haidi: a very good morning. welcome to "daybreak: australia." i'm hiv-aids made in squid -- i'm haidi stroud-watts in sydney. shery: from new york i'm shery ahn. the top stories this hour. u.s. stocks rebound as investors rushed back into tech. the s&p 500 rising back above its 100-day moving average easing concerns of a market correction.

but big funds are backing away from china. smart money from soros to elliott management blaming politics and uncertainty for this. shery: and new zealand central bank may raise rates even as covid outbreak threatens growth. this is a picture across wall street. we are seeing u.s. futures muted at the open after the s&p 500 surged back above that 100-day moving carving. we had more positive sentiment being felt after that i.s.m. services activity data beat estimates. we also had the nasdaq 100 gaining ground more than the -- a percent. this after the 14-day r.s.i. fell to the lowest since march for those tech giants real flashing those oversold signals. the 10-year yield also one point topping the 1.53 level and settling at 1.52% and this having a lot to do with what's happening in the markets with the commodity surge. we are continuing to see the bloomberg commodity spot index

extending record highs. if we can turn on that g.l.c. function on the bloomberg you can see the gains right there. you are now seeing w.t.i. crude. that $79 a barrel level. gains for a fourth consecutive session, especially after opec plus gain just really is gradually raising supply and that disappointed investors. nat gas also, that 2008 high, domestic production falling to a three-month low with this ongoing energy crisis around the world. when it comes to the metals side of things we only had copper under a little bit of pressure. we saw those net bullish copper bets falling to a six-week low. soybean also surging. this agricultural commodities index you can see, soybean oil in fact surging the most since august. we have thin trading. but this record surge in commodities, haidi, really threatening that goldilocks scenario that we saw for many markets, right? and in fact the citi global

earnings revision index, now, this is the analyst sentiment, forecast for the future when it comes to those positive earnings minus a negative earnings revision. that almost falling into negative territory. this as we continue to see those concerns over inflation and plummeting after hitting that all-time high in may as you can see on that chart. haidi: yeah. sherri, it is this concept that inflation transitory or not so transitory and what central banks have to do and fading caution in the markets. we heard from some prominent investors from brookfield to the president of blackstone saying now is a good time to start offloading some assets. he says that as we get closer to fed tapering that long-term rates are start going up and you don't want to get caught with an enormous amount of assets that may not be productive in the post-pandemic era. he has been focusing on of course on these alternative

investments across entertainment, across education, and health care, really the sectors seem to benefit from the reopening trade globally. but very interesting that we see that note. and although he does say he doesn't think this is necessarily the top of the market yet. shery: when it comes to offloading we have seen selloff in chinese developers, right? that are now priced for a meltdown. with those property stocks continuing to fall, we had fantasia holdings not being able to make those bond payments. and china's dollar, junk bonds now seeing the biggest drop since 2013. yields, decade high. really perhaps a little bit to do, haidi, with thin trading volumes given thaiss a -- a golden week holiday and something that we continue to keep an eye on as we are still waiting to hear more about evergrande as well. haidi: yeah. always waiting on more news from evergrande, right? let's get more on our top stories. kuwait i want to bring our correspondent, stephen engel, su kennan and economics global

policy editor kathleen hayes. steve, i'll start off with you. what's the latest that we know around the china risk situation? because we are getting these increasing notes of caution from prominent investors. stephen: yeah. increasing notes of caution. some going as far as to say that china perhaps is uninvestable. we know about george soreas owe -- george soros' comments in august pouring millions into china would be a tragic mistake. of course, we put this question to a number of our distinguished guests at a virtual bloomberg invest conference. and the responses were quite interesting. including this from soros fund management c.i.o., don fitzpatrick. let's hear from her. >> are you allocating toward china or away from china? >> i would say we are not putting money into china right now. stephen: not putting money into china right now. again, other guests voiced some

concern of course about the broad regulatory crackdowns, whether it's on technology or online education or elsewhere, it's -- you know, striking notes of caution is the big key right here. luke ellis, speaking as well, if you are investing in markets, it's impossible to have no view about china adding that china looks less attractive than a year ago. amid the crackdown on tech and education. of course, luke ellis runs the world's biggest publicly traded hedge fund firm man group. we also heard from blackstone c.e.o. jon gray who took a little bit more of a longer-term approach and less pessimistic, less doom and gloom, jon gray saying china will continue to grow faster than the developed markets. and he cited the entrepreneurial spirit in china and a government that wants economic growth to improve people's livelihoods. and one last note that i'll make. at this bloomberg invest conference as well with haslinda amin we got g.i.c. which is a

sovereign wealth fund of singapore. it's rare indeed to get any kind of portfolio guidance or makeup of the portfolio or any kind of really market-moving comments from either g.i.c. or tamasik and g.i.c. of sick pour -- of singapore says they are weighing portfolio changes with its china holdings in response to the ride waning policy curbs and acknowledge that hard tech like semiconductorrors as well as health care, those sectors in china that will enjoy regulatory support, they will have the tail winds. shery: and it doesn't help that china is continuing to battle the global energy crisis, right? su, we continue to see those commodity prices rallying. su: yeah. the global crunch really hitting u.s. trading. let's go right to natural gas. because u.s. natural gas closing at the highest settlement price in 12 years. and what's happening here is suddenly the global glass shortage is stoking concern about similar shortages in the

u.s. if weom, you can look at the price hike that u.k. and asia are facing. crippling shortages that are sending prices to never before seen levels. this as demand for the furnace fuel heats up pardon the pun of what is forecast to be an unusually cold winter. in fact, the shortage threatening to shut down some u.k. factories as a lot of factories feel they may have to turn over and convert to oil. let's talk about oil. it remains in sharp focus. a day after the opec plus producers decided to hold pat to their earlier decision back in july to raise oil output at a slower rate than analysts expected. in fact, analysts expected double the rate. you're now looking at west texas intermediate traded here in the u.s., largely used in north america, it is at the highest we've seen in seven years, extending that rally in asia trading. we're now at about $79 and going

toward odd 80 although -- toward $80 although some say we could be overbought. a lot of green calling your attention in particular to brent crude which is above $82, and u.k. natural gas which is up in the double digits, closing in on a 20% gain, this is the kind of increase that again is bringing fear back to the u.s. finally, we've got saudi arabia reducing pressure for all crudes to asia which is its biggest market a-- a sign some are saying may be an indication that they're aware their latest decision moved prices higher instead of steadying the market their goal. haidi: speaking of key decisions to kathleen where expected to push ahead with the first rate hike in seven years. we have concerns over surging inflation. but downside risk from the virus right now. i think it's really interesting that bloomberg economics is actually the odd economist out saying that they will hold in --

this month as they did back in august. >> that's right. but a bold call because nobody really tend to agree with them and a very important reason why. yes, you got the continued lockdowns which have expected to slow down the economy. however, look at this chart. they are expected to raise that key rate by 25 basis points to 0.5%. it was pushed down 75 basis points in march of last year when the pandemic started wreaking havoc on the economy but a move to 0.5% today because look at the blue clyburn. -- blue line. that's at 3.3% and breeched the top of the target in july. you think maybe something low rates had something to do with that? let's look at house prices because in the latest month they were up 25.5% at a year over year rate. surging house prices are a big, big, big concern in new zealand. another reason why they're expected to move today. now, let's see and again, the price there is another reason

that there's a concern. but in terms of the rbnz they held off in august not because they didn't think they needed to raise rates, probably 50 basis points but there was the day of the meeting lockdowns announced. and the head of the rbnz said later it was a communication challenge. how could they turn on a dime so quickly? so they didn't. then -- and we spoke to him two days later and asked him about well, what about october? what about a rate hike then? he said they'll watch inflation. and continued to rise. jobs, they remain strong. and he said in terms of a rate hike, it's definitely a live meeting. >> a live meeting. we retain the right but not the obligation to move policy when we think it's necessary. >> now, today, even though third quarter g.d.p. is expected to track the rbnz said is to go ahead to make the rate hike because they expect a rebound after that. the latest covid developments are seen ruling out a 50 basis

point rate hike which they are yesterday to do in august. and again, yes, in our bloomberg eke owe team says they will hold and signal a november hike. so there's a little more drama around this move than we might have thought. it -- thanks in part to bloomberg economics. shery: we'll find out in a few hours' time. our global and economics editor kathleen hayes with su kennan and stephen engel. let's see how the uncertainties around central bank decisions, commodity prices surging and china are really being felt across markets. sofi -- what are you watching? sophie: we do have the kiwi dollar holding steady as those risks are priced in. but a dovish move from the central bank in new zealand could weigh on the currency. check out the aussie dollar holding below 73 at the start of trade this morning. it did slip, though after the r.b.a. affirmed that a 2024 start to policy tightening would be the time line for them. and when it comes to the housing market this morning the australian banking regulator kimpeling a lending curb to cool

the overheat in the property market in australia. elsewhere, we're seeing futures point to gains in asia after the steep losses that were clocked across the region. as inflation hits appetite for tech names and switching out the board that knocked back the kospi into a technical correction on tuesday making korea, taiwan and japan the homes of the three worst performing major markets globally this month. turn around for the kospi which last year was the world's best performing market as retail buyers piled in. but the exits we've seen, of foreign and institutional funds, that has pushed it below 3,000 points for the first time in six months as the ball has -- vol has spiked as well and charts are back to levels last seen before a resignation and the topix testing support at the 200-day moving average. at the start of a month that's typically good for the benchmark and kishida on his first day as prime minister really unnerving markets with his plans for wealth redistribution,

#kishidashock was trending on twitter as stocks did take a dive and over at norma they expected the corrective mood in japan will continue until there is crater around the earnings season coming up, haidi. haidi: over to vonnie quinn with the first word headlines. vonnie: haidi, thank you. u.s. national security advisor jake sullivan will meet with china's top diplomat in switzerland this week. u.s. officials say young and sullivan will follow up on the september phone call between presidents biden and chi. a summit between the two leaders is on the agenda. trade is also on the table this week with talks planned between u.s. representative katherine tay and the vie niece vice premiere. democratic senator elizabeth warren has criticized the federal reserve's leadership saying chair jerome powell showed bad judgment by failing to stop unusual trading activity by top officials. speaking on the senate floor warren questioned why powell didn't prevent officials from making the investments. and in a later interview with bloomberg, she repeated her

opposition to powell's reappointment. >> last week, i said that i would not support chair powell's renomination because in one decision after another, he has consistently failed to serve as an effective financial regulator. but that is not his only failure. chair powell has also failed as a leader. haidi: chair powell has received the backing of more than half the republicans on the senate banking committee which could help him secure a second term. senator mike crapo of idaho became the seventh of 12 republicans on the banking panel to endorse the fitting fed chair who also has broad support from democrats. powell's term expires in february. chinese president xi jinping will skip the g-20 summit in rome. sources tell bloomberg that chi won't attend -- xi won't attend the meeting in person citing china covid protocols why he's not leaving the country. xi has not been outside china since january of 2020 but

attended seller several meetings virtually. the gflt-20 leader summit begins on october 30. a facebook whistleblower has testified that the social media giant is well-aware of the societal and mental health risks posed by its platforms. but wants lawmakers to think the problems are too difficult to fix. frances haugen told a senate committee that internal documents show the company prioritized profits while stoking division and undermining democracy. facebook says haugen never attended a decision making meeting with top local executives. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2,700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. sherri. shery: a look at how bus lead remembers navigating uncertainty in the markets. we'll hear from key voices of the bloomberg invest global conference. before that, we talk strategy with alpha trade c.i.o. max

gokhman. find out why he says spooky season for investors is just getting started. this is bloomberg.

>> there's not lost places to ga regime like we're in now. >> it's a very good time to be liquefying assets. >> markets are liquid. so exiting makes sense. >> i'm not saying the market is going to go down 20% tomorrow but i am saying that there is sensitivity. >> do you still want to own equities? >> if we've got reasonable growth, equities, they are in the end tina, they're the only alternative for most people. >> what you don't want to own is long duration fixed income. >> long bonds feels like the wrong answer. >> because there you're more vulnerable. there's no place to hide. >> many institutions certainly seeing a home for crypto in their portfolios.

>> and crossing the chasm to mainstream. >> whether bit coin and ethereum survive at the end of the day i'm not sure. >> the risk-reward potential far outweighs any of the other things that they may be able to look at. shery: some of the high-profile guests attending the global invest conference. spooky season may just be getting started. alpha trade c.i.o. max gokhman joins us from california. max, always great having you on. i mean, we are just a few weeks away from halloween. after all. so i just wonder, though, the fear, is it going to be something more substantive like a correction coming up or just more volatility and sideways trading? max: sure. i think we could be in for a by of both. on the -- in for a bit of both. on the one hand this inability of the markets. you accept that that is very likely to -- the fed is loophole it -- likely to taper in november. we saw it in happen in september. weirdly a day after the actual fomc announcement we saw the curve really steepen.

and then we also have the issue of earnings. we've seen earnings revisions really climb in the first couple of quarters of the year. but as we're now seeing these heretofore transitory pressures from inflation and supply chains, still there, i think we're going to see some companies that actually have to guide down. and that combined with the continued gridlock we have in washington which gives me a bit of a reminder to 2011, well, that could send us in for a correction. but what i will say is i don't think that correction will harold the recession. there's still tremendous stimulus that's untapped. shery: we have seen of course a commodity rally boosting those energy companies, right? this g.t.v. chart showing not enough to offset the bigger counterweight to the ticker giants, nearly 40% of the s&p 500 is tech, tech and communications, right? so what does the commodities rally do to stock levels

overall? what's the net impact here? >> sure. -- max: sure. i think the net impact the rally will continue unabated is negative and -- is -- medium term we will see thatas -- as -- anyone who expects opec to be generous in the short term is going to find themselves in a losing trade. but over time, we do see these commodity rallies as producers increase their production. and i think when it comes to tech specifically, you're absolutely right. we really now when we think of u.s. intuits equities, we're talking about the banks still. and they were -- they were of the right medicine last year, but just as vaccines evolved we need to look at different ant dotes to market malaise this year. haidi: what are those ant dotes then? considering there's so much uncertainty going into whether

the inflation environment is transitory, whether the supply chain issues can be ironed out. max: i think we number one can look at financials which remain quite cheap. in fact, i think by some margins, they're about as cheap as they have been post-financial crisis. and they're also going to benefit from a rising yield curve. they're going to benefit from a continual spending on services which actually we're seeing and that leads to some more traditional consumer names as well. and when it comes to inflation, reits even though you wouldn't think they would be as well given rent eviction more dorms and companies are not returning to the office, as an inflation hedge, investors have really flocked to them and there's potentially additional room to run there as well for reits. haidi: i want to get your final thoughts on evergrande. so much has been said about this. what can you add to the conversation, particularly the takeaway for foreign investors? i know -- you know, foreign credit investors shouldn't be --

shouldn't be really surprised by the -- what's plague out now. max: we shouldn't be. it started with tech and now continuing into evergrande with debt investors is china has decided to put foreigners in the back of the queue. there was a long period where they were being courted and china really wanted to have more f.d.i. but as i said on the program last time i was on, they've really shifted their policy. and i think that really heralds this new regime where china is going to do what it needs to bolster its middle class. president xi has talked about this olive tree economy where you have a very thick middle, the middle class and a very slim elite. and so they're not going to help the elite or help foreigners going forward in my view. and that's a huge policy shift that we need to account for. haidi: max, always great to have you with us. c.i.o. from alpha.

you can get a round-up of the stories in today's edition of "daybreak." you can get that at dayb on your terminals. this is bloomberg.

haidi: a quick check of the latest business headlines. three major ratings agencies downgraded fantasia hold doings levels signifying default after it failed to row pay a $206 million bond. s&p, fitch and moody's cut the chinese developer's rating on tuesday as concerns grow about contagion risks from its larger peer evergrande group. fantasia said it will assess the impact of the missed bond payment on its financial condition and cash position. singapore sovereign wealth fund

g.i.c. is considering changes to its portfolio in response to china's wide ranging regulatory crackdown. c.e.o. lynn chael cot says g.i.c. will favor sethors supported by the government including semiconductorrors and health care. plenty more to

vonnie: i'm vonnie quinn with first word headlines. securities and exchange commission chair gary against already said the u.s. will not follow china's lead in banning digital tokens telling the house hearing the government's focus is on ensuring the crypto industry adhering to investor and consumer protection rules. and anti-money laundering regulations and tax laws. beijing last month issued a sweeping ultimatum against crypto trading all transactions. saudi arabia has cut prices for crude oil destined for asia. its biggest market.

saudi aram co-lowered its key november light grade by 40 cents. the worrell's largest oil exporter also cut prices for nearly all grades headed for the u.s. the mediterranean and northwest europe. the opec plus cartel led by the saudis and russia opted on monday to continue with gradual production increases. and that triggered a surge in crude prices. australia's banking regulators has raised the minimum interest rate buffer that lenders need to account for when assessing home loan applications. the centralliian prudential regulation authority cites growing risks to financial stability from a booming housing market. it sold -- told vendors to assess new borrowers' ability to repay and an interest rate at least 3% above the loan product rate. moody's investor services raised ottowa look on india's credit rating from stable to negative. ending the threat of a downgrade for a shay's third largest economy. the credit score was kept at baa-3 at the lowest investment grade. that's on par with russia and

with romania. the agency says downside risks from negative feedback between the real economy and the financial system are receding. global news 24 hours a day on air and on bloomberg quicktake powered by more than 200 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: facebook in the eye of the storm after whistleblower accused the social network of putting profits before people. here are some of frances haugen's testimony to a senate commerce committee. >> they can't protect us from the harms that they know exist in their own system. because it is causing teenagers to be exposed to more anexoria content and pulling families apart and places like ethiopia it's fanning ethnic violence. haidi: joining us to discuss is tech reporter noami nix. what were the takeaways from this hearing? >> i think one of the central takeaways is that frances haugen believes that facebook isn't

going to be able to fix these kinds of problems on its own. that it's going to be required outside oversight to force the social media network to change and that's why she said she decided to copy thousands of pages of documents of facebook's own internal research to highlight some of the discussions on these problems. she talked about the lackluster response to hate speech. she talked about how embedded in facebook's infrastructure, embedded in facebook's algorithm are structures that essentially reward content that is angry, that -- that might be include misinformation or hate speech. that is more polarizing. which might not be in the best interests of users and the general public. haidi: we heard from several senators saying they would potentially support subpoenas to try to get additional documents from facebook as part of a broader congressional investigation. take a listen to what we heard

from elizabeth warren. >> the loudest voice in this hall is facebook's. and the other giant corporations. they hire the lobbyists. they make the big campaign contributions. and even more importantly, they fund the dark money. the part that you infer even see their finger brits on it. they're the ones who undermine the basic premise of democracy. haidi: senator richard blumenthal calling facebook morally bankrupt. does this move the dial when it comes to the pressure that social media giants including facebook are under politically? >> yeah. i mean, i think one thing that was different about today's hearing compared to other hearings is how much it was a, kind of a fact-finding mission from lawmakers. they didn't use it as the opportunity as much to upon active indicate or to grandstand. they were actually asking the witness questions to learn more about-face book's business practices. i think the second thing that

was kind of unique about today's hearing is there was a lot of bipartisan agreement that something needs to be done. some of the topics that usually cause disagreement among democrats and republicans on the issue of tech regulation we didn't hear much about that. and so the question is, they agree that teles a problem. would had he agree on a potential solution? and will they be able to get that solution passed through a typically grid-locked washington? and that's a real big question. haidi: nami nix there at bloomberg -- noami nix there our bloomberg tech reporter. singapore sovereign wealth fund g.ics c. is weighing portfolio changes in response to china's wide ranging regulatory curbs. speaking at the bloomberg investor global conference, c.e.o. lim chow kiat which sectors they will have exposure in and what kind of returns they are expecting. >> there are many things happening in the markets. in a way, it is also just like another day. especially over the last couple of years.

we have got many of these different crosscurrents so investors need to navigate, you know, through this treacherous waters. sometimes it feels like. and china indeed have been -- has been in the news for the last couple of months with a slew of policy actions. we have been of course looking very closely at it. our view remains constructive. we looked at, you know, the various policy actions closely and find that they are analyzable. in fact, quite a number of them in a way investors have had -- in terms of what was going to happen, and the big picture really also is that if you are to invest in china, even the last 10 years you would have

seen three to four bouts of very, very high volatility. every three or four years you got to -- a selloff of 20, 30 -- 20%, 30%, 40%. but each time things calm down. and it comes back. so i think we would want to kind of take that perspective, right? that expect volatility, especially a place like china or other sort of more developing markets. do a lot of bottom up work. because you have to try and -- but in the main one, you analyze these policy actions and actually it makes the system more sustainable in the long term. >> both g.i.c. and tamasik have been hit big by the crackdown especially on investments in ek-tech that means you didn't anticipate the crackdown despite the heads-up you're talking about?

>> we cannot anticipate every action. but i think that the direction that china has been moving in terms of needing to regulate, right? data, needing to regulate financial leverage, i think those things, you know, i would say have not been big surprises. investors do have to reposition. for example, i think there are certain sectors which are going to enjoy more policy tail winds. >> such as? >> what people talked about. the hot tech, areas that china needs to make sure, right? it has to -- the right expertise. i think investors would look at those more favorably, right? simply because the policy tailwind will be behind. so just like other investors, g.i.c. needs to reposition. and i would say perhaps with this -- would this move toward tech, our expectation of returns

also need to be adjusted. i think in the consumer tech or consumer internet space, historically we enjoy very, very sort of quick big return in a short compressed period of time. but i think in areas which are more high-tech requiring a lot of r&d investment over a long period of time we simply cannot have that kind of expectation. haidi: g.i.c. c.i.o. lim chow kiat speaking with haslinda amin. and rbnz holding its monetary policy review and widely expected to height the official cash rate to 0.5% with the exception of bloomberg economics, they expect them to hold. we will be reviewing that decision with sharon zollner after the break. we are also watching -- defending a class action begun in australia half of investors

who bought shares between august and may when the company posted four earnings downgrades. shares plunged by 62%. also, watching those miners including b.h.p. and rio tinto after western australia made covid vaccines mandatory from december for many workers. we do have lots more ahead. this is bloomberg.

sophie: you're watching "daybreak: australia." ahead of the asia trading day the r.b.a. stick to its guns when it came to the start of the policy liftoff in 2024 but over at capital economics they say we could see early rate hikes by 2023. given that sustained higher inflation is anticipated. they predict that the surge in energy and food prices will keep inflation above the mid point of the r.b.a.'s target. next summer instead of falling back to 1.5 period as the central bank predicts. capital economics also sees second round effects emerging next year, haidi, that will lift wage growth in australia. haidi. haidi: well, even with that covid outbreak that's spread beyond oakland, new zealand central bank is expected to begin a series of interest rate increases to tame inflation and reign in soaring house prices. our next guest sees that process beginning in a few hours' time with the 25 basis point hike and

we are joined by sharon zollner. great to have you with us and i have to say you're within the majority and i think the only economist that expects a hold is actually a very -- bloomberg economics. but there is a point, right? that the risks point to the downside. particularly if new zealand is looking to kind of abandon covid zero and reopen. sharon: i guess the challenge for the reserve bank like many central banks is that the risks to growth are to the downside but the risks to inflation are to the upside. so in that context, i think it makes sense to get one under the belt while the going is relatively good. while emphasizing that we will be watching developments very closely and stand to pause or change direction if that turns out to be warranted. haidi: and to your point when it comes to inflation, i want to throw up a chart that takes a look at inflation overshooting the rbnz target and where you would see the target.

the cash rate is not helping with that at all. where do you sit in terms of ths this transitory for longer camp? sharon: well, it's more than just imported inflation, though. there's clearly a lot of that coming down the pipeline. we have an incredibly tight labor market and by many measures the tightest on record. core inflation is already at 3%. the top of the reserve bank target bend. inflation expectations are rising, among businesses and households. and up until this outbreak at least, we have -- had very strong demand in the economy. and by that very strong housing market. so unlike in many countries, all the birds have been flying in the same direction. and suggesting that higher rates were appropriate. now we have these downside risks to growth. and that -- in the end there's -- a job to do on inflation. and they will wait to see how things pan out before changing tech. shery: how is the economy doing when it comes to business

sentiment? sharon: it's been amazingly robust. and it's very important for today's decision. because the reserve bank, they would need to see a sustained decline in business sentiment and activity indicators to be convinced that this covid shock is a negative -- that is a negative demand shock. because we've all learned from experience that this is not the g.x.t. or a big hole in demand. at least as much of a supply side shock. and therefore a lot more inflationary. so having said basically that a meteorital have to hit for them not to hike today the risk is if they don't deliver the market will decide they're all talk and never going to do it and all the expectations that are currently built in will collapse and that could see mortgage rates fall and that the -- at the moment the reserve bank is very focused on traig to -- trying to rein in the housing market and would would vow that as unhellful. shery: what does that mean for the pace of the rat hikes going forward and the magnitude of each of those hikes? sharon: your forecast is they will hike now and then again in february. and then not take every

opportunity to hike. but rather take a more cautious approach. we also think the -- only reach 1.5% by the end of next year as opposed to the reserve bank's expectation of 2.1%. and the household sector is very, very -- so we think a -- 1.5 would be a significant break rather than just less scarce. haidi: new zealand chief economist sharon zollner there. you can also turn to your bloomberg for more on the rbnz decision later. you can go to tliv to get commentary from our expert editors. if and when new zealand does exit its covid vati and starting to talk about the pathway out, even as we see other cities command a lockdown as a result of delta, it will really bring to an end one of the most determined economies and countries when it comes to keeping the covid strategy to elimination rather than just

living with it. we have seen certain states in australia start to get into the idea of living with delta as well. but really i think at the end of the day, it leaves pretty much in terms of major economies just china, still sticking to covid zero. and it will be very interesting to see how that plays out particularly when it comes to them just shutting their borders entirely, right? even the president is saying he doesn't want to leave china as a result of the covid and restrictions settings. haidi: -- shery: it is going to be difficult, right? these lockdowns shutting down the country, what does it mean for the economy? you don't allow those transactions with other countries, those connections, at a time when beijing will be hosting the winter olympics very soon. we are going to watch thousands of athletes from around the world, right? so it will be an interesting thing to see how beijing handles this. given that covid zero status has become sort of a political point

of pride, right? they of course have really carried out the massive vaccination campaign more than 70% of the population vaccinated. and you can keep track of those vaccination campaigns around the world. check out bloomberg's vaccine tracker on the terminal. and bloomberg -- and bloomberg.com. this is bloomberg. ♪ ♪

haidi: a quick check of the latest business headlines. york capital management has said to be planning an asia based spinoff which could become one of the biggest new hedge fund firms of 2021. bloomberg sources say the unit named my alpha will be run by york partner and will have $3.5 billion in assets under management. when it's formed in early december. york unveiled plans last year to exit most of the hedge fund business. pepsico's third quarter sales beat analyst estimates. the snack maker is boosting its full-year forecast on rising appetite for its products and beverages. pepsico also plans to raise prices next year which will become the number one tool to offset higher commodity and supply chain costs. >> we were somewhat constrained on the supply side. generally speaking we are more rillet than most in that regard. but i do think we probably did leave a little bit on the table

as a result of some of the input challenges that we had. that said, we feel great about the quarter. i mean, 9% revenue growth is a strong number. and that's a sequential improvement on both the one and two-year basis. haidi: one of nintendo's most popular games supersmash brothers ultimate will soon feature a new character. sora the teenager from kingdom hearts and one of the most popular characterness gaming and sorrow will be the final character addition to a key nintendo in the live stream announcement. and more than 600,000 viewers. shery: i'm not a gamer but that's very, very cute. let's stay with japan, inc. tech giant n.e.c. planning to buy more overseas companies to expand its service portfolio as governments and companies digitalize their operations. bloomberg spoke exclusively with c.e.o. -- with the c.e.o. >> i wanted to ride on the new wave of the new market. that means open market over the

5g. n.e.c. is sitting in a very unique situation. and japan has two operators. n.e.t. and the new innovators. those are very much pushing from the approach and also the top down approach. and we are working together with them and to create a new solution to the world and n.e.c. is very unique positioned to be able to provide end solutions. n.e.c. will be growing and at the pace of the market growth. >> you have a pretty ambitious goal of 20% market share in the

oran space. what are the biggest challenges for achieving that as well as what are the chances you might beat the goal? >> yeah. the biggest challenge is like how we can persuade people to accept commercial will you work -- commercially workable systems and open ran systems. in this sense we have to be competing with the known open ran competitors such as the current incumbent players ericsson and nokia so that is the biggest challenge. >> speaking of acceptance of new technologies, you've been in this business for a long time. you've seen the transition from 2g to 3g from l.t. and 5g and each one took a slightly different time and often the supply and demand interplay was

complicated. how do you see the option of 5g progressing so far? >> i'm very much optimistic about the pace of the acceptance. and as you see, and we sold the screen -- the vodafone recently announced and adapting the open ran systems as part of their commercial deployment and also the deutsche telekom is also announcing that and then we see like telefonica, one of the bichette operators. and in multiple countries, they decided to deploy a commercial base and the sites and the -- 24 countries. so i think everybody is getting very serious about it. and everybody is believing that this is a very feasible.

>> japan has a new prime minister. he would like to hear your expectations for new policies and reforms in general as well as more specifically things that are relevant to your i.t. and 5g businesses. >> the most important things of politics is the stability, i believe, for the business. like us. he announced a new -- to support science and the technology as well as the pledge for the carbon neutral. so i think the -- the things move well. and i'm looking forward to and seeing new like stimulations. haidi: speaking exclusively with bloomberg news. all right. let's take a look at some of the stocks where watching heading

into the start of trading here in sydney. soph. sophie: we are watching a.g.l. energy which was upgraded at u.b.s. and morgan stanley but both banks trimmed their price target u.b.s. saying the planned stinnes spinoff of its retail unit from coal assets won't provide significant capacity for growth for either businesses and evolution mining is on watch as well. the stock was raised to overweight at j.p. morgan ahead of its production update. the miner cutting its gold output forecast and cost guidance for next year. banks also on watch after regulators raised lone requirements to address risks in the housing market as home prices have been surging ahmed this ultra low interest rate environment. r.b.c. saying this move is happening sooner than expected, sherri and that should temper credit growth with more macro measures to follow if that does fail to happen. shery. shery: and coming up in the next hour, we'll get more insight on markets from u.v.p. head of equity research from asia, karen calder. that's it for "daybreak: asia." "daybreak: australia" is done but "daybreak: asia" is next. we have the australia open,

though, coming up. this is bloomberg. it's moving day.

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shery: hello from bloomberg's world headquarters in new york. sophie: we are counting down to asia's major market open. haidi: welcome to daybreak asia. our top stories this hour. asian stocks look to follow the rebound on wall street as traders weigh inflation and energy costs against the pandemic recovery. sounding the alarm on chinese stocks. big firms