoint. It really blew away expectations. 82 . E sales jumped quarterly revenue Beat Estimates by 1. 5 billion. Growth in china and better margins help to return it to profitability as the ceo said no one can match our pace of pumping out new products which the company felt capped up despite disruptions from the pandemic related shutdown. On the conference call, executives said they see improvement in home price sales and expect Gross Margins to be flat and fiscal year 21 revenue to be in the singles and low double digits. Di they were the bright spot in that recovery story. Is you have to realize china much farther along in its recovery from the pandemic then the u. S. That was reflected in the sales. China also was quicker to come out of lockdown. The country is encouraging citizens to exercise more. China sales were up 6 for the quarter, that compares with a decline. State by state. North american sales were down 2 . Weve got a lack of sporting events hurting brands. Theres a big excessive inventory. It is important while the overall sales did not grow, they work far better than expected. Back to you. Su keenan there. Coming up we will be speaking with a Senior Market strategist and economist. Joining us to talk about the cost of recovery and reacting on teslas battery day. Have plenty more ahead on daybreak asia. This is bloomberg. Haidi very good morning. I am haidi stroudwatts in sydney. Shery im shery and in new york. Welcome to daybreak asia. Set for ants look uncertain open despite a late rally on wall street. Investors remain concerned about the feds wording of a long and uncertain recovery in the u. S. Tesla is on a bumpy road te
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