haidi: a very good morning. welcome to "daybreak: australia." i'm haidi stroud-watts in sydney. we are counting down to asia's major market opens. shery: from bloomberg world headquarters in new york i'm shery ahn. the top stories this hour. evergrande misses interest payments taking the cash-strapped developar step closer to one of china's biggest debt restructurings. haidi: beijing's real estate crackdown weighing on wall street. u.s. stocks falling as dip

buying enthusiasm wanes. shery: and investors are also waiting cues from the fed and the b.o.j. analysts question whether policymakers can effectively ward off risk. this is a picture across wall street. we are seeing u.s. futures under a little bit of pressure. this after the s&p 500 fluctuated between gains and losses throughout the session. it finished marginally lower. this of course after the worst in four months. industrials were the biggest decliner today. in fact, the second biggest decliner this month after materials, that's surprising given the concerns over evergrande over commodities and of course we do have the fed meeting right now. treasury yields ticked a little bit higher. we are seeing through now rebounding up half a percent of that $7 a barrel level. it was a choppy trading today. and relatively calm on the broader markets. take a look at this g. tv chart on the bloomberg. because this is showing right now in green the moves of 1% higher, red 1% lower. in fact, the total number has been 35% of 1% moves in either

direction in 2021. only 35 times against 120 last year. the average number of 1% moves is usually 65 per year. so really have to put that into context when we're talking about the worst day in about four months or the pressure that we saw today and the volatility. and of course this coming at a time when we have the fed meeting. and we are awaiting to see what the fed says on tapering asset purchases. but the -- very important in telegraphing, haidi, what happens with actual tightening and rate hikes. haidi: yes. that is a -- and we're looking ahead to the asian central banks as well including the beavering of japan. let's take a look at how this is coming through with the start of trading in asia. looking like a pretty mixed picture. we are seeing new zealand at that last trade about .1% lower starting off the back foot when it comes to sydney as well. we will be watching the iron ore

miners and given more pain given that we are seeing steady signals of contractions when it comes to china's steel making sector. and that is heralding further losses for iron coree which has been one of the microstories to be connected with the evergrande saga. chicago nikkei futures harold a little bit of downside. about a quarter of 1% and the start of trading in china, we had that missed bank repayment loan repayment from evergrande which we were expecting. now we're looking ahead to thursday when the coupons on two of those bond repayments are due. but shery, when it comes to geo politics we still continue to watch these tensions between beijing and washington. shery: which were at play at the u.n. general assembly with president biden giving his first speech as president. and he emphasized that the u.s. is ready to confront china's military and economic ambitions but did promise that the u.s. is not seeking a new cold war.

and he never actually called out china but -- by name but we know that some of the issues that he talked about including protecting the minority referred to beijing. haidi: yeah. when it comes to beijing, very interesting. because we saw last we had china surprise the world and the united nation was their pledge to go carbon neutral by 20600 and this year more environmental pledges by president xi saying china plans to stop building new coal-fired power plants abroad. and will also be upping that support to help poorer nations adopt clean energy. so very much a focus on their clean energy objective despite the political firestorm continuing around them. shery: and that's really having an impact on the broader commodity space, right? we saw the stumble in iron ore prices given the steel output curbs of beijing is implementing right now. and you talked about evergrande earlier. yeah. they missed payments. we do have a huge -- another

debt coming up thursday. and in the meantime there's a lot of debate about what evergrande means for china. is this china's lehman moment or not? haidi: and i think a lot of analysts are saying it's not a lehman moment. just because the system that ever grand operates. but -- evergrande operates. but questions geffen the silence from beijing this is clearly some sort of learning moment, right? a teachable moment. and investors are expected to walk away with some sort of lesson learned. but take a look at what ray dahlia has to say when it comes to weighing in on the systemic race debt crisis arguments. >> a moment produces pervasive structural damage through the system that wasn't rectified until the treasury came across in terms of its borrowing and then the fed came across with quantitative easing. but this is not that kind of a shakeup type of thing. this is -- $300 billion is what

they owe. and this is all manageable. shery: bloomberg economics also says that the tur mole in evergrande is unlikely to trigger a lehman-like financial crisis. let's bring in our markets reporter ye xie. i'm hearing a little bit more consensus toward the not lehman shock campus. whether it's barclays, citigroup, u.b.s. and we have bloomberg economics. so why the anxiety in the markets, why is it so pronounced this week? >> i think -- yeah. the consensus that this is not china's lehman moment. the political, economic system is different as ray dalio mentioned that the -- your debt, own currency you can deal with that and it's happened over and over again. and so this is a consensus. but at the same time, evergrande is really a -- of the industry -- real estate industry as a whole. and their liability is $20

trillion which is large. so i think the market concern is beyond evergrande, any systemic risk in the whole real estate industry. because china has tightening the industry quite a dramatically over the last couple of months. and there's some concern that they may be overtightening a little bit and a policy mistake down the road. at least that's part of the concern the markets have now. haidi: even if we believe that haircuts are really looming for evergrande and shareholders and stakeholders, are there bigger concerns about what this means for, you know, the wealth effect in china if there was to be some sort of -- i guess mini debt crisis within the property market? >> yeah. i think that's part of the reason why the global investor seems to be on edge at the moment. because there are probably other similar mile leveraged real estate developers in china.

and if there's a contagion, investors will be looking for who the next ever grande. and there's a bit of a contagion. and you have like the banking funding becomes a stress. and there's tightening of financial conditions which cancel economic growth. so this is -- there's some expectation that the pboc or chinese policymakers have coming to the market somehow to provide some clarification what that plan is and how do they reinforce the evergrande risk. haidi: always great to have you weighing in on this story. the other big story almost overshadowed by evergrande is central banks, the fed may reveal plans to taper their bond purchases tomorrow. inflation remains uncomfortably hot. however, before that, japan is coming up where it's expected to see them stay put on policy, price pressures again, and our

global policy editor kathleen hayes is here. let's start off with the b.o.j. what's key for investors in terms of any kind of change to the growth forecast? >> well, actually, it's important to start with the fed because the b.o.j. of course haidi is watching everything the federal reserve does. every central bank around the world. and what the fed -- there are three main things in focus. the taper plan, their view of inflation, and the dots. what do they expect for rate hikes? we're looking for a recent bloomberg survey where 67% think that the taper will be signaled to start in november. there's two camps right now. the hawks say look, inflation isn't temporary. it's persistent. we have to start doing the taper. and in case we need to start haiging rates by the end of next year. the end of 2022. team transitory says oh, no, we can see inflation starting to subside already. the economy is not at full employment so we can go more slowly and that leads us to the dots. every three months, the fed updates its outlook of the economy, g.d.p., unemployment,

inflation, and its expected rate hikes. and when you look at the dot projections, look at 2022. that's where now seven of 18 fed officials think the rate hikes are going to start. will those dots move up again? they moved up for two months in a row. now we turn to the bark of japan. a totally different story. because they have concerns about inflation being too weak and growth being too weak. this is g.d.p. you can see after the big pandemic drop, that big red bar down, two positive months of growth or two positive quarters i should say and virus, the cases started picking up in japan. a negative quarter. the second quarter gets positive. people concerned about the third quarter becoming an -- because of stabbedded -- extended lockdowns and more. and you have a zero rate, you have yield control and e.t.f. purchases continuing but maybe a downgrade in the assessment of growth. haidi: our global economics and policy editor kathleen hayes. united nations general assembly

is under way with geo politicalentials looming on the sidelines. president bideson urging the world to tougher from conflict toward cooperation. against the urgent threats of climate change and disease. >> we are not seeking a new cold war or a world divided into rigid blocs. the united states is ready to work with any nation that steps up and pursues peaceful resolution. the shared challenges. shery: let's bring in our new york bureau chief shelly banjo. a busy week in new york. let's start with biden's comments on china not seeking a new cold war. >> yeah. biden basically spent a big part of his speech throwing a line -- drawing a line and difference between what the u.s. is trying to pursue around democracy and saying no to authoritarianism. he didn't mention china specifically. he didn't say the word china. he did mention -- he did not call out china specifically. but the message was clear.

we want to really display a difference between what the u.s. is pursuing and what china is pursuing and to try to get nations around the world to take the u.s. seriously again from a -- from a foreign policy perspective. haidi: what is the rhetoric we hear when it comes to a coordinated effort in so far that we haven't seen before to get the world vaccinated? >> right. so tomorrow there will be a vaccination summit that biden will also participate in. and we have reported that the u.s. has pledged to increase the amount of veerches that it -- vaccines that it sends around the world. the shushes has sent the most amount of vaccines around the world and cystsized for vaccines that lay waste because there aren't enough people who want it in the united states. whereas there's countries around the world still clamoring for it. and so what we're expecting tomorrow to see is a real commitment by the united states to say we are going to give more

vaccines around the world. especially as the conversation in the u.s. at least turns to booster shots. because the idea is how can you continue to give booster shots to people in the u.s., many of whom don't want the vaccine, when there are so many around the world who want it and still haven't gotten their first shot? haidi: shelly banjo. vonnie quinn has the first word headlines. vonnie: haidi, thank you. the u.k. is said to be exploring joining the u.s. m.c.a. free trade agreement between the u.s., mexico and canada. it's a recognition that the biden administration will not start negotiations on a bilateral deal anytime soon. the u.k. is conducting negotiations around the world to replace its entire free trade treaty with the european union. so far it has struck deals with the e.u., japan and australia. south korean president moon jaein, the two decrees, the u.s. examine china should declare an official end to the korean war. moon told the u.n. general

assembly this is a key step toward an end to nuclear activity on the korean peninsula. the war which ran from 1950 to 1953 ended in an armistice, rather than a peace treaty. the f.d.a. may decide as soon as wednesday on whether to recommend fizer booster shots. that would set the stage meetings between an advisory panel of the c.d.c. this week. on friday an f.d.a. advisory panel rejected a call for boosters for all adults. it recommended them for a narrower group of people aged 65 or older and other at risk populations. those parameters could be tweaked by the f.d.a. johnson & johnson says its booster shots prevent acute covid infections. the company data showed that is second dose given two months after the first provided 100% protection against severe disease. another study found the additional doseas 12-fold increase in the production of covid antibodies when given six months after the first. the f.d.a. has yet to advise on

j&j booster vaccines. goebel news 2424 40urs a day on air and on bloomberg quick take powered by more than 2,700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: still ahead the university of sydney gorana grgic joining us to discuss the general assembly that's happening in a post pandemic world. and coming up next, the market outlook from julie c. biel amid those evergrande and taper risks. this is bloomberg. ♪

>> the selloff yesterday was a clearer crash in the uptrend. a lot of people talking about it's not that big of a deal. it's a buying opportunity. actually when you look at the technicals, you look at the

charts, you look at the prospects that we're going to disappoint on the earnings front because of the covid slowdown, we're ripe for a correction. shery: guggenheim's scott minerd warning of a 10% to 20% correction for u.s. stocks. our next guest sees potential in the u.s. economy for modest growth there's also significant downside risk. and even an outside chance of stagflation. portfolio manager julie c. biel joins us now. great to have you with us. given the uncertainty over growth, over the price picture, where do you go for some safety and also for investment opportunities? julie: so we continue to believe that quality needs to be a focus for investors. and i think now that is especially true. we've seen solid spending in the consumer. and that's held up actually relatively well. so you could see modest growth happening going forward. but i think the outside pressures of extended covid, the lack of schools opening, daycare

struggling to stay open, labor force participation. there are a lot of challenges in the face of this economy. and that gives me some concern. not to mention the fact that the inflation pressures, it's going to be hard to gauge whether they're really temporary or longer term. haidi: where are you finding quality? julie: we're looking for businesses that are truly differentiated that have strong pricing power in case we have inflation. those are the ones that we really are focused on. i like businesses that are helping -- helping other companies modernize their digital footprint. you know, as consumers, we're really used to very elegant design thanks to apple. but in a lot of sectors of the economy, they're still on very antiquated technology. insurance is a great example. we all know that. a company like duck creek technologies is helping insurance companies modernize so that they have a graphical user interface that looks very similar to something like what we expect from apple and the

like. other companies that are helping modernize include olo. olo is helping restaurants really modernize their ability to do direct service e-commerce with their customers. that's really helped them play a part in part of the covid recovery. so if we continue to have staying at home more, i think olo would actually benefit from that. haidi: and select whiff it comes to some key health care sources. julie: there is a company called cooper a contact lens manufacturer and they have a strong position in traditional contact lenses. but what's exciting is that they have a new product that actually helps with childhood my opennia -- myopia and stemming that before it happens would be a wonderful thing. they've demonstrated good efficacy here in the u.s. and in china, they finally been approved and the chinese market for myopia is much larger than here in the u.s. so i think that has a lot of opportunity and it shouldn't be

impacted really by covid either way. so i think that's a nice opportunity for a quality investment. that doesn't rely on any outcome of covid either way. haidi: when you take a look at how the markets naturally react to the threat of a liquidity crisis like evergrande, right? does it make sense to you this kind of theory of assigning a macro target, things like iron ore and like the chinese currency? julie: it's hard because i think in order to -- you have to have a strong degree of confidence that you know the direction of the market in order to do that. and so we don't believe that we can predict. but we know that we can prepare. so i don't think these indications are a sign that we should suddenly get very defensive. i think you're better off doing -- finding businesses that have a strong business structure around them that can demonstrate, they can do well in good economies. and can still do very well in poor economies. so that's the kind of business that we really like.

something that has something structural around it like a network effect. those are the types we like. shery: senior research analyst at kayne. and always great to have you with us and get more on the markets and the round-up of stories you need to know to get your day going. today's edition of "daybreak" is on your terminal at d.b. . this is bloomberg. bloomberg.

shery: a quick check of the latest business headlines. china evergrande is set to have missed interest payments due monday to two of its largest bank creditors. sources tell us the property developer hadn't made the payments as of late tuesday. banks were expecting evergrande to miss the deadline and it's unclear whether they will

formally declare the company in default. we're told some lenders are waiting for evergrande to propose a loan expengs plan. u.s. bankcorp has announced an $8 billion deal to take over u.f.g. union bank of the deal includes $5.5 billion in cash and about $44 million u.s. bankcorp shares. it should be completed in the first half of 2022. the deal makes u.s. bankcorp california's fifth biggest lender by deposits. it's part of a wave of consolidation in u.s. regional banking. credit suisse is considering moving its asian investment banking operations into its global securities and advisory business. the board is set to be meeting next week to discuss strategies. sources say it would mirror a similar decision last year bringing asian markets activities into that unit. it's the latest move in a wider overhaul of the troubled lender which was hit hard by the arcago scandal. fedex has cut its annual

earnings outlook and posted a quarterly profit below analyst expectations. this after struggling with higher costs as package growth has stalled. the company says costs suffered because of a tight labor market and led to a $450 million increase in costs from a year earlier. shares fell over 3.5% in extended trading on the news. haidi: taking a look at the day ahead for australia, melbourne embracing for another day of protests over covid vaccinations in the construction industry. demonstrators are promising to return to the streets after two days of at times violent clashes with the police. and as melbourne and sydney remain under lockdown, the oacd has sharply downgraded australia's growth forecasts and expects a 4% expansion for 2021. but that is a 1.1% drop on previous estimates. plus facing shareholders on its added -- a.g.m. and we will be

watching that stock as the company which is one of the nation's biggest polluters is currently trading at its lowest level since 2007. shery: haidi, take look at some. markets right now. we are seeing stocks trading down for a third consecutive session. down .2% at this point. and we do have still a partial lockdown in auckland. we are seeing sydney futures under pressure. down .2%. this of course as we continue to see mining giants being hit by that slump in iron ore. futures when it comes to nikkei futures, now .1%. they fell yesterday. and saw the worst in about three months after they came back from that long weekend. the japanese yen remains in a range and today, we focused on that d.o.j. policy decision. not much change expected there. but we are watching the economic assessment given the states of emergency in the country. chinese futures down a little bit. we're all concerned about

evergrande. we're watching that very closely. plenty more to come on "daybreak: australia." stay with us. this is bloomberg. ♪ the comfortable way to work out. -that looks fun actually. -looks like a paisley. -hey, a paisley, we'll take it. -yeah. oh my god, i could do this and watch tv at the same time. -exactly! -fantastic. oh yeah, i can do this. this is easy. and definitely better than the floor. -it feels sexy. -it feels good. i want this in my house. (host) wondering if the aerotrainer is tough? (engine revving) - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color

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>> china will step up support for other developing countries in developing green and low carbon energy. and will not build new coal hospital fired power projects abroad. -- coal-fired power projects abroad. president biden: we are not seeking a new cold war or a world divided into rigid blocs. the united states is ready to work with any nation that steps up and pursues peaceful resolution to shared challenges. today we're going to discuss the

next steps on all of this and as well as how the u.s. and u.k. can continue our cooperation in afghanistan and indo-pacific and around the world. haidi: president biden speaking earlier at the u.n. general assembly. well, president biden and the australian prime minister scott morrison have had their first face-to-face meeting since last week's announcement of the new alliance in nuclear submarine deal. bloomberg's paul allen joins us now. hoping that president biden used his name this time. we're talking about some asia nations raising these concerns over how it upsets the balance of power in the region of the was this addressed? >> yes, it was. and pal shah and indonesia and china and north korea among those that are concerned about how this alliance upsets the balance of power in the region. the words arms race or risk of an arms race have been kicked around. you heard president biden there saying that there was no desire

to seek a new cold war but at the same time in the b&e lateral with president biden and scott morrison, scott morrison talked about the aukus agreement going to the freedom. cease which is a clear pointed statement directed toward china and its activities in the south china see. and scott morrison also said that this alliance doesn't seek to exclude friends in europe and the subtext there is over europe and france's unhappiness over the cancellation of the deal with france to buy conventionally powered submarines. shery: what are we seeing in terms of the backlash from europe right now? paul: well, it's not going away. france has been talking to the e.u., to suggest that the proposed e.u.-australia trade deal be slowed down. it was already going pretty slowly anyway. but it's getting reasonably warm hearing on that idea within the european union. scott morrison, though, says he's confident that that deal will eventually go ahead and saying that these things take time.

and he may have a point. because we also have the aukus partners and the european union having the shared concern over the risks posed by china. the u.s. and the e.u. are moving cautiously on plans for stronger investment screening rules. from keeping technology from being misused that threatens security and human rights and also resisting challenges to non-market distortions. and that again, the subtext pretty clearly directed at china. haidi: bloomberg's paul allen there with latest. president biden of course using that first address to the u.n. general assembly to lay out his vision for an era of intensive diplomacy with allies and vigorous competition with great powers. but without a cold war with china. as discussed the u.n. meetings at the university of sydney's government and international relations, gorana grgic. great to have you with us, gorana. so what's your takeaway? was this a measured kind of approach and tone that was struck by global leaders, particularly president biden with respect to beijing?

gorana: certainly we've heard a lot in the leadup to this speech as to what key themes would be and they very much resonate with what president biden has been promising actually all throughout 2020 when he was running for the presidency and of course some of these key messages since coming to the office. the idea that the united states will rejoin some of the multilateral frame works that president trump pulled out of, that it's going to invest heavily into the diplomacy and it's going to support all of these efforts with extreme competence and expertise in international affairs. certainly these are some of the themes that we heard in president biden's speech at the unga. but con speckiusly missing was actually the mention of china. president biden of course said that we are not looking into the new cold war but that america is

ready and will do everything to protect its allies to work with its partners, to uphold basically the international order and the rules that are governing it or have been governing it for the previous. haidi: we talk a lot about the remaining relevance of the u.n., right? particularly as you say the multipolarity of these relationships, the heightened competition between the big competitive nations. how does that really threaten the work of the u.n.? gorana: so one thing that has been a -- between the trump and biden administrations is this idea that the united states finds itself in an era of strategic competition. and certainly the assessment is shared as with some of the partners and allies, most specifically if you take a look at the assessments from around

the indo-pacific, the alliance here but also in europe. for biden, one of the major challenges moving forward will be actually how to work on addressing some of these issues that concern the governance of the so-called global commons whether you talk about climate crisis or the response to the pandemic or whether it's the issue of arms control and proliferation. so how do you compartmentalize this sort of idea of strategic competition on the one hand with china primarily but also to an extent with russia and some other emerging powers that might be acting as the structure in their regions? and then on the other hand, how do you work with these same counterparts basically on finding solutions that concern all of humanity? and again, this has been one of the rallying cries of the secretary general of the united

nations. shery: how important is this week for president biden? this was his first speech to the u.n. general assembly as president after years of former president trump's america first policy. gorana: it's extremely important in terms of the kind of signaling and the optics. we know that last year, obviously, the unga was a virtual or at the opening of the unga was a virtual summit more or less. and that basically now these were leaders -- world leaders are in the same room and a time to again reaffirm what have been the kind of established or emerging doctrines on part of some of these presidents that are new obviously, some that have returned, and certainly for president biden, coming into the unga with the trying trans-atlantic crisis -- brewing

trans-atlantic crisis, and the decades of the alliance, and isn't really a good look. but also the fact that it will be capped with some of these other summits and meetings that will take place later. and quite momentummous. -- momentous. haidi: china was focused on environmental goals with the speech with xi jinping. and we didn't see jabs toward the u.s. what's the strategy here? gorana: well, it seems again that the strategy will be one where the two countries seem to be working on addressing the domestic level but the big question is the extent to which we are going to secord nation of those efforts on the international front. and this is why everyone's eyes will be very much focused on what's happening or what will happen in glasgow toward the end

of the year with the conference of parties to address the climate crisis. so at the moment, china, enthusiastic about some of the overtures on the part of the biden administration, for instance, climate envoy, former secretary of state john kerry hasn't necessarily been all that successful in committing his chinese counterparts to see eye to eye on this matter. again, in the context of what's been happening on security and strategic competition fronts. shery: great having you on. gorana grgic, university of sydney lecturer. and let's get to the first word news with vonnie quinn. vonnie. vonnie: thank you. president joe biden has used his first u.n. general assembly speech to double the money the u.s. will spend helping poorer nations fight climate change. to more than $7 billion by 2024. the -- a mixed response from

environmentalists but the real test is whether beaudin can win over congress and spur other countries to step up their own climate ambitions. china's president xi jinping has told the u.n. general assembly his cent plans to stop building coal-fired coal plants abroad and vowed more support for poorer nations to deep clean energy. the announcement came a year after he said -- to make china carbon neutral by 2060. beijing, the finance institute report says more than 70% of all coal plants built today rely on chinese funding. the i.e.a. has called on russia to supply more natural gas saying the energy crunch is an opportunity for moscow to show it's a reliable supplier. the agency says russia is meeting its contractual obligations to shift gas to europe. but as exports are still down from pre-pandemic levels. gas prices in europe are breaking records as russia keeps a cap on the additional flows needed to refill storage sites.

global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2,700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi. haidi: still ahead, ray dalio says the evergrande debt crisis is manageable as investors get hurt. we will hear on the co-chairman next. this is bloomberg. bloomberg.

shery: you're watching "daybreak: australia." time for morning calls ahead of the asia trading day. we're looking ahead to the fomc meeting, fed chair jerome powell facing the challenge of convincing investors that plans to scale back asset purchases aren't a runway to raising traits for the first time -- interest rates for the first time since 2018. the fed is expected to hold interest rates on wednesday while telegraphing tapering of bond purchases. one third of economists is your vlade by bloomberg see that hint being followed by a formal announcement in november, haidi. haidi: yeah. and turning to china as of course markets reopening for trade later after that two-day holiday. b.o.a. securities has cut its forecast when it comes to economic growth and sees china's economy growing 8% in 2021. and then 5.3% next year. they say that delays in policy

easing are dimming hopes of a turnaround in the fourth quarter. also noting that any major mishandling of a major default would further rate risk of growth dislocation. you asked ray dalio and said evergrande debt crisis is manageable and other investors will be stung by it. the founder of hedge fund bridgewater associates spoke with bloomberg at the greenwich economic forum. >> i think there's a tendency and an understandable tendency to think because they are -- capital and communist that they're going to go back to that kind of a thing. the -- they're not. xi jinping, for example, introduced a newer stock market in beijing and made a point of being the one who introduced the market in beijing to be small and medium sized enterprises. they know that it catches mice. and so the issue is the capitalist is not in control.

the issue is there's a system for the whole system, and then what they want to do is make sure that it's not a capitalist-driven system. so -- and then there's data control. and then you have to understand there's micromanagement. it's like the kids, there's a top down versus bottom up. whether you like it or not, that's what it is. >> how can our listeners and our viewers prosper from their micromanagement of the real estate debt collapse? we're beginning to see in china. what is the opportunity if we see their dominant investor position economically -- demecqly go down in price, dhow play that? >> well, the mechanics are the same as the united states went through and everybody else went through. so it would be very similar to -- >> ok. >> our 2008 mechanics. >> lehman collapse -- >> it it's happened over and over again. is the central bank makes a decision of moral hazard. they never used to have moral

hazard. >> do you believe they're there after this week that we've seen in the markets? >> they knew that this was happening. and there's the preparation to this. and they know that there's more. and -- and that's good -- a good thing, not a bad thing. because in the past, it used to be -- that they would guarantee it. the banks, five major banks would loan -- state-owned enterprises and local governments with implied government guarantees and it was bad. so the process is the same. expect the exact same type of process as we would go through which is to say that -- >> ok. >> there will be -- there will be -- they will be stung. investors will be stung. that's how it works. and that the system will be protected. because it's denominated in their own currency. >> beautiful. i want to get this on the record, ray dalio because every wall street firm is saying this morning this is not a lehman molt. what we witnessed yesterday in -- >> not lehman. >> explain why this is not a lehman moment to ray dalio. >> because a lehman moment produced pervasive structural damage through the system that

wasn't rectified until the treasury came across in terms of its wore -- its borrowing and the fed came across with quantitative easing. but this is not that kind of a shakeup type of thing. this is -- $300 billion is what they owe. and this is all manageable. the basic economics is for all countries, in all time, is that if your debt is in your own currency, you can deal with it. >> you can work it out. >> you can work it out. we've seen it happen over and over again. and it's a good thing that lenders get stung or that the borrowers get stung. that's how the system works. >> yeah. i want to go to my number one question to ray dalio. i'm fascinated by this. you and i have said at the embar, at the mandarin in hong kong and looked at that spectacular experiment, i had the honor of lord patton with us the day of the hong kong collapse that changed essentially in polity there. how the western banks, ray diamond, moynihan of a

reinvigorated bank of america, how should the western banks adapt and adjust in hong kong to new china realities? >> well, i think very simply you have to decide whether the rules and the -- in place is a place that you're comfortable with. they will set the rules. and you go in there and you decide if you're going to be part of that as a good sit zeb -- a good citizen or you're not. you don't jump in and out. in other words, china is a strategic play. you're not going to jump in and out. so -- and the amount that you're in should be that which you're comfortable with. it's the same as an investor. it's not smart to sell on the break or buy. it's a strategic play. shery: bridgewater associates co-founder and co-c.i.o. ray dalio speaking to bloomberg's tom keane. markets reopen in mainland china today after a two-day holiday. during that time, evergrande contagion fears have rolled stocks in hong kong and around

the world. so what will investors see today? let's bring in our asset editor andre. should we expect some catchup to the losses that we saw in hong kong? >> hi, shery. look, that would be the obvious reaction. but keep in mind this is china. and anything is possible. and it is really not clear at the moment how -- how that is going to play out. although yes, we could see some pullback. i think what will be interesting to watch today, though, is the pboc daily open market operation. there's little liquidity in the market after that two-day holiday in china. and that will be very closely watched for a hint of how beijing plans to deal with this debt crisis. if we do see a large net injection, that suggests that the -- that beijing wants to reduce any chance of systemic stress after evergrande as you

said roiled the market. the same time, we do see a withdrawal of funds, it could mean it's prepared to tolerate some market volatility as this develop developer moves closer to default. keep in mind there has been no comment on a state resolution from beijing. it is treating this case as an isolated case. but yeah. look, one thing that is worrying investors and why we could see some pressure on those china stocks is that there might be a miscalculation in china in terms of a tightening. and what this means for the world's second largest economy, for a potential slowdown there. having said that, the consensus seems to be that this is not a lehman moment. we just heard that from ray dalio. and very tempting to liken it to to a big global event. and also, i think the point is to be made that if we do see a big crash, you will probably have the national team coming

and support the market in china. haidi: beyond evergrande, and of course it's still a big week when it comes to central bank -- banks, is this playing into the nary active or are expectations pretty baked in? -- narrative or are expectations pretty baked in? >> haidi, that's right. evergrande is roiling the market when the markets are quite vulnerable. and yes. i think that the fed is going to be a big focus. and eventually investors will start shifting their attention to these -- to a road map of tapering. so what the fed meeting and what central banks are doing is going to come back as a big focus. you know, markets are at very high levels. so evergrande is affected to some extent is not that surprising.

haidi: andreea papuc there. a global operations, the latest on the bank's overhaul. this is bloomberg.

haidi: credit suisse is considering moving its asian investment banking operations into its global securities and

advisory business. this would be the latest in a wider overhaul by chairman antonio to turn around the troubled bank. let's go to our finance reporter for the details. so credit suisse has been working on a strategic review for months now. what's the latest to come out of that that we're hearing? >> haidi, it's a bit of a -- a vati for credit suisse, which is thinking now about putting its asia investment banking unit to the deal advisory team under a global umbrella. and remember that just a few years ago, the previous c.e.o., tt. -- t.j.spimam brought the unit out of that into the asia business and thinking about putting it back in under a global investment banking unit. as you say, the credit suisse has been doing this strategic review for months now. they've been working with mckenzie, we understand there's a board meeting coming up next week and after that we are expected to hear a little bit more about the new strategy. shery: so what does this then

mean for that asia business? >> so shery, the asia business just like many other parts of the credit suisse empire worldwide has been losing a lot of senior staff. ever since the bank hit up against these two dilemmas of greenfield and arcegos and lost a lot of money from these situations. and you have seen a lot of senior bankers leave and what the asian business sort of reintegrations aiming to do is to sort of streamline and centralize the business and perhaps make it easier for bankers here to access that global network for cross-border deals, for example, or just to tap into that. and the issue with central sensation does come a bit of a loss of power. a loss of autonomy and likely to come as a bit of a blow for the regional head.

haidi: credit suisse development and its turnaround. let's get you a quick check of the latest business headlines. japan financial services agency is reportedly taking action against mizzou financial group. and its banking unit. and including a.t.m. outables. the report that the f.s.a. plan includes directly managing the lenders system overall and maintenance to prevent broader network financial network concerns i should say. misuo has had several system -- misuo has had several system failures. draftkings offered to acquire u.k. gambling from entain a deal worth $22 billion. entain is considering the cash and stock offer for 2,800 points a share an acquisition would dramatically expand draftkings' emerging gambling empire. a surge in sports bet something driving all of this deal activity. coming up in the next hour of martin schulz discussing the bank of japan, what could come, policy wise, after the departure.

that is it for "daybreak: australia." we do have daybreakasia and interesting times in the market. a mixed to tepid outlook when it comes to the start of major markets trading here. but of course hong kong off the holidays with china set to resume in the wake of evergrande. this is bloomberg. ♪

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haidi: a very good morning. we are counting down to asia's market opens. shery: i am sharapan in new york. this is "daybreak asia." that credit crisis set to on risk appetite as mainland chinese markets reopen after a two day holiday. investors awaiting