shery: u.s. stocks pair most of their games after did buyers --

u.s. stocks pare most of their gains after dip buyers. and evergrande may have missed a payment, but marathon assets is buying its debt. haidi: the s&p 500 fell slightly -- are actually rose slightly, but we did have the nasdaq 100 rising. treasuries rebounded a little bit, but still above that five percent level after the congressional budget office saying the treasury is likely to exhaust its ability to borrow as soon as october. stockpiles also rising for the

first time in a week, so we are also watching chinese abr's falling to the lowest in about a month, and this as we continue to see concerns about the gaming sector. local media reporting china has not approved any new license of videogames in the last two months, so we saw gaming companies lose ground, but we were very much focused on what all of these central bank chiefs were saying that virtual panel with fed chair powell saying the inflation spike we are seeing right now will see a beginning, middle, and and, and christine lagarde agreeing that perhaps the inflation spike is to do with the reopening of the economy, so everybody seems pretty sure this will be a transitory phenomenon. haidi: what is less certain is the issue of avg -- of

evergrande. we talked to one investor who said they just started buying and will continue to do so. >> the big picture is it is a problem. it is problem for china, a problem for the housing market, a problem for banks and the whole segments that rely on this. there's a lot of jobs related to this and a lot of commerce related to this. haidi: of course, that's only one of the concerns when it comes to china. we continue to see the power crunch leading utilities in china to compete with energy star european utilities, and that is really pushing stock prices in north asia higher to almost record highs. this, of course, a key concern in china. here in the u.s., we continue to see that deadlock in congress over the debt ceiling, and

president biden's economic plans as well. let's get more with our congressional reporter, emily wilkins, so what does another debt ceiling boat mean? >> this is controlled by democrats. democrats do not need republicans to join them for this one, and they have just passed this bill. it will go to the senate, but the fate of this bill is not looking very good. democrats in the senate are going to have to get at least 10 republicans to join them to pass the measure, and there do not seem to be 10 republicans willing to vote for the debt ceiling. we have heard from republicans again and again and again that they are not going to take this vote, despite the fact that they were happy to raise the debt ceiling under president trump,

it is now president biden, and democrats have control of washington. democrats have ruled out using the reconciliation process to move the debt limit, but there are serious questions about what plan b might be, if this might be something that biden could do unilaterally. there has been talk of minting a trillion dollar coin to pay the debt. lots of ideas are being floated, but there is that october 18 deadline that treasury secretary janet yellen laid out. by that point, democrats will have to come up with some sort of solution or else the u.s. will begin defaulting on its debt. haidi: jay powell still thinks it is a supply-side snag causing inflation. >> he said models did not get it down, but the supply chain breakdown was a complete surprise.

let's take a look at a bloomberg chart. we can talk about what they said against what the numbers are actually doing. that turquoise line shows that inflation for the past five or six month has done nothing but move within the fed's target. that is cpi year-over-year, still above 4%. is it temporary? is it becoming persistent? let's move to the white line which is the eurozone line. christine lagarde said yes, bottlenecks are accelerating in some areas. the ecb is monitoring it. again, betting on transitory, that number up about 3%. their spike is shorter, only a couple of months. now we move on to the purple line. that is the u.k. they are watching second round of facts. you can see the yellow line,

japanese and nation, still weak, but he says demand is surging so fast supply cannot follow in japan. he expects this to be a bit prolonged. you look at numbers, you tell me. temporary or transit -- no one knows for sure? -- temporary or transit? no one knows for sure. shery: he was sort of downplaying the risk of a crisis from evergrande. another day, another headline with this company. what's the latest? >> more evidence that offshore bondholders are less of a priority. we are getting news, at least from four bondholders who have talked to bloomberg news on condition of anonymity that they as of last night had not been

paid on another dollar bond coupon that was due yesterday to the tune of $45.2 million on top of the 83.5 million dollar coupon payment that was due last week. fitch has cut its credit rating even further into junk, given evergrande is likely to have missed interest payments, as we got that from bondholders. this on top of another bond issued by a company called jumbo fortune enterprise. that was a bloomberg scoop. that $260 million bond matures this sunday, and a group of on holders have formed a committee in the event of a possible default. they claim that it is a joint venture whose main owner includes hung how real estate. you mentioned the ceo saying

evergrande will eventually be restructured. they are going to pay home buyers, suppliers, and onshore bondholders -- they will be paid first before offshore creditors. haidi: the latest there on evergrande. let's take a look at how we are shaping up in our markets. sophie: china pmi very much in focus this thursday as we assess the potential weight from the power crisis, which is affecting large parts of the economy on the mainland, more so than the delta crisis. while the yuan has stayed relatively resilient against this backdrop, with the pboc likely to step in to curb its impact, asian currencies probably speak and have been on the downturn this month as the dollar has climbed with u.s.

yields, and inflation spikes do remain with us for longer. that could keep up the pressure on asian forex. the thai baht down nearly 4%. the euro fell below 1.16 for the first time since july of last year and traders are piling options to hedge against potential downside risk going further. at bvh, they predict the yen will hit below 125. we have seen shorts built up to a record, which some say could provide room for a recovery in the currency.

in japan, vaccinations ramp-up, and they predict some surprises to the upside. shery: that's now get over to vonnie quinn with the first word headlines. bonnie -- vonnie: after winning over his party, the japanese -- the former japanese prime minister must win over voters in november. he is promising to deliver major stimulus by year-end and indicated support for raising public sector wages. the u.s. fda have authorized half dose boosters of moderna's covid vaccine. the timing of an announcement is unclear, but it comes as the u.s. recovery from the latest coronavirus wave is taking hold.

the international olympic committee says no international spectators will be allowed at beijing's 2022 winter games. it says tickets will be sold exclusively to spectators residing in china's mainland who meet iris requirements. they also say athletes who are not fully vaccinated will have to quarantine for 21 days upon arrival in beijing. new zealand will offer residency to as many as 1000 migrants. officials say the majority of her last will be granted within a year of the category opening in december. global news powered by more than 2700 journalists and analysts in more than 100 20 countries -- 120 countries. haidi: the former japanese

premier showing his strength amongst party insiders. this is bloomberg. ♪

>> this inflationary spike will not lead to a new regime of ongoing higher inflation. the current spike is really a consequence of supply constraints meeting very strong demand. >> we certainly have no reason to believe that this price increase that we are seeing now will not be largely transitory. >> the underlying inflation is not so weak as the headline figures.

>> we understand the effects of rates. shery: top central bankers downplaying the inflation threat. our next guest still favors global tech despite that spike. the principal annual investors annual aid summit concludes today, and a speaker at the event joins us now from seattle. it is great to have you with us. we continue to see those concerns over tech, and we are seeing those outflows especially from those big tech etf names. are valuations not a concern for you with rising yields? >> valuations are a concern, but valuations can be affirmative over the long-term rather than

the short-term. when we look at the cohorts of the u.s. market, particularly on a cash flow basis, you do see that the reasonable valuations and one of the more predictable, reliable, secular growth engines to come across the global landscape in some time. we think despite the current skepticism around the pace of growth in the future, that cohort of names can continue to deliver above average cash flow generation and note new growth enterprises, even when growth can become scarce. shery: does that mean you are staying put in the u.s. equity market? we have seen some people say perhaps there's good opportunities over in china. >> from a cross-asset perspective, it is indeed tempting to take a look at what is taking place in china and go looking for value, but from where we see our current

financial condition, we do like the u.s. and high level financial conditions available inside the u.s. it also offers a rich landscape for a value-driven cyclical opportunity given the breadth of the market size. shery: are you positioning your portfolio to have elements of stagflation leverage or stagflation-proofing? >> we are pro-risk from a multi-asset perspective. we see opportunity in equity as compared to the limited set of low yields and high levels of spread across fixed income. we do think that the tremendous frontal -- fundamental improvement can lead to positive returns going forward. we do tend to see earnings

growth this year forecast at 45% , another 7% next year. that fundamental growth supports i think a pro equity position. at the same time, credit, particularly in u.s. high-yield, has really attracted futures as well as low default rates. we think those risk up positioning's in concert with mitigated risks in some areas lead to the right positioning. haidi: what do you think is an efficient pricing mechanism when it comes to regulatory risk? >> this issue cropped up recently. a lot of it makes sense thinking about country risk. i think investors globally may have been surprised or may have missed assess how country risk takes shape in china or how it

can manifest itself. we think that risk management module and perceiving all the unique features of a market within a country risk framework makes sense to consider the kind of change we have seen out of china. haidi: in so many economies, it feels like psychologically there has been a move on from covid or at least moving with covid. at the start of the pandemic, we talked about how things would structurally change on the others. how do you invest around that, or are things returning to normal in more ways than we originally anticipated? >> well, covid has brought a lot of change around capital markets. i think most particularly when you think about lasting impact. asset prices have recovered, but what has not changed is the pace of change in certain industries, and as the global tech giants have continue to take share and innovate, and it becomes the fuel and investment focus of other growth industries, we do

see the continued opportunity for growth offset by zombie firms, the continued presence of weak corporations who even post-covid field the pain more acutely. we think those firms have been booed by the surge in liquidity. when that liquidity is washed back out, we think perhaps they will be more visible in the economy and the market. shery: where in emerging markets are you finding those opportunities? the way they have been dealing with the pandemic has differed. >> yeah, as we look across emerging markets, we see pockets of opportunity in asia and, of ours, latin america. taiwan seems to hold pricing and growth attentional as tech fuels demand for semi's in that area. we also saw a record print in import/export in taiwan in august of this year. i would highlight singapore stands at the center of global

trade as reopening begins to happen, so there is potential opportunity there. as well as thailand as tourism begins to open. that is another area we think could potentially see some interest. on the latin american side, mexico has been sort of the bastion of strength. we think that economic momentum can continue, and we think the positive surprise can continue out of mexico. shery: but the positive surprise when it comes to earnings is pretty well past the peak, right? do you feel like investors, given how i watering valuations are at the moment, have set up for that? >> i think investors are pricing it appropriately where they see risk in the market. i we have positive intermarket views on e.m., u.s. equity still

remains our favorite overweight position in stability, the growth projection. let that be an anchor, almost a defensive positioning, as we look for more unique opportunities or idiosyncratic opportunities tactically in emerging markets. shery: it was great having your insights. thank you. you can get a roundup of the latest central bank speak and everything you need to get your day going in today's addition of daybreak. you can customize your settings so you only get the news on the industries and assets that you care about. plenty more ahead. this is bloomberg. ♪

shery: here's a quick check of

the latest business flash headlines. some holders of the latest evergrande dollar bond coupons or they have not been paid yet. the company owes $45 million in interest on the bond do 2020 for with a 30-day grace period. the bonds have presented opportunities for bad debt specialist marathon asset management. the ceo says his firm bought their debt for the fourth time this week and will continue to do so at current low prices. next the big picture is it is a problem. it is a problem for china. it is a problem for the banks and the whole, you know, segment that it kind of relies on this, right? so there's a lot of jobs are

related to this and a lot of commerce related to this. shery: sources tell a smirk has agreed to buy acceleron pharma, but the news did not win over investors. the move would see merck take control of a potentially lucrative drug. haidi: economic data out of new zealand today. in australian, we are expecting business approval and credit data for august. australian government report forecasting iron ore prices set to average below $100 a ton.

we have heard that britney spears, one of the most successful musical artists of all time -- her father has been suspended by an l.a. court from a controversial

vonnie: the u.s. house has passed standalone regulation to suspend the federal debt limit through 2022. it will now go to the senate where it is expected to fail in the face of solid republican opposition. meanwhile, the house speaker must decide on holding about on the infrastructure bill.

central bank chiefs have given reassuring messages on their economies while acknowledging concerns about the pace and challenges for a recovery. speaking at an ecb forum, christine lagarde and christine powell both repeated that inflation spikes are temporary. china's national development and reform commission has most to keep regulation electricity and gas prices stable. earlier, bloomberg sources said beijing was considering a hike in energy costs for factories to help ease a growing supply crunch. china's power crunch may hurt agricultural production and processing and trigger a renewed surge in world food prices. the autumn harvest is under way

just as food shortages hit half of provinces where china's food is grown. 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. shery: the surge in the dollar and an unexpected weekly gain in u.s. fuel supply led to a choppy day for traders. a pause in that relentless value we have seen so far. su: a bit of a pullback from surging to three-year highs. you look at the energy price chart, you see the pullback was pretty much across the board with the exception of gold, which moved higher with this big surge in the dollar, and that is because we have seen the dollar surge the most since june.

john kilduff says the dollar has surge to a level that cannot be ignored at this point. let's take a look at the bigger picture for oil futures. west texas intermediate affected by the fact we saw an unexpected surge, a big buildup of 4 million barrels in the nation's crude oil supply with print crude, which hit haiti earlier in the week, a three-year high. we are seeing a bit of a pullback as well, although major banks like bank of america and goldman see oil going higher to $90 and even a hundred dollars. we quickly dive into the bloomberg. the commodity rally has pretty much been across the board, though again, the u.s. dollar's strength significant enough to put a real dent in that, and for crude oil trading in new york, it was more or less a search for

direction in this latest session. haidi: energy futures vying for all-time highs. su: asian and injury very much a different story. china depends on a lot of imports for its energy. there's a landgrab for these futures, and you hope that freighter is powered by liquefied natural gas. this effort is pushing asian liquefied natural gas to all-time highs. check out the latest price movement in asia because you will see the latest spot price is within striking distance of a record. again, a lot of these futures are flirting with records. we go to the bigger picture for natural or lng, and you will see

it is the highest price many have seen before. in fact, these huge surges impacting other commodities. most of the increase, as you can see, has been in recent weeks. check out coal, which has already been at records. we talked about shortages in asia. china, of course, the biggest consumer of coal, and china doing everything it can to ensure it has enough supply in a separate effort designed to ease this power crunch. beijing authorities are considering letting power generators charge factories even more for electricity in order to encourage more generation. a lot of this also fed by predictions of an unusually cold winter ahead. haidi: su keenan with the latest on the energy crisis. speaking of china, some firms

are seeing opportunities in evergrande's asset crisis. >> the big picture at evergrande is it is a problem. it is problem for china, a problem for the housing market, a problem banks and the whole segment that kind of relies upon this, right? there's a lot of jobs related to this and a lot of commerce related to this, a lot of industry related to this. here's the pecking order. for all the folks thinking about evergrande and the logic of how it will play out. the first obligation, when this gets restructured, when that day comes, and we think that can will get kicked down the road a bit -- some coupons may be paid in the interim, but the first pecking order is they are going to make sure the homeowner that but those homes takes delivery

and that they are made whole. second is the trade. the folks

and this case study to play out before we would invest more. haidi: that was the marathon asset management ceo. coming up, the former foreign minister set to become japan's new prime minister. we will hear more coming up. this is bloomberg. ♪

>> we must start working on economic stimulus measures as big as tens of trillions of yen by the end of this year. we need to realize a free and

open end of pacific, and we have to solve many serious issues in this country, including declining population. i'm determined to start my work today. shery: that's the x foreign minister --haidi: that's the x foreign minister laying out his agenda to become prime minister. he may have swayed his party, but now has to win over voters as japan seeks to revive an economy hit hard by the pandemic. in many respects, he, along with a number of other candidates were seen as safe hands, as continuity candidates. what are we expecting in terms of any big policy reforms? >> as you mention, he was really the status quo choice in a very

interesting election. it was a 4-horse race, and the other three candidates each in their own ways proposed very radical responses, and the public also has responded to that. it feels like something big will need to happen. japan has economic difficulties that predated the covid crisis, so this vote is seen as a vote for the status quo. he could surprise us, but i think in many ways, we are going to see more of the same. >> i suppose on the upside, whoever becomes the next prime minister will likely be able to ride the wave of an economic rebound once these restrictions are lifted. what are the biggest challenges economically? >> i think you are right.

i think he really saw the country through its hardest times with the coronavirus pandemic, so in many ways, the new leader has a much easier job, but japan is grappling with a still struggling economy, huge national debt, and he has per-person economic stimulus plan but also mentioned that he would like to postpone further debate and discussion about that until after the general election, so i think the first, there are many economic challenges facing japan, but the first task in the first project will really be this next general election, which has to happen by november 28. shery: will he be able to appeal to voters as the face of the election? >> that is a great question.

it was a very close race. in the end, there was a runoff. in many ways, the opposition was the popular favorite. people seem to like him. he is seen as a much better communicator, so voters may respond out of disappointment in the general election. i think that is an open question. haidi: it was also former foreign minister. when it comes to policy, he seems to be a bit of a dove, but in the campaign, he showed some harder edges. where does he stand? >> that is an open question, too.

i think there has been pressure within the ldp to take harder stances to china, but i think a hard right candidate spooked a lot of people with her very heart of rhetoric on china, spooked the business community as well. as a foreign minister, he was very much of a dove, very much in favor of diplomatic solutions. he managed to set up the historic visit by then president obama to hiroshima in 2015, and it remains to be seen how he will react within the region. he has mentioned that he wants to take conflict with china very seriously, but he has also mentioned diplomatic solutions,

so it is harder to know if it is a real change in his policy or if this is kind of rhetoric leading up to this election. shery: your point about spooking the public, he did broach the idea of another sales tax hike, which would spook anyone. perhaps some of his policies seem to be a little bit of the new type of japanese capitalism and redistribution of wealth? >> yes, i think proposing a sales tax -- sales tax hike was an incredibly unpopular policy. the problem is that any economic stimulus in japan is going to raise the question of -- well, where's is the money going to come from? and japan does have huge debt.

a lot of that debt is domestically held, so in some sense, it is a less precarious situation than other nations that might have a lot of debt held overseas, but that is a huge concern. sales tax is very unpopular and really hits people in their daily life and their daily expenses as well. haidi: thank you so much for joining us with insights on the japanese election. time now for morning calls. japan, a key issue for analysts. sophie: certainly, and our guest just noted, while there are still question marks as to where the funding will come from to finance government spending, questions coming in as to how

big we could see the new stimulus package come in under the new premier. you have the board shifting gears at goldman. this latest analysis takes into account shifting trade structure and exposure to domestic demand. we are switching out the board, a modestly bearish scenario for the property sector in china, which sees a 2% drop, and calculating a limited hit to asia. haidi: we are going to stay with commodities, and australia may need get use to an oil price slump.

more than 1400 new cases of coronavirus recorded in the last 24 hours in victoria state, a big jump from under 1000. we will have plenty more ahead. this is bloomberg. ♪

shery: this is the picture across commodities. we have a forecast of milder weather putting a dampener to potentially more demand coming up. nickel also fell to the lowest in more than two months. we continue to see pressure on base metals not only because we have the china power crunch but also a very strong u.s. dollar also dampening the appeal for precious metals, and over about that 20 level, but after falling to the lowest in a year and cotton continues to gain ground around that 100 level. it already saw the best quarter in 10 years, up more than 20%, given that china continues to buy cotton, and we have already

seen failing crops around the world hurting this commodity. haidi: let's get to iron ore because this is a huge part of what the government relies on for growth. the price expected to dip. we have some of the details. this dip on revenues, what are we expecting? >> a one dollar movement in the price means $250 million in revenue for the government, so the last few months where we have seen iron ore above $200 a pound -- a ton has been fantastic for the bottom line -- above $200 a ton has been fantastic for the bottom line. but those golden days seem really coming to an end. the price of iron or slipping below $100 a ton next year and

the department boosting revenue that it collects dropping from a half now down to about 1/3. one bright side is that australia is a very low cost producer, so the price for the higher cost producers tend to get squeezed out. shery: let's turn to another commodity that is becoming scarce. is australia about to face a shortage of lumber? >> yes, we got a new report from the australian product administration morning of a shortage of 50,000 wooden timber frames for houses in the next few years. something needs to be done. something will be done by planting trees, but trees take 30 years to fully mature, and something needs to be done now. plantations have also suffered in australia due to fires, so that has not helped either.

demand for homes is rising as the government tries to bring on more supply and also stimulate the economy, so this is a problem that could be coming down the road. haidi: let's get you a check of the latest business flash headlines. creditors should return more than $500 million that the bank accidentally sent them last year. a trio of judges in manhattan heard her commence from both sides on if it should reverse a lower court's decision that the creditors can keep the money. citigroup call that a misapplication of the law that sent shockwaves. bloomberg has learned that at least 11 game sellers have been working on 4k games. the nintendo switch 4k feature is said to be planned for the

second half of 2022 hour potentially later. we hear kkr is in advanced talks to buy australian art company in a dealer could be valued at 870 million dollars. kkr is also speaking with rope's owners -- with probe's owners. a deal could be announced next week, but negotiations could still fall apart. sources tell us merck has agreed to buy nasdaq-listed acceleron pharma. the move did not win over investors. acceleron pharma fell by 8%. the move would see merck take control of a potentially lucrative hypertension drug. shery: that is it for "daybreak

australia." "daybreak asia" is next. this is bloomberg. ♪

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haidi: hello and welcome to "daybreak asia." sophie: we are counting down to asia's major market opens. shery: our top stories this hour -- asian traders way a week and to the u.s. trade session. the dollar hitting a 12-month high as investors look for havens. china evergrande