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 cues from the

beer j and the said on any unexpected shift in policy. haidi: another day of ever grand watching and as expected, they did miss those two bank repayments. we knew that this was going to happen. the bank had been told by the government to expect this. the next deadline is thursday. we will be watching out very keenly for market reaction to that but you have got to wonder at this point how much pain is there in this lesson being taught to investors right now? we know this is probably not going to be a moment down to just the fundamentals of how the chinese government -- how this system really works, but how far are they willing to go to be able to avoid that moral hazard that would come with bailing out the company like this? shery: you mentioned the market there. we saw it throughout this week already. markets are not only concerned

about what is happening at ever grand but also because we have this momentous fed decision. really, powell does have a challenging job in trying to convince investors that, yes, we are going to scale back as it purchases but that does not mean we are raising interest rates right now. we continue to see that push and pull when it comes to the market trying to balance all of these concerns and trying to figure out what the fed is trying to do. haidi: what is also momentous is going into the bank of japan decision day. all except one out of 47 economists are expected for that asset buying as well as rate targets to be kept on hold today. we are at the end of the month seeing the beer j governor as being the longest out of any telomere. it will be interesting to see where the continuity remains the name of the game as we get into that leadership vote to replace

the prime minister next week. shery: i'm curious to see what the economic assessment will be given the state of emergency in japan. the virus has played such a key role around the world and this has been one of the key topics that the un's general assembly -- at the un's general assembly as well. we are the likes of president biden saying they are not seeking a new cold war. we heard she's in pain talking about his environmental goals and also from president moon jae-in saying that they should declare an end to the korean war and we should remind our viewers that the correa's are still technically at war given that the armistice was signed, -- koreas are still technically at war given the armistice was signed, not a peace treaty. haidi: really a directionless kind of session for wall street. we saw the dip buying starting

to wane. still a bit of uncertainty over what happens to china ever grand. new zealand down by .1 percent at the last trade. we have seen sydney futures off by .25%, continuing to watch those iron ore minors as we see just that downside really continuing for the metal. we are expecting just further pressure when it comes to the construction industry as well as steelmaking in china as well on the back of these environmental curbs. nikkei futures softer by .4% and i had to the start of trading, back from that two day long weekend, we are seeing futures a little bit muted as well. hong kong of tors -- of course taking a break. so much of that was due to china ever grand. a potential major liquidity event. they have taken one step closer after missing those interest payments due on monday.

market watchers have been engaged in a furious debate over whether this will become china's lehman brothers moment. a systemic meltdown is unlikely. let's crossover to our greater china executive editor. the criticism of people saying that is this is a fundamental misunderstanding of how debt works in china, right? what is your most likely scenario we are dealing with here? >> as long as ever grand contains its debt problems, the situation will remain relatively manageable. ray dalia made that point overnight and he made the point also that china -- the vast majority of china's debt is denominated in yuan, which makes it much more manageable for the government. as long as this does not spiral into some sort of contagion that affects other developers, it will not be lehmans for china.

shery: what are we expecting when it comes to this week and all of these interest payments due. should we expect catch up for those losses that we saw given the anxiety? john: i think we will very likely see a bit of a catch up in stock markets especially. what will be worth watching for investors today will be with the ppos he does with its open market operations at 9:15 this morning. if they provide are liquidity, if there is a net injection of liquidity into the market, that might be taken as a signal that authorities are there to try to reduce stress but of course, they could also withdraw. they could not provide the amount of liquidity that people were hoping for and that could send a different signal very clearly that beijing is ready for a little bit more pain. haidi: what is the impact on household wealth given how

significant that connection is for property holdings in china. john: very interesting. we were talking earlier about the missed payments to the banks. partly, that is due to the fact that local governments -- the government is telling ever grand to take all of its working capital and use that to build these homes they sold to property buyers that have not yet been built. one of the big strains on the company is it has a lot of accounts payable to construction companies and it has not been able to pay. it's taking all its available resources and putting it into that part of the business so it underlines how in beijing's eyes, making sure that those homebuyers get their homes is much more important than what bondholders eventually get paid. shery: john liu there. we have an alert on the bloomberg. we are getting a readout coming from the yucaipa prime minister, boris johnson, his office, when it comes to that meeting with

president biden. the two leaders agreed on the importance of protecting the peace process. the u.k. is saying the two leaders also discussed china and russia in the meeting. they also discussed the impact of brexit on northern ireland, this coming at a time when we have heard from sources that the u.k. is actually exploring joining an existing free-trade agreement between the u.s., mexico, and canada. that would be the usmca as they continue to conduct simultaneous negotiations around the world in order to be able to replace that treaty with the european union. it's a big week around the world, especially here in the u.s. central banks, the other big focus. the federal reserve may reveal plans to taper its bond purchases tomorrow as inflation remains uncomfortably hot while the bank of japan is expected to stay put on policy. kathleen hayes is here with

us. we will be watching the fed closely. kathleen: everyone wants to know what is your taper plan, your view on inflation, and what about those dots? right now, a bloomberg survey shows that 60% of the economists we spoke to do expect the fed to signal the taper starting in november. that would be just around the quarter -- corner. there are two camps at the fed. there's the hawks who say, wait a minute, inflation is no longer temporary. it is persisting. it is becoming a problem. let's start the taper now. we can start raising rates. team transitory says we can see signs that all those post-pandemic jumps and prices are starting to fade and the economy is not in full employment. they are willing to go a little more slowly. every three months, the fed

updates their view of inflation and how they think rate hikes will go. 2022. that number is up to seven out of 18, seeing the first hike next year. if that goes up again, that would send a strong signal to investors. very different picture at the doj. the bank of japan is seeing inflation that is too weak, concerned about growth. let's take a look at gdp. we know inflation turns negative, deflationary and the latest quarter, but gdp is at risk here. you can see that strong couple quarters of growth. the economy was moving along after being in recession but then the virus cases in the first part of our year started rising. a positive second quarter is in jeopardy now because they had to extend the emergency lock downs. what is that going to do? the doj is going to sit tight right now and they will keep the key rate at zero, maintain yield curve control. continue to buy etf purchases as

needed to support the stock market. and perhaps release some details on the lending program. as for the elections coming up, a new premise or back burner. that will not make any difference. maybe hirohito kuroda will get some questions about that at the press conference. haidi: kathleen hays. vonnie: thank you. united kingdom is said to be exploring joining the u.s. free-trade agreement between the u.s., mexico, and canada. it is a recognition that the biden administration will not start negotiations on a bilateral ill anytime soon the u.k. is conducting negotiations around the world to replace its prior free trade treaty with the european union. so far, -- president biden is said to be planning to order 500 million pfizer covid vaccine doses to donate abroad. sources tell us negotiations between the white house and manufacturers are continuing.

a deal is poised to be unveiled at a virtual vaccine summit. the order would double the number of pfizer shots u.s. has bought for export. however, is not clear when the delivery would shift or how much it would cost. they may decide as soon as wednesday whether to recommend pfizer booster shots. that would set the stage between meetings this week. on friday, an advisory panel rejects the call for boosters for all adults. it instead recommended them for a narrower group of people, aged 65 or older, and other at-risk populations. those parameters could be tweaked. she's in pain told the u.n. -- president xi said they plan to stop ordering coal-fired power plants abroad. the announcement came one year after xi pledged to make china carbon neutral by 2060. the report says more than 70% of

coal plants built today rely on chinese funding. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: the bureau j is expected to stand pat on its stimulus to close on wednesday. we will get a preview of the decision later this hour with the fujitsu chief policy economist. up next, your head of global strategy sees four so-called bogeyman on the horizon for markets. this is bloomberg. ♪

. >> crack -- the selloff

yesterday was a clear crack. when you look at the technicals, you look at the charts, you look at the prospects that were going to disappoint on the earnings front because of the covid slowdown, we are ripe for a correction. shery: scott minerd warning of a 10% to 20% correction for u.s. stocks. our next guest sees consolidation in the short-term but believes the fed and the government will continue to support the economy and markets. let's bring in the head of global strategy at riverfront investment group. great to have you with us. how challenging will it be for chair powell tomorrow to try to explain to the markets tapering does not equal tightening? >> easy. the fed has spoken to his actions. they are not going to take stimulus away from the economy too early.

remember, tapering -- he's talking about tapering the money program. that is far different t tapering of balance sheets. slowing down purchases is still stimulative to the economy and injecting liquidity. shery: would you combine the consolidation of 10% to 20%? it means it will be in the 0% to 10% range, meaning it's not going to be worth trying to get back in. if you have extra cash and you have been kicking yourself because you want to be in this market, i think you can get 3% to 5% pullback, it's probably not a bad time to put cash to work. haidi: where do you put that cash to work? it feels like the pullback that we have seen is perhaps less about the worries over a

liquidity situation and more about an excuse given how overbought this market already is. michelle: -- >> i think i put it broadly in the market ultimately, there is still a tug-of-war between u.s. large caps and s&p 500 for everything us. u.s. large caps have sort of round the table and eventually, everything else, which is small and mid, value stocks, which is international stocks, will have their day. we think that will happen. right now, it's undecided when it will happen so i would probably just spread my money broadly. haidi: we are going to talk about china, not just the ongoing client but this slow-motion disaster we watched in evergrande. regardless of whether it's going to be a systemic crisis or not, what does it tell you about investing in china and by extension, the appeal the e.m.? doug: i would be nervous.

if you are an investor and you see a market where there growing government intervention, where the transparency is declining, so far, treatment of foreign shareholders has been pretty terrible. i think there's plenty other places around the world to invest. i don't have to go there. i would probably be continuing to take money out of china, may on strength. haidi: what would make you want to play back into china? what kind of level of transparency would you need to see? doug: i think it's about trust. trust is something that cannot be built quickly. i think there's a lot of trust that has gone away with what has been going on in china. as a foreign investor, i have to see sort of multiple trust confirmation points, not just one of them. it will take time and probably more time than most people think. shery: does that mean you are

staying away broadly from emerging markets given how big of a waiting china has question marks doug: brought emerging markets, buying the brought emerging market indexes, to me, probably i would be looking to be a little more specific, maybe emerging markets x china -- e x-china or markets like south america which some say had some of what china had, which is lower cost workers in the proximity to u.s. markets far and near. >> great to have you with us. doug sandler. you can get a round above the markets and stories you need to go to get your day going. today's edition of daybreak is available on dayb on their terminals, and it's also available on mobile in the bloomberg anywhere app. we have lots more ahead on "daybreak asia."

this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo. the boj expected to keep its negative interest rate -- and atchison -- asset buying -- an asset buying targets ahead of a ruling party vote next week that will effectively determine the country's next prime minister. an 8 billion dollar takeover deal of japan's union bank. we will watch the shares at the open. plus, the government is leaning towards partially lifting the state of emergency in 19 prefectures including tokyo at the end of the month, haidi. haidi: let's get you a quick check of the latest business flash headlines this hour. china evergrande is said to have missed those interest payments to at least two of its largest bank creditors.

the property developer had not made the payments as of late tuesday. banks were expecting evergrande to miss the deadline. it's unclear whether they will declare the company in default. some lenders are waiting for evergrande to propose a loan extension plan. credit suisse may move its asian investment banking operations into global securities and advisory business. the board is set to be meeting to discuss strategy. sources say it would mirror a similar decision last year, bringing market activities into that unit. it is the latest move in a -- in an overhaul that was hit hired by the scant -- hit hard by the scandal. the agency is reportedly taking action against mizuho financial group and its banking unit. the nikkei reports the plan includes directly managing the lenders system overhaul and maintenance to prevent broader financial network concerns. they have had seven system failures since february. fedex has cut its annual earnings outlook and posted

quarterly profit below analyst expectations. the company struggled with higher costs including those associated with the tight labor market which rose to $450 million on the year. growth in package volume unexpectedly fell. shares fell in extended trading on the announcement. shares saw their biggest drop since may after the ceo warned streaming growth would be slowed. he blamed the rise of the delta variant for production delays while flagging slowing disney plus subscriptions in india and latin america. disney's streaming service has been a huge growth engine. more than 160 million subscribers globally. shery: a quick check of the markets. we are seeing u.s. futures under pressure after we saw the s&p 500 fluctuating between gains and losses throughout the session after the biggest drop in four months earlier this week. here in the u.s., we continue to

watch congress because they are discussing suspending the u.s. debt ceiling to after the 2022 congressional elections. we are seeing all of these statements come from the white house, saying the bill would avoid catastrophic response. nikkei futures down following the worst day in three months after they came back from a long weekend. this of course as we head towards that boj policy decision, not much change expected there. i'm watching closely what is happening with that economic assessment given that we have seen those different states of emergencies that could really affect what policymakers say when it comes to the trajectory of growth in japan and of course, it is all about china. we are going to go towards that open after that holiday and this coming at a time when evergrande of course has really caused anxiety throughout broader markets, not to mention that today, we also have the pboc

with their loan plan rates for september. the expectation is for a hold. we have not seen any moves for months already. so we are going to be watching what happens on that chinese market front as evergrande has just missed that interest payment due monday. we continue to watch these developments about evergrande given that of course we do have the pboc coming back with open market operations after the holiday break. perhaps one opportunity for them to signal is they are going to do anything about this bill crisis. haidi: certainly, we are watching -- this developing crisis. haidi: certainly. we will be getting more from the united nations general assembly underway including china's man's to stop building power plants abroad and their intention to support developing nations transition to green energy as well. lots more to come. this is bloomberg. ♪

>> this is a moment when the world has to decide whether it wants to grow up or not. to make a crucial change or not. pres. biden: the united states will double our financing to help developing nations tackle the climate crisis. today, i am proud to announce we will work with the congress to double that number again. >> it will act as an un-blocker. >> our goal of achieving climate neutrality. >> korea will scale up and set

up a green no-deal trust fund with a view to supporting the work of global green growth institute. >> carbon dioxide emissions before 2030. and achieve carbon neutrality before 2060. shery: world leaders talking about their respective commitments to climate change at the general assembly. let's bring in our bloomberg energy order. president xi jinping vowing to stop building overseas coal powered plants. how significant is this? >> very significant. china is one of, if not the largest, financial supporter of overseas power plants as global banks have pulled out of the center or in recent years. japan and south korea had announced earlier this year there plans to stop overseas financing, so china's decision

today really pulls the rug out from under any future coal powered developments. china's policy banks have given more than $50 billion to coal powered projects overseas since 2000 so this is really going to help slow the development of the high emissions sector. haidi: we have also heard china pledging to help foreign nations develop their own green energy. is this sort of in line with i guess the usual playbook when it comes to infrastructure investment and economic soft power that we have from beijing? dan: that's a good point. a lot of the world's largest green energy companies along with green energy technology in the solar field, big nuclear companies by the state, that these guys all have a ton of opportunity to export clean power. so as china opens the same flood gates over the past couple of

decades, that could really open the floodgates to help developing nations get clean power they really need. shery: already, we have seen some of those environmental goals really affecting the commodities space with the output curves. what is next for beijing on the climate front? dan: their plan to keep carbon emissions by 2030 and reach carbon neutrality by 2060 has been lauded by the international center but they have to come up with details on how they are going to get there. the government will release detailed five-year plans through 2025 later this year for the renewables sector and people are going to be watching really closely to see how that helps them get that peak carbon target. haidi: dan murtaugh there. speaking with the u.n., we saw

one million people watching one speech that was being given at the start of the yuan general assembly. of course, the sustainable development goal moment at that event. i'm not talking about people watching president biden or even one million people watching president xi. it was bts, the kapok band, taking center stage at the u.n.. they spoke about the resiliency of young people, saying do not refer to us as a lost generation just because you trade -- you tread your own path does not mean you are lost. they called for people to get vaccinated. there were special presidential envoys being designated by president moon. it was really quite astonishing to watch them play this performance with permission to dance at the united nations. shery: i'm always amazed to see this fascination with this group. i have friends in their late 30's still being crazy

fans together with their children. when you look at korea, you have president moon jae-in asking for the end of the korean war and this country exporting celebrity after exporting manufacturing goods and cosmetics. it's amazing. we are still technically at war. i have to say, it's really amazing what the celebrity can do to catch everybody's attention, right? haidi: i absolutely love it. you and i always talk about how exciting the week is for academics and geeks and world watchers but to have one million young k-pop fans tuning in to the united nations -- shery: i am excited for the heads of states, not necessarily bts, but it adds the---chary on the ice cream. let's get to vonnie quinn with the first word headlines. vonnie: first word news now. the iea called on russia to support more natural gas to europe, saying the energy crunch

is an opportunity for moscow to show us a reliable supplier. the infancy says russia is meeting its obligations to shift gas to europe its exports to the continent are still down from pre-pandemic levels. gas prices in europe are breaking records as russia keeps a cap on the an additional flow needed to refill storage sites. a french bid to delay a pivotal e.u. trade meeting is gaining support. they assess the trade pack washington struck with australia. brussels will press the pause button. a growing number of states have backed france's requests to postpone the meeting scheduled for september 29 in pittsburgh. south korea's president, moon jae-in, says the two korea's, the u.s., and china should declare an official and to the korean war. he said this would be a key step towards an end to nuclear activity on the korean peninsula. the war, which ran from 1950 to

1950 three, ended in an armistice rather than a peace treaty. johnson & johnson says it's booster shots prevents acute covert infections. data shows a second dose given two months after the first provides 100% protection against severe disease. another study found the additional shot spurred a 12 fold increase in the production of covid antibodies when given six months after the first. the fda has yet to advise on j&j booster vaccines. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery. shery: coming up next, we discussed the japanese economy ahead of states boj decision and the inflation data later this week with the fujitsu chief policy economist, martin schulz. this is bloomberg. ♪

haidi: the bank of japan is expected to keep its tools in place later on. bloomberg economics notes the boj may downgrade its assessment of economic conditions given the impact of virus containment measures. let's get some analysis from the fujitsu chief economist. what are you watching out for from the meeting today given that there are no expectations of any change to policy but

potentially a downgrade to the outlook? martin: the bank of japan is certainly not -- in terms of monetary policy. they are discussing the supply chain disruptions in southeast asia. the slowdown in exports. during the second quarter. the third quarter is much weaker, frustratingly weaker, because the olympics. exports are slowing. this will be -- i doubt the bank of japan will downgrade the outlook from recovery trend to anything lower because of fourth quarter might be much stronger. haidi: the tinkering around the fiscal framework is most interesting, particularly as it has been indicated that whoever the next leader will be, they will be seeking that support from the bank of japan.

martin: mr. kuroda already pointed out that he on the bank of japan will be supportive basically of any fiscal policy coming out. what everyone is looking at now in particular, investors as well -- will the next prime minister, will policy focus on productivity, on some structural reforms that are supportive for growth? this is where the bank of japan is coming in as well. it will probably point out a few more of the measures. shery: he seems to be the favorite by the public and foreign investors. does that change the dynamics of the japanese economy cut them a -- economy, the markets at all? martin: the bank of japan and the government were tremendously

supportive throughout last year well into this year. there are still fiscal packages sitting there, not being spent. and consumers are tired of lockdown. the last on will end on september 30 and they are already spending. supply chain issues can be overcome. it is about intimate. the olympics did not do the trick. he is promising the most in terms of the getting some structured policies. shery: do any of the candidates make a difference for governor haruhiko kuroda himself? martin: not so much. basically, the spending -- intensive finance will remain the same. the outlook will remain the same. it is just where the spending is going. if it goes more into security, more in terms of income, rebalancing between the

city centers, the region, into green growth. the bank of japan demanding structural reforms for decades. more happy and supportive first am policies. -- for some policies. shery: what will the boj be watching? what is important for them? martin: the bank of japan, in terms of the exchange rate, in terms of the policy. there is tapering overseas in particular, with the fed getting more pressure with the supply side shocks. the bank of japan is tapering on the conscious side but it remained supportive on the fiscal side. this balance keeps the yen pretty weak compared to where it could be. that is a very good policy mix also for corporations. shery: marshall's, always great having your insights as we head

towards the boj policy decision. fujitsu chief policy economist. the man who correctly predicted the crisis is sounding a repeat. the nobel prize winner said the world is caught in a death. speaking exclusively to tom keene and jonathan ferro, he said central banks may not always be able to normalize rates when the time comes to do so. >> my concern is that compared to a decade ago, that levels both private and public are much higher than before. 20 years ago, debt to gdp ratio was -- and now it's rising. in china, it's 330% of gdp and rising. my concern is that we are in a deathtrap. it's not just fiscal dominance. when central banks are going to want to essentially phase out

unconventional monetary policy given the risk of a crash in the bond market, and the credit market, in the stock market, the economy, and therefore, it is a deathtrap, unable to normalize policy rates. >> i am so honored you are here. his new book, on debt, is my book of the year and this is the guy to talk to about it. some golden feathers to this new debt crisis now. how do you interpret the outcome of this buildup in debt, which is life at the zero bound? nouriel: we are in a situation in which we are not reducing debts and deficits. whenever there is a crisis, we have to backstop the financial system. there is more buildup of public, private debt, because zero policy rates, negative policy rates, quantitative easing. we are in the super cycle in good times and bad times. that ratios are rising. central banks are in a trap.

with these levels are private and public debt, they would be a market crash, economic crash. the path of least resistance given that will be to wipe out the value of nominal debt. that's one of the reasons why i see loose monetary policy, loose fiscal policy, loose credit policy. tom: this is a critical story. he speaks of the old world. are we going to do the same thing they did in venice in the city state of the 15th century, which is inflate our way out of our present challenges? nouriel: we have a huge amount of debt. what are the options? are we going to cut government spending? political pressure around the world is to do more spending to deal with income and wealth inequality. are we going to raise taxes on the wealthy and the rich?

there will be constraints on that. debt will remain high and therefore, the path of least resistance will be to monetize them and try to wipe out with higher inflation the real value of nominal fixed interest rate debts. of course, over time, that will reprice. higher volatile inflation. inflation was premium are going to go higher so that will be a solution in the short-term and high debt ratios with real rates rising over time will imply debt defaults because of the unsustainable debt situation both in the private sector and the public sector in a number of countries. we see both inflation and the debt crisis. >> good to catch up with you. great to have you with us on the show. walk me through what that means for growth for the next couple of years, for the next 10 years, given everything that you just described. nouriel: we have on one side debt ratios that are unsustainable and as i pointed out, the current amount of stagflation where growth is lower and inflation is higher is not just driven by short-term

supply bottlenecks both in goods markets and the labor market. i point to that as i see over the medium term nine negative supply shocks that are reducing potential growth and increasing cost of production over time. very briefly, what will happen is protectionism. balkanization of global supply chains, aging population in advanced economies and emerging markets, restrictions to migration from south to north. decoupling between the u.s. and china on trade, technology, data, information. global climate change will increase the cost of energy and the cost of food prices. the pandemic will disrupt global supply chains. and finally, the rising income and wealth inequality implies helping workers, labor unions, and that will put upward pressure on wages. >> that was the nobel prize-winning economist nouriel

roubini speaking exclusively with bloomberg at the greenwich economic forum. we do have plenty more to come here on "daybreak asia." this is bloomberg. ♪ let's get a quick check of the -. ♪

shery: here's a quick check of the latest business flash headlines. china evergrande is said to have missed interest payments to at

least two of its largest bank creditors. the property developer had not made the payments as of late tuesday. banks were expecting evergrande to miss the deadline and it is unclear whether they will formally declare that, and he in default. we are called some lenders are waiting for evergrande to propose a loan extension plan. draftkings has offered to acquire a u.k. gambling firm in a deal worth north of $22 billion. it said it is considering the cash and stock offer for 2800 pence a share. it would dramatically expand draftkings emerging gambling empire. u.s. bank corp. announced an billion-dollar deal to take over the union bank. the deal includes $5.5 billion in cash and about 44 million u.s. shares. it should be completed in the first half of 2022.

the deal makes the fifth biggest lender by deposit. it is part of a wave of consolidation in u.s. regional banking. haidi: we are watching how japanese equities will move when trade open shortly. let's get a preview from our stocks or order in tokyo. of course, we have had the reaction across markets that have been open to these evergrande liquidity and debt crisis fears. we expect to catch them? >> yes, like you said, we have worries over evergrande. issues are still waiting on markets. if you look at futures trading, nikkei futures trading 0.5%. so now, i think we are kind of expecting another week open. whether it will be a steep as yesterday, we have yet to see. of course, yesterday, if you look at the topix, although it

did fall as much as 2.3%, it did pare losses to less than 2% so there are investors waiting to buy on the debt. what we will see today -- >> still the breakout rally given the expectations about the leadership change. does this mean we can see that rally being derailed? what will really determine that? min: it has become less exciting overall because of this evergrande issue. which not everyone has been expecting, so it does provide certainty over the outlook for japanese equities. but like you said, we still have positives including expectations over the elections. we do have the earnings season coming up this month so there are potential catalysts for waiting investors ahead and of course, we do also have the fomc meeting.

still, investors may not be inclined to make any aggressive moves for now but you are not hearing people saying this is -- japan's rally. it's just taking a breather for now. we have a lot to see going forward. we will see first today how markets react. shery: min jeong lee in tokyo. some specific talks we are watching in japan, saw anger after the huge row we saw in the previous session. we are watching what the stock will do. today, we saw losses of 5%. we heard that soft 2 envision fund -- will actually -- softbank vision fund -- we heard softbank vision fund 2 carried out their funding. that has become a unicorn, blockchain infrastructure form.

we are watching mizuho financial . we have heard reports from the nikkei that they will issue a penalty. that will include the watchdog overseeing and directly managing the bank system overhaul and maintenance. some of those crypto stocks that we are watching over in japan, given the latest moves we have seen in the crypto space, we are continuing to see that downward movement in bitcoin, down .6%, drop below $40,000 at one point, given that we continue to see that regulatory drumbeat grow. the 100 day moving average at this point handing at the 40,600 level so if they break that resistance level, we may see further falls. ethereum down .2%. we have heard goldman and coinbase are backing a crypto fund manager.

the startup is raising $41 million in the funding round, haidi. haidi: we will be previewing a little bit later our announcement. talk about the country's outlook when it comes to what happens with evergrande, systemic risk. they will be joining us plus we get more insight on how stocks are likely to perform with the mainland equity markets returning to trade later. we do have the market opens in sydney and tokyo, next. this is bloomberg. ♪

shery: welcome to daybreak: asia from bloomberg world new york, i am shery ahn. caroline: -- haidi: asian trademark is just opened, the center stage for missing interest payments that lurches toward defoe. potential interventions with mainland chinese market

reopening after a holiday. plus the doj and the fed ahead, clues that could telegraph a pullback in stimulus. shery: japan coming online, korea on holiday, the nikkei down by 61%, lower by material and financial stocks. the worst day in about three months after coming back from that long weekend. the japanese yen holding steady, trading in a narrow range, not surprising given the anxiety not only because of evergrande but also the fed dollar and yen buying so we are seeing a push and pull. you have the doj policy decision, not much expected on that front but we are seeing the 10 year yield holding steady. haidi: a little excitement, we just had an earthquake that

struck near melbourne and could be felt as far as sydney in the office, we had a little shaking. we are hearing a 5.8 magnitude earthquake striking 38 kilometers south of a mountain in australia. we continue to watch but when it comes to the market, not much action, a flat start to that staggered open at the open of trading in sydney, we will continue to watch. macro ties to evergrande and the property sector and the chinese government. the aussie dollar trading at 22.72, kiwi stocks up by about .1% and the q. week dollar under 70 u.s. cent. our next guest suggests buying selectively in the market due to volatility on pork policy visibility, joining us from

singapore is the executive director of investment strategy at ocbc world bank management, tell me how you are approaching a chinese or emerging-market portfolio. we have had people come on and say they are on investable, you don't want to take the risk, there is too much opacity. what is your view? >> we cannot agree with some of those views by others. china's economy is slowing down, you have got a regulatory crackdown, and the policy is facing a juncture and the evergrande saga. it is spooking investors, we have no clarity as far as regulatory crackdown is concerned, as far as the economy is concerned, authorities have

monetary support. they have not done anything exceptional. we are telling clients it has changed sharply from this year. but chinese move cautiously, this is not the time to buy aggressively. there is a downturn and you are not sure when that is going to turn up. haidi: the selloff in the u.s., does that tell you more about the levels of how overbought these are, that evergrande may be the catalyst to much-needed rebalancing? vasu: the equity markets have been exceptionally well, the u.s. stock market has been the leader. world investment up almost 96% from the bottom in march of last year, that is a lie. at the same time, if you look at

the spike in earnings evaluations, they are not going by. they're not exceptionally expensive, you do not have international markets. evergrande comes in at a time when the markets are nervous, equities are double in the last 18 months or so. understandable, it has provided an excuse for investors who focus on the negative. we don't think the upside is negative. there have been millions of upsides. but in the next few weeks, the next few months, evergrande and fomc, the delta variant and others will create volatility. to some extent, that can be an option. shery: we see debate about whether this could be a moment. this is where ray dalio stands

on whether or not this is a moment. >> it has -- reduced structural damage through the system that was not rectified until the treasury came across in terms of its borrowing and the fed him across quantitative easing. this is not that kind of a shakeup type of thing. $300 billion is what they owe. this is manageable. shery: you mentioned some opportunities perhaps, where you see that? vasu: i agree. if you look at the liabilities of evergrande, it is less than a percent of chinese banking system loans. it is very low right now. even indirectly if you look at the chinese banking system, exposure to property developers, construction companies, it is in the region of 9%, something

manageable. i don't think this is a systemic problem. most of the loans of evergrande domestic, not international. you do have some u.s. dollar loans, most is domestic. i think this is something china can and will manage. nevertheless, we will see what he plans to do and that will create nervousness. if you do by china with a strategic -- you have to buy cautiously and gradually. there is no hurry. shery: given our focus on evergrande and concerns, it seems like the f1 see has faded to the background. what should investors be watching for given that we have the fed decision? vasu: it will come back to the forefront in four hours or so.

investors want to look out for whether the fed is going to indicate how much it will taper provide, whether it will taper soon, and what had been the last -- expectations forward. the fed was looking at no interest rate hikes. the last meeting we saw the dot plot move. they may see hikes in 2022. this what the markets care about. the interest rate is going to be brought forward. if that happens, -- if it doesn't, it provides the market some cover. shery: thank you so much as always. now to vonnie quinn with the first word headlines. vonnie: president biden planning for 500 million covid

vaccine doses to donate abroad. he -- manufacturer is continuing. the deal will be unveiled at the virtual vaccine summit. this is nearly doubling the amount of vaccine shots the u.s. has given, but no word on when it will ship or how much it will cost. the fda deciding wednesday whether to recommend pfizer shots, that in the stage for a meeting between the advisory panel this week. on friday, and fda advisory panel rejected the culver boozers -- boosters for all -- called for boosters for all. it is just for 65 and older and at risk populations. the u.k. is exploring joining the free-trade agreement between the u.s., mexico and canada. it is a recognition that the biden administration will not start negotiations on a bilateral deal soon. the u.k. conducting negotiations

around the world to replace its prior treaty with the european union. so far with the eu, japan and australia. a french bid to delay a trade meeting with the u.s., citing the deal between australia and the u.k.. they will press the pause button. many states have backed france's request to postpone the meeting scheduled for some temper tonight in pittsburgh. -- september 29 in pittsburgh. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i vonnie quinn. this is bloomberg. haidi: let's look at some of the movers in the tokyo session, banks on the move, trading up by about 1% after the dental services agency said it would issue a penalty against mizuho financial over outages over the

atm's. they will also see a system overhaul and maintenance. mitsubishi ufj up by 1.3%, after years of speculation ending, making an acquisition proposal for the union bank, adding to the wave of consolidation across regional banks. softbank trading to the outside after the lock chain infrastructure platform becoming a uniform -- uniform -- unicorn. around $155 million. ahead, we will preview china's decision discussing the outlook with an economist. a stable u.n. in the wake of the evergrande crisis but will there be a short squeeze or funding shortages to come? next, we will get more on the evolving crisis with the

property developer missing interest payments to two of its largest bank creditors, those two bond payments as well. this is bloomberg.. ♪

haidi: evergrande one step closer to default after missed interest payments due monday. a serious debate over whether this will become china's lehman butler moment, but while stakes are high, a systemic meltdown is unlikely. john, it seems like the consensus is that we are not going to see a lehman moment, not due to a lack of severity but the nature of the that system within china. what are we setting up for? >> i think even if there is not

a lehman moment for china, there will be lots of pain for banks, bond holders, investors with money and evergrande. that is certain for companies unable to make interest payments. they also have about $119 million of interest payments on bonds coming later this week on thursday, about 670 million dollars of payments to make by the end of the year and about -- more next year in bonds. there's plenty to worry about even if this is unlikely to cause a systemic issue. shery: we are seeing property developers dragged lower. john: because of all the troubles evergrande has had, there is concern about other property developers, whether it

is going to lead to contagion, fundraising, make sales more difficult for developers and cause him trouble. shery: jean-luc with the latest -- john liu with the latest. as the consensus -- the consensus is it is not a lehman moment there has been a high-profile moment same perhaps it is, the world's richest banker and ceo of an indian lender, he is saying evergrande seems like china's lehman comment and he reminds of the infrastructure in dental services and when that happened there are problems in that bank, the indian government answered swiftly but evergrande we are seeing them trade their bond about $.25 to a dollar level. haidi: a lot of interesting

discussion, if you think about it as a major systemic liquidity event, i wonder what the impact will be when it comes to mom-and-pop's, people holding these properties yet to be built. so much of china's consumption story hinges on that household wealth. that is a very interesting question. as john mentioned, lots of pain ahead for all of the different stake holders. ray dalio, speaking of provident investors, saying the debt -- prominent investors, saying the debt crisis is manageable although investors will be stung. the founder of hedge water -- hedge fund bridgewater associates speaking at the economic forum. >> there is a tendency, understandably, to think because they are maoist and communist that they are going to go back to that kind of thing. they are not. xi jinping introduced the newest

stock market in beijing. he made the point of being the one who introduced the market in beijing to these small enterprises. they know it catches mice. the issue is that the capitalist is not in control. the issue is there is a system for the whole system, and they have to make sure it is not a -- driven system. then there is data control. and you have to understand there is micromanagement. it is like a top-down versus bottom-up, whether you like it or not. >> how can our listeners and viewers prosper from there mike management -- there micromanagement in china. what is the opportunity if we see their dominant investor's vision domestically go down in price? how do you play that? >> the mechanics are the same as

the united states went through and everybody else went through. it would be very similar to our 2008 mechanics. so what we do, it has happened over and over again, the central bank makes a decision, a moral hazard. they never used to have a moral hazard. >> do you believe right now after this week in the markets? >> they knew this was happening. there was preparation and they know there is more. that is not a bad thing. in the past, it used to be that they guarantee it. state enterprises and local governments, implied guarantees, it was bad. the process is the same. expect the same process we would go through. which is to say there will be some. investors will be stung. the system will be protected because it is denominated in their own currency.

>> i want to get this on the record, every wall street firm is saying this is not a lehman woman. explain why this is not a lehman moment? >> well because a lehman moment produced pervasive structural damage through the system that was not rectified until the treasury can across, in terms of its borrowing, and then the fed came across with quantitative easing. this is not that kind of a shakeup. $300 billion is what they own, this is manageable. the basic economics is for all countries in all time, if your debt is in your own currency, you can deal with it. you can work it out. we have seen it over and over again. it is a good thing lenders get stung or borrowers get stung. that is how the system works. tom: my number one question, you

and i have looked at that spectacular experiment, i had the honor of lord patton with us the day of the hong kong collapse in the change in policy. how should our western banks, people you know, how should the western banks adapt and adjust in hong kong to new china realities? >> you have to decide whether the rules are in a place you are comfortable with. they will set the rules and you go in and decide if you are going to be part of that as a good citizen or you are not. but you don't jump in and out. china is a strategic play. you are not going to jump in and out. and the amount that you are in should be that which you are comfortable with. it is the same as an investor. it is not smart to sell on the break or by, --- buy.

it is a strategic play. shery: bridgewater cochairman, co-cio ray dalio. other stories you need to know in today's addition of daybreak, berg sue approach subscribers go to -- subscribers go to your terminal, this is bloomberg. ♪

shery: prices still below that $100 level, china continues on its environmental push. we heard from president xi jinping they hope to achieve neutrality by 2060. prices averaging almost half, copper also we have seen concerns over evergrande. gold has been bid up because of haven manned.

cost futures higher as brazil's harvest fell to a 12 year low. haidi: the ceo saying the company is bullish on oil. >> when you look at our 10 year plan, this is the greenest -- we were very interested, when it came to the market, we were pleased to be able to do that. >> the deal did coming higher on a per barrel basis. i appreciate that oil prices are up, but some are saying it is too high. be you pay too much. how did you come to the right valuation? >> we didn't even look at today's prices, we make sure it fit our supply framework and we felt like we paid a fair value for the onset based on that cost of supply framework. all in below $50 wti, it is not what the price is doing today.

to represent the long-term prices, we made to -- we need to make sure if it's our framework about how we allocate capital. >> this is a longer-term question, you guys do things before the rest of the industry. you were regulating your cutbacks, paying out buybacks and dividends, the rest of them were spending their cash flow. then when you cut your payouts you didn't first for the industry. the fact that you have to raise it and you bought two huge deals, what does that tell me about how you, ryan, see the industry of the potential super cycle or supply crunch coming up? >> i think we are pretty bullish on the next couple of years. think the supply and the balance in the market, restraint the opec-plus group has put into the system, the recovering demand we see coming out of the covid pandemic, we see demand

approving. we see getting back to pre-pandemic levels by the end of the first quarter next year. in the market getting balanced. there has been discipline as you point out on the investors. which is what we have been following for the last four or five years. it is important. we are pretty constructive on the price going forward, but in our view the world is going through an energy transition. there's going to be increased demand for the product if we go forward. we want to be in the best basis, the lowest cost supply basis in the world. we've got a strategy to be really driving the company and itsortfolio to the lowest cost of supply so we can continue to meet -- to be the demand of a changing world. haidi: next, the boj and the fed, clues that may telegraph pullback in stimulus, a preview

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shery: look at the markets now. extending declines after the worst day in three months. we have anxiety over evergrande, central bank decisions this week. also down about .5%, electronics and automakers leading the decline. given the angst in the markets, the japanese yen trading in a narrow range. dollar selling, yen selling need a big push and pull on the currency market. u.s. futures at the moment down

.4%. we saw a lot of seesawing in the new york session. we ended the session down given the concerns over evergrande and that hit miners in australia as well as iron or. we saw a rebound when it comes to iron or prices, but the bigger picture continues. financials leading the decline. a big week when it comes to central bank decisions. two in focus including the federal reserve ready to taper. how worried the bank of japan is about sinking into inflation. who better to explain than our global economics and policy editor kathleen hays. kailey: -- kathleen: this is a big meeting because we been waiting to know are you ready to taper, and it is taper -- temporary and how about the dots?

are they going to hike rates? they are tapering inflation, the taper expectation survey said 67% what they are going to signal at the end of this meeting is the taper is going to start in november. and they will give us more details as well. two camps, one says transitory, the transitory team. they say we don't need to go fast, don't worry about rate hikes quickly because inflation is subsiding as the post-pandemic stresses ease. the other team, the hawks are saying how long can you call inflation that stays at 4% or higher year-over-year temporary? it looks persistent, we think it's time to announce the taper now, get it done by early next year in case we need to hike rates by the middle or second half of next year. dots. every three months the fed updates its view of rove, unemployment, inflation, and

they say here is what we think the course of the rig is going to be. the numbers have gone higher the last couple of quarters. seven out of 18 are saying we're going to hike rates next year, that is what we think based on what we see now. what if that numbers higher? that could extended some waves. one thing to remember is all of this is being debated while joe biden and his team at the white house think, should we reappoint jay powell or not? you want someone who is not going to let inflation get high, we want to see the economy maintain growth, unemployment falling. this adds another element of consideration for jay powell and to the fed as they try to do with a have to do and communicate. haidi: continuity is the name of the game for the boj, what are you watching for? kathleen: the boj is the odd one out, isn't it? most of the other

banks are looking to start reducing stimulus, not the boj because of a couple of things. inflation has been almost a year below zero, that is called deflation. there was a pandemic and weak growth but the problem for the boj is looking at gdp, where it has been and where it is expected because this is testing clouds over their decision today where they can't do much of anything. gdp was down sharply last year. japan seemed early to be hit on on its own virus problems but the rest of the world, shutdowns, lockdowns, not as many demands for exports. coming out of that, look at those two orders of average growth. -- quarters of average growth. then the first quarter, you get a negative gdp, been positive, almost 2%. the rate of exports has been slowing, how badly are these lockdowns going to affect consumption? that is one of the

big questions that has to be answered. or details on the green lending program. are you going to get questions for the governor about the upcoming election? a new prime minister, what they want to see. is it looking at jobs, saying you want to help this grow? those could be some interesting questions that they have to field today as he gets ready to become the longest serving boj governor in history. haidi: speaking of continuity, our global economics and policy editor with the two big ones, let's get to vonnie quinn with the headlines. vonnie: johnson & johnson says a second dose given two months after the first provides 100% reduction against severe disease. another study found the additional shot decreased the

antibodies when given -- increase antibodies when given six months after. the south korean president says the two koreas, the u.s. and china to declare an end to the korean war. he told the un's general assembly this would be a key step to the end of nuclear activity on the korean peninsula. the war ended in an armistice rather than a peace treaty. president biden has used his u.n. general assembly speech to double the money the u.s. will spend helping poor nations fight climate change. a mixed response from environmentalists, but the test is whether he can win over congress and a spur other countries to step up their climate agenda. the chinese president has told the u.n. general is only his country plans to stop building new coal-fired power plants abroad. he also about support for poor

nations to develop clean energy. this is a year after he pledged to make china carbon neutral by 2016. a beijing finance institute reports more than 70% of coal plants built today at roof -- rely on chinese funding. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ shery: we take you live to the u.s. congress where the house of representatives is voting right now on raising that $28 trillion debt ceiling. this coming at a time when the treasury has warned it could run out of accounting measures -- measures to stave off a payment default sometime in october. continue to see the vote and it is expected it will pass. the house has the votes to suspend the debt limit and keep the government-funded. this will suspend the debt limit

until after the 2022 congressional elections. they needed 217 yes votes and got it the house. the issue is what happens in the senate. republicans are bound to block -- block the measure in the senate. we head toward twin crises in the coming weeks, a government shutdown and a u.s. default on debt. it's discuss with jack fitzpatrick. it seems the house does have the votes in order to pass the bill and extend the debt ceiling, the question is what happens in the senate. >> they just got enough votes in this ongoing house vote to pass this measure that combines the government funding and that limit measure, but it seems clear there are not going to be votes necessary in the senate. i've been asking republican senators that still support this. there is only one who has said he likely will support this measure.

the insistence from republicans is they separate these two measures and they would then support the government funding provision to avoid a shutdown and required democrats to act in a partisan way through a reconciliation process to suspend the debt when it. which is complex, which is why this is the tense time in washington because democrats are seeking republican votes rather than going down that partisan path. haidi: what is the state of play when it comes to the infrastructure bill as well as timing in relation to the broader bill? >> the infrastructure bill is going to be interesting. leadership has promised a vote on that next monday. the moderates think they have the votes because republicans will join them in backing this bipartisan bill that has to pass the senate. progressives do not think that is the case and they are support

until they can get that broader reconciliation bill. on monday we are going to find out who is right. but the fact that they can't get the reconciliation bill done so quickly in time for a september 27 vote complicates the democrat plan. they tried to take these two tracks and do both of them together. clearly they are not going to be up to do that and on monday we will learn about who has the leverage, the moderates or progressives based on the result of that vote monday. haidi: jack fitzpatrick in washington as we monitor those votes. we are getting the latest when it comes to multiple earthquakes striking east of melbourne. we had the biggest quake causing damage to buildings in melbourne, magnitude 5.8. it struck 38: ours south of mount--a mountain.

-- 38 miles -- kilometers south of a mountain. another quake following the initial one, the 5.8 magnitude striking mount bola. building damage rubble across metropolitan melbourne and chapel street which is a popular restaurant and nightclub precinct, five kilometers from the district. including right here in the bloomberg office. we will monitor that situation but we are getting subsequent quakes still happening in melbourne. coming up, we will talk about the risks facing china's economy. fears of contagion continue to play out out of evergrande. joining us next with her views. this is bloomberg.

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>> they don't really know what they are going to do right now. maybe a little bit like what we were trying to figure out prior to the lehman crisis. that is, do we step back and let it go and take our chances, or do we intervene?

my bet is they are ultimately going to intervene, but it has not played itself out yet. there is a lot of politics still to go on in china. alix: shery: -- shery: weighing in on evergrande, our next guest says policymakers will try to avoid evergrande causing risk or contagion in the market. china economist, right having you with us. what form could any support from beijing for evergrande take? peiquian: thank you for having me. the fate has been concerning because there has been no reaction from the state. the bottom line from our view is the government will be preventing any systemic risks in a broader financial market. we think that the government and central bank has a toolbox to

achieve that. we think they might be stepping out with liquidity injection should there be more so off or worries in the market, so that will achieve more stable liquidity levels as well as market rates. in the lon term, we think cuts will be on the table. this will be for banks who have exposure to the property sector and also it helps the maturing amount of and a less lining up. shery: are we passed the aggressive tightening phase question mark --? peiqian: i think they are past that phase because it has been tighter than our expectations in the first three quarters of the year. do bear in mind we have $3.65 trillion of local government

bond issuances this year and we have a lot of room for that to accelerate into q4. we expect a rebound in q4 which might offset some of the pressure we are seeing now. haidi: how much does the government care about the externalities when it comes to what is being affected by evergrande? do they care about iron ore, bond market prices? what foreign investors are thinking? what is the domestic priority in handling this? peiqian: i think there are a few considerations for the government. the bottom line is economic stability. as you mentioned, commodity prices are facing more pressure as a result of a campaign from a couple of years ago. commodities specifically follow

credit closely as well. it is not surprising to see a commodity price under pressure given how it impacted it significantly in the first half of the year. the economic conviction has not been deteriorating sharply, even though we have faced a couple of crisis moments in the previous quarter. starting from the pandemic, we had a recovery but we have been hit again by various outbreaks domestically. but china has been quite responsive to offset any of the downward pressure. the government is targeting using policies and of any broad-based policy so far, but we do not rule of the possibility of more broad-based easing policies if they weigh the systemic risks. haidi: you talk about social stability being key.

property to camille asian is the nest egg effect in china, particularly with social welfare being not a strong. what happens to the homeowner effect, the wealth owner effect? peiqian: it's not our base case at this moment. we expect the property sector to remain largely sick -- stable, but given they are facing more pressure, think there might be some room for easing on the demand side. given that properties were leaving speculation, there is room for some owners, especially first-time homeowners, in a crisis scenario. that will be helpful to upgrade in the immediate term. shery: during the market uncertainty, we have seen the chinese yuan be pretty resilient. are we going to see strength against the u.s. dollar and

other currencies? peiqian: that is an interesting observation, it has been stable given the market and the credit risk. that has been a strength of china and a silver lining of the economy broadly. i think the market is confident about the stable recovery of china's economy in the long-term, given that there is a lot of capital outflow. our focus is what we are looking at for the year, and the exports and the supporters of the currency until year end. haidi: what is the long-term goal for the property sector? are we looking at a lower contribution to broader gdp if they obtain their goal --

teaching investors and stakeholders a lesson when it comes to the accumulation of debt and aiming for a smaller but less leveraged and more stable property sector? peiqian: i think the entire policy goal was started in 2016, to make sure home prices, the property sector is decoupled from credit. there is speculation in the properties us -- sector. it is not that it will be less important as a contributor of gdp, but i would expect any long-term the property sector prices to decouple from credit health and property sector will be more a stable contributor to gdp growth structurally. haidi: always good to have you, the markets in china economist for natwest. next, reopening after the two day holiday, ratings in global

markets and will we see the selloff down? monitoring the impact of evergrande's to take contagion -- contagion and looking ahead to the surge as well. lots more ahead to this is bloomberg.

shery: latest headlines -- haidi: -- the board is said to be meeting to discuss strategy, mirroring a similar decision last year bringing a sharp market activities into that unit. an overhaul of the troubled lender hit hard by the scandal. mitsubishi u.s. j trading higher in tokyo after a deal to sell its union bank unit. u.s. bank corp. is acquiring the lender which has 400 branches across california, washington and oregon. the deal is worth $1 billion and should be competing -- completed in the first half of next year. it includes about 44 million u.s. bank shares. a u.k. gambling firm -- considering the cash and stock offer for 2800 pence a share.

the --driving deal activity. shery: markets reopened in mainland china in over 30 minutes. evergrande contagion fears have hit hong kong. what will investors see? let's bring in our bloomberg markets coanchor, it is your moment to shine. [laughter] >> i get my chance to shine every day, do i take it? not really. i will probably be the only bright spot, wearing my bright blue suit today. it is on the back of -- we expect declines on the catch down trade. i was speaking to a guest yesterday, a hedge fund manager out of hit -- shanghai. as into how he described with the open will look like.

>> i think it will be down because of global, but the market will be choppy and volatile until the evergrande situation is more clear. i expect people to support it and the market could go up until then. david: as far as what it might look like, there are several tracks to mirror what we might consider a gap, closest one might be the global etf that tracks -- we are going to see that in the chinese currency and commodities trading on the chinese. haidi: it feels like a new zombie franchise called contagious debt crisis. what signs are you watching out for in terms of this contagion and waiting for action. what are you looking for? david: there is a great piece

today out of simon flint: get the crisis menu if you will. so what tools do policymakers have really to avert any tort -- any sort of systemwide fallout? we will reveal that in a couple of minutes, but i guess to your point, open market operations resume today. big injection last time, one hundred billion, and that goes into your other point where we have yet to see any signs of contagion. money market rates and funding rates with the banking, banks coming back online. we will watch these things very closely in about 10 or 15 minutes. if this moves up, maybe a signal that there is some hoarding of cash, not to say that we will a lot to track as we approach the reopened. haidi: a lot more of david and his turn to shine coming up. we will get insight on the

evergrande saga, the lead economist and expecting conditions for the property sector to remain tense for some time. that is it for daybreak asia. our market coverage continues after the start of the trading in shanghai and shenzhen. this is bloomberg. ♪

♪ david: it is not :00 a.m. in beijing, shanghai and here in hong kong welcome "bloomberg markets: china open," to "bloomberg markets: china open," -- welcome to "bloomberg markets: china open," i'm david in glass. markets set to open around all the risk for evergrande