haidi: hello and welcome to daybreak asia. sophie: we are counting down to the major market opens. shery: good evening from new york. our top stories this hour. a cautious mood for asian investors after a jump in treasury yields and oil prices weighing on u.s. equities. a fed president stepped down after embarrassing revelations

taking out two hawkish voices. china's power crisis hits global supply chains as factory cut productions to conserve energy. we have more breaking news on the developing story. south korea is spending $11.4 billion to build three battery factories and an assembly plant, building electric f-series pickup truck's in tennessee and kentucky. it is the largest index 118 year history and will create two sites to produce electric vehicles and batteries to power them. the factories well employed 11,000 workers. ford is spending $7 billion and south korea as kate innovation kicking in $4.4 billion. again, the latest on that partnership between ford and sk

to build three battery factories. haidi: one will be watching today. the other big story is we are mulling the implications when it comes to a fed tapering policy is robert kaplan, and the president of the boston fed reserve both stepping down. it has been an interesting day of news flow. embarrassing revelations related to stock trading last year. these are two of the more hawkish officials, so beyond speculation as to why they step down and details of the story, we are looking ahead to whether this has any implication for the tapering trajectory if they are replaced by people who are perhaps more dovish. this opening up the opportunity for more diverse representation of the fed. shery: given they are elected by the board of directors as opposed to the bank of governors. those hawkish comments already

have moved the markets. reinforcing the message that tapering is imminent, so we have seen treasury yields continue to spite. the five year yields is sensitive to monetary path is topping a 2019 level, settling around the 2020 high. the 10 also briefly topping 1.5% level we have not seen since june. haidi: we continue to talk about the energy shock. is this the next big supply and demand side stock? not just for china and europe, but spreading throughout the world, particularly as the northern hemisphere gets close to the cold season. we see this playing out in china where it is not just factories giving but skyhigh electricity and energy costs, but in northern china, homes are suffering blackouts as we get closer to winter. this has been a twofold issue.

one part is lots of provinces cutting the uptake as a result of environmental curbs and policy priorities from beijing, and the other is the supply side. actual lack of electricity amid the skyhigh costs. we are seeing this play out in india as well and other countries. we will continue to monitor that. shery: we continue watching residents taking ahead, blackouts, traffic lights being turned off. all of this is adding to the downside on growth. goldman sachs with the latest to come out and cut the growth forecast for china. what you have? sophie: that's right. goldman trimming the trajectory for growth in china through the year and, we have seen third-quarter growth coming in at 0% on a quarterly basis, and they trimmed the annual to 8.7% in light of industrial

production, they anticipate downside pressure. at a time when the economy has been relying on energy industries. checking in on the offshore yuan, it has managed to stay on the front foot. capping a five-day gain even as we have seen higher u.s. yields put pressure on emerging currencies, touching the 111 handle against the greenback. in commodity markets, we are seeing crude hold at $75 a barrel. market deficits are calling for more upsides. the aussie dollar has been tracking the rise in energy prices, as well as iron ore, amid some restocking by china steel mills. . it has weighed on minors in australia, stocks set to cut the longest run since december, 2017. shery: fed officials reinforcing

the message of imminent tapering, but also making it clear that the economic recovery still has a way to go before any rate lift up. let's cross to our fed reporter. we had plenty of fed speak. what were the takeaways? reporter: absolutely. you are hearing these officials reinforce that taper method. everyone seems to be on board at this point, we start before the end of the year. haidi: when it comes to the changes we are expecting, to expect a replacement to skew the debate? reporter: around taper, i don't think so. that's just because i do not know we will have a replacement

before we start tapering. these things usually take quite a while, a few months. we may not have those new people names before the end of the year. it's also worth noting that neither of these two presidents were voters this year on the committee. haidi: china's energy crisis is shaping up as the latest shock to supply chains, factories forced to conserve power by carbon production. this coming as millions of people feel the impact of soaring natural gas prices. our chief asian economic correspondent joins us with more. how significant is the electricity issue? reporter: i think -- we spoke to several and they explained what is going on. on the one hand, production has been stalled out right or they are told when they are allowed to resume it will be on a staggered basis, maybe three

days a week. what they are saying is, we know the story about the higher raw material costs, shortage of shipping containers. they are grappling with the fact that they are not allowed to turn on factories. it's coming at a crucial time of the year. we know how china is central from that. just for that. -- for that. shery: we had a few companies downgrade growth forecast for china. how soon can we see this hit to the chinese economic recovery? reporter: it's going to come pretty soon. there is no doubt about it. you have seen investment houses downgrade their forecast. we are getting some mixed signals from authorities on this, some have come out and say they will look to minimize any disruption on production, and

our own reporting said some key suppliers, apple for example, is being given some preferential treatment. the full extent is not yet clear. especially when we spoke to manufacturers, they're all very worried. the impacts to the economy will certainly be material, but when you throw in the property side of things, there is going to be a hit to china's economy. shery: of course, the uncertainty in the property sector is not helping. the ever-growing crisis continues, a further sign of deepening troubles. a deep-pocketed allied and poker buddy is further selling down his stake in evergreen. let's bring in stephen engle. a key ally cashing in his chips. stephen: another sign of the deepening troubles at china

evergreen. the bondholders do not pay their coupon last week, and tomorrow there will be another due. the woes are mounting for china evergrande. when you had your poker buddy, the china estate holdings billionaire founder, it has been backing ever grand -- evergrande. they played poker together, along with henry chung and others. they had the gentlemen's agreement that they would back them up. this stock has obviously tanked, and this is accompanied -- a company that is paring back stake. the latest filing saying the

state has been reduced further to 4.7%, and the founder of chinese estates, the ceo, she apparently has also cashed in her entire personal holdings in evergrande. not a good sign. there was some good news, there were reports yesterday, part of the reason why the stock was up, reports that perhaps the life insurance unit could fetch upwards of $600 million if it was sold, but key assets have not been able to be sold. the tower in hong kong, the new energy vehicle unit, it was not sold. it also just with through -- withdrew its plans for a starboard vesting. plans that the pboc is injecting more liquidity into the financial system ahead of the end of the quarter technique, exasperated by the situation. they also put out a statement coming off friday the quarterly

meeting, saying that they will ensure that healthy property market that includes protecting homebuyers lawful rights. haidi: our chief not the asian correspondent from the latest from china. let's get over to su keenan. su: chuck schumer says the senate will take further action this week to keep the u.s. government open, after senate republicans blocked legislation to suspend the debt ceiling and temporarily extend government funding beyond september 30. one likely scenario is lawmakers strip out the debt ceiling language from the funding bill and find another way to address the debt. bloomberg has learned that janet yellen is declining to return calls from the imf chief, was accused earlier this month of improperly intervening in a world bank report.

the communication breakdown comes ahead of the imf and world bank annual meeting starting in october. sources say they previously had easy access to yellen. meanwhile, the leader of germany's social democrats is calling on partners to join him in a new government as soon as possible. the appeals to the greens and pro business free democrats to daca three-way coalition. angela merkel's -- says they will still try to forge a majority. becky ally says that cannot happen after a second place finish. japan will reportedly left its virus state of emergency as new infections received. broadcaster says regional authorities will keep some restrictions in place. more than 57% of the population is fully immunized. it will be among the last task of the prime minister.

his replacement will be selected on thursday. 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 su keenan. this is bloomberg. shery: more on those stories and other issues that you need to get your day going in today's edition of daybreak. go on the terminal, it's also available on mobile. customize your settings so you only get the news you care about. this is bloomberg. ♪

>> employment for still short of the mark on what i consider substantial further progress, but if progress continues, it

may soon be. >> it's clear made substantial further progress in achieving inflation. there has also been progress in maximum employment. assuming the economy improves, the moderation in pace of purchases may soon be warranted. shery: some officials with a purchase -- hawkish message. our next guest says yields should be higher and will likely see an upward trend before we get to pre-pandemic levels. let's bring in the vice chairman at 1879 advisors. could we see yields spiking even faster given the global energy crisis? when does this become a problem? guest: i think it becomes a problem for the stock market when we actually see inflation. if we see systemic inflation

driving up costs, we won the risk of stagflation. i do not think that's going to be an issue. i think his first rates -- interest rates become a problem if they overshoot targets. right now they are considerably lower than they were and a pre-pandemic environment when the federal rate was considerably higher. i think there is room to see a more normalized interest rate environment, a steeper yield curve, which i believe is a sign of strength. haidi: ubs says if we see that, it will actually favor cyclical cycles -- sectors like financial and energy. without be your bet as well? the reopening trades? guest: that harks back to what

everyone was calling the reflation trade. i do not think it's a story of one or the other. i think there is a lot of great companies that can grow in a high interest rate environment. i'm not talking about interest rates going to a stifling level where it kills the housing market an opportunity for companies to invest, i am talking interest rates in the 2% to 3% range, which offer better yields for fixed income investors, and still offer affordable rates for financing. haidi: are the markets underpricing the macro risk of energy crisis globally? guest: are they pricing in? haidi: underpricing. guest: that is yet to be seen.

i think we have a huge risk of rising energy costs leading with natural gas right now. as we get into the winter season, as they say winter is coming, i think we see a risk of contagion on energy costs crossing the sea. i'm not looking forward to heating my home this winter. there is clearly some inflationary aspects to that area -- to that. haidi: when you hold companies that are expected to do well, give us some examples. we know the earnings season is likely to be a softer one. guest: we like companies -- you can say we hedged the matt rowe out of our -- macro out of our

portfolio. we like companies with growing revenue, improving margins. companies with positive cash flow, regardless of the economic headwinds. if we can hold them for multiple market cycles, the macro is not important to us. these are companies that are going to do well and are going to continue to drive returns for investors. microsoft right now we think is a fantastic opportunity. we are especially bullish on technology. sure it did not have a great day today, but on the longer term we think we are on the cusp of a capital investment windfall for productivity boosting companies like microsoft. we think there is plenty of time for productivity gains to help

grow the economy, even with some rising wage inflation. haidi: his tax reform the other big risk? there is not much investors can do about that. guest: there are some taxes like corporate tax increases that let the air out of the balloon for everybody, especially for smaller companies. reinvestment in those companies drives a lot of economic growth and it a key contributor to gdp. we are hoping there are not a lot of tax increases on the corporate level, the personal level to some extent. taxes on the individual basis

very whether you are an international investor, investing in a 401(k). quite frankly, taxes on the individual basis, once they are in place they don't change the profile for better or worse. corporate taxes certainly her companies -- her companies that are earning revenues and seeking to put that back to work. haidi: great to have you with us. the vice chairman at 1879 advisors. lots more to come on daybreak asia. this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo. in japan, softbank vision fund senior managing partner is set to leave the firm by the end of

the year. he was at ranked by three other executives. we are just one day away from a leadership vote, the election is almost certain to go to a second round with no candidate expected to reach an initial majority. reports say the japanese government will end the state of emergency covering tokyo on september 30 read we will have more on the fire situation later. in south korea, consumer confidence strengthened for the first time since june, suggesting consumers are putting the virus outbreak behind them as the economy continues to recover. ford motor and s are puttingk $11.4 billion into three battery factories and an assembly plant for pickup truck. keep an eye on defense stocks after reports north korea fired what japan said was a ballistic missile into the ec. -- east sea. haidi: quick check of the latest

business flash headlines. wells fargo has been fined by the u.s. department of justice after claims it defrauded customers who used its affect services. the u.s. to says the lender overcharged almost 800 customers, many of which were small or medium-sized businesses. wells fargo reaped tens of billions of dollars from the practices which the lawsuit described as a brazen and wide-ranging fraud. finance.com says it is restricting singapore use to comply with regulations. binance says the curbs include access to deposit services, crypto trading, the channels ended with stocks. previously they said they would hold stocks after a warning from the central bank. reliance is in talks to buy a stake in google backed mobile content of either. such a deal would give strategic

entry into video content and access to valuable real estate on the affordable mobile phone it is developing with goodwill, slated to hit the market at the end of october. up next, policy su: this is dayb.

we start with the dallas fed president, he has joined eric rosengren in early retirement. both have been under scrutiny for securities trading activity last year. kaplan said the recent focus on his financial disclosures were becoming a distraction. the boston fed confirms rosengren will retire to between ongoing health condition. china's central bank is

promising to ensure a healthy property sector after evergrande set shocks across the market. the pboc agreed to a safeguard of the real estate market and protect homebuyers right area the central bank also said it will step up ordination of monetary policies to prevent risks. meanwhile, a pivotal trade meeting between the u.s. and eu this week will be narrower in scope than originally planned. the contents of the joint statement are also still up in the air. disagreements are behind the changes. we also hear that france will not agree to the draft which is planned for wednesday. japan says a projectile launched by north korea may have been a ballistic missile. they say the initial conclusion

follows earlier findings that the north fired a projectile to waters. it comes after a test earlier this month of short range ballistic missiles launched from its terrain. 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 su keenan. this is bloomberg. haidi: let's take a look at how we are setting up. what are you watching? sophie: taking a look at nikkei futures, seeing downside pressures. a lot of focus with treasury yields, that has put pressure on emerging currencies. we have again testing the 111 handle amid the pressure. the election, switching up the board, our colleagues have tracked the pickup in foreign holdings of local stocks in

japan this year. over at goldman, they expect an additional foreign fund flows coming into japan of ¥2.5 trillion by the end of this year, with strong earnings momentum among positive catalysts, which called the bank to raise its year end target to 2225. the index reaching 2200, with the potential to surpass that. shery: let's delve into the election. we are just a day away. that election will be for the leadership of japan's ruling probably, -- party, and policy differences are becoming clearer. let's cross to our politics reporter in tokyo. the prime minister who is said to be replaced tomorrow, but are the latest developments on the election, especially when it

comes to the differences between these candidates on key issues? reporter: as you mentioned, for japan, china is one of the most important issues they will face immediately and going forward. as we know, relations between japan and china have chilled quite significantly over the past couple of years, especially hong kong had a shocking effect on the japanese public, and to change their attitude towards china. we have seen a range of different responses from these four candidates, but the one who is taken the most hawkish stance is one of the two women. she has held an online meeting with the president of taiwan, which she uploaded onto youtube. she wanted everyone to know about this. she has talked about welcoming

u.s. missiles on japanese territory. these are the kinds of things that could irritate beijing. in addition to that, she has also said she will be a regular visitor to the controversial war shrine in tokyo that many people see in asia as a symbol of past militarism. haidi: we have seen reopening stocks do really well in anticipation that there might be an end to the state of emergency. if that likely to happen? reporter: yes. it is a slightly complicated situation. over the last -- before he is replaced, is how to lift the emergency which is at present

over tokyo and a large place of the country. --'s weights of the country. the latest report is all national restrictions will be lifted, but that these local authorities free to implement their own restrictions. we have seen reporting about tokyo, restaurants will be allowed to serve alcohol. but they will still be required to close early and we are not really sure what time that will be. we can expect, i think, a large increase in consumption. at least bars and restaurants which people have been avoiding, and have failed to make money for many months. as people come back to work, economists are saying we can expect to see bigger sales at department stores as long as people go back to work. haidi: our politics reporter

with the latest in tokyo. coming up next, an energy company's ceo joins us to talk how he is planning to turn it into power. this is bloomberg. ♪

>> china will step up support

for other developing countries and developing free and low carbon energy. and will not fund coal powered projects abroad. china will seek to peek in missions before 2030 and the truth carbon neutrality before 2060. shery: president changing pain climate pledge at that u.n. general assembly. a question now is whether those green ambitions will still stand, especially as winter approaches. the shortage of natural gas means countries including china are snapping up dirtier fuels such as coal which accounts for two thirds of its electricity. let's bring in the head of research. what implications does the power crunch have for china policy pledges? guest: it is unlikely china will

make any changes to its targets to its so-called contribution honor. the goal that china has set for itself is to reduce its omission intensity of its economy by 60% to 65%. it is already well underway to achieving this goal, so in some ways, china is very well set for meeting his paris agreement target. regardless -- of short-term challenges. we do not expect any shift. haidi: a slew of other big political events. german election results. does that have meaningful possibilities are implications for climate change measures? guest: there is an expectation

that if they won enough seats to form a coalition government without any other policy -- support, they would push forward with moving the goal of phasing out coal power. the current target is 2038 which is considered a bit too late. unfortunately, the results mean they cannot form a government. they need support from moderate parties. that means it becomes likely -- unlikely we will see any significant shift. shery: what about in japan? we have the party leadership phot for the ruling ldp which will essentially tell us who the next prime minister is. guest: japan's long-term goals, net zero by 2050, these are just done recently and have been legislated. regardless of who wins, the

targets are set. >> important is around who is able to deliver on the target. among the four candidates, arguably only the current reform minister is the only one who has put forward enough policy statements to suggest that he will have credible, specific policies to deliver. the other three candidates have made comments. again, the comments made raced out around whether she wants to go aggressively. haidi: the bloomberg head of asia research. we are seeing a coordinated push for renewable power generation among global leaders, transmission is becoming the limiting factor.

energy companies are planning to build the world's first intercontinental power grid dedicated to renewables. it will connect the world'sla fa to singapore. this is a 5000 kilometer transition system, which effectively reduces emissions by 6 million tons per year. joining us now is ceo. transmissions as well as supply when it comes to renewables, transition energy sources, it is clearly and focus as we see this energy crisis gripped not just the likes of china, but europe and now other countries like india. can the technology and production when it comes to renewables keep up with the man? -- demand? guest: fundamentally, the answer is yes. the challenge we face is we have

abundant renewable energy resources. we can meet our societal demands many thousands of times over from our resources. the challenge is that often the way the resources are abundant is very distant from where the large -- what we are trying to address with the australia and asia parent is to capture and utilize the abundant resource that northern australia has an to translate that to singapore and better serve those markets. transmission is really key to be able to better utilize whatever abundant energy resources are. to put some numbers to that, in the australian context, australia received -- last year,

australia converted 400 to electricity. as an industry, on paper, there are lots of projects that are being built or under construction. in terms of capturing and utilizing that resource, the industry has barely begun. technology, if we look at solar technology, storage technology, it is all there, it works now. it will only get better. we can make this transition happen in a rapid timeframe. haidi: we talked about the reduction in admissions. what is the model you use in other asian countries, what is a compelling business case for importing energy from australia? david: australia has always been an energy exporter. we are trying to capture this type of abundant resource, solar

resource. exporting that to our neighbors. from a reliability perspective, the solar resources are tried and tested, it is there every day. it's an incredibly valuable resource that can be utilized. from a geopolitical perspective, obviously it is supplying energy from a stable political environment, and that is seen as advantageous to our customers. shery: what are the biggest challenges you are facing in a project of this scale, trying to build the world's first intercontinental power grid? david: the technology -- we are trying to put together three broad technologies. sow the technologies, battery storage and high-voltage direct-current transmission. we can build a system tomorrow

that captures that electricity, dispatches it 24/7, all the way to singapore. doing that in the optimize way is the greatest challenge, because it is a 5000 kilometer long piece of infrastructure with millions of potential design inputs. working our way to ensure the system is designed to deliver the most reliable, resilient supply, and being cost-effective. that is the greatest challenge. putting all of those elements together. we can do it, it's making sure we do it in the most cost-effective way. shery: if this is used to capacity, what is the expectation it will help asian countries work towards carbon neutrality is? david: it's the first of its kind in terms of capturing the abundant resources. solar farm, hours of storage and

transmitting that over that distance. it's the first of its kind, but it is designed to be the first of many. this one project, we're looking at supplying up to 15% of singapore's electricity demand. we had 58 million petty jewels of solar resource, we can supply -- that's enough to supply tens of thousands of levels of demand from different countries. we want to replicate this model many times over. haidi: one last question when it comes to the political situation in australia. we have not seen the australian government made commitments to emission targets. how do you break through the cultural obsession with coal, there is a fear around renewable energy in this country, is that why you are focusing on exporting to other countries

that have greener energy policies? david: i think fundamentally, the economic case speaks for itself. we are not just exporting to singapore, where also proposing to be the major supplier -- we can only make it work if we are offering a compelling economic case, as well as being reliability and resilient. we can do that. the political environment is very important. our role is to put forth the economic case and demonstrate its value. shery: david griffin, it is great having your insights. if you missed any part of this conversation, tv is your function. you can watch past interviews and also watch us live.

you can dive into the securities or bloomberg functions. become part of the conversation, send us instant messages during our shows. check it out at tv . this is bloomberg. ♪

haidi: a quick check of the

latest business flash headlines. facebook has halted plans for a special instagram platform after critics said it would be harmful. the social media giant said children would lie about their age and argued a designated site with age-appropriate policies and no ads would be safer. facebook set it up and to the idea after taking time to support with parents and experts. polestar is set to go public with a stock deal after a rough enterprise -- valuation of $20 billion. the company plans to spend $1 million to bring three new models over the next three years. volvo announced it will invest up to $600 million, giving a close to a 50% holding. shery: ford and sk innovation are spending more than $11 billion to build three battery factories and an assembly plant in the u.s.. for more of a spring in -- ring

in chester. how big of a bet is for making on ev with this investment? reporter: it's a gigantic for the company. it is the largest investment in forward's -- ford's 118 year history. they are not building just one factory. it is a very big deal. haidi: we expect unionized labor? chester: that is a good question. ford is building them in two states that have right to work, which will give the new workers at these plants, 11,000 of them, she opportunity to vote on that.

most of ford's current facilities in the u.s. are unionized, but these plants in tennessee and kentucky are possibly candidates for unionization, but that remains to be determined and that could affect the cost of production. it will be interesting to watch. shery: chapter dawson. we will be watching the open in south korea. entertainment linked stocks in south korea, i can hear you laughing. i think it's because of that squid game. it's really interesting, talking about the netflix smash hit, a korean drama, a hunger games of sorts. i do not know if you watched this, but it is pretty gruesome. i was flipping through netflix,

it is trending number one, a korean drama. it is so scary. there are people who are in huge debt will have to go through these deadly games to make it and win prize money. it is kind of addictive but awful as well. [laughter] haidi: this is on our list to watch. we are still making our way through money heist, the spanish central bank robbing series. this is next on my list. i love this kind of dystopian, post-apocalyptic. it is quite funny, when you start to see the types of catalysts that drive certain stocks, particularly in the south korean market. shery: super creepy, but yes. i do not think i could watch anymore episodes. start watching it and get hoped, but are thinking, why am i watching it? let's see what happens tonight.

it is still treading on netflix. city futures, down a peg about one half a percent. we continue to see iron or rebounding for the past five sessions. kiwi stocks higher, up 1/10 of 1%. the kiwi dollar rising after three weeks of declines against the u.s. dollar, the prime minister saying a pilot program will begin for returning international business travelers, covid-19 playing a role when it comes to these markets. nikkei futures under pressure after falling in the last session, we have a small pause in the rally that took the stocks up to that 1990 level. kospi future levels up by 4/10 of 1%. haidi: coming up, we are taking another look at the power crunch in china, impact on the broader economy with a securities managing director and chief economist. we are also getting more insight into markets, big-money

investment. amid global yields an energy crisis is. this is bloomberg. ♪

(announcer) the core is key to losing weight, getting back in shape, and feeling good. introducing the aero trainer, designed to strengthen your core, flatten your stomach, and relieve stress and back pain. it conforms to your body and increases muscle activity. abs, back, obliques, hips, and glutes. get incredible results in just five to ten minutes a day. the aero trainer supports over 500 pounds, and inflates and deflates in seconds. check it out at aerotrainer.com. that's a-e-r-o trainer.com.

: hello, and welcome to "daybreak asia." haidi: taking a look at major markets in asia, our top stories this hour, the cautious move for a big investors after a jump in treasury lee yields and oil prices went on equities. and the supply change, taking steps to ease the shortage.

plus, and embarrassing stock trading revelation with the fed's hawkish voices. anchor: coming online, let's go to sophie with what is to watch. sophie: with the election happening on wednesday, we are seeing a downside with both the nikkei and the topix, with the nikkei saying there is momentum, and we could see the topix over 2000 by the end of the year. 111, with a low, gaining some ground this morning, turning to south korea, we are watching independent stocks, and we are seeing the kospi up by 1/10 of 1%, and another under pressure why the -- while the korean won is -- banks boosted the asx along with travel stocks. we are seeing some pressure this

morning with the materials index also losing some ground. this sector is snapping the best run since 2017 amid the slump we have seen in iron ore prices, and singapore holding around 120 this morning, and the aussie dollar just holding onto overnight gains here, down since the opening trade, and switching at the board of the anticipated pickup in demand with oil, that is keeping prices somewhat elevated, although we are seeing some below the $80 per barrel here, although with the energy crunch, depleting crude and more around the world and the prices in china, that is affecting metal demand and supply, which goldman says pertaining to aluminum prices ticking towards 3000 in london this morning, and then out with a forecast with the gdp outlook, which has been lowered to 7.8% for this year, with energy targets weighing on

industrial activity on the mainland. offshore, managing a five-day gain after emerging currencies are under pressure amid the rise in u.s. yield and with the chart on the terminal, we did see the u.s. 10-year yield brief italy -- briefly hit a market we have not seen in a while. benchmark yields. haidi? haidi: difficult to stabilize the government yields with the recovery. let's bring in our guest. is this surprising or something that you think is just pressure that is being released, if you will? how sustainable is it? how do you invest around it? >> the yield is in a very tight range, especially the five-year yield. 0.7% and 0.9%, and the 10-year yields declined, as well, as

sophie mentioned. i think now, it is difficult to reconcile these lower yields with the very strong basis and an outlook for a recovery with demand going up with other items coming down. so now, we're seeing this, as you mentioned, and we have broken out of some of the rangers, and we are moving higher, and i think that is something normal for this stage in the recovery. haidi: do you still favor equities in the u.s.? what makes that compelling for you compared to asia? rajeev: asia is still suffering from a number of factors, and one of them is what is happening in china. we are seeing a slowdown in growth. you mentioned goldman's revision downward. and there is the rest of asia.

asia is also suffering from a slow exit from the covid crisis. many countries have very low or zero covid, and that is being revised now, and finally, vaccinations have been ramping up, but they are still coming from a slow base, so i think asia is somewhat behind developed markets in terms of recovery. anchor: going back, we are seeing the two year yield spiking, which would be the highest since march 2020. that was just before the pandemic started, so this come of course, after we saw the five-year touched the -- this, of course, after we saw the five-year high touching a previous level. the chart on the bloomberg showing you those moves higher. when it comes to asia, where will be see the impact of the treasury yields? rajeev: higher yields in the

u.s. and eventually higher rates always pose a challenge for emerging markets and a challenge for china. one, to the dollar itself, a stronger dollar, of course, puts downward pressure on many asian currencies, and that makes it difficult for many of the central banks to kind of follow the fed to keep the differential of interest rates, so asian central banks will have to tighten at a time when it is challenging as growth prospects are improving, for sure, but they are improving more slowly because of the difficulty in really fighting the virus. anchor: also coming at a time when we see these concerns. with that, the energy crunch really not helping, and that is really accelerating the move in the treasury market. our question of the day, which assets are at risk for this

global energy crunch? rajeev: generally, import energy is more under control, so big importers of energy will see more challenging times for their current positions, and the big importers, south korea, but a lot of asia are big importers of energy, where as other parts of the e.m. are more exporters. the energy in the cpi is important, and as you mentioned, central banks respond to that, and that puts them in a very difficult position. the reserve bank of india is clearly on a more dovish side, and it will not be working too aggressively. haidi: are there macro headwinds

coming from an energy crisis, particularly as we go into the northern hemisphere winter, particularly as there are already -- there is shakiness when it comes to the recovery in places like china? rajeev: yes, higher energy prices, and we have seen them in gas, and we have seen them in oil, as well, have two impacts. one of them on one side, having to increase ration expectations, and we have seen a little of that happening in one u.s. market, and it is because of energy, and it does pose problems with central banks, that the other one is another tack. they can spend less on other goods and services, and that is a bit of a problem, as well. it will be a headwind, as you mentioned, to the recovery. shery: before we let you go, let

me ask you about the yen, because you mentioned the stronger u.s. dollar, at a time when the boj is holding steady, so does the outlook for the yen go from bad to worse? rajeev: yes, i expect the yen to weaken further from here, with the dollar/yen, and it is a case for a stronger dollar and especially against the yen, but then, also, the other fact that is very important is on the risk side. the yen is a risk protection currency, when risk goes up. but markets stay strong, that side of the yen is less valuable to investors. shery: great to have you on,

rajeev. let's get to soon keenan with the first word headlines. su: a ballistic missile. cuter news says the initial conclusion from the japanese defense ministry follows earlier findings from south korean officials. this comes after a test earlier this month of short range ballistic missiles launched. to the u.s. now, majority leader chuck schumer says the senate will take further action this week to keep the u.s. government open after senate republicans blocked legislation to suspend the debt ceiling and extend government funding beyond september 30. one likely scenario is that lawmakers struck out the debt ceiling language from the funding bill and find another way to address the debt. bloomberg has been told that u.s. treasury secretary janet yellen is declining return calls

from the imf chief who was accused earlier this month of improperly intervening in a world bank report. this is ahead of the imf and world bank annual meeting starting in october. sources say the imf chief had easy access to yellen. and that german centerleft social democrats calling to join in a new government. appealing to the greens and democrats to back a three-way coalition. the candidate for chancellor angela merkel's christian democrat block says they will still try to find a majority, but a key ally says that cannot happen after a second-place finish. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries.

i am su keenan. this is bloomberg. haidi: still ahead, china pottsville power crisis -- china' is power crisis moving to home. and hours after one event, we take a look at implications for tech policy. this is bloomberg. erg.

shery: officials are reinforcing the message of imminent tapering and also making it clear that the economic recovery still has a way to go. our fed reporter, we have a lot of fed speak today. what did they have to say when it comes to tapering? reporter: yes, today was really

and echoing i what we have heard -- really an echoing of what we have heard over the last few months, that they are broadly supportive of tapering starting towards the end of this year and then continuing into next year and ending around mid year, and that is also what we heard from chair powell last week after the fomc meeting. haidi: so come of course, a lot of that fed speak was overshadowed, if you will, the dramatic exit of eric rosengren and robert kaplan from the dallas and boston feds respectively. any word on who their replacements might be? catarina: yes, absolutely. so while it may not affect tapering directly, it will have implications for when the fed starts to lift rates. right now, the committee is

evenly split on the first rate hike being next year or beyond next year, and these two members are on the more hawkish side, so if we see them replaced by more dovish fed members, for example, you could start to see a shift for the first rate hike. shery: the implications when it comes to the selection of the new members? catarina: yes, this has been a big focus, especially over the last year, given the conversations that are being had in this country over racial injustice and over diversity, in general, so my guess is that there will be a big push for some of these positions to be filled with more diverse candidates. certainly, for example, the dallas fed region is a region that is 40% hispanic. yet, there has never been an

asian or hispanic leader of the fed here, so i think you're probably going to see folks push for that. haidi: catarina, after what was very eventful day for fed watchers. that's get to the ever -- let's get to evergrande, an ally and poker buddy, joseph love, further selling down his stake in evergrande. stephen engle is in hong kong. so the ally of the founder and the company have been a big friend. we see a key ally really cashing in. we are going to go with the poker analogy here. stephen: you take the money off the table if you are else with a stacked deck, and a losing hand

after losing hand, then you kind of lick your wounds, but, yes, the billionaire chairman of the china estate holdings, he is said to ba poker buddy with the evergrande along with a representative of new world development and others. especially from joseph as well as his wife who is the ceo of china estates, but recently, in filings, we have noticed they have been selling down their state, and yesterday, in a stockmarket filing, we have heard that the wife of joseph has sold out her entire personal holdings of evergrande.

joseph and another reduce their holdings from 5.7% now down to just 4.7%, and last week, we had learned, as well, that if, indeed, china estates had sold off their entire state, they would be sitting on a loss of about $1.2 billion, so, yes, it is a troubling time, obviously, as we have seen this low developing train wreck go on. it did not pay necessarily the coupon payment last thursday, another $45 million in coupons to tomorrow. there was some good news tomorrow in the market, but we got reports that it's 50% stake in its life insurance unit could be over $600 million if sold. no buyer yet war for their stake in the new energy vehicle, which, of course, scrapped its plans for an investment as a unit has tanked down 35% in the last two sessions alone. haidi: the pboc seems to be pushing in money. what are they

saying? stephen: tight for the community, the holiday in china, and you have this exacerbated by the evergrande position, so pboc coming in with a tune of $15 billion of u.s. dollar, -- dollars. evergrande did come up on sentiment. the quarterly meeting for the pboc was late last week. we got a statement yesterday from that quarterly meeting, and there was some positive sentiment portrayed by the central bank on the property market that is obviously under regulatory scrutiny and being under severe pressure, as we saw with some developers having similar trouble, not to the extent of evergrande, but they have basically said the pboc vowed to assure a healthy property market and said they would aim to protect homebuyer'' lawful rights.

haidi: stephen engle with the latest. coming up, the biggest gateway to asia, grappling with record backlogs, further crippling global supply chains. we hear from an executive director, ahead. this is bloomberg. ♪

haidi: the port of l.a. is grappling with record backlogs. it is the busiest such facility in north america and a gateway to asia. one person told bloomberg he is focused on improving efficiency, but they need more federal funding. >> all throughout the supply chain, asia factory output is at record highs, and yet, we are still behind in orders. increases in much as 30%

incapacity has been deployed, and yet, we still do not have enough space. cargo coming to the port is like taking 10 freeway lanes of traffic and compressing them into five. cargo is sitting longer, as it is at warehouses. we have to speed velocity throughout the domestic supply chain, as well. reporter: with the container liners, they will say that the covid-19 pandemic has basically exposed shortcomings imports like l.a. gene: there is no one answer, ed, but there been discussions. over the last decade, the u.s. government and congress has outspent by 11: one, billions of dollars going to the east and gulf coast, versus a little more than $1 billion here on the west coast. that has to change. ed: you have a lot of different arms working in synchrony, the truck drivers and the warehouse. what is the story there?

gene: three segments, and one is the dockworkers, they have been out several days a week since the pandemic began. second is that the work being done on the docks has improved vessel productivity by 50% since the surge started last summer time. we are moving more containers on and off ships on average per call than any other port in the world. second, the truck drivers. only about 50% of all truck drivers, calling her once a week, those that are registered, and capacity of vessel has increased by 50%, but truck capacity is increased by only 8%. the last segment is the warehouse worker. we have more than 2 billion square feet of warehouses from the pacific to the desert region. they are overflowing with cargo. we need more folks on the job and need to expand their work hours, like everyone else. ed: final question, how do we make this better? is it more investment in

infrastructure, the federal government getting involved? how do we fix this problem? gene: short and long term, the federal government is involved. the supply chain, looking at certain commodities, like agriculture, is front and center every day. bringing on the former u.s. department transportation deputy , secretary, and secretary of transportation of maryland, absolutely a light on the subject. working around-the-clock to help us out, as well. ed: we are clearly seeing a huge amount of demand for your service. in the time of year, will demand be as high? if you invest now, are you going to be investing in a slowing market at some point, as we start to see some of this extreme demand fading from the system? gene: yes, good to see you. great question. at some point in the future, the import cargo will plateau. if we can get past the delta

variant, the mu variant, we will go back out and spend discretionary income in that segment. we are not there yet. at the same time, we see a strong market through the lunar new year. others are telling me following that holiday, if there really is one because of all of the work at hand, they will focus on replenishment in the second quarter of 2022. shery: that is the executive director of the port of los angeles. and a check of the business flash headlines, one tv makers said to go public, giving a rough enterprise value of $20 million. it is backed by leonardo dicaprio, and they plan to spend billions bringing new models to the market. innovation, three battery factories and an assembly plant in kentucky and tennessee with

investment as the largest in its 118 year history, and it will employ nearly 11,000 workers. coming up, china's power crisis sp it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today. baaam. internet that doesn't miss a beat. that's cute, but my internet streams to my ride. adorable, but does yours block malware? nope. -it crushes it. pshh, mine's so fast, no one can catch me.

big whoop! mine gives me a 4k streaming box. -for free! that's because you all have the same internet. xfinity xfi. so powerful, it keeps one-upping itself. can your internet do that?

haidi: all right, let's get you to sophie kamaruddin and, in hong kong. sophie: the nikkei 225 under pressure, down by 6/10 of 1% this morning, and we are seeing tech among the biggest lacquers across the region here in the face of higher yields on a hawkish fed. the two-year yield jumping to a march 2022 -- 20 too high.

-- jumping to a 2020 high. we are seeing energy stocks also climbing. oil prices, brent hovering around $80 a barrel, this as demand recovery is seeing a tightening market. we do have miners under pressure and tire or -- and iron ore slipping, even though we see it holding run a mark in singapore, but that might be looking to see some technical pressure there. we are seeing another gaining ground in sydney as the outlook for alumina prices are looking bullish, according to goldman, shery. shery: following your comments on oil, we are seeing supply

concerns, with goldman sachs also upping their brent to about $10 to $90 a barrel. we are seeing a little bit of pressure in the asian session, still wti above the $75 per barrel, and brent about the $85 per barrel as we continue to see demand for alternatives, nat gas still hovering at a seven-year high, this really spreading towards the commodity space, aluminum at about a 13-year high. we are watching china, as well. a surge this year at the heart of these issues with the power crunch in china. china now cracking down on energy consumption in the past week as power cuts in some areas are now affecting everything from plants to traffic lights. our next guest says this power crunch in china will have a stagflationary impact. the managing director at huitai,

higher inflation, will this also translate to cpi, because we have seen those gains, but not so much when it comes to consumer prices, which, of course, could worry policymakers, as it could social stability. eva: yes. we have seen a big jump in energy prices and commodity prices, chemical products, and so on. so far, we are probably going to see double digit cpi in september, at the rate it is going, and with industrial production growth even going lower year on year, not post-pandemic but new lows since

2020, so a big impact. cpi, that impact is likely to be next, because there is a softening of demand, as well, including for the holiday. we are seeing hotel bookings at only 70% capacity, versus years before, so we are not seeing as much of a hike in consumer prices, especially in october, because this autumn as well as in october -- a higher base. shery: what areas are you expecting to see economic growth in? we are seeing some downgrading their overall growth forecast for china, i think your expectation for gdp forecast is already at the lower end of the spectrum. eva: yes, we are, actually.

we downgraded the gdp forecast twice this year. first time, it was at the end of may, and then again in early august. by may, we downgraded because we saw very notable fiscal tightening year to date, on the back of strong exports. the fiscal tightening was amounting at the time to 6% or 7% of gdp on an annualized basis, and in august, we downgraded partially because of the pandemic but also because we were seeing a lot of the restrictive policies coming out at the same time infrastructure investment, as well as power issues -- because the energy consumption restriction has become higher prioritized than economic growth, so we are seeing potentially about 5%

growth. first quarter of this year, a lot of it was driven by trade surplus increases year-over-year in real terms, and for next year , we expect it, so it could go back up. haidi: we see the predatory -- priority of protecting homebuyers as a key for the pboc at this point. he deleveraging campaign, given all of the uncertainty and worries -- the deleveraging campaign, giving all of the uncertainty and worries -- eva:

execution of the policy for the past many years, but as we, in retrospect, the deleveraging effort or the longer term sector derisking, as they call it, they have stayed on course for that, so in terms of evergrande, i think they will try to avoid a huge market volatility, especially to prevent this the spill over the financial sector. however, i think the principle is to use as little capital, with evergrande, and going forward, if there were more cases resembling this among property developers, we do believe that they will continue to do the derisking. too much of an injection, hoping the market will be able to absorb some of the risk, and equity holders, at the same time, will have to be improving private comfortable air and will have to be responsible -- their

private situation, and will have to be responsible. i think that is a long-term sense, but they will adjust the margin to avoid too big of a spillover, for sure. haidi: are there other property developers that you would be worried about? evergrande is not where the pain ends, with the deleveraging or the derisking across the property sector? eva: yes, evergrande is one of those that extended rapidly over the past decade or two, but there are others who have used leverage and have overgrown their balance sheet, so you can probably see it in the overseas bond market reaction in terms of

credit risk widening. of course, evergrande will serve as a reminder that there are risks associated with it. on the other hand, the sort of the evergrande deleveraging or the tightening of suppliers, upstream and downstream suppliers, their cash flow will also serve as a reminder for the government to further tighten the scrutiny over property developer cash flow in terms of making sure they pay their suppliers before they use the money for their own expansion, so i think the effect is if you would call it a double edged sward, talking about cash flow as well as loosening, i think the government will try

tightening supervision over other cash flow deployment items. haidi: eva, we really appreciate your time, with the chief economist at huatai. in the hours ahead, will be checking in on the hong kong property market with a guest. also, a vice president will be with us to talk about the asia sector recovery plan in asia. coming up next, we talked to the cofounder and ceo of a start up with the latest round of funding and the latest for insurance tech. this is bloomberg. ♪

sue: this is "daybreak: asia." i am su keenan. robert kaplan has joined eric rosengren with retirement. kaplan said the recent focus on his financial disclosures risks becoming a distraction. it was confirmed that rosengren will retire due to an ongoing

health condition. and one item is narrower in scope. results still up in the air, with disagreements among eu countries about changes. also, a lack of agreement with the technology meeting planned for wednesday in the u.s. the white house is refusing items with a huawei release and of two canadians accused of spying. they do not refer to the episode as a prisoner swap. there were no questions as to whether china would be encouraged to seize foreign hostages in the future. japan will reportedly list -- lift its virus state of emergency from friday as new infections received. one broadcaster says regional authorities make a -- keep some

restrictions in place. more than 50% of the japanese population is fully immunized. and a prime minister's term in office, a replacement selected on wednesday. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. haidi: one company has boosted their valuation to one billion aussie dollars after raising $100 million from investors, including another holding company. the fundraising is one of the biggest among fintech companies, and cover genius's ceo, angus mcdonald, is with us. what are you going to do with the extra capital?

angus: thank you for having me here. insurance. we work with some of the world's largest digital companies to help them with better insurance inside their shopping cart and registration forms. what we are doing with the money is we have been growing rapidly. especially over the last six months. we have signed 20 new partners, and our gross premium has tripled, so what we plan on using the money for is to expand globally and to grow our teams so we can really turbocharge our growth over the next couple of years. anchor: how important is it to get the backing from the likes of some in japan? angus: it has been really important. we made the decision of partnering, as well as getting an investor who can support us. one of the largest insurance

companies in the world, sompo, what they are really strong at is developing markets. the value propositions, working with us, that we can work with them in a lot of developing markets that are growing rapidly and where e-commerce and travel, in particular, are growing rapidly, so having a partner and investor like sompo work with us on that, i am really excited about it. anchor: your funding rounds were oversubscribed. why did you leave money on the table? angus: we have always been very disciplined with how we raise capital. the company was bootstrapped from its early days. we have always wanted to make sure we have a plan for the capital that we raise, so when we go out to markets, we are raising capital for a plan that is going to really grow the is

this, so we waited for this moment. i think it is the time when we now have multiple new partners, where we have branched out of travel and are into e-commerce and shipping, fintech, and property, as well, and we need to invest in our global team, so the time is right. we do not want to be raising large amounts of capital that we are not going to be using to grow, so that is why we are very diligent in making sure we make sure we hit that number. anchor: companies raising money, fintech has been growing exponentially around the world during the pandemic. what do you make of valuations in the sector? angus: i do not actually look at valuations. i am someone absolutely focused on the business. we wanted to raise the right amount of capital, and valuations take care of themselves. i am not commenting on the evaluation at this stage, but

what is really important is that we have now got the capital to be able to grow globally and to be able to deliver on all of the wonderful insurance products that we offer. anchor: you must have been looking at that 29 billion dollar buyout. when you take a look at that growth trajectory, the story of that company, where do you want this to end up? is it somewhere along the line of what you would be planning, as well? angus: yes. i mean, the analogy, the embedded insurance business, they are an embedded business, and we have a lot of very similar e-commerce partners that we both work with, so it is analogous. i think where we are different is the industry that we are in. at this point, we have raised this money with a plan, and we

plan on executing that plan over the next period of time. to execute on that growth, then all options will be open to us. anchor: it is great having your insights, the cofounder and ceo of cover genius. we do have a report from the bloomberg. we are hearing from gary gensler, saying that crypto markets will not end well without regulation. we continue to see more moves, not only here in the u.s. but also in china, who regulates the market, china, in fact, coming out and trying to ban crypto completely. the pboc closing loopholes involving exchanges. we are seeing downside pressure on it going. it was fluctuating. in the new york session, at one point, it was really close to the 42,000 dollar level, before

the chinese announcement on these bands, ethereum slumping down towards the evening here in new york, and now we continue to see further downside pressure. this is bloomberg. ♪

anchor: china talking about nonmedical abortions, and still unclear what constitutes a nonmedical abortion. let's bring in a bloomberg reporter. so can you explain the news, the guidelines? this could be perceived as more state involvement into family-planning , into trying to reverse the demographic story here. reporter: sure. good morning, haidi. this comes from what is basically like the cabinet, part of a policy, as you sit, to reduce abortion. again, it is still vague, but if you look at it against the backdrop of one of the stories in china this year, which is the population slow down and the demographics. a relentless amount of policy messaging just aimed at the idea that they need to get chinese

women to have more babies. anchor: so what exactly are the guidelines saying now? isbella: it can be one of those things that chinese policymakers often do, say something and maybe come back and finesse it a bit more, but i think it is quite clear that they do have this goal, as i mentioned before, trying to get women to have children, because nothing is really sticking. it is really at that point where many women see having children as too expensive. they just want to enjoy life. maybe they just want to have one child, and that is really not enough to make up for the shortfall of children that is the result of the one child policy that china is still working through the effects of. haidi: which we know was ultimately disastrous, right? so is more family planning policy key right now?

isabella: yes, lots of family planning experts and women's rights advocates say trying to control what women should and should not do with their bodies does not really help, and you need more holistic policies or just a nicer environment if you can just for women or families to want to have children or have more children, and even recently, like the crackdown on school tuition, private tuition. it is all part of that. they want to be seen as fostering an environment to raise children, and the question is whether this is all too late to get the government obviously has control over many, many facets of chinese life, and family-planning is one of those. even recently, they have relaxed the one-child policy. they can have up to two, and then three, and many people are

wondering that there is not any cap anymore, you can have as many children as you want, and that is a difficulty that the chinese policymakers have, relinquishing the control that they want over how people make their decisions. anchor: our bloomberg senior and after, isabella steger, there. and facebook with a special instagram platform for kids under 13 after it was said it could be harmful. the socio-media giant said children were currently -- the social media giant has said that children have been currently lying about their age. anchor: one company and talks to buy a stake in a google-backed provider. such a deal would give strategic entry plus access to valuable real estate on mobile phones it

is codeveloping with google. anchor: that's take a look at some of the stocks we are watching at this point. what is on your radar? sophie: the pboc vowed to look at property after liquidity concerns sent shares falling to a 2017 low. a developer has said they have not sought policy support from the government, and markets assessing the impact on production material stocks, down 14% this month, as authorities push to limit energy intensity. energy security has become a concern. lng this winter pure we are seeing nat gas stocks rallying. one of the largest lng buyers jumping, and that would be a record gain.

anchor: our coverage continues as we look ahead to the start of trading in hong kong and shenzhen. stand by for "bloomberg markets: china open." this is bloomberg. ♪ it's moving day.

and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today.

yvonne: it is 9:00 a.m. in beijing and shanghai. we are counting down the open of trade on the chinese mainland and hong kong. our top story is a treasury yields jump as they embrace tapering soon. more hawkish tale from the speakers there. the energy crunch stoking further downgrades to the growth forecast. goldman sach