♪♪ >> hello from bloomberg's world headquarters in new york i'm shery ahn. we are counting down to the major market open. haidi: i'm haidi stroud-watts in sydney. asian stocks are set to fall, declines on surging commodity prices and how that could spare inflation. president biden warning the u.s.

may default, the republicans are reckless by blocking a debt ceiling suspension and facebook says services are starting to return following a devastating six-hour outage. >> let's turn to sophie for what to watch. sophie: the governor is expected to keep rates at a record low which is fueling concerns around the housing market. bond yields are rising with a 10-year back up 152 and the dollar keeping above the 73 level, resistance since mid-july. the h.p. losing half a percent following stock production deputy with copper out of chile. it is energy prices that have led the rally commodities pulling up the charts showing you that picture there. we have seen the bloomberg gauge of raw materials, a spot index rising 90% since the marlow that

we saw amid this pandemic, so with this inflation fear then being boosted by this picture pulling up the board, that is top of mine this tuesday, c.p.i. data from the philippines and thailand and waiting on inflation data from south korea. now, we have nikkei futures just now swinging to gain on in chicago but this after a loss of 4% overnight. we're keeping an eye on tech today, haidi, after a mega cap, the nasdaq losing 2%. bouncing about a third of a percent and after pay showing you some of that concern around tech, shares losing ground. haidi. haidi: the persistent high inflation rate, shery, it was more than that, a confluence. events, a facebook whistleblower on that tv interview as well. what we didn't expect was this six-hour outage when it comes to the major facebook and facebook

owned apps, facebook messenger and what's app, we're all probably a lot more productive getting a whole lot more work done. that way into the story as well. facebook 5% and it spreading through the body of some of those tech cohorts as well. interesting, we heard a little while ago saying this is why you do have the me none listic concerns over facebook being in control of all of these apps, when one of them goes out, a domain server issue, clearly it's affecting everything. they are slowly starting to come back online now. shery: interesting what that might have done to traffic flows. i remember that you told you that your parents messaged you asking what's up with facebook, so, yeah, that would be very interesting to find out where the flows went because people still need to stay connected.

really when you talk about practices, around the world, south korea launching that month-long parliamentary grilling of tech giants and tonight it will be a busy day in south korea. we have the national policy committee grilling companies, the communication committee handling google korea, apple korea among one others, one dubbing it a simple of greed. there is a lot of fears that this might be a chinese style crackdown on tech. we'll see how this goes. let's talk about the inflationary pressures and what crude is doing. with the rally, we see signs of the oil marketing tightening from that global energy supply crunch, falling inventories, increasing winter demand and opec surplus supply deal above $80 a barrel for the first time

in three years. let's discuss with commodity strategist mike, we have seen on the bloomberg shows that were viewers that the r.s.i. is on overbought territory, where do we go from here? michael: that's a good indication that prices are getting stretched. in the long term, thinking about crude oil, we're basically at the same price as 2011 around $80. remember that was support. now it's resistance. to put into context, this is a major shift, a perfect storm. opec discipline has been unprecedented, we have never seen this kind of discipline for opec. i don't think it's going to last that long. supply will come on as it always does. u.s. shale costs in 2011, 2012 were $70, now they're $30. unless free market capital doesn't kick in, we have low inventories, that's how you put peaks in prices once you get

back the storm, a pretty significant storm at the moment. >> we have seen output when it comes to u.s. shale closing. has the cost discipline story created more of a buffer? michael: sure, supply has declined partly, but it's reaction to last year. prices went negative. the average price of shale based on metrics, $35 a barrel. two years ago, it was $50 a barrel, you're seeing that in profits in equities and a lot of the energy markets, energy doing so well, why, they're making profits. that's the big difference from two years ago, cost of production lower, price much higher and the rig count is picking back up again. i see a potential for a new cycle starting around $80. the other one started around $110 a barrel and natural gas driving prices higher. that's not really a good sign. yes, the energy transition away from coal to natural gas. we had the big hurricane in the

gulf of mexico, to me, this is a shorter thing and the natural gas price market is closing in on the winter. what if it is a mild winter, this is not levels you want to be buying on the crude oil market. shery: great to have you with us. let's get you to washington now where president biden has been warning about the debt limit, a congressional reporter laura has the details. laura, where do we see it now with these negotiations? laura: today, the debt ceiling, no end in sight. we had a lot of finger pointing today, president biden as you mentioned, he warned earlier today that the u.s. government is at risk of breaching the debt limit in two weeks and blamed senate leader mcconnell, a meteor headed for the u.s. economy. he is not budging sending a letter to biden earlier today

saying that republicans remain unified against providing any support for raising the debt ceiling and they want democrats to go through a cumbersome approach that could take a few weeks to do that and do it on their own. in the meantime, senate majority chuck schumer for his part said that he will force a vote in the senate on whether to advance a house passed suspension of the debt limit, house passed bill that was suspended into december 2022 and force every republican on record and we do expect that to be blocked in the middle of this week and we'll have to see where things go from here? shery: what are the broader implications from this. we heard from secretary janet yellen that the deadline was october 18 or slightly after that, but just around that date. laura: yes, she has said that there are, she testified to that recently, there are some of the

treasury department using extraordinary measures to force that out a little bit longer, a week or two more. an interesting thing, both the house and senate are supposed to be out next week and so if suddenly the democrats decide they are the ones who blink and decide to use this process that will take a while, it would, they need to stay in town and do this and it would involve, they have to go back and relook at a fiscal blueprint they had used for the debt ceiling and on two different occasions it would have to unlimited that could go on all night. shery: laura, bloomberg congressional reporter from the latest from d.c. in japan, the 100th prime minister gave a glimpse of his administration's economic priorities including forming a panel on new capitalism to

distribute. let's go to isabel reynolds, this feels like a sign of the times. we have seen prosperity in china, tech hearings in korea, new capitalism in japan. it's very, very early in the new administration, but any idea what that might practically look like? >> this was the first mention that kishida said of a panel setting up for this new capitalism. he hasn't fully explained what it means, it does sound a bit like common prosperity. one of the things he has emphasized is pay rises in the public sector which one of his advisors have told us could lead to bigger pay rises across the board. he has also talked about the corporate sector and he said that it shouldn't just be shareholders who are benefiting from growth. there should be more benefits

for people actually working in the companies, all of the stakeholders in the companies. this is a bit of a shift in thinking. he wants to get away from any kind of mere liberalism in terms of ideas, the panel is to review the ideas and figure out a plan to go forward. i think there are going to be other ideas around digital liesization and environmental issues, it will be interesting to see what comes out. the tax rate on investment income, he certainly said a couple of times that he is going to review that and there could be a hike coming for people who have large investment incomes. shery: he has named a new tax policy chief as well according to the nikkei reporting this morning. when it comes to geopolitics and the sensitive issues including

security, where does the new leader stand? isabel: right, he has had a rather dovish image before he came into the campaign. when he started the campaign, he became, he began to show a harder edge, he seems to be taking a slightly harder line on china. having said that, he has emphasized and he repeated that last night that he wants to continue dialogue with china. china is an important neighboring country for japan. obviously they can't sever their relationship. so he is very keen to carry on with talks. having said that, giving the timing of the election, he confirmed that the election is coming on october 31. that means he said last night that he implied anyway that he will be taking part remotely in the g-20 summit and the 26 summit. that implies that he won't be really having a good chance to sit down with the leaders with him that has issues and get to grips with what is going on.

his real debut in person on the international stage could be coming a bit later. shery: isabel reynolds with the latest in tokyo. to vonnie quinn. vonnie: the biden administration will directly engage with beijing to enforce commitments in the trade deals struck in under president donald trump. an official says all is on the table, it does not intend to escalate tensions. cath ri will speak soon to china advice premier and she'll put u.s. economic interests first. >> i am committed to working through the many challenges ahead in this bilateral process in order to deliver meaningful results. but above all else, we must defend to the hilt our economic interests and that means taking all steps necessary to protect

ourselves against the waves of damage inflicted over the years through unfair competition. vonnie: taiwan has a 56 total military aircraft were detected on monday as beijing steps up military near the islands. the 72nd anniversary of the founding of the people's republic of china. the u.s. urged china to slow flybys, it could lead to miss calculations. another chinese developer has failed to repay a maturing bond echoing ever grand's date woes, it didn't pay a bond due on monday. separately, another says it didn't repay $108 million and that a default was probable. the builder's bonds tumbled earlier on monday on speculation it would meet its obligations. bloomberg news powered by 2,700

journalisted and analysts in 120 countries. i'm vonnie quinn, this is bloomberg. shery: on day break asia, more on beijing's real estate he woulds, the offer of red capitalism and privatizing china, frazier says evergrande is one of many more officials. strategist emily wise joins us next. this is bloomberg.

shery: surging oil prices could be bad news for emerging market assets. four weeks of gains. the gauge for developing nation currencies has remained little changed during that time which deifies an historical

relationship. emily, great to have you with us. does this fan the flames of potentially persistent inflation and the negative implications? emily: we have already seen that emerging markets central banks don't quite have the luxury of waiting out what might be transitory inflation, the maerkts can wait on hold and hope that things will fade overtime. emerging markets central banks have been much more proactive. the continuing supply issues that we have seen alongside the issues with oil where we're seeing things crop up in india and china and brazil, they continue to keep the price pressures on and will keep this transitory inflation going on for longer. haidi: you look at energy stocks, they have outperformed all others by just a huge margin. not even close here when it

comes to even global stocks not within the u.s. as well, right. do you see opportunities within that space? emily: we certainly have seen a big move and definitely i think we see that reflected in oil prices now adds well. what is more concerning to me is actually some of the traditional countries that normally benefit with these sorts of moves, we aren't quite seeing these gains in energy stocks and oil translating over into positive gains in markets, seeing that improvements in the local equity markets. haidi: with treasury yields jumping, really asian assets taking a big hit. u.b.s. called this the tantrum in asian assets. which markets will get hit the hardest if yields continue to rise from here and what level does it become really

counterproductive? emily: yeah, yields have been a big focus of ours and we actually reupped a study that we did a few months ago when we were in this situation of rising treasury yields once before. in general we find a 50 basis point move higher in u.s. yields can bring substantial for emerging markets on the local debt side. those impacted are mexico, turkey and indonesia, markets that have a lot of foreign participation and also have some other idiosyncratic issues that make them more vulnerable in risk high times. across the board, we see this isn't a positive for e.m. the move in treasuries, up to 2% would be pretty extreme, we are looking in the medium term for a little bit, but not quite reflective of a tantrum just yet, given there are a lot of differences this time around when we compare to the 2013 tantrum. haidi: you have more indo sin

accuratic risks like evergrande, could we get, at what point would it become as dangerous as it was back in 2013? emily: so i think we'll start with the good news this time around which is that the taper has been well communicated and protected by fed officials, on top of that, the external vulnerabilities that made vulnerable in 2013. there are risks to pay attention to. we have seen the market has been able to ignore some of these risks for a very long time, particularly very specific stories like evergrande, what we're watching going forward, we think there is more volatility in these markets. it isn't the same where risks go up over time story in the rebound over covid. we're in the rockier period

making a more complicated period going forward. haidi: thank you for your insight, thank you for that. coming up next, facebook suffers a devastating outage for more than six hours kicking it's global users offline. we have more details. this is bloomberg.

shery: facebook says it came back on online after it suffered a devastating outage that shut out many of it's 2.6 billion social media users including instagram, facebook and whatsapp. the services become available now in a trickling sort of sense. do we know what caused this extraordinary six-hour outage? >> we're still waiting for

confirmation from facebook, but we believe it was something to do with the domain issue, so essentially when you go to facebook.com, you type in that domain, that address, it then connects you to the service and there was some type of break in the ability for the domain to actually connect you to the content on facebook and so we believe that that's the issue that seems to be the general assumption, but again, we're waiting for facebook to confirm and i would guess they're going to release more technical details about what happened sometime later tonight. haidi: this coming at a time when facebook has already had a very busy week with the whistleblower revelations. kurt: that's right, this is a pretty crazy week for facebook. it was already a busy weekend as you mentioned, speaking on "60 minutes" last night and speak again tomorrow before a u.s. senate subcommittee. there is a lot already at stake for facebook this week. to have this kind of happen

today and really dominate the whole news cycle today, it goes to show you that facebook is certainly top of mine for everybody right now. haidi: what sort of inkreezed scrutiny could we see on facebook given the latest outages, not to 34e7ction the whistleblower? kurt: i think if we're going to see anything, it's probably going to be related to the whistleblower. the outage was a bad look and it certainly shows that facebook is a little vulnerable from a tech standpoint, but i think, you know, the stuff that the whiz hl blower plans to talk about is facebook's handling of hate speech, the handling of young teens and children online, that's the kind of stuff that is going to anger a lot of members of congress here in the u.s. and, you know, it could be the thing that finally drives people from both sides of the aisle to do some law, pass some laws around data privacy, pass some

laws around advertising targeting. that's a big if, i think the whistleblowers documents and testimony tomorrow will be probably more damning for facebook than the outage we saw today. haidi: kurt wagner with the latest on facebook. a quick check of the latest headlines. amazon fell into negative territory for the year with a sharp drop in the session. it's pushing investors out of tech and other high growth areas. airport. there is a sale of the life insurance business. the potential say could value the unit as much as $1 billion and that other insurance and investor funds have shown interest. tinder is ruling out a virtual currency that allows users to buy perks and boost chances of a match. users can earn inapp points by staying active and keeping their profiles up to date or by purchasing them with regular

money. the feature is available only in australia. plenty more to come on day break asia, this is bloomberg.

shery: we are taking a look at tokyo inflation numbers. coming in at a gain of .3 of 1%. that is actually more than expectations that we had over contraction of .1%, the number is still a gain of .1 of 1%, stripping out volatile fresh food as well and the impact of energy prices we actually see an on consensus contraction of .1 of 1%. this as we continue, of course

to watch to see what the bank of japan does under this new leadership in japan have not had really much success in terms of reaching that 2% inflation target. that boost that we see when it comes to energy prices and crude prices in particular trading at seven-year highs will give a little bit of a boost. the yen, not much of a reaction, it has been trading near a one yeeb r- yeek high, the concerns over evergrande china risk hurting stocks and creating a bit more of safe haven currencies like the yen. more on the oil patch which has been dominating headlines in terms of increasing inflationary expectations and perhaps we're here for transitory but longer. sophie: after we saw opec maintain its approach to boosting supply, those jumped to a seven-year high, crude holding again close to that level, so oil joining other commodities as

key inflation risks that is also facing a slow normalization of supply chains. we are seeing the soft start to october trading continue after the worst month for global stocks since the pandemic. we had japan among the three major markets that did close higher in september and as you well know, the inflation targets certainly has been elusive goal there. we have seen a daily short selling of japanese spikes, some of that optimism over reforms dissipate in japan and this morning we are seeing nikkei futures in singapore loose more than 1% early in the session. over in sidney, tech is the biggest tech after it pays off more than 6%, energy is the clear leader with the sector gaining more than 2% in sidney, after we saw on the u.s. session with the nasdaq losing more than

2%, early moves in asia, up .2 of 1%, shery. shery: the biden administration says it will engage with beijing directly in the coming days with the u.s. trade representative catherine tai sent to meet the chinese advice premier. let's get the details from eric martin in washington. first of all, take a listen to what ambassador tai had to say today. >> i am committed to working through the many challenges ahead in this bilateral process in order to deliver meaningful results. but above all else, we must defend to the hilt our economic interests. and that means taking all steps necessary to protect ourselves against the waves of damage inflicted over the years through unfair competition. shery: eric, what do we know about this potential meeting?

eric: yes, absolutely. this was a policy speech by ambassador tai at a washington think tank earlier today, monday morning in washington. we don't have exact timing yet for her meeting with li, but we know that this is something that is a top priority for the u.s. and that the strategy is based on several pillars. one is engaging to insure phase one compliance from china, phase one purchases, restarting 301 tariff exclusions, uggs businesses who want tariff exclusions to import from china, continuing to pursue u.s. priorities not addressed in the phase one deal and all of this while working with allies and like-minded partner hads. so this is a much awaited announcement of this policy and as ambassador tai said, this is a starting point for the biden

administration's relationship with china on trade. shery: when it comes to the strength in the u.s. economy, is this a reset when it comes to trade or really a tweaking of the phase one and two agreements under the trump administration? eric: well, in some ways it's a tweaking in that they will be following the guidelines from the phase one deal that was agreed by the trump administration, but it was interesting to hear ambassador tai say she doesn't like the term phase one. that's not the official name of the deal and because it implies that there will necessarily be a phase two that raised expectation force a particular kind of negotiation to follow whereas the biden administration is focused on directly engaging with beijing about the commitments on purchasing and otherwise, but also kind of starting given the relationship

a new feel and a new focus under the new administration in the u.s. shery: issuing martin with the latest. in china, the country's indebted property sector continues to vex traders as we look at the latest on evergrande's coupon repayments, another failed to pay a maturing bond. our next guest says the president is turning his attention to the property sector, but may be unaware of all of the risks he is running. joining us from singapore is frazier, always great having you on our show. tell us what may be the president be missing here? frazier: we have seen that of the chinese economy and society and trying to remold them as he

sees fit. in preparation for next year's party congress. he is certainly not an economist. i don't think he appreciates the impact he is having, whether it be in private sector or economy more broadly and how partners are viewing china as a stable place for business. when you look at property, a huge driver of the chinese economy over the past 20 years or so. to fiddle with that mechanic, he is impacting many areas, local finances and middle class finances. haidi: so are you saying that evergrande could be a systemic risk or more of a broader approach to evergrande as a developer in the entire sector. my question is what could be the repercussions of what the president is doing? phrase combreer: it isn't evergrande per se, they'll take

this acute crisis and make it to a chronic crisis, they will be able to make good for certain investors and the retail and identified properties, foreign bond holders or equity holders are way down the list of priorities. they can manage out the problems of evergrande, but if you're concern is about property in general, that's a huge component of gdp, they complain about affordability and is priced extremely high, especially in the big cities. if you want cheaper houses, that means the existing buyers are going to have a lot of losses. that's going to cause social unrest and cause pressure on bank finances, on individual finances and certainly local government finances, you start fooling with that model, however flawed it is, there is a lot of knockon downstream affects. shery: my question is how do you address social stability as a

key priority of the government but also discourage hazard at the same time in an investing sense? >> start addressing these areas 10, 15, 20 years ago. these aren't new problems and invite more and more debt and more and more credit they have been able to push off these problems into the far future. the far future has now arrived. i think one of the immediate concerns will be making sure people have put down for houses ultimately see their properties being built and actually know they will get something at the end of it. this is a huge problem that they face, you can't keep bailing out companies or bailing out investors and at the same time not expect hazards. this is why there is a lot of potential dangers for the president as he tries to remold the entire society in some sort of idealistic image he has. >> as you say, these are

investments and policy results that have come home to roost after many, many years. is this a moment for china, the bigger concern the longer term drag on economic productivity? should we be more concerned about wastage in these for years to come? >> it's this longer term case of slower growth trends, less innovation, less create itself, less profits that you're basically spending a lot more of your assets and your resources mopping up your historic problems. that already coupled in a geopolitical environment which is tougher in china, a demographic environment which is tougher in china, the role of the future is not going to be that rosey.

>> great to have you with us. coming up next, sought korea takes aim at big tech both at home and abroad. in just a moment, we'll be hearing from the country's fair trade commission as she tells you how far seoul will go to boost competition. this is bloomberg.

>> this is "daybreak asia," i'm vonnie quinn with first word headlines. sticking with its plan for slow and steady oil out put increases. after a short meeting, ministers ratified a rate hike for november, but traders reacted with alarm pushing crude to the highest in almost seven years. oil is joining natural gas, coal and others that stresses the world's recovery by spurring inflation and disrupting industries. president biden has warned that the u.s. is at risk of reaching its debt limit in two weeks. he blames senate republican leader mitch mcconnell for what he described as a meteor headed for the economy while demanding that republicans stop blocking evidence to suspend the debt ceiling. the president has called on the senate to suspend by today simple majority which would save risk for a default. pres. biden: republicans in congress raised the debt three

times when donald trump was president and each time with democrat support. but now they won't raise it, even though their responsible for more than $8 trillion in bills incurred in four years under the previous administration. that's what we would be paying off. vonnie: japan's new prime minister has called for a general election at the end of the month. he is speaking to bolster support for its party. they are expected to maintain as parliamentarian majority. global news 24 hours a day on air and on "bloomberg quicktake" powered by more than 2,700 journalists and analysts in 120 countries. i'm vonnie quinn, this is bloomberg. haidi. haidi: south korea's actions are drug paraphernalia legals from china's recentiousdowns.

we spoke to the chairman in this exclusive interview. >> we want to see what they make, like what changes they are actually bringing to this market and another one is we are investigating their activities of other related. we completed one investigation into the global activity and in the case google might be like hampering the rival companies from like realizes their obligation in others. after the investigation is completed and our deliberation process could start shortly, in other cases we are currently

investigating and also like payment for services as well. >> it seems south korea is taking lead in legislating laws targeting big tech companies. what are the top priorities in terms of tech regulations, do you have any specific goals or directions for these investigations? >> the platform are players of innovation and for us or top priority is to maintain the drivers of the market. so either to maintain the innovation in the market, we have been trying to intervene the market at the least possible ways. so in order to protect our competition in the market and at the same time inherent innovation in the market, we are trying to provide the basic and

most profound structure in the market. that's our key priority. >> do you have any message for the industry players and market players who are, well, some of them are worried about potential like tightening in regulations, environment in the country and do you have any message for them? >> our top priority in our law enforcement is to increase the competition and also to increase the activities in the market while k.f.t.c. is trying to provide the more fundamental rules to the market and we hope to see that the market becomes more competitive and also we see that in the market like a true, fair, transparent, like a trade

system and we have a faragty system where the companies and new entrants, they grow together and they actually innovate together and eventually that's going to enhance the welfare. that's what we believe. i want to say to the market players, trust us. we are here to help you. >> korea fair trade commission chairperson speaking with bloomberg news. we'll discuss the crackdown in more detail over the coming house. we will hear the outlook for the affected sectors and tell us how the crackdown is affecting their strategy. of course, we'll be watching those tech hearings today, a busy day we have the likes of kakau appearing in parliament. congress continues its audit of other government and state run agencies including the finance, defense and environment

ministries. south korea's online shopping data will be released later at noon local time, over in japan, we already had tokyo c.p.i. figures earlier, the core c.p.i. rose less than expected. we're also awaiting bank services and composite in the next hour, we expect them to stay in contracted territory. another is set to be dipping back into the market after a cutback of exposure two years ago and one of our top stories, the prime minister naming a new cabinet ahead of a general election at the end of the month, haidi. hype -- haidi: let's get it over to our

bloomberg energy head of research, what does the selection mean for energy and climate change policies and commitment from japan? >> thank you, looking at the cabinet selection, the most notable immediate observation is that the two former climate policy champions in the administration, the former prime minister as well as the former administrative foreign minister, the main rival to sishida are missing in a new cabinet. there are a lot of new faces in the cabinet, but the minority have deep ties with the former prime minister abe, former finance ministers and overall this suggests a potentially more

conservative approach, many including myself are very surprised how the prime minister took a lot of action on climate change, but a lot of it was actually the credit goes to former environmental minister as well as former minister who are now missing from this new cabinet. haidi: are we expecting any changes to the position on the upcoming 26? >> critical factors around on whether the new government goes to the target. they hosted a summit on climate. japan, u.s., and canada, all three announced new ambitious targets, together this made the g-7 targets aligned. u.s. and canada have formally submitted to the u.n. secretary

their more ambitious targets. japan hasn't done that yet. october 12 is the final deadline to submit this new more ambitious target. haidi: ali there. plenty more to come on"daybreak asia" this is bloomberg.

>> and here is a quick check of the latest business flash headlines, the autonomous vehicle unit is set to see its ride hailing business become a $50 billion operation over the next couple of years. the c.e.o. will present those plans to investors this week. he is expected to say that cruise will charge for rides and will expand if it gets the green light from california regulators. they are said to be in early discussions with the mines for stake in the western project. the huge exploration project would be a departure from the policy of shunning risky jurisdictions. qualcomm has partnered with newly formed quality equity firm.

the complex transaction ends a lengthy battle for control of the auto tech company. the $37 a share deal means an 18% premium over a rival bid. they will carve out the driving operation for qualcomm and find owners for the rest of the business. we're headed towards major market opens in asia, what are you watching? sophie: with south korean markets reopening, we are watching e.u. regulators to treat adults in early stage of covid. parliamentarian hearings are continuing. lost $10 million in a single day last month if you recall amid the scrutiny. the regulator in korea has spoken of taking a fair and balanced approach and switching at the board in tokyo, in japan we're keeping an eye on retail and consumer stocks, to show you

what we're keeping an eye on, a 19% earlier drop in sales and we had an operator pushing into declines for sales coming in at 5:00% when it comes to the losses for sales, heidi. haidi: coming up, more analysis on south korea's tech crackdown, we speak with james lynn and also be discussing some of aberdeen's top investment strategies, christina is with us for that. we do have the marketer in seoul and tokyo coming up next. this is bloomberg.

>> welcome to bloomberg asia. >> and i'm in hong kong. and and looking at the major markets opening in asia. and commodity prices will spur inflation. and another chinese developer

and and bloomberg korea's antitrust regulator. >> japan and korea coming on-line, korea, what are you seeing? >> and japanese stocks and more than 1% and nikkei and one of the tokyo stocks is sticking up and that is below 111. and that is a push for the dollar yen. and also loom large. turning to south korea after the long weekend, the last trading day, we are seeing it decline 3,000 points. and could see a small and

looking more appealing than the larger piers and anticipated and we see expectations for inflation for six months and due out later this month. we are keeping an eye and continuing to lose ground and continues for these types of industry. and over in sydney we have the dollar and they have gained and leading the jump shedding while we have opec decided to maintain

an approach and nand is picking up and pulling up a chart the rising and we saw the biggest jump and my colleagues and indicates some of those concerns around inflation. >> our manager. christina, great to have you with us and this is going to be for longer. with oil prices at seven-year highs, is this a real risk that investors haven't seen? >> we have to beer in mind and you've got, coming off

expectations were low and and 2021 and secondly, i think with covid continuing to weigh on the world, you have -- you are likely to see it here and there and and semiconductor shortages and going to add pressure there. and as the world moves towards lower emission and in that are transition and as you ramp up energy, you might see higher energy costs. having said that, as some of these things pass through and covid and people manage, some of

this will ease but not all of this. this is a disappointing issue. but over the longer term. >> something to bear in mind. >> we have seen energy stocks just widely outperform and look at this chart showing the huge margin in terms of that outperformance. do you think that is how it is so far? >> i think they need a spike and we are seeing now and run its costs already and i think that is continuing to watch how different governments contain this. there are several things there, right? if i break it down in two parts, in the near term, people are trying to address and keep

prices elevatedded and as we touched on and the world and ramping things up, you might see issues where it has come out and china for example, and lower hydropower and that could also result in a few hiccups here and there. >> would you be a little bit more carbous in the investments now that perhaps you are seeing it spread across china? >> and that's a good question to ask as well. we have to take a step back. over the longer term, we continue to expect that the world will push towards lower carbon environment.

that journey is clear. the benefit of the investors and going through -- >> what do you feel about the long-term for tech, especially in korea? because there are now fears we will see a crackdown with hearings now just in full swing? >> that is adding it to the markets as well. we are seeing that play out and there are a few things we will have to continue watching. as we discussed earlier as well, we have seen heavy selloffs in these large tech names and found values. we have to be selective with some of these things but i think

what we believe is that again, it's not about killing these tech giants. they are important for the system in korea. i think it is about finding allowing innovations and we continue to be positive and how to add to them and this is to weigh on things for a while. >> thank you. investment manager. we do have more on that decision from opec. bloomberg has the latest. and many analysts were expecting a bigger boost.

>> about doubled. and there would be about 800,000 barrel a day increase for the month of november and perhaps going forward the decision was the 400,000 par el a day which had been agreed upon pack in scrul. they decided on a monthly basis of 400,000 barrels a day each month going all the way to september 2022. but you take into account, what we have is a demand, a shortage of supply and oncoming winter that is expected to be very cold and china under order to all of the stakeholders and buy up whatever supplies they can and intense tightening of the market. and look at the reaction and

investors and traders alarmed and puts them spiking up 2.5% and $78 in plus and in asian you are looking at the big picture on the bloomberg. we'll show you those and nrm april of last year, and had gone below zero and he believes it is ag perfect storm for oil prices and how there was a reaction and hitting 80, three-year high and we go to 850 and goldman sacks is raising end of the year forecast to 90 and many

projections say it could go well over 100 if it is extra cold. >> oil prices is one reason that it is hitting these record levels. >> and it is engaged in 23 different commodities and we have got oil joining coal and natural gas to be a real rich concern for inflation as we heard from our friends. quickly, u.k. experiencing a panic for energy and have troops coming in to help deliver some of the gas. so that perhaps is an amen that asia that the u.s. could face if

there are no and bloomberg and you see how natural gas has been sky high. there are many that are saying that goldman sacks among them that the utilities are faced with a natural gas shoartage and they may switch over to burning oil and that exascerbates that we have seen for oil. >> heidi, thank you. president biden said that the united states is reaching its debt limit and plaims senator mitch mcconnell. demanding that republicans stop olympicking efforts. the president has called on the senate to suspend the debt limit.

>> another chinese developer and debt would hes. and it did not pay 205 million bond that was due on mopped. and didn't repay a loan and default is probable. facebook says they are recovering after many of its 2.7 billion and many customers could

not access facebook and instatistic book.

>> we'll discuss the market implications and research analyst. japan's new prime minister lays out his economic vision. this is bloomberg. ♪

>> japan's 100th prime minister gave a glimpse including of formal a panel to distribute and our politics reporter and we may also be seeing on the geo

political side and the prime minister held a phone conversation with president biden. what do we know? >> the call with president biden went well and they agreed to work on the free on the independento-pacific and talk about the increasing power of china. we don't have full and they are talking about the conversation. on the economic policy, he laid about more details about his plans and what that means to me is what is different in the recent past is new capitalism and going to set up a panel to look into ideas and has a minister in charge of this issue who will be speaking to the press later this morning. some of the ideas he has talked

about, redistributing income and it is great but we need to make sure that people who work in companies are seeing the fruits of that, not just the shareholders and he talked about raising pay in the public sector and people who work in kindergartens and those pay raises will prompt mentd private sector companies and will trump those pay raises. >> and we have the former olympics' minister, what do we expect in terms of stimulus. >> and needed to help japan out

of the experience from the pandemic. things are looking very good for japan in terms of the pandemic itself. the number of infections has fallen dramatically in the past few weeks and it is very small compared to a lot of countries and the state of emergency was ended. so that is a real opportunity to revive the travel industry and bars and restaurants that have suffered with so many people staying at home and and we'll that is a go-to travel to encourage people to go for that.

>> they have forces on both sides of this policy question, don't they. if we look at australia's growth outlook and the pandemic was hit hard. we have seen retail sales hit a three-month low. and we are seeing sorrows concern and head of the r.b.a. and said that g.d.p. could contract 2%. and unemployment now down to 4.5% and could go back up to the

# high-five. and ta is a reason and sack even rollouts and international kraid trade in november. and again, recently, but he keeps saying, done expect rate hikes until 2024. housing prices are doing. and in fact, if we look at this next chart, what we are going to see that are key rate. and it has been there for 2020. and you are seeing a lot of demand nor homes. this is a big deal. and the prices are up 17.6%. as credit aprovals keeps riseic and there is a concern this could to lead to instability. we are going to be looking in the post statement any hint there is going to be curves on

home lending and ahead of the october 8 financial report. >> kathleen hayes with that decision. ♪

>> more than half of china's experience and for more than a decade. the factors and coal mines to low rain and and of course, demand has continued to grow. and and we are in seoul. help us understand these factors that have caused the crisis in

china. >> you mentioned a number of factors that are kon flaiting and issue just to keep it very short. as china came out of the pandemic, the economy recovered quite fast which led to rapid production of coal and some mining accidents and regulation regulations on safety for coal mining which constrained coal production which had an impact on prices. over the summer and local authorities were conscious of these issues and make sure their demand would be balanced. by september, they were relaxed on those measures and it was

higher than expected and some modern supplies, hydro and wind were lower than expected and some provincees and with were not meeting and resulted to the decision to cut power supply in certain sectors of the economy. >> what does this mean for when china can develop the crisis then? >> for china, we are expecting a short-term and rise. this may have some impact on energy sectors and imagine the impact on various commodities like steel and aluminum.

>> we have the latest on china's power front. this is bloomberg ♪ 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: australia trade numbers out for the month of august. rising 4% from the month earlier. imports saw a decline of 1% from the month earlier. also getting the september job advertisement seeing a fall of 2.8%. all of this coming on the rba decision day with the reserve bank click to keep policy unchanged. the board is that the focus on financial stability risks primarily arising from the property sector. but it will be fairly

significant to monitor in terms of commodity flows and shipments from australia given we have seen not just a ban on coal shipments to china, but the huge man for certain energy commodities. that trade balance for the month of august coming in at $15.08 billion over that $10.1 billion trade surplus predicted. shery: at japan we are getting the bank pmi numbers, the final numbers for the month of september. coming in at 47.8 for services which is slightly better than the initial estimate. the composite coming in slightly better at 47.9, but worth noting the services and composite pmi have been in contraction territory for a while. services numbers in contraction since january of 2020. not surprising, we continue to be there given the extended

state of emergency. let's turn to sophie for what to watch in the market. sophie: nikkei 225 lose more than 2%, falling for a seventh straight session, set for the worst losing streak since may 2019 with tech leading the drop as inflationary fears ramp up. 4.4% yearly rise in energy costs helping to drive first year on year gain in 14 months for core consumer prices. japanese energy stocks leading the best performers in tokyo with oil and gas producer rising to a one-year high, jumping more than 5%. switching the board for price action in sydney, trading at session lows. miners a drag as iron ore pulls back. the korean won trading around 11.85 while the kospi has fallen.

amid parliamentary hearings and south korea. korean air is rising with travel stocks and utilities and energy names climb. oil jumping to a november 2018 high. we are seeing korean crypto names gaining ground. haidi: yes. speaking of crypto, we heard from the citadel and founder saying the federal reserve has a no win job right now when it comes to fiscal stimulus and demanding the work the fed is doing. n an -- in an interview with bloomberg, he said he would trade in crypto if it were regulated. >> we don't trade crypto because of the regulatory uncertainty. we often make markets in companies whose business models i do not have a fondness for because one of our jobs as a market major is to meet the liquidity demands of american families who want to invest in x, y, or z. and it's not my job to tell them

if they are right or wrong, it is to route provide them -- it's to provide them with the best possible price. we just are not involved in cryptocurrency today. and i believe that chairperson gensler is spot on on the need to have thoughtful regulation around cryptocurrency. i actually think that doing so will make it a smaller market because it will become a far more competitive market than there's -- when there's regulatory clarity. and that will be good. a small-market, less people involved are frankly trying to make a quick buck. whatever the virtues are of that product, and i think those are pretty nebulous, will become very different in a world of competitive exchanges and competitive pricing by tier one market makers willing to put their best foot forward. so i really believe that chairperson gensler is spot on on the need for regulation, and

the sec has a solid history of writing good regulatory policy. to be >> clear though >>, if it was related, you would trade it? >> i would because it would need the medes -- the needs of our partners who want to have a tier one firm making prices. part of the reason we are so significant in retail market making is our high reliability. we are there every minute of every day, and we provide a great service every day and every minute of every day. and they want us to provide pricing crypto. i just did not want to take on the regulatory risk in this regulatory void that some of my contemporaries are ready to take on. shery: let's not get to vonnie quinn with the first word headlines. vonnie: opec-plus says sticking with his plan for slow and steady now -- oil output increases.

traders pushed crude to the highest in almost seven years put oil it joining natural gas -- they are threatening the world's recovery. japan's new prime minister has called a general election at the end of the month. he is seeking to bolster support for his party which lost public confidence. they are expected to maintain its parliamentary majority but any gains by the opposition could hinder the agenda. the biden administration says it will directly engage with beijing in the coming days to enforce commitments in the trade deal under donald trump. they do not intend to escalate tensions. a trade representative will speak soon to the chinese representative and says she will put the u.s. economic interests first. >> i am committed to working

through the many challenges ahead in this bilateral process in order to deliver meaningful results. but above all else, we must defend to the hilt our economic interests. and that means taking all steps necessary to protect ourselves against the waves of damage inflicted over the years through unfair competition. vonnie: taiwan says a total of 56 chinese military aircraft were detected in its air defense zone monday as beijing steps up military forces the island. the flights came after national day celebrations marking the 72nd anniversary of the founding of the people's republic of china. earlier, the u.s. urged china to halt its flybys saying it could lead to ms. kuck relations. -- lead to miscalculations. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: as the markets await word

on evergrande bond payments and another potential asset sale, yet another indebted chinese developer, fantasia, has missed bonds and loan deadlines. also waiting to get more clarity when it comes to the $260 million jumbo enterprises bond we learned about late last week. really the implications as to what these opec across dealings, potential for cross default. we've kind of stopped talking about the possibility of a lehman style moment as systemic crisis. but the question is how much of a drag does this continue to be for policymakers? shery: especially as you see more property developers facing challenges. fantasia seems to be less of a systemic issue given its smaller waiting in the benchmark. but let's get stephen engle in hong kong to break this down for us. so how significant is this and what do we know at this point

about this developer? stephen: we do know that signs of stress in the property sector are really starting to bubble up here of course you have the red lines the chinese government has imposed onto control debt loads as developers combined with the property curves to prevent speculative bubbles and that is combining to hammer some of these smaller developers and they are having problems paying off their responsibilities and liabilities, as evidenced by the latest fantasia holdings group. stock code is 1777 hong kong. it is suspended after falling 58% this year. its bonds have also tumbled and on monday it did not repent -- repay $207 million u.s. that was due on monday. it put out a statement saying we will assess the potential impact on the financial position due to

the bond payment. in addition, country garden services, says fantasia unit doesn't -- did not pay an additional $108 million u.s. loan that came also on monday. that default was possible. now, this is on top of what we got late last week, news of another developer in china has received a demand repay some debt after missing two local interest payments. demanding repayment of about $75.4 million u.s. in outstanding principal and also crude interest. so it is not just evergrande. evergrande is the poster child because it is the world's most indebted, but there is a lot of trickle-down effect by the policy and drying up of this property market. -- drawing up of this property

market. haidi: so it's still just uncomfortable silence when it comes to evergrande? do we have any word on bond immense due, a reported asset sale we caught wind of yesterday? stephen: there has been lots of silence. no word on that principal payment from jumbo fortune enterprises. of course that was a bond that was guaranteed by the domestic unit of evergrande. it matured on sunday. payment principal was due yesterday. we have had no word. we have speculation in the market with evergrande as well as evergrande pretty services. both of those shares were suspended yesterday. we thought it would be news on the bond statements are on large restructuring. then we got trickled out news from local media in china saying hobson development would be buying a 51% stake in china

property services. that is there property management arm, one of the more valuable assets in the portfolio of china evergrande. but we got an announcement to the market saying there will be a major transaction. still no news on that. again, continued silence from evergrande just adds to the uncertainty surrounding this troubled developer. shery: stephen engle as always with the latest on evergrande and all the headlines breaking almost every day. we do have more breaking right now. the kospi index in south korea falling 10% from its july record. on this pace, on track for a correction. they have just come back from a long weekend and are playing catch-up as we already saw the asia-pacific index falling to the lowest since august. in today's session we are seeing health care information technology leading declines. not surprising given we are also seeing those valuation concerns with treasury yields continuing to rise.

we do have tech hearings in south korea for the next five weeks. we have a lot of grilling for those tech giants today. the countdown about 30% since june. coupon down about 50% since the ir ipo. we continue to see downside pressures in all those different sectors in the south korean economy. next, we speak to -- about the outlook for the korean tech sector. of course we will get you the latest on seoul's antitrust crackdown. this is bloomberg. ♪ this is bloomberg. ♪

haidi: with south korea's antitrust regulator is trying to diffuse fears of a widespread chinese crackdown. for details, let's bring in peter elstrom. the parallels have been made but what are the policy goals? peter: it's interesting to hear the regulator speak about what their goals are. this happens of course and made a very broad global crack down on big tech. you have seen it in the u.s. where officials in washington have wanted a crackdown on big and have not made very much progress. you have also seen it in china where they have made a lot of progress, partly because they have acted unilaterally about

some constraints. it seems like south korea is trying to trace a middle path where they are signaling they want to take actions against powerful tech companies domestic and foreign, but they want to do it in a moderate way so they leave lots of room for innovation and growth by small companies and small merchants but they do not cripple them in the meantime. shery: between domestic and foreign companies, we know south korea became the first country to impose curbs on app stores from apple and google. so how much of this is aimed at u.s. giants compared to local players? peter: right. korea made headlines by taking action against apple and google in particular by forcing them to open up their app stores. this is something the u.s. and europeans have wanted to do for a long time. but this also was focused on

some domestic players. they weild a lot of power within the korean market, so regulators are looking to loosen up those monopolies so smaller merchants and smaller companies have an opportunity to play online and not get hurt i some of the high fees they would have to pay if these gatekeepers keep their monopoly powers. shery: peter elstrom there. let's discuss the broader market implications and bring in senior research analyst. it is great to have you with us. let me just get started with what the ftc chairperson had to say when he came to the regulatory environment they are trying to foster. take a listen. >> our top priority in our law enforcement is to increase the

competition and also to increase the activities in the market. i would say to the market players and investors, trust us. we are here to help you. shery: so, all of these new regulatory scrutinies that we are seeing from the government, is this a long-term positive or negative when it comes to the market implications? we already have seen the reaction from the likes of cacau coupon really losing ground. but what does it mean long-term? james: well, i think if you are talking about long-term, i think this is moderately positive. i mean, when there's competition, more innovation happens. so obviously trying to foster competition i think is always a positive. with large companies which have gained a lot of dominance, that

also means there will be a threat on their monopoly power. so i think it goes both ways. shery: in the meantime, how do you position in the market? james: we have not seen very positive on korean tech names, particularly after they ran up so much. i think a lot of the expectations on the very good business quality and a monopoly, and i think the market has been baking in a very long-term approach. when there is some uncertainty for that i think valuation has to give and that is what has been happening. we still stay in the sidelines how we see companies. haidi: what would you want to see in terms of changes in the inflationary outlook to change that view? james: well, as i just mentioned, inflation plays a role. we'll have to see the inflation

in the rates stabilizing. but we're at such a low interest rate, i do believe that there is more room for the rates to go up. so in the short-term, i'm not really finding a convincing time to get into these stocks. i would like to see how the regulations and other uncertainties unfold. and then evaluation. so i will wait out. haidi: are there tech names that have better growth chances than others in the regulatory environment? james: yes. in the korean market, within the tech space, i prefer the semi names, and also the semi and ev battery material names. the main reason is that these

companies are targeting global markets. so, in terms of the regulation, the other big tech are mainly focused on the korean domestic market, which would put them under a lot more influence of regulatory risks. i think that is a difference. also in terms of valuation, these companies tend to be cheaper. while the ev batteries have run up a lot, you have some names in that sector which are still trading in the high teens. if you seek out those few names and i do believe there are opportunities there. haidi: james lim, really appreciate your time. we do have more on the outlook for korean tech stocks later on. this is bloomberg. ♪

shery: here's a quick check of the latest headlines. the autonomous vehicle unit is set to see its business becoming a $50 billion operation over the next couple years. sources say the ceo will present plans to investors this week. it's expected to say they will

charge for rise as soon as next year and will expand if it gets the green light from california regulators. qualcomm has partnered with newly formed the private equity firm on a deal to buy vioneer. the complex transaction ends a lengthy battle for control of the company. it's an 18% premium over a rival bid. they will carve out the autonomous driving operation for qualcomm and find owners for the rest of the business. they are said to be considering -- sources tell us the potential sale could value the unit at as much as $1 billion and other insurers and funds have shown interest. the move would be the first disposal after the company was created from a portland restructuring of a group. haidi: let's look at other data

points we are watching. sophie: on the agenda, philippines cpi due at the top of the hour. inflation has been running hot. prices in august rising for the fastest pace since 2018. the consensus for eight 5.1% -- for a 5.1%. due in part to higher oil. getting a snapshot of where we are seeing inflation, above target across the world. brazil very much topping that list. south korea is also in the top 10. this week's data expected to show cpi will rise above 2%, which would bolster the case for a rehike this year. shery: and of course we continue to watch as those implications on inflations, central-bank

decisions, mean for the broader market. as we continue to head down across asia we are talking about the nikkei. being at the lowest level since august. it is seeing its worst day since june already and falling for a seventh consecutive session. we're seeing the japanese yen holding at that 110 level while the kospi is now on track for a correction, falling about 10% from its july record, its worst day since february. not surprising given we continue to see that pressure on tech with valuation concerns, not to mention those ongoing hearings in parliament. also downside for the asx 200 and stocks. coming up, we get the outlook for china's real estate sector amid fears of evergrande contagion with the head of property research. haidi: that is it from daybreak asia. markets coverage continues. we are looking ahead to the start of trading in hong kong pretty stay with us.

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yvonne: welcome to "bloomberg markets: china open." david: counting down to the open of trade in hong kong. mainland markets are shut for golden week. yields up, equities down as inflation fears of spiking on rising raw material costs. yvonne: the debt crisis spreads to another chinese