tv Bloomberg Daybreak Australia Bloomberg September 23, 2019 6:00pm-7:01pm EDT
paul: welcome to daybreak australia. i'm paul allen. kathleen: i'm kathleen hays. sophie: i'm sophie kamaruddin. we are counting down to asia's major market open. ♪ here are the top stories we are covering the next hour. world leaders gather for the u.n. general assembly. the call of climate change top of the agenda. teenage activist greta thunberg says it is too late. she says the future has been
stolen by greed and arrogance. growing concern about containing short-term rates for balance sheets. we hear exclusively from bill dudley. kathleen: later in bloomberg technology global link, a new report says juul is the target of a criminal investigation. another major setback for the e-cigarette giant. now a quick reminder on how u.s. stocks ended on this monday. you can see nearly mixed. we have to say flat but it was a bit of a recovery after friday's a slump. volume about 28% below average. 0.06%. at any rate, people are watching markets. people are watching the economy and the purchasing managers index is, from the market group. they were pretty good for the u.s. they held it above 50 for manufacturing and services. not so for european look at what
happened to the euro after the week numbers from germany. we were looking at the bloomberg euro index. on the far side, quite a draw at the end but if you take a look the more, you are seeing index is at its weakest level since 2017. germany manufacturing pmi went down to 41.4 from 43 and change. 50 is the dividing line. economists saying this is another recession signal out of germany, the biggest economy in europe. that was after some weak numbers from asia overnight. how are things shaping upper asian markets now? sophie: asian futures are hinting at a muted start. japan is set to reopen after the long weekend. 1%stocks are adding 1/10 of at the start of cash trade. we will be waiting on central banks, speaking with the
governors of the boj and rba. flagalia low and may further easing as the government signals and wants to return to a budget surplus. at noon today, we will hear from the pboc governor and other officials for an update on the mainland economy. carrie lam's usual meaty appearance this tuesday is likely to be overshadowed by trade developments counsel slashing its forecast, making for the worst year since 2009 for shipments. paul: let's check in on the first word news now. ritika: thanks. asked stevenmp has mnuchin to explain why the u.s. planned a tour. the visits for montana and nebraska were called off on friday, causing marcus to tumble amid fear. trade talks have stumbled. mnuchin said the timing did not talk so the tour was halted. president trump asked why,
indicating he was not happy. the trade deal that president trump says he has agreed with japan may be in trouble. sources close to the talks have told the new york times and washington post that tokyo remains concerned the president may impose tariffs on vehicle shifted to the u.s. officials say they must be allowed to abandon the deal if that happens. the issue was the last major obstacle for trade agreement and the white house has wanted it signed during the un's general assembly. britain, france and germany have joined the u.s. and blaming iran for attacks on two key saudi aramco plants last week greeted the issue will be discussed on the sideline of the un's general assembly in new york. claiming responsibility for levels in yemen, saying if iran were behind the attacks, there will be nothing left of the refinery. told euhnson has president donald tusk that he still wants a deal and that
brexit will happen at the end of next month. the pair met ahead of the un's general assembly in new york with the split just six weeks away and increasing doubts a deal could be struck. in the u.k., the labour opposition is promising a second referendum. >> too much has happened in the last three years for this now to be decided without consent of the public. a basic andsk them vital question. leave withpared to the best deal that can be secured or wouldn't you rather remain in the eu? ritika: global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts. this is bloomberg. kathleen: thank you. around 200 world leaders and thousands of diplomats are gathering in new york for the
un's general assembly with plenty of geopolitical intrigue. that includes president trump's july phone call with ukraine leaders. denied asking the president to investigate joe biden in exchange for u.s. military aid. president trump: there was no pressure put on them whatsoever. i could have. i think it would probably, possibly have been ok if i did but i did not put any pressure on them whatsoever. why? because they want to do the right thing. they know about corruption. they probably know joe biden and his son are corrupt. kathleen: we are joined by a national security editor in washington. so much going on in new york, welcome. forgive me if i am confused. first, there was no talk about ukraine a few days ago in the conversation the president had with the leader of ukraine. then he said maybe i mentioned. now he is saying i didn't. is this semantics? could he have mentioned ukraine and say by the way will you
please go after joe biden and his son? >> we know he did have a call with ukraine leadership and could have discussed of the issue of corruption. that has been a long-standing issue with ukraine that goes back to the obama administration. a lot of concern about where western support for ukraine ends up. that is different than talking to the president of the country and saying is there any way you could investigate one of my biggest political opponents? that is the crux of the issue. that is what has people on the democratic side saying let's see a transcript. kathleen: is it fair to say we did not get any further ahead today? >> i think president trump is saying i may have discussed some of these things, but if i did, i discussed it in the context of corruption. kathleen: i want to get in the discussion about iran and the u.s. so many bilateral meetings. >> two weeks ago, it seemed like the u.s. and iran were headed on a path to having talks between
president trump and president rouhani. the attacks on the saudi aramco oil facilities a week ago really stalled that effort. ifare still waiting to see some of the sideline diplomacy that is going on here -- emmanuel macron of france, shinzo abe of japan will have a breakthrough. we have not seen size of that but it is a good forum for that to happen. there is no logistics were meeting rooms to work out. they are on the ground. it is a matter of getting them on the room. paul: climate change will be a key theme of the u.n. general assembly. president trump was not expected to show up at the climate summit but he did but not for very long. best no, i think it was at may a symbolic appearance. the president originally did not have an appearance on his schedule. he did show up for 15 minutes and did not speak.
he listens to other remarks made by german chancellor angela merkel for instance but we did not hear any new policies or new actions on the climate front from president trump. paul: national security editor bill, thank you for joining us. still to come, our exclusive constant -- conversation with former new york fed president bill dudley who tells us what he thinks policymakers could have done more to contain the madness we saw last week. kathleen: next, carol joins us food she says the markets have been remarkably resilient so far. we will ask how she is positioning amid global uncertainty. this is bloomberg. ♪
weaker by about 1/10 of 1%. this after a very quiet day on u.s. equity markets. volatility is very low. i'm paul allen in sydney. kathleen: i am kathleen hays. u.s. stocks started the week pretty flat as the latest purchasing manager index numbers disappointed. su keenan has the details. i love it when eco-numbers are what the markets are watching. su: it was one of the slowest trading day of the month so far, down about 20% below out -- below average. the closing numbers, a 1% drop in the s&p. not by much. you will notice oil holding steady. we will get to more details on that in a minute. we want to go into the bloomberg because volatility is the title of one of the biggest stories at the moment. it has to do with wework. one of the most anticipated ipo's that has now been delayed
and big drama developing. will softbank push and succeed in pushing? they want to remove the ceo and founder adam neumann. spending profusely is one of the issues. the company has yet to make money. this you will notice shows the drop in bonds while this big tempest is growing. let's go to some of the big movers. you will see the size of the moves not that great. pg&e in the spotlight. and wildfire liability issues. cutting power to 25,000 customers in northern california to keep more fires from happening. pacing the tech gains. facebook under pressure. beyond meat getting another downgrade and raising concerns about the valuation of that recent ipo. quickly to oil. we have oil rebounding, slightly moving higher despite conflicting reports on saudi
supply, whether it is rebounding or not. kathleen: all right. su: take my word for it. paul: thank you very much. rolning us now, we have ca schlaf. thank you for joining us. i want to bring up this chart on the bloomberg which illustrates what a quiet day it was on u.s. equity markets. volatility pretty much evaporating really. it seems to be equities really looking for a catalyst. what will provide it? guest: perhaps the earnings season and a couple of weeks. until then, you have got pretty equally balanced, even if the surprises comes from opposite sides. worse business news and better consumer news out today. you have that going on so i think a lot of people don't want to get on the way out but don't necessarily want to commit more so you have this tension until
we get into earnings season. paul: what are your expectations for earnings season, because it appears a lot of the gains we have seen in equity markets over the past few weeks have really been due to future promises of fed easing, what is your opinion? carol: a piece of that but the underlying economy is in reasonable shape. even globally, there are clouds in the horizon but not necessarily indications of a huge recession coming. you've got good consumer confidence and spending in the u.s. the u.s. has been in prior markets that has been the engine of global growth. i think there is a big balance that way that people are looking for and waiting on, waiting patiently. kathleen: i wonder how long people can wait for a trade deal. you could argue that donald trump as much as president xi would like to get a deal done. he would like to have a stock market that is rallying and playing that -- claim that
victory as he goes into the 2020 election. i think a piece of it is there is another camp here that says the trade issues, the decoupling of that two largest economies are not necessarily a short-term fix to make and maybe perhaps we all get used to their be think trade issues that are being reworked as companies and countries rework. it is just one of those, it is an irritation. kathleen: so, as an investor, what do you do? you could watch the central banks continue to cut rates, manufacturing continuing to weaken but you can say stocks are holding up. where do i put my money or do i keep it where it is? carol: you make sure you rebalance continually and regularly. make sure you focus on quality. make sure you match, if you know you have upcoming spending needs, make sure you have cash rates for those.
we actually encourage people to think that you don't necessarily have to buy and sell on the same day. you can trim some gains, sit on cash for a little bit and then rearrange it to other asset classes. without trying to rebalance regularly. paul: we have been talking a lot in the past few weeks about how the u.s. consumer at the moment. can you talk about potential risk to consumer health, albeit from a protracted trade, job slow down or even oil price drop? carol: i think the biggest risk for consumer spending would be employment. if employment starts to roll over and people don't, number one, fear for their jobs or fear of their ability to switch jobs -- right now, it looks like consumer spending is pretty solid. it tends to follow economic downturns because businesses start laying people off in a big
way, and they are still trying to hire pretty actively. paul: what is your outlook for the rest of 2019? what are your picks? carol: well, we continue to focus on high quality and leaning a little bit into this growth trade, but also backfilling with more conservative names. we're neutral overall relative to global indexes, stocks versus bonds. a little overweight in the u.s. versus the rest of the world. we are being very watchful, active about rebalancing into this. we are looking at other idiosyncratic categories in terms of private capital and hedge funds. kathleen: would you have more defensive approaches? utilities and things like that? dividend paying stocks? big tech companies that have been beaten up and they look like a good deal. if you are really going to put some money someplace, give us an
idea of places that look good. carol: dividends are always a nice thing. it is nice to get paid to wait. leaning into the high-quality growth is a reasonable place to be because you have productivity and you are seeing growth. we continue to like technology as an industry because it is pretty impervious to a variety of things. we continue to focus on consumer cyclicals versus staples. kathleen: what is the biggest risk to outlook as 2019 draws to 2020,e and we head into which who knows where brexit will be, who knows where the u.s.-china trade war will be? we know there will be in intense presidential election in the u.s. carol: one of the biggest risks is unknown liquidity issues in the market. we saw the hick up the short-term fixed income market. we have seen pickups -- hiccups in the stock market as a result of change rules and regulations after the 2008-2009 crisis.
the fact we have a lot of the market now that is passively managed and we don't know how it will behave. kathleen: because markets are not always passive. carol: exactly. kathleen: thank you for joining us. appreciate you taking the time. abbot downing deputy chief investment officer. how about getting a roundup of the stories need to know to get your day going in today's edition of daybreak? bloomberg subscribers can go on their terminal. it is also available on mobile on the bloomberg anywhere app. if you want to go further, customize your settings so you only get the news on the industries and assets you really care about. this is bloomberg. ♪
the version of its high-end mac pro desktop will be assembled in texas after receiving tariff waivers on components. the u.s. government approved apple's request for an exemption on 25% tariffs on 10 key components imported from china. apple says the new version of the mac pro will have to .5 times more american-made products than the previous model. of one of china's tech tech hubs is dispatching officials in what is seen as an attempt to exert greater influence over the private sector. authorities say the initiative will improve communication and speed up projects. the chinese drinks giant and automaker are also part of the program. google has launched a rival to apple's arcade to service, having new subscriptions for games.
it will cost five dollars a month and offer users access to 350 games and apps. devices with android version 4.4 or later will support play pass, and new apps and games will be added every month. those are look at the top global tech stories i am watching. paul? paul: thanks. federal prosecutors in california are reported to be conducted a criminal probe into e-cigarette maker juul. the dow jones says it is another major step back for the company whose sales were halted in china. alan huet covers this. give us some context. >> this is just one new development in a series of regulatory step asked and challenges that have been facing francisco, in san a major e-cigarette maker. they have faced regulation, scrutiny and probes from the ftc, the fda, cdc.
there has been a lot of discussion about vaping related illnesses and deaths that you may have seen in the headlines. and investigations from state attorneys general and now this probe from the u.s. attorney's office in northern california is just the latest. this is something of a growing snowball of regulation that is facing this company. granted some of the concerns of vaping related illnesses are not specific to juul, but we are seeing that as one of the biggest makers of the increasingly popular devices. this company is facing a lot of regulatory blowback. taylor: it is interesting because online sales were halted in china last week. why did that happen? ellen: this was something the company had been looking forward to doing, starting to sell its devices in china. china is the world's largest market for cigarettes and tobacco products. they had launched somewhat quietly their products online on
jd.com and t-mall. two major online retailers in china. they were on the market for a few days when all of a sudden they disappeared. as our reporting showed earlier this week, juul was not notified as to why these products were pulled. it is leading question marks about the future of the abilities of these companies to sell their products overseas which is where they look for for growth. there has also been some sales cutbacks in india as well. as this company is looking to overseas, its sounds overseas, it sounds like they are also starting to get some complications from where they can or cannot be allowed to sell. taylor: we know all of this increased scrutiny cannot be good for a company. altria, one company that has an investment, $13 billion in juul. juul is a private company. how does all of this impact their valuation? ellen: that is a really
interesting question because as a private company, juul, we only get the occasional glimpses into what it might be worth. one of the most recent glimpses we had was this deal from altria late last year in which the company bought a very large stake in the company, valued it at about $37 billion. that is what we are looking at when with think about the valuation of the company. we are trying to get clues as to how that might change. you have to imagine increased regulatory scrutiny is going to make investors more nervous about the sales futures of this company. this is a product where some major decision by regulators both in the u.s. and abroad could dramatically and suddenly change their ability to sell products overseas or in the u.s. we have not seen anything quite so dramatic yet, but we have had the company make some changes where they have pulled some of their flavored products voluntarily off of shelves in anticipation of regulation from
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paul: 8:30 a.m. tuesday morning in sydney and a very pleasant spring morning it is. the market open is 90 minutes away. futures just a tad weaker. i'm paul allen. kathleen: i'm kathleen hays new york where it is 6:30 p.m. we are going to get right to the first word news now. ritika: thanks. president trump has made a short and unexpected appearance of the u.n. climate change summit in new york. listening to the debate, but declining to speak. world leaders and business figures scheduled to discuss how to tackle climate change amid growing popular anger at the lack of action so far. teenage activist greta thunberg
told the summit they have ignored the issues for too long. >> you have stolen my dreams and my childhood with your empty words. yet, i'im one of the lucky ones. people are suffering. people are dying. entire ecosystems are collapsing. we are in the beginning of a mess extinction and all you can talk about is money and fairytales of eternal it can on the growth. how dare you? [applause] ritika: nissan and carlos ghosn have been fined $16 million from the fcc to settle u.s. allegations they failed to disclose in compensation he was slated to receive on retirement. nissan will pay $50 million and ghosn, the remaining $1 million. it lazily gave him authority over pay decisions for himself
and other officers. embattled utility pg&e is cutting power to more than 20,000 customers in northern california to stop electrical couldn't from sparking wildfires during the current dry and windy weather. the power has been cut in three counties. pg&e has warned 120,000 customers in nine counties that they may be effective. filed of bankruptcy with a wildfire liability in the billions of dollars. global news 24 hours a day on global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts. this is bloomberg. kathleen: thank you so much. we will get right onto what to watch in asian markets this morning. sophie, not too much action in the u.s. to bounce off of so what are the drivers? sophie: i am taking a look at currencies this morning early in the asia session. want to highlight the euro, 50% of the sharp drop we saw overnight with the currency
weight by german and french economic data. despite what we are seeing, it is trading near a may 2017 low. switching it out to check in on the offshore yuan. it is holding aits overnight gae despite the loss we saw in its counterpart. this ahead of a midday press briefing from the pboc governor and the finance minister of china. we will get an update on the economy. this is one of the preceding the october what anniversary taking place next tuesday. take a view on the aussie dollar. it is up this morning but still below the 68 handle. goldman sachs says the aussie dollar does face a downside with pressure we are seeing for most of the year given we have odds of an rba rate cut on the rise. money markets pricing in 80% chance of that happening next weekend. today, we will hear from the
aussie governor. his speech may ease -- may show further easing as the government is looking to go into a budget surplus. there is continued concern about the year to attend -- year to date trend. paul: thanks very much. let's get more on what we should be watching as trading get underway in asia. we are joined by bloomberg across asset asia editor andreea. some particular awful manufacturing numbers from germany overnight. can we see concerns about global growth on asia stocks today? andreea: i think the german numbers are going to be something that traders in asia are going to focus on. it did concern germany suffering a downturn in almost seven years. more than that, it plays into these concerns about global growth. we didn't see the euro and european stocks decline.
we didn't see the same level of declines in u.s. stocks. that is because the u.s. manufacturing index still shows the u.s. economy is the global leader. you do have this hope yet again that we will see some sort of resolution in the trade talks with the high-level discussions starting next month. these concerns about global growth are starting to play out to some extent in asia. the beginning of september, we had value stocks on a bit of a tear rising. we have seen that stall. we have a chart that shows that. managers are saying what is needed, they want to see confidence that we are seeing an upswing and we are deftly not seeing that at the moment. these are stocks that outperform went economic growth is going up. we are seeing this while the u.s. economy is still relatively strong, the numbers out of germany and france are something
that are definitely going to start being of concern to investors in asia. kathleen: depending on which country and currency, there was concerns about asian currency weakening but not so with the thai currency. why so? andreea: that is right. it has been incredibly popular this year. it's actually the best-performing asian currency at the expense of currencies more exposed to this tradewinds. the yuan, the korea yuan. is up 6% this year. what has been driving it is it is seen as a hedge by investors among this tradewinds because of thailand's current account surplus and record of reserves. another reason is that the market is pricing in less of a chance that the bank of thailand will cut rates again.
it did cut rates in the last meeting which was a surprise to the market. they see less of a chance of that happening this week. they are reviewing their rates policy tomorrow. what could stall this rally, it is probably a resolution to the trade dispute. a bloomberg study shows the thai baht was one of the least responsive to shocking the yuan. if we see a trade resolution, you will likely see the opposite of that. kathleen: thank you so much, andreea papuc. to see any of our charts again, you can go to our library on the bloomberg terminal. it is at gtv . moving onto the federal reserve, working hard to rein in a key policy rate after overnight repo lending dried up. former new york fed president who was once in charge of this, bill dudley, spoke exquisitely
to bloomberg earlier. bill: the currency is growing. the treasury's cash balance, the fed is growing now that the debt limit issue is being resolved. as a consequence, number of the reserves and the banking system has been shrinking. this is tricky because the federal reserve does not know how many bank reserves bank s need to satisfy the liquidity requirements and how much demand is going to be generated by the fact interest is now paid on reserves. the fed -- for years, there were plenty of reserves, but now they are getting to the point where reserves demand is better than supply. it is a shock to the system. >> you said this is a trust market. you work for years in the trenches of this with a goldman sachs market experience. over to the new york fed. you just said it, the fed is not really know.
if the fed does not really know, does that potentially affect trust? bill: i don't think so. we always knew there were some desired demand for reserves but we cannot observe how much that demand was because there was more in the system. there was always a point where the reserve supply shrank to where we would see upward pressure on short-term rates. point, theched that fed would know we need to add more reserves to the system. andrew: one complaint we had, they were late. what is your response? bill: maybe one day. it would have been nice if they responded were quickly. is this an event for markets? it is not an event for the economy. andrew: it has been emerging for the last 12 months -- that you left. this new york fed is different under williams that it was to you. is it as sensitive as what is
happening to markets? bill: i don't accept that. tom: defend tom williams and the fed. bill: we knew there will be some points where reserves have shrunk to a point where demand will equal supply. when that happened, we would see upward pressure on rates. that's what happened last week. no surprise. the other thing people don't really appreciate, it is not one person at the top of the federal reserve that does it. there are hundreds of hundreds of really qualified people that execute monetary policy on behalf of the federal reserve. where are we today? we are in a good place. repo rates are back down to where they should be. the federal funds rate is well within its range, so mission accomplished. tom: talking to citigroup, a small bank you might be familiar with. everything is fine, it is a kerfuffle. there is a survive -- sizable part of our bloomberg surveillance audience that are flat out worried or even don't
agree with the idea that the balance sheet of the ecb, boj and the fed has moved from x up to $14 trillion. they want a reassurance that that is a good place to be rather than the nostalgia of moving back to a previous balance sheet regime. bill: if we move back to the previous balance sheet regime, the federal reserve will have to intervene massively on markets on a daily basis. in the current regime, you have enough reserves in the system, you don't have to do anything day-to-day. the interest rate you pay on excess reserves essentially sets the limit of money market rates. the federal fun rates trades within the rate. needam i right that we $400 billion as a plug-in? bill: people do not really know but i think the fed will build up a bigger buffer. they are doing it by building repo operations. there is a prospect of two things happening.
number one, they will increase the size of the balance sheet. chairman powell talked about that in his press conference. the balance sheet will start to grow again. the second thing they will strongly consider is introducing a standing repo facility. kathleen: that was former new york fed president bill dudley with tom keene and jonathan ferro, talking earlier today. in typical bloomberg fashion, we could not have timed this better because just minutes before tom and jonathan spoke to bill dudley, john williams, the current new york fed president was mentioned and speaking about this same topic as he opened the new york fed's annual treasury market conference. he too says the recent repo market turmoil raises the question that the new york fed, all of them have to be looking at it very carefully. >> it is important that we examine the reason market dynamics and the implications of
liquidity needs in relation to the reserves. we will continue to monitor and analyze these developments closely. kathleen: as we heard tom and jonathan saying, bill dudley said it, jay powell talking about this in the last press conference call. we will hear more about this. the fed is in a brave new world of a giant balance sheet. it is a new way of operating. they will not be making it up as they go but definitely taking it step-by-step and figuring out exactly how they have to do what they are going to do. paul: a brave new world of the giant balance sheet. a mashup, a terrifying one at that. still to come, we will discuss u.s.-china relations. the university of california san diego. we will have the dire consequences. this is bloomberg. ♪
kathleen: on october 1, china will celebrate 70 years of the people's republic. this week, we are taking a closer look at a transformation during that time and the challenges it faces today. we bring in our next guest, susan shirk, chair of the 21st century china center at u.scsd, university of california san diego, and a former deputy secretary of state in the clinton administration. so, susan, when you look over this span of time and the tremendous changes, progress, struggles china has gone through -- when you put them on the geopolitical stage now, where are they? a much more they're significant power regionally and globally. of course, their economy has
grown by leaps and bounds, and really an economic miracle of double-digit or almost double-digit growth over more than 30 years. so, things were going pretty who has a xi jinping, much more -- as a much more ambitious leader, has challenged the united states more aggressively. of course, president trump has pursued an effort to reduce bilateral trade deficit which is something that does not matter very much to the country's economic welfare. we now ended up in quite a bitter relationship. the big question is is there a way to get out of this? kathleen: was this sort of inevitable to a certain extent? because you can tell all the
voters of the rest states that it didn't matter, that the u.s. got this big trade deficit with china. they would probably beg to differ with you. you can remember last summer with the u.s. raised the wto complaint against china, intellectual property. japan and europe were right there. part of it is china was once a poor struggling country. now it is a much more powerful and richer country. it seems on both sides, you look at this objectively, there has to be some adjustments. nobody's in the same place they were 70 years ago. susan: i agree with you completely about that. but the bilateral trade gap is not what caused -- what's causing the problems of manufacturing unemployment in america. matteruch more complex and there are a lot of other economic issues that we need to be negotiating with china.
but, what i am saying is i don't believe that the tension in the relationship now is inevitable just because china has become more powerful and the united states feels threatened by a rising power. that is the official line in china. that is what some international relations experts like graham allison believe. but i believe it is really the choices china's leaders make, the policy choices they made in the south china sea and the way they dealt with japan, the way they started treating international firms in a pretty biased manner and creating all sorts of nontariff barriers. that made some bad decisions which are now coming back to haunt them. it has created a backlash internationally.
almosteah, and that is the scene over the past 20 months, these trade talks go somewhat off pace. how are these trade talks going to be disentangled from the other issues you are talking about, like security issues, structural reform and the like? susan: the current reaction or backlash against china in the united states goes far beyond the trump administration and president trump's concern about the trade deficit. the security concerns have really become very prominent and they bled into technology issues. so right now, it is because china looks like a security threat that we see this very strong backlash in the united states. what this means is that even if there is some kind of partial
agreement between the u.s. and china on trade, it doesn't mean that the risk of a new cold war is over. paul: yes, so we are closing in on the 70th anniversary of the people's republic of china. when we get to the 71st anniversaryt in a years time, how will the relationship look? are we heading down the cold war track or do you have more of an optimistic outlook? susan: it really all depends on whether or not we can devise a strategy instead of just pushback. that strategy has to involve negotiating with china the issues that are of greatest concern to us. and doing it in a sensible, professional manner. combined with pressure. b ut, negotiation -- but, negotiation has to be part of that.
that is essential because we need to test whether or not xi jinping is a pragmatic leader the way deng xiaoping and even hu jintao were. ideologue,dogmatic, very ambitious like mao zedong? we will never know unless we try to test that through a sensible approach to negotiations. that is what i hope we do. now, i have not a lot of confidence in the trump administration is going to be able to do that but i hope to be proved wrong. kathleen: one more quick question. when you look at not just president xi, but when you look at the people around him -- again, 70 years into this, looking at all the challenges. from their point of view, they are trying to deal with what they see as a big threat and may be unfair challenge from the u.s. what is the leadership around xi
looking now? how are they going to move this forward or not? would well, i think they -- many other leaders in china would like to pursue the kind of reassurance approach that deng xiaoping and his successors pursued. but they are trying to figure out how do you do that while still looking strong domestically? course, thed, of domestic risks are always the most prominent ones for china's leaders or for politicians in any country. so, they have to look strong in the eyes of the domestic public but they want to do it in a way that does not provoke a damaging conflict with the united states and other countries. they haven't really done that -- found that sweet spot quite yet.
certainly, xi jinping hasn't. paul: university of california at san diego professor and former deputy assistant of the secretary of state susan shirk. we will continue our coverage of china 70 years later with kelsey broderick. on friday, bloomberg television takes a look inside the hong kong protests in a special one-hour program. stephen engle investigates the cause of the and rest and looks for possible solution. that is hong kong on edge this friday at midday, 2:00 p.m. in sydney. ♪
plans to invest more than $12 million in autonomous or electric cars. shares rose 12% this year while aptiv has surged more than 40%. kathleen: the aviation authority and lion air are pushing back at a local investigation into last year's fatal boeing 737 max c rash, saying too much blame is being put on the indonesian side. directed toward the carriers. the faa in the u.s. is preparing to send regulators around the report. update on their paul: airlines operating in hong kong are calling for government help to offset the business impact on the street protests. a ministry board representing 70 carriers is urging the government to implement temporary policies, including a waiver of landing and parking fees. the board says many airlines have cut services in hong kong as routes have become
paul: good morning. i am paul allen in sydney. we are under one hour away from the market open. shery: good evening from bloomberg's global headquarters in new york. i am kathleen hays. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this tuesday, world leaders gather for the u.n. general assembly. tension in the middle east, and climate change, top of the agenda. brazil prepares to defend its handling of the fires in the amazon. we are joined