It is just past 7 00 p. M. It is just after 7 00 a. M. And hong kong. Happy early monday. This week is all about janet yellen and governor kuroda taking center stage. It seems like the boj might overshadow the fed this week. Thats right. It was an interesting time. Last night, we saw some hand in hit manhattan. More on that later. Just to see how things are kicking off so far. Consumer confidence and new minutes ago, aew recovery in the Third Quarter. The kiwi dollar flat. Meets later this week, but no change expected. Australia, five straight weeks of losses. We could see a soft open in sydney today. We are seeing a lot of Dollar Strength since friday after that better than expected inflation for august. Japan futures are pretty much flat, yen holding on. 102. 26. What will we watch in new york . Two week ramy ramy two words, the fed. We have to talk about the bombing. How is that potentially going to affect trading . Linkght now, there is no to International Terrorism. It is being prosecuted as a terrorist event. , lowerrd street manhattan, but not near main sections. 830 p. M. Saturday, a device went off, spreading shrapnel, bystanders hurt, property damage. And im detonated device was found by the fbi, describing the device is a pressure cookertype situation with wires sticking out of it and a mobile phone attached. That mobileelieve phones were involved in both devices. As you can see, there was panic in the area. Separately hours earlier, there had been a pipe bomb in neighboring new jersey that has added to the anxiety. The fbi investigating these. There have been 1000 police added to new york. United Nations Assembly will continue on monday. They dont believe there is any chance of immediate threat, but want to take every precaution. Ramy it is good that no one was killed in this event. There were at least 29 people injured. One of them seriously. Lets do a recap on the business side of things. Downy, markets lower, across the board. What is the story . The fed hanging heavy over the market. It is pretty much wait and see. Lower across the board. A lot of the movers were having to do with energy. Energy was down it on friday. Bank stocks lower ahead of the mover fed. Big , unitedrs like oracle technologies. Loyal really the big story, down because we did see some speculation about nigeria and other countries bringing more supply on, adding to the clot fears. The fed hanging heavy, what are we expecting for a rate hike this week . They are expected to stand pat. On the eve, the market solidifies their view. Behind a fedrgency move given the fact that inflation has remained tame. There will be a couple of reports out, but not a lot, a light week economically. A housing will be the big focus. Thelso have the tail end of final days of the democratic and republican debates, the first one happening, but the final leg of this president ial race. If you look at the Consumer Confidence gauge, very interesting chart. Uncertaintyg record about the outlook for the next 12 months. Economists say that could have a lot to do with the uncertainty about this election as we head into the final weeks. Yvonne we will look ahead to that. Fed, the boj, focus on Central Banks in the spotlight this week. Observers cant agree which levers the bank maypole, some expecting a complete overhaul of stimulus. Analysis indicates a further rate cut is highly unlikely. We will be in tokyo for that decision. Is there anything we can say with confidence . Will they take rates further below zero . We look at two things. We are looking at the yield curve. I have the chart here. It compares the curve before the july policy meeting and where it is now. Two things worth noting. Yields are up across the board. This is just about the case anywhere else in the world as well. More telling for japan is that blue box. Up until auary and few weeks ago, that curve was actually inverted, which basically indicated that they may that the market was expecting the boj to cut rates further. What has happened since then his distortion, the market started to price that out. Now, there is more upward slope if you compare the green line to the yellow line. In other words, it reflects market expert patients. Market expectations. The yield curve is one thing we are looking ahead to, but there is another forward indicator that says cuts are less likely. We always talk about the functions that show you forward rates and currencies. Let me bring another chart up. This up thisbring because the market started to price in less expectation chances for the boj to cut rates further. What you see, those circles, those of the boj meetings. The first when you see on the left side of your screen was a big surprise. The red one, that essentially was Market Expectations before the july meeting. It was. 2 . We are a little higher than that. Is less you that there probability that the market is pricing in that rates will be taken further below zero. Let me check my function very quickly and show you how that looks. There we go. It is very confusing, but the part you want to focus on his right here, where rates are at the moment. Rates are expected to fall, but not as much as july. Thank you so much. Looking ahead to what may with happen the boj on tuesday and wednesday. First word news. Reports from algiers say opec may call an extraordinary meeting if members reach a consensus on strategy. They are optimistic about the upcoming in formal talks, which are described as consultation, not decisionmaking. Russia will also be at the talks , fanning speculation that a deal to cap output may be agreed. Over at the reserve bank of australia, he has been that the bank for his entire career since 1980. He was Deputy Governor under Glenn Stevens. He faces the challenge of matching his two immediate predecessors on inflation known forut is also concentrating on asset bubbles and financial imbalances. Putin has held the victory of his United Russia Party with pauls giving it almost half of the vote in sundays parliamentary election. Remainsonal popularity high, lifted by a surge of patriotism after russia annexed crimea in 2014 and despite International Sanctions pushing the economy into recession. Turnout was 40 , down from 60 five years ago. Global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. This is bloomberg. Ramy the a long bills are sounding. A warning indicator for banking stress hit a record in the First Quarter, highlighting the risk from ballooning corporate debt. Tom mackenzie is looking into this. What is that indicator saying . About thee talking credit to gdp cap, the difference between the credit to gdp ratio in china and the longerterm trend. The bank of International Settlements which measures this says the number in the First Quarter hit 30. 1 . That is the highest level that it has been since 1995, when data started being collected by bis. This is higher than 41 other nations and the euro area. 10 says anything about usually points to risks for the Banking Sector. A blowout like this suggests that a full on banking crisis could be looming. You mentioned this financial crisis looming. Is it inevitable, a banking crisis in some of these banks . Many analysts have said for quite some time that a recapitalization of chinas banks will be on the cards in the next 23 years. Many analysts simply debate what that level with the level will be. There is a lot of concern amongst analysts that the bad loans ratio is much higher than the official number. The official number is 1. 75 . Bee analysts say it could more like 20 for chinas banks. We know nonperforming loans have been growing in the second quarter, increasing by 6. 8 billion. There are a couple of factors that play to chinas hands. The Banking Sector is largely statecontrolled and oversee debt levels from china banks are relatively low, so that gives the government some leverage. Pboc says capital levels will remain strong even in a severe shock. Some new signs of banking stress. Thank you so much. ,till ahead on daybreak asia not expecting to see a rate hike from the fed this week or year. John sloan joins us to talk about market sentiment. Ramy we speak to deutsche banks chief economist about the bojs upcoming decision and why he says the central bank cant stop the yen from strengthening. This is bloomberg. Down to are counting asias first major markets to open this morning. Sydney futures are unchanged. You are watching daybreak asia. In hongi am yvonne man kong. Falling to more than a threeyear low, beijings toasury holdings declined 1. 2 trillion in july, a drop of 22 billion on month. Official chinese data suggest fx reserves were little changed. Takata aiming to shortlist buyers. The company could itself of for sale as it deals with the biggest ever safety recall. Kkr is said to be among the suitors, as well as the Carlyle Group. It comes as General Motors looks to delay the recall of one million vehicles fitted akata airbags. They are saying certain designated models are less risky than those linked to death and injuries. Will continue to conduct a longterm study. The week ahead will be the busy one for Central Banks. Looking for clues ahead of the latest fed and boj decisions. Lets look at the key events i had this week. Good to see you. We see a slight majority expecting the boj might do something this week, but should they be waiting for the fed . No, the fed is probably going to wait until the end of the year. That gives the boj scope to do something if they feel they need to. I dont think they will do anything this week. I think we will get the statement that the current stance of policy will deliver the inflation they hope it will. Japan is then Monetary Policy has reached the limits of its effectiveness. Any further decline in and just rates could be counterproductive as households more as the return goes down. Yvonne they might the steepening the yield curve, going further into negative rates, but do you see any risks to this has you see the commitment to buying more bonds . They areave shown happy to have the yield curve steepening in short term rates come down. The whole framework they have for how qqe works is by depressing longterm Interest Rates. Depressing yield curves runs against that policy. Likely alternative to doing nothing would be what people have discussed, some kind of flexibility on asset purchases, going away from an 80 tree and are hard target to a range, a bit like tapering off, but then cutting shortterm Interest Rates to stop on deals from rising. The likely combination of those two moves would not work. You still end up with higher bond yields and a stronger yen. Yvonne they will not call it tapering in any way. What would is steeper yield curve mean for the yen . It seems like we are staying on the sidelines. These are the options traders, yen will goe the next. Where do you think we can go from here . Is so much uncertainty on the japanese and fed side. I think people broadly and asia is clients are on the sidelines, trying to sort out the macro risks. The story for the yen is a current account surplus. Any further monetary easing could increase that surplus by convincing people to save more and invest less. Thats what we have seen, yields coming down, household saving more and businesses and not investing. Surplus willccount grow and provide more support for the yen. Ramy i want to ask you about fed funds futures. That also happening as the boj is meeting. What are your thoughts on what will happen over tuesday and wednesday . P do want to bring up my wir function for bloomberg users. We have a probability of a hike of 20 . It has fallen from a week ago, 30 . Four months ago, 58. 5 . Are you in the majority where you think the probability of a hike is about 20 . We feel it is unlikely they move this week. They would have to have been talking up rate hikes much more aggressively. It seems the fed was preparing for a rate hike, then we had a few speeches that took that away, so i dont think we get a move this week. What we get is a statement that tries to keep the bias in that direction, the odds of a rate hike in december of, and as long as the data does not disappoint, i think we will get a rate hike in december. Ramy the algiers meeting coming up next week. More oillike with supply coming off because of syria and libya, the prices off. Do you think theyre going to throw oil in . It is unlikely that we get a credible commitment to take supply down. We real story on oil is that have taken enough supply out of the u. S. Relative to demand, and this market has been calibrating already. An expectation for oil prices to grind higher over the next year or two is a reasonable one. I dont think we get a strong commitment to take supply down. Ramy it does not seem like that. Ahead, did the rush to beat apple lead to the crisis over the samsung. We will look at that next. This is bloomberg. Yvonne this is daybreak asia. I am yvonne man in hong kong. Samsungs news, desire to beat apple lead it to russian the release of the galaxy note seven smartphone, including the new battery that can overheat and catch fire. Suppliers were given tighter deadlines despite the phone featuring a range of new features. Tell us about the competitive rivalry between ample apple and samsung as we know it right now. And samsung are the giants in the mobile phone industry. It the past five years, they have banished all major competitors out there, motorola, once the leader, has been bought and sold a couple of times. Nokia fell by the wayside. So these two have emerged and have then fears competitors in the space, and they have a becauseted relationship samsung also supplies components to apple, including panels, chips, and other kinds of things, so they have a long, contentious relationship, particularly in the smartphone area. Who have been arguing about is the more Innovative Company for a long time. Yvonne it seems like reporters inside accesssual to samsung to understand how things backfired with this battery crisis. Tell us more about that. Thats right. Inside access got to the company and saw that earlier this year that at samsung realized the new iphone would not the as breakthrough and innovative as phones in the past, and they saw that as an getrtunity for the note 72 consumers attention because they felt like it was a really good phone, so they decided to press ahead with lots of new features including Iris Technology recognition, and also a battery that had more capacity than in past years and was also faster charging, so they were really loading up the features. They also decided to introduce it earlier than last year. This time they moved up that unveiling by 10 days and push hard for the deadline. Our sources are telling us that there was a rush to get the phone done at that time, and as we know there were problems with batteries that came out after that. Thank you so much. The latest on samsung there. Up next, Janet Yellens next move with days to go before the feds latest call. We yvonne we are now just 30 minutes away from the first major market opens in the region. We are starting this week on a beautiful note. Ramy looks beautiful over there. 7 30 p. M. Sunday here in new york where markets look set to start the week down. S p 500 futures are down just a little bit. It has been a roller coaster ride in the past week. Closing friday down. Im Ramy Inocencio in new york. Yvonne and i mean man in hong kong. You are watching daybreak asia. Lets get the bloomberg first word news with juliette saly. Juliette new york city Officials Say saturday night explosion in chelsea was an international act, but so far there is no terrorist connection. 29 people were injured in the blast on west 23rd street. A second potentially explosive device was discovered nearby and a pipe bomb exploded earlier in new jersey. Police say there are no up just links between the three. In china, further concerns over ballooning corporate debt. The countrys credit to gdp get which stands at a 15year high exceeds all other nations. That is according to the bank for International Settlements. Readings above 10 signal elevated risk of banking strain. Shinzo abe says the bank of japan should continue with asset purchase and negative Interest Rates to prevent the yen from strengthening further. Hamada defended the qe program, saying there is a lack of available japanese government bonds. Global news 24 was a day powered by more than 2600 journalists in more than 120 countries. Lets look at how the asian markets are shaping up. Haidi lun is on the markets. It is all about the central bank this week. Haidi there is only one story in town when it comes to these markets this weekend. It is the plethora of Central Bank Activity building up to this crescendo. Lets get to the boj first. David has been talking about the latest comments from hamada, saying, continue with qe, with bond purchases. Markets, its to the is anyones guess as to what they can do. A lot of analysts think were going to see another week of continued volatility and caution because investors are split in two camps. That thencerned potency of Monetary Policy, the effectiveness, and potentially the downside of what we could be building up to a dangerous bubble, whether that argument is going to come into play. Japanese markets are closed today. Australian futures are looking like a pretty flat open. As we getof cautious, closer to the bank of japan and the fed meetings, in terms of the fed meeting, this chart coming out from Goldman Sachs is saying, in terms of the Market Pricing, the fed has never hiked with the exception of 1994, when theres been Market Pricing less than 70 . We are still at 20 . If you are looking at the fed, theres a lot more to be done in terms of guidance. Other Central Banks around this part of the world have a lot going on as well.