>> hello and welcome to daybreak asia. sophie: we are counting down to the asia market open. shery: our top stories, the fed suggests tapering start next month and continue into next year but says it is not a signal on the rate lift off. haidi: ever grand keeps

investors on edge with the latest bond filing. the fed plays down contagion risk. shery: japan's outgoing prime minister -- ahead of the first so-called meeting of the quad group. haidi: we are watching asian market reaction. it was slightly hawkish. most of markets said the tapering could start in november, which is soon, and finish made 2022 and look to start normalizing with the growing inclination to raise interest rates. powell was just talking about first steps in terms of withdrawing pandemic support same we could see tapering november 2 or third but leaving

the door ajar in terms of waiting longer. he wanted to save the start of tapering does not start the countdown of raising rates. shery: right, just the fact that his comments were less vague than the statement is what markets were watching. this has had an impact when it comes to treasury yield curve flattening during the session and repercussions in the u.s. and around the world. we are seeing developing nations start to move. one hour ago brazil raised their benchmark one full percentage point. haidi: and we watch the ever grand saga. today's the day when some coupons are due.

but we had the filing when it comes to the yuan leaving analysts befuddled. fresh uncertainty after a vaguely worded statement saying essentially one of them had been resolved by negotiation. lots of speculation about if they are trying to sidestep declaring a default, potentially giving beijing more time to come up with their own restructuring plan. lots of reports look like we see interest free entities and turn it into a state owned entity. we are hearing opinions, one saying research affiliates pulling back exposure to china

in favor of others. shery: you have to love the market reaction to the vague statement. markets in the u.s. opened higher because you're confused about what it means but we have the ongoing saga, potential tapering from the fed, more and more bearish bets coming from investors in the emerging markets. haidi: and this week has been disrupted by holidays anyway. let's go over to sophie for a look. i suppose some of the anticipation has been taken out of ever grant because of the statement. >> oil saying china might take a triple hit of cash prices and delta impact and delivering

drive. at goldman, pressure for oil of over $90 per barrel for rent which would tighten further at a time where a time where gas demands oil. we might get an announcement from south korea about if prices will be raised for fuel. in japan, one of the best-performing stocks this month could be affected and this area is in focus. korean export data is due this month. we have rate decisions from taiwan and philippines about economic outlooks. adb has a forecast for taiwan, south korea, and hong kong while

lowering the projection for south asia where we will likely see more support come from policy we -- policymakers in the region. shery: the federal reserve is confirming they are ready to taper bond purchases and be finished by mid next year. rate lift off by the end of next year. kathleen hays has t takeaways. are we seeing a more hawkish? tilt? -- tilt? kathleen: jay powell, press conference today after the meeting they folded the line about being ready for tapering. in his statement he alluded to his speech and said it could start by the next meeting, which is november. >> we discussed the appropriate

pace of tapering ones economic conditions satisfy the criteria in the guidance. no decisions were made but participants view as long as the recovery remains on track, a gradual tapering that concludes mid next year is appropriate. kathleen: that means they would be done in eight months. there is no connection between tapering and lift off but you cannot lift off the rate until you taper. stocks moved up again. there were seven members looking for the rate hike and now it is nine, which is half. i'll show you another chart that says at this point, there are still nine members who do not see any rate hikes in 2022.

maybe 2023 or 2024. but the turquoise and purple, there are three who see two rate hikes next year. opening the door to the taper opens the door to a rate hike, even if it does not happen right away. haidi: is the fed getting worried about higher inflation won't be as tapered? kathleen: jay powell said he expects the supply chain constraints to start using and then inflation will fall. they updated their projections and went from seeing 3.4% inflation is year two 4.2%. but next year they see it going down to 2.2%.

so a surge and then it will cool off and then we will look at what we are doing. jay powell also said it will not take a superstrong support to open the door in november, it just has to be halfway decent. haidi: china is facing interest payments on two bonds. it is a crisis across international markets. it was a vaguely written statement. let's cross over to stephen engle. we heard from ever grand on debt repayment and now we are watching for the dollar bond. >> global investors want to find

more details about if the $84 million in coupon payments on the dollar bond will be paid today. indications are maybe it won't because they did not pay the bank loan interest on monday and put out a statement to the market yesterday essentially saying they have resolved through negotiations payment interest on the yuan note. it says the payment has been resolved via negotiation off the clearinghouse. usually chinese companies pay through a clearing house and when they pay directly to the noteholders it is often a sign the companies cannot pay the cash on time or in full. that is why investors scratch their heads when they saw the statement. is this a resolution or a delay

because they cannot pay? that would indicate that into factor they are defaulting but not actually being named -- in de facto they are defaulting but not actually being named in a default. there is a grace period. but it would technically be a default. we want to bring you the biggest names covering this story. one of the banks would be hsbc. they get the bulk of their revenue and profitability from china and hong kong. this is what the ceo had to say. >> the turmoil in the market does not have the potential to have third order impact. clearly with the changes taking

place in the ever grand situation is concerning and there is potential for second and third order impact on the markets and we have to stay focused on that. >> hsbc has been among the larger holders of ever grand debt, along with blackrock. a little over $200 million ever grand dollar bond. shery: and we have heard beijing could be announcing a major restructuring. >> a new site is saying the government is in the process of working out the restructuring of ever grand into three separate entities underpinned by state owned enterprises, essentially turning a private company,

obviously the most indebted developer, into a state owned enterprise. that announcement could be revealed in days and sources say the chinese government wants to protect the interest of chinese investors who put down payments on the homes and bought products , they want to stem the contagion and to that they will restructure, according to anonymous sources from asian markets.com. haidi: we will continue to bring you developments. let's get to vonnie quinn. >> jay powell says there is litter -- little direct closure but prices could impact global conditions. ever grand could damage

confidence. >> this situation seems particularly -- particular to china which has the highest debt of any emerging market economy has had and the government has been working to get it under control. there is not direct u.s. exposure, the chinese banks are not tremendously exposed. >> janet yellen wants wall street to assist with negotiations. she contacted leaders from several banks in recent days and funding could be adjusted in october. and pressuring republicans to help raise or suspend the debt spending. biden and emmanuel macron will meet face-to-face to mend ties. officials in paris have been

outraged and biden has spoken with micron over the phone. leaders agree open conversation could have mitigated the situation. clover says late stage step -- late stage trials of the covid a shot protect against 79% of delta cases. the clover shot stimulates immunity against covid and try to data shows it prevents 67% of cases caused by any strain including gamma and mu. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: coming up, japan says the military rise in china could strengthen economy. more details. and we discussed the tapering

timeline with a macro strategist. this is bloomberg. ♪

>> jerome powell says they could unwind their asset program by mid-2022. we are joined by kathleen hays and macro strategist at mellon. kathleen: he has held several roles in washington, where you helped craft policy statements. when jay powell says tapering

could start as soon as the next meeting, is not the same as saying, we are tapering in early november? >> no. they first and outs and action. i took the idea that tapering would soon be warranted meaning that they would devote the november meeting to lay out details. powell has repeatedly said we will get a lot of specifics before we start. we haven't gotten those yet. i think they will donate that november meeting and then maybe start in december. slowing asset purchases? it will be done by the middle of next year. kathleen: half of the group is saying we see the first great height by the second half -- the first rate hike by the second

half of next year and some of them thinks there will be two. >> i don't think it is a group. i think it is a set of a pretty assertive purchases. i think what he did was to tell his committee we are not in a rush, we will learn more in the next meeting about what happens with ever grand and fiscal legislation am a so let's announce in november. so that gives them until the second half of next year. shery: did markets overreact today? >> when you are sitting in the

boardroom, you have no idea what market participants will take. i think they got it about right. they will unwind unconventional policy action. there is a sell by date for the act of purchases. probably july of next year. and that they fully intend on starting to raise rates may be as soon as december of next year but what they also heard is that they are confident enough about the economy to do that. and that's good news. shery: we are wrangling the debt ceiling. could that throw a curveball as the fed gets ready to announce something? >> yes. it is a curveball that the chair caught. there are moving parts that are significant about the outlook.

we do not have to decide right now. let's put it off to november. by november, they will know about the continuing resolution to keep the government running, and they will know about the home of the debt ceiling. why would they wait? >> i guess if you are being surveyed, you are not watching those kinds of things as much. is there a risk that the fed is so cautious with the tiniest saying that they let expectation get out of control? >> you are interested in what the fed will probably do, not what i think they should do. i think the increase in prices was more widespread, more per -- more salient than households --

salient to households than expected. they raised the inflation forecast by a percentage point and it will probably go higher than that. that is why we are seeing a sequence of them marking up to the reality of higher inflation. so that says they will have to do more further down the road. but that is part of the strategy. they are worried that the risks are asymmetric. if you move too soon, the economy falters. if you wait a little longer, you always have the option of raising rates more than thought in 2023 or 2024. that is there playbook. shery: thank you very much. you can get a roundup of the stories you need to know in

today's edition of daybreak. this is bloomberg. ♪

haidi: facebooks mark schafer is stepping down after 13 years. he helped develop they are ai organization, including removing content that violates policies. he will be replaced by andrew bosworth. bank of samara -- bank of america ceo -- at the risk of being poached by competitors. they've been boosting firms in the fight with talent. bank of america is reserving the

rate pay for jr. bankers. it was raised to $100,000. >> our attrition rate is the lowest in 10 years. we have plenty of capital. so it is down to doing the hard work. haidi: apple gives workers as much as $1000 in order to get retail operations back on track. tim cook criticized leaks to the press, including details about their product launch event and a meeting held last week. next, j.p. morgan and the market outlook amid said taper talk and the ever grand crisis. this is bloomberg. ♪

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we are watching for the count down to opening in seoul after their thanksgiving. south korea will raise power prices for their sword -- fourth quarter. >> we will be watching energy

markets given the ongoing supply crunch boosting for refiners in south korea. the yen is holding steady. concerns around tighter supply going into winter which goldman says could push brent to $19 per barrel. when it comes to the eem space, the key factors will be the impact on china and cushioning the down the side.

haidi: jerome powell played down the risk of market contagion when speaking about it earlier. >> the ever grand situation seems particular to china, which has a very high debt for an emerging market economy, the highest it has had, and the government has been working to get it under control. the big chinese banks are not tremendously exposed. haidi: for more analysis, let's bring in joe from jp morgan. fundamentally, it is clear the priority will be foreign investors and stakeholders.

>>: i do not see this as a big problem. looking at property developers, it is 7% of total loans. let's look at evergrande. i do not see this as systemic, but it could be industry wide. so i'm not concerned about the rest of the emerging market but i think investors have to be prepared of rising rates and other problems that might emerge in the sector. i think the government will do

something that is guided in this case. china had been allowing more corporate default. it's just that the size of this one will have to take time to play out. so i think prioritizing workers, domestic investors in wealth management, i think some banks will take a hit, it was made clear, but i think states will be guided. haidi: the lion's share is payable. so is it possible for policy makers to get the in development properties built so homeowners can get what they paid for but also have a teachable moment where they will not support more

hazard and the red lines are still intact? >> they will have to walk a fine balance. you do not want to have a sale prices impacted. land value could still go down more. analysts see land could go down another 15% between now and the end of the year. so we have to see how it plays out. there are many different kinds of creditors involved but i think looking at the overall numbers, it is a question about how the pboc reacts. the numbers are manageable and do not .2 systemic risk. i think we have a situation here where markets need to be more at

a standstill. haidi: for the global economy, how problematic is what is happening with ever grand, even if it does not end up in a huge spillover, it is combined with a fed tapering to come. >> i do not see that as being a major issue in all of this. it is effectively on cruise control. powell has -- we do see this taking place towards the end of the year. i do not see the fed being a major issue with this problem but the issues in china are bigger and this is not something

we could put a short term timeframe on digesting. data shows a slowdown. it's not really about fed policy. there is still regulatory tightening that could play out further. bonds markets have been resilient. >> what about the divergence between the pboc and said -- and the fed? >> we are at multi speed recovery.

in the u.s. as recently as july we were looking at 9.5%. so it's not all about the fed. china is acting on a lot of priorities. so it is not just ever grand, it is the growth rate we saw before these problems emerged. >> we are getting confirmation of the report that the fda is authorizing the third dose of the pfizer booster shot for some populations including those 65 and older and those who are high

risk and work in high exposure places. >> joe biden wants wealthy nations to donate more covid shots and donate them to poor countries. they will send 500 million more vaccines abroad. the summit laid out goals about vaccinating 77% of the world one year from now. china media say guidelines will accelerate news lines covering ai. washington accuses beijing of

hacking in order to get information. taiwan is set to join a pacific deal. the president has made joining the pact a key goal of her final term in office. this will complicate discussions between member nations. the spike in european gas prices and ministers from the regions have voiced concerns about energy costs hitting all-time highs. ireland says short-term measures are needed to avoid losing public support for the green shift. global news 24 hours a day, powered by more than 2700

journalists and analysts in more than 120 countries. this is bloomberg. >> janet yellen appeals to wall street ceos about the debate. will they help? this is bloomberg. ♪

>> janet yellen is calling on the leaders of wall street to campaign to pressure republicans to support raising or suspending the debt ceiling. joining us is sally bakewell. what does secretary yellen want? > from wall street she has urged -- secretary yellen want from wall street? >> i think this is a sign of the pressure and janet yellen has called wall street ceo to try to enlist them in her campaign to get debt limits suspended or raised.

it is an interesting move because i think bank ceos do not want to be seen lobbying directly for any political outcome so i think this would be more about that she likes -- she would like some ceos to maybe mention something about why defaulting would be bad and the government cannot raise the ceiling so it raises those concerns. speaker pelosi quoted her yesterday in a speech where she said that he said failure to address the debt ceiling could cause catastrophe and harm america, according to nancy

pelosi. >> do we have precedent when it comes to ceos that are more vocal, or is this not in their wheelhouse? >> some have spoken about the debt ceiling in 2011 and probably since then. they are weighing in increasingly on certain political topics but i think they would want to steer clear as anything that seems to align with lobbying. i think analysts on wall street are increasingly convinced that lawmakers will not address the debt ceiling soon so whether that adds urgency or creates a different momentum among the ceos to speak about it, we will have to see. shery: it is about keeping

workers, given the shortage of talent. it happens over and over again, the banks are raising pay in order to keep bankers at their jobs. listen to the head of bank of america. >> the talent. our attrition rate is the lowest it has been in 10 years. we have plenty of capital. it is about employee and doing the hard work. shery: the shakeup could pave the way for a new generation of leaders. we will watch closely to see what happens. haidi: talking about the race or talent, it's not just about the money. it is about whether the working

culture can be approved by young people. one employee is suing the employee about a toxic environment in london. a 35-year-old veteran at ubs is seeking more than 200,000 pounds for negligence over anxiety disorder that he says was created by the anxiety from working there. so when it comes to attracting and retaining young talent, wall streetch minister told bloomberg china military influence could pose a risk to japan and ever grand could

affect the world. they are joining several at the white house. daniel k has more. what do we expect from the outgoing prime minister in these talks? >> this is his swansong and he is there to show solidarity and represent japan in his broader strategic initiatives and bring together the u.s., india, australia, and japan. he won't be in office much longer but there is consistency in policy toward china among the candidates in the japan election so no matter who takes over for him, they will maintain the same

kind of hardline policies. we will not see what happens during shinzo abe's tenure. since the pandemic, it's hard to see any light at the end of the tunnel in terms of what will prompt relations to improve short-term. >> what else will they be addressed in the meeting? >> it's friday. sue goa is heading over. -- suga is heading over. the quad has taken a lead. they are talking about supply chains, semi conductors, chips. this is part of a broader initiative by these democracies to set the standard in asia and say, look, for asian countries,

this is a positive vision we are trying to show the world. this is what we can offer you as developed economies. kind of an alternative to china. there is a military aspect to japan as well. australia, u.k., u.s. security partnership was just announced and this is emblematic of that suga. welcomed the partnership and said he would deal with france and sees france as a key security partner in the region. so he is trying to mend fences at -- as the transatlantic alliance comes under pressure. >> coming up, facebooks chief

technology officer steps down next year. we will discuss what this means. this is bloomberg. ♪

>> facebook chief technology

officer plans on stepping down next year after 13 years. this after the company announced changes to apple's app policy. >> also when facebook is facing intense scrutiny and criticism by the technology that is supposed to remove harmful content, that perhaps it does not work well. he will remain at facebook, shifting to a senior fellow role. this follows recent eggs -- exits of other top execs. the cto is part of the original

gang and oversaw key areas like blockchain and augmented reality, the ai organization, and this is the group that developed the technology facebook uses to automatically find and remove content that violates policy. there has been a lot of focus on that lately so this is getting more attention than normal. >> what has been the impacts of these latest ad restrictions? >> apple stock drop in the latest session. it repaired some losses by the close but the recent changes could limit targeted advertising and that will have a greater impact in the third quarter. a slowing impact on growth and

the drop in apple stock to the lowest point since earlier in the summer. facebook already seeing declines in their digital ad business. >> south korea numbers for the first 20 days of the month. average exports daily have risen 31.3% year on year. the headline number rising 22.9%. chip exports, 7.7% gain year on year. they saw judgment -- double digit gains but have eased. exports from china to the u.s., 20% each. imports, gain of almost 40% year on year. >> industry shortages get worse

and delivery rising to 21 weeks in seoul, well above the danger zone. ford strikes a partnership with a start up to use recycled materials to build new batteries. haidi: in the next hour we will talk about the latest earnings and impact of the global supply chain and crisis out of china. the market opening in sydney and soul is almost upon us as markets digest a slightly more hawkish than expected and j.p. morgan saying tapering could begin as early as november.

we are also watching the fallout of evergrande today. a very serious announcement yesterday regarding yuan bond and watching for any report on the restructuring from beijing. this is bloomberg. ♪

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shery: hello and welcome to daybreak: asia. haidi: taking a look at the major markets opening in asia. apex shares set for a steady open after wall street shrugs off the new fed taper timeline. jay powell says bond buying could be scaled back from november. it is crunch day forever grand as the dollar bond comes due.

chinese state media report talks of a state takeover. we'll be getting a check on global supply chain stress. let's take a look at the start of trading in asia as we continue to try and work out what the implications are from a more hawkish fed announcement overnight. sophie: a staggered open in sydney. the a6 200 higher by miners. as we see iron ore extending, holding gains above $100 in singapore after rising from a 16th month low amid the concerns over evergrande. jeffries trimming the price forecast for this year and next. the chinese property market makes up about 15% of global steel demand. after the long break, officials

in seoul say they will be monitoring risks from the fed and tapering timeline. the cost be lower by 1% this morning. we do have cap kobe bouncing nearly 3% this morning. this as power prices are to be raised for the first time in eight years on account of the move for oil and coal costs. checking on commodity prices to check in on crude this morning. brent coming under pressure along with new york crude. at goldman, they see brent pushing toward 90 bucks a barrel if the winter is colder than usual. exacerbating the tight supply situation we are seeing. check out the dollar index. we are seeing it steady after what we saw on the fed's comments around tapering. the offshore you want holding below 648 as we assess the concerns around evergrande with investor focus on the dollar bond payment that is to be made. shery: when the markets open in

hong kong, will be watching chinese estate we have an alert on the bloomberg. they sold evergrande shares for 240 6.5 million hong kong dollars. they are going to post a loss of nine and a half million hong kong dollars on the shery sale of evergrande. they were one of the biggest backers of a pre-listing ground for evergrande's property management arm last year. the executive was a founder of the -- was a friend of the billionaire evergrande founder. you can see that stock a losing ground in the past year. down almost 50%. with all the certain -- this uncertainty over evergrande,

let's discuss the markets with the asia pacific investment strategist at city private bank. crates savvy with us. we are seeing the course of -- great to have you with us. raising the chorus getting louder. does what happened the last few weeks change her portfolio strategy especially with the fed turning a little more hawkish than we expected today? >> some caution is due but there is a lot of that news regarding china already. and with regards to the fed, even with this lately hawkish tone from last night, tapering is likely to begin december and end the middle of next year. that is something the market has been expecting for months. i don't think this is a major seachange. with regards to evergrande, all these people looking for a lehman brothers moment in china probably have to wait for another turn. i would not treat this as

completely bad but there is definitely a lot of risks. shery: the ongoing trickle of news starting to hurt sentiment around the world. how do you position in your -- in this market? where you go for safety and comfort? >> on the fixed income side because yield interest rates are still so very low and likely to move up. it thanks it difficult for fixed income. we are still overweighting equities. within equities, we want to be relatively defensive. her top favorite sector is global healthcare. -- our top favorite sector is global healthcare. when you look at the covid situation, the objective is to live with it. treated as the flu and there will be a sustained demand for things that will be used for treating this disease. i think the overall demographic and demand situation is still

very strong. it has been performing very well with low volatility. that is one of the areas we are most favoring. haidi: does a messy fallout from the evergrande saga potentially impact stocks that would otherwise benefit from cyclical growth in china yucca from the -- in china? from the consumer side of things. >> this is an important point. even if evergrande makes its payments and they probably will, otherwise all this maneuvering in the onshore market means very little. in any case, even if they survive this bout, there is still going to be tremendous pressure for this company to survive. even when you look beyond evergrande and you still see a lot of risks with the rest of the real estate sector.

this real estate development is 35% of fixed asset investment in china. it is massive. so far this year, it has been growing at 12%. that is an uplift for the economy so far this year. that is likely to be going away and might become a drag. that is the big problem here is that china is experiencing a broader cyclical slowdown and more policy help is needed. we did see the pboc react a couple times this month. today, and other 90 billion net addition to liquidity. we need something more. the channel that is likely to come would be credit provision from the government bond space, from funding for fixed asset investment outside of property. there are a lot of areas they can try to boost.

at this point when you look beyond the evergrande the full issue, there is still quite a lot that needs to be done to restore economic growth. haidi: we are getting more news when it comes to chinese estates. this is one of the biggest are tj backers of china -- our strategic backers of china estates. saying they may sell all of the remaining evergrande shares. they sold close to 110 million shares at a nine and a half billion dollar hong kong dollar loss. it seems they are cutting their losses. does this have broader implications for emerging markets? how does and ian m dash and em portfolio look if you are balancing from trying to get away from the exposure in china? >> it is a clear risk. the way china economy is most

connected to emerging markets is through the markets channel. the property sector is a big dose of demand for the commodities. at the end of the day if we are seeing a significant drag from property investments, it will have to be made up somewhere else such as in fixed asset investments. it is a big hole to make up. fortunately for some commodities such as copper or aluminum or even seal -- even steel, you have two trends. one is that the global trend toward green development demanding a lot of commodities that feed into that supply chain and on the others, china is continuing to reduce capacity in this industry similar to what it is doing to the property sector. what you end up seeing is the prices for these commodities might not be hurt tremendously

because of that supply demand dynamic is still kind of tight. haidi: great to have you with us. let's get you to vonnie quinn who has our first word headlines. vonnie: fed chair jay powell says there is little direct u.s. exposure to debt ridden chinese developer evergrande but thanks the crisis could impact global financial conditions. he says corporate defaults in the u.s. are very low but an evergrande could damage confidence. >> the evergrande situation seems particular to china, which has very high debt for any emerging market economy. really the highest any emerging market economy has had and the government has been working to get that under control. there is not a lot of direct united states exposure. the big chinese banks are not medically exposed. vonnie: the japanese prime

minister has warned about china's rapidly growing military influence ahead of the first in-person meeting of the so-called quad group. he told lynn by the changing power balance could threaten japanese prosperity. she will join leaders from the u.s., australia and india on friday at the white house. beijing says the group is pursuing confrontation using a cold war mentality. u.s. treasury secretary janet yellen reportedly wants wall street to assist with negotiations on the debt ceiling. bloomberg has learned janet yellen contact banks from jp morgan, citigroup and wells fargo. u.s. funding could be exhausted in october. sources tell us she is asking the business community to pressure republicans to support raising or suspending the debt ceiling. president biden will meet his french counterpart face-to-face in an effort to mend ties. a u.s. nuclear powered submarine deal with australia has outraged officials in paris.

biden has spoken with emmanuel macron over the phone for us for the first time since the agreement was announced. the leaders agreed that open consultations would have benefited the situation. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. vonnie quinn. this is bloomberg. shery: still ahead, the world's biggest dairy exporter considers an australian ipo as it focuses on its core new zealand milk business. the head joins us later this hour. more on evergrande as the attention turns to the offshore payment. teresa kong tells us how she expects the saga to play up. this is bloomberg. ♪

>> it might be naive to think the market does not have the potential to have second order and third order impacts. clearly with the changes that are taking place in the evergrande situation, it is concerning and there is potential for second and third order impact particularly on the capital markets and the bond markets. haidi: the hsbc ceo speaking about the impact of the evergrande turmoil. the developer says it has a result interest payment due on one of its domestic bonds but uncertainty is spreading after evergrande issued a vaguely worded statement. the focus also shifting to the payment due on its five-year dollar note. let's get analysis from teresa kong. in the mean term, we have some of the biggest strategic

investors in chinese estates selling off potentially their entire holdings when it comes to evergrande shares at a nine and a half billion dollar loss for the amount they have sold so far. what is going on under the hood? are these negotiations buying time as we await for potentially a restructuring deal from beijing? >> i think that is right. i think the most important thing right now for the chinese government to do is to communicate. i think the chinese government needs to show a visible hand that it is actually in the middle and coordinating these efforts. one of the things the chinese government typically does not do is articulate ambiguity. i think here, it is ok for the chinese government to say that we did not know for sure how this will play out, but we are very much in control in that we are working hand-in-hand with

the company's advisors and all the stakeholders to come up with the best possible outcome for all the stakeholders. haidi: when it comes to foreign stakeholders, institutional investors and such, the writing is on the wall. to an extent, this is probably your view that this is how the cookie crumbles when it comes to investors. they should know if you are a mystic retail investor, you will be treated more kindly as this plays out. >> that is absolutely right. if you think about it from a type of restructuring, the chinese government as well as advisors fully understand their needs to be some type of priority. just following the guidance, social stability, i think first in mind would be those people who actually bought homes.

for suppliers, construction workers need to be paid. second in line would be people like the moms and pops who invested in these bullet management products thinking they are fully guaranteed. third and i think would be the onshore and liability hoarders. these are the people who have onshore assets and they are much closer in terms of legality. last but not least, these are the offshore bonds who should be aware of the risks they are taking because they are flipping a double-digit coupon as well as the equity holders who should expect a substantial loss. haidi: we are already seeing losses for those companies that helped out evergrande. chinese estates expecting to see a nine and a half billion hong kong walked out hong kong dollar laws. when we consider the cash in hand is only -- is this the start of a domino

effect for every one in anything that is closely related at all with this company? >> i see this as more idiosyncratic than systematic. to be sure, there will be spillover effects in the capital markets. we have already seen high-yield bonds trade down anywhere between five to 10% depending on how closely related they are to evergrande. the investment grade property names which are lowly and well-managed continue to hold in relatively well. as for second order effects, i think the chinese government has broadcast the fact they are aware of the potential fallout into the financial system and they have injected liquidity. they need to explicitly broadcast their intention. shery: i was going to say the pboc injecting liquidity, could

that be seen as broader parts of the market operation or should we take away more from what that could imply? >> it is difficult to do a direct attribution in terms of what central banks do but in this case it is probably a safe that that the chinese authorities want to actually go a little overboard. there is little downside for them to inject the liquidity. be sure there is that sufficient liquidity in the system. haidi: always wonderful to have you with us. we do have lots more to come on daybreak: asia. this is bloomberg. ♪

shery: we want to clarify the latest developing news on chinese estates. the nine and a half billion dollar hong kong loss assumes all shares are sold in evergrande. this would be sold at that 240 6.5 million hong kong dollars and when you take into account all of the shares chinese estates held and used all them, that would incur a loss for chinese estates from evergrande of nine and a half billion hong kong dollars. let's turn to panama. the minister says the country will offer vaccines to foreign visitors. the country initially lagged peers in its vaccination drive. we spoke about that earlier and also discussed the impact of supply chain disruptions to the panama canal. >> it is doing well because of the expansion of the panama canal that allows for bigger ships and that makes up for --

shery: that expansion happened a few years ago but now we have these huge shipping costs rising. shippers making record profits. is there any plan to raise the toll? >> not for now. great connectivity by air n.y.c.. we feel like panama has a lot of potential to help companies in the supply chain troubles we are encountering right now. shery: the country is expected to return to growth this year after a series of downgrades and downward pressure on the economy last year. as the investment grade still at risk? is that something you are concerned about? >> these are difficult times but the imf, the world bank have

said that panama will increase the economy by 10%, which we believe it is going to happen because the first semester, our economic growth is 10%. haidi: we spoke to the foreign minister a few months ago and she expressed concern about the forcing of penta moss vaccine almost a close leave from pfizer and it may not be -- forcing of the vaccine almost exclusively from pfizer. when do you expect a full opening up and are you concerned that is going to be hindered by future variants? >> we have as of today more than half of our population with two doses of the vaccine. we are using secure and effective vaccines. in the month -- month we are going to have more than 70% of our population with two vaccines. that has been one of the keys of

our economic plan for recovery. that strategy of having plenty of vaccines. we are going to open for tourists to visit panama and get vaccination in panama and allow them to see the other wonders panama has in take advantage of their vaccination plan. shery: the government right now is negotiating with first quantum coppermine. you are trying to raise royalties. how much are you expecting to raise? >> we have been preparing a strategy for negotiating this with experts, international experts and a good team of negotiators. we are positive we are going to make an improvement on the conditions we have right now with that with the coppermine. shery: tell us about that

improvement in environmental and labor, also oversight was the government's plan. >> yes. we believe international practices right now used for technology and for different environmental plans that a mine has to follow and that is what we want panama copper to use. and also a tax, and economic conditions that are sufficient for panama. as it is right now, we are not getting the benefits that we should. but the company is sitting down with the government and they are also cooperating. the conditions of markets are different. we are very positive we are going to get good results. haidi: animals commerce and industries minister.

coming up, japan is warning about the economic consequences of china's military rise. we get more details with the prime minister next. this is bloomberg. ♪

>> we continue to expect it will be appropriate to maintain the current zero to one quarter percent range for the federal funds rate and to labor market conditions have reached levels consistent with the e-minis assessment of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time. if progress is continued as expected, the committee judges a moderation of the pace of asset purchases may be warranted. participants generally viewed that so long as the recovery remains on track, the gradual

tapering process that concludes around the middle of next year is likely to be appropriate. half of fomc british offense forecast these economic conditions will be fulfilled by next year. as a result, the median projection for the appropriate level of the federal funds rate lies slightly above the effect of lower bound in 2022. shery: fed chair jerome powell speaking up -- speaking about the rate outlook and paper timeline. philip in decision in asia and much awaited boe and a meeting in norway where we may see the first g10 rate hike. let's bring in kathleen hays. let's start with the philippines. what are we expecting? kathleen: let's put this in context. southeast asia's virus and still not completely under control. vaccine rollout is very slow. that is the biggest cloud hanging over the economy.

the philippines inflation is rising but what can the central bank do? they cannot take steps to raise interest rates. they have already made several cuts in the rrr rates this year. the last time uber television spoke to the central bank chief, he expressed this resignation i guess you could say they have done all they can. it is one of those situations that has happened to a lot of central banks in the world over the past year and a half the state of your policy, the state of the economy, so much riding on viruses, vaccines. that is what they have to do. and it comes to the philippines, it will be interesting to see what kind of signaling we get from them. what kind of forward-looking -- prisma believe it is going to have a lot to do with the progress they expect on the pandemic. economists are saying that the economy, the lockdowns have started to fall. there are some signs of the academy but they don't expected to get back to its pre-pandemic level until the end of next year

or 2023 at the earliest. that is why their stock withhold. haidi: in the u.k., we see growth continuing to struggle. inflation expectations are the highest they have been all pandemic. a triple -- a tricky balancing act for the bank of england. kathleen: very tricky. they have already started on their bond purchase tapering. they were one of the first of the major g10 central banks to start doing this. they are on the path that would eventually start pulling back against inflation. look at that tiered as you noted, inflation expectations, the latest reading shows inflation is expected to be up to 4.1%. it is already above 3%. you can see it is well above 2%. like any other economy in the world, there are pressures on prices and with supply chain constraints from the pandemic, put those on top of the fact that the u.k. had a big brexit.

that has already had an impact on things like supply chain, shipping. all kinds of things. michael saunders is one of the external boe members who has called for this move to start toward tapering. kathy man who is -- she was the economy at the -- the economist at the bif. she is another one of the new members that might start tilting the boe a little more hawkish. we are showing you the crisis response through all the many crazies. higher cpi. this worry about the growth slowing down some of the supports for employment and the pandemic falling back. another one on hold with lots of economic trauma around it. it is so interesting that norway, the pandemic hit them but because they have a large sovereign wealth fund, that has helped next up the economy. they are ready to say there point in terms of growth, growth has picked up.

they are ready to say we will go ahead and hike are key rate. they're going to lead the g10 nations in heading in that direction. we saw from the fed today that half of the fomc members to the first rate hike in the second half of 2022 but g10, norway out in front. haidi: our global economics and policy editor kathleen hays. let's look at the markets taking all this in. let's get over to sophie for the details. sophie: taking a look at currency markets on the back of the fed update, you have the dollar index closing in on hikes for the year. g10 currencies being lower by the kiwi dollar, which is trading below 70. the korean you want dropping nearly 1%. -- the korean yuan. we do have the kospi being led lower by coppell, which is trading at a may low set for a sixth straight day of losses.

could cal bank also under pressure. seeing tapco gain ground earlier. this on the back of the update it will list prices in the fourth quarter to account for higher oil and gas cost. switching out the board for the mood in sydney this morning, the asx 200 rising by 8/10 of a percent. seeing some divergence for miners for bhp while fortescue is higher by 3%. it has announced a new coo for its iron ore division. check out what is going on with iron ore prices. downside seeing from jeffries, trimmed the average forecast for i went over to $150 a ton. pulling up the chart on the terminal as our colleagues have noted em stocks bearing the brunt of the evergrande episode. that turned short last week for

the first time in over a year. when it comes to em credit, goldman expecting the spillover from china onto em duration. that will be limited as they anticipate a systemic risk will be contained. shery: let's get to vonnie quinn with the first word headlines. vonnie: president biden once wealthy nations to donate more covert shots and deliver them to poor countries faster. biden announced the u.s. will buy another 500 million pfizer vaccines is sent abroad. this pushes the total pledge of 1.1 billion doses. the summit laid out other goals including vaccinated 70% of the world one year from now. china has announced plans to improve intellectual property protections including boosting compensation for loss resulting from violations. state media say the guidelines would accelerate legislation covering big data, artificial intelligence and gene technology. washington accuses beijing of

hacking to gain ip from fields including industry, high-tech research and tertiary education. sources say the taiwanese application enter the cpp were sent to new zealand. the president has made joining the pack a key goal for her final time in office. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. haidi: japan's prime minister has told bloomberg china's rapidly growing military influence could present a risk to japan. he is sent to that she is set to join the first leak of coordinating nations.

let's get more from our asia managing editor. what to expect from this meeting? >> we are expecting a lot of solidarity between these nations. japan, australia, the united states and india. all democracies in asia that have come together over the past two years to try to counter china's weight in the region. try to offer an alternative to countries in the middle when it comes to things like vaccines or infrastructure, technology, computer chips. a lot of what this group is trying to do is pin their pet -- end their dependence on china and provide an alternative vision when it comes to rules of the road and economic growth so that they do not lose countries to china's sway. we will see a lot of that from the meeting on friday at the white house. shery: the prime minister is

leaving office very soon. what can we expect from the liberal democratic party in terms of foreign policy? >> really all the candidates kind of sharing the skepticism of china that has become entrenched since the pandemic. ahead of them, most of shinzo abe's term, he spent his time repairing relationships with china and within closer to beijing. that was all drilled with the pandemic. -- all derailed the pandemic. with u.s. china relations taking a dive, japan basically was totally relying on the u.s. for security purposes. that alliance is its number one foreign policy. as a result, tensions have growing between china and japan during that time. japanese lawmakers have also cited the risk to taiwan in particular as affecting japan security. that upsets china and has also

kind of hurt ties. all the candidates who could take over, we are not expecting a talk with china anytime soon. shery: our asia government managing editor. the world bank estimates developing countries need nearly 2 billion more doses to achieve the vaccination targets for 2021. the president told bloomberg addressing the shortfall requires cooperation from other nations. he spoke to us about the cancellation of the doing business report. >> in 2020, the staff raised questions about the integrity of data dating back to 2018. there was an outside firm brought in. the board of directors got into it. they shared the support last week it shows the irregularities and goes through that.

the report speaks for itself >> here we think >> >> the report stands on its own? yes. we discontinued the report. the world bank is going to be involved in the business climate of developing countries. that is critical for them in establishing jobs and getting growth, attracting new investment and that is the purpose of the report the purpose of the world bank is to help countries and the people in the country's move ahead. we are still going to be doing that. >> you had this report come out as well. we don't need to get into the nitty-gritty of who did this or what. is further action needed by you on this uproar? are you saying enough, let's move on? >> therefore is discontinued and we be looking for new ways to have an impact in those areas which i think is the most important thing now.

>> time is too valuable. it is seven dollars a dose to get a vaccine. why can't we vaccinate africa? >> this is on everyone's mind and it is frustrating. the access in the advanced economies, i am the chair of the task force that includes imf, wto and who. there are 2.4 billion access doses in the advanced economy. the goal would be to have those early doses, the early deliveries go to developing countries where -- that can use those doses. it is a hard logistics problem because you have got to get the dose from the factory to a country that once that kind of those. someone to mrna doses. someone astrazeneca. someone j&j and so on down the list. they sit in a warehouse and they are not applied to people. that has to be improved. we are urging -- the task force is urging the advanced economies to allow a swapping of doses. if they have a delivery scheduled into their warehouses

in october of this year or november of this year, allow that dose to go to a developing country person and take a later delivery schedule because you do not need it. you have access to .4 billion doses. >> it is an excellent point. we're having a conversation about boosters in the u.s. when there are many people throughout the world who have yet to receive their initial dose. do you need the biden administration to take more leadership on that? >> i think the world has to come together and find solutions to this problem. the boosters -- countries are going to want to do that as needed to protect the population. that still leaves huge amounts of excess doses even in near-term deliveries. what we are working on is trying to get november and december delivery scheduled so that the countries can prepare to deliver. you need a specific kind of cold storage or trained personnel on

each kind of vaccine. we need much higher numbers of vaccinations in developing countries and especially in the poorest countries. haidi: the world bank president speaking with tom keene. coming up next, considering an australian ipo as the company focuses on the core new zealand milk business. judas swells joins us to talk about the latest results from the top area exporter. this is bloomberg. ♪

haidi: the dairy giant fonterra says its net profit fell by 60 million kiwi dollars in the latest financial year driven by high milk prices. the company still a feeling the impacts of covid across the supply chain. for more on the results, we are joined by judith swales. let me start off on a common challenge we have heard from many ceos, which is supply chain issues. we talk about the competitive environment of trying to get your product into key markets. you expect attentions to continue? judith: it has been a tough year as everyone has spoken to with ships and containers in the wrong place. even though we shipped a record

volume of product in the last financial year, we expect disruption to continue, which means we are working closely with our customers as well as our supply chain partners. we don't see it resolving in the short term. haidi: ointment you expect to decide on analyst trillion ipo? we are looking -- when would you expect to decide on an australian ipo? kathleen: we imagine it would take 18 months if we do good on that path. we're going to spend the next couple of months looking at what potential ownership structure could look like. an ipo looking at all the various options looks like the most likely at this stage. haidi: you have an idea what sort of stake you would retain in the australian listing and how much you would expect to raise? judith: that is all the work in progress at the moment. we would expect to retain a significant share. it will be a majority share.

as we go through the process, we will understand what the interest will look like and how that will play out. it is early days. we just announced it today so we can keep everybody in full disclosure with our teams and shareholders. shery: in the meantime, how can you prepare for the supply chain disruptions when you're expecting them to continue for a while? judith: we have responded well in the last year. we have seen product shift through channels. particularly as covid has impacted on restaurants and out of home heating. we have managed to switch projects -- switched products to where people are cooking at home. despite all the challenges, we still have product and we still deliver to our customers in markets. markets closer to actual customers so we are smoothing that impact that has been coming out of new zealand where most of

our product comes from. it is working and partner with customers on demand and manufacturing to make sure we can get into market when it is required. we have done a pretty good show -- pretty good job so far and maintaining that focus. shery: globe are milk powder prices are drifting lower in recent months. is this going to have an impact on your business? judith: it went very high in the second half of last year. we were paying around nine dollars toward the end of the second half. we would say they are normalizing back into where we were expecting. which was in the forecast range. we are pretty pleased with the way they are trending at the moment. haidi: have you extract or build more value from the product chain particularly when it comes to the new zealand milk? judith: that is the focus we talked about today, but our long-term aspirations. it is about how do we derive more value because the forecast

in new zealand, milk is to be flat at best. if we want to continue to grow, we're going to have to extract more value, which is why we have got to invest in sustainability. we know it is important to consumers. they want to know we are responsible in our production. that we are looking after the environment. we are planning to invest around a billion dollars until 2000 30 on improving our manufacturing, reducing our carbon emissions and efficiency. that is the supply chain. but then you get to what we are going to make. we're going to invest more r&d to develop new products. we are calling this our nutritional solutions. we know consumers are changing. they are more interested in mental health, cognition, active living. more products into those chains and into those consumer needs is

going to help drive more volume. shery: give us a demand picture because your ceo has said china is still in good shape. it is still a part of your business. can we expect any expansion? judith: if it is a sniffing in part, it is a third. asia-pacific has had a good growth profile. 28% improvement across asia-pacific despite the ravages of covid. we will see good growth coming out of asia-pacific as well as through china and some other markets shery: shery:. thank you so much. -- and other markets. shery: thank you so much. does not see a shock for -- as -- including china by next european i spoke to the president earlier about the fed

decision. >> the increase in interest rates we can expect in the near future by the fed will not affect only dollar countries like ecuador but would affect only emerging markets. therefore i do not think it will be a shock. i believe they will do it with prudence in a gradual way. that will affect emerging markets and within them, ecuador without a doubt. i believe countries like ecuador are still attractive for investment. i would say avid returns on investments of 10 to 15% remain attractive even if interest rates gradually start to rise in the international market. shery: very important for your government, the fact that you're are trying to get the free trade agreements with the rest of the world including mexico and you want to expand to the pacific alliance. can you give us an update on the progress you have made? >> we will request to the entry

of ecuador to the transpacific partnership. and we will do that immediately. we have also addressed ecuador's interest in sign a free-trade agreement with the united states with u.s. government officials and both republican and democratic senators who have visited our country. they should have been then -- should have been done a few years ago but it did not happen. not because of the u.s. but because of the ecuadorian government at the time prioritized ideology over an economic opening for ecuador. with china, i have already spoken to resident xi jinping. we have set an ambitious goal to sign a free-trade agreement until march of next year. which coincides with the launch of the winter olympics. hopefully when i visit beijing, we can sign that treaty and in the medium-term, our plan is

designed sign 23 trade agreements with the largest economies in the world. haidi: the ecuadorian president speaking with shery earlier. we are getting developing news when it comes to the evergrande story. chinese media saying there was a special meeting being held by evergrande group on the evening of wednesday regarding the resumption of work and guaranteeing delivery to those who have paid deposits for properties. this is a developer that has more than 1300 projects across 280 cities across china. a lot of them have stopped developing or stopped tilting given there are so many payables being owed to contractors, to suppliers, to builders and staff. your hearing they expressed more than 4000 leaders that they must do their best to resume work and

resume production to ensure quality of building. interestingly mentioning the stakeholders when it comes to their wealth management products saying they will resolutely implement the redemption work of evergrande wealth investors. as we continue to watch the story and also watching the dollar-denominated on the payment due today. let's take a look at what we are watching in the market. sophie: we are watching chinese as states, the company sharing all of that shares in evergrande at a loss. keeping an eye on chinese banks as they try to soothe investor nerves about vulnerability to evergrande. icbc saying it has gradually reduced exposure with sufficient loan collateral. we are watching evergrande's dollar bond appeared trading at around $.29.

investor focus shifts to the dollar bond interest due this thursday. watching to see if there will be payment or negotiations to extend. shery: a very exciting show coming up. number markets china open is next. this is bloomberg. ♪

>> this is my kitchen table and also my filing system. over much of the past three decades, i've been an investor. the highest calling of mankind i've often thought was private equity. then i started interviewing. i know how to do interviewing. i've learned from doing my interviews how leaders make it to the top. >> i asked how much he wanted, he said 250, i did not negotiate. david: and how they stay there. yo