♪ haidi: hello from bloomberg's world headquarters in new york. sophie: we are counting down to made -- asia's major market opens. haidi: our top stories this hour. stocks are set to climb after progress on the u.s. debt ceiling deadlock. the dollar is bouncing ahead of friday's job report. plans for talks between president biden and presidency even as beijing warns over

taiwan. a 40% surge in gas prices in minutes. the deal comes with strings attached. shery: we have an alert. we are getting south korea's august current account numbers. we are seeing goods trade falling to 5.6. we are also seeing the current account narrowing to $7.5 billion. that would be 7.512 billion. this after widening in the previous month. not that surprising given that way -- we have seen export starting to slow down. in the previous month, we had seen double-digit gains but not as high in the 30% gains that we saw in the past few months. the current account balance starting to marrow -- narrow at $7.5 billion. haidi: we are seeing tepid gains

in the first few seconds of trading in sydney. let's get you straight to the markets with sophie cameron. sophie: a two day drop for aussie shares. stocks opening higher. a report that china has released australian coal to manage the power crisis. the u.s. may release emergency oil can -- reserves. wti extending losses by 0.5% after launching the biggest drop in two weeks. keeping an eye on energy names in australia. when it comes to the bond space, we are seeing aussie bonds gain for the first time in two weeks. investors weigh potential u.s. debt ceiling deals. i head of china's reserve data do this thursday, which may offer clues as to contagion risk from ever grand. the cnh is looking to strong in

the face of capital market uncertainty. on that theme, nikkei futures with little change this morning. we are bracing for potential swings in tokyo. the nikkei to 25 falling for an eighth straight day. that's the worst since 2009. shery: we continue to watch the direction of the new leadership in japan. japan is eyeing its first panel meeting on new capitalism in october. we have seen this increased focus on loss distribution that has not sat well with investors. the nikkei has now fallen for an eighth consecutive session, the longest losing streak since 2009. let's get some market insight. we have a series of guests at the bloomberg invest global conference. take a listen. >> i'm not surprised to see this most recent retreat in

correction that we've been going through. >> china has gone through a bit of a correction. >> their plan is to be a superpower and they are moving in that direction. we think it's investable. >> diversification is key. >> being better diversified geographically. >> you have to be agile. >> asset management will be more important in the next ak. >> we've seen dramatic growth in allocations to privates. >> everybody on the sidelines saw the performance with this reopening. we are seeing a resurgence in demand. >> it has never been more punitive to hold cash. >> as inflation falls overcome the whole thing falls over. >> the problem is stagflation. thus the real risk. >> we should expect to see continued volatility. shery: as we continue to discuss about how much exposure firms are still having to china, this question of whether chinese

assets are investable or not. we heard from the carlisle ceo saying that many firms are under investing in china. this raises the question as to not whether you are exposed but in what way you are exposed. a lot of investment leaders are underexposed to that market. he was talking about the region always having short-term funds. the conversation should be how you invest in china and not whether you do. he says the mindset needs to be one of very long-term to be consistent and to be permitted. looking past the recent political upheaval's for the longer term, the demographic story that china still has to offer. shery: a bit of a different narrative coming from him from what we've heard earlier in the week. we have deferred -- heard from elliott management that they would become more cautious on china. even some talking about erasing the word on investable when

talking about the chinese market. we continue to see creditors really eyeing the next debt repayment dates after the default. we have seen this increased investor angst. we have nearly a dozen firms with that maturing through early 2022. we will be watching what happens in the credit space. here in the u.s., we saw that big reversal in the stock market. really markets reversing that 1% loss in the session after senate republican leader mitch mcconnell offered a deal to raise the u.s. debt ceiling into december which would alleviate the immediate risk of a default. president biden and listed financial and corporate leaders to help him put pressure on gop lawmakers. >> we will be defaulting on a debt that would lead to a self-inflicted wound that risks the market taking and wiping out retirement savings and costing

jobs. shery: let's get more from our tax reporter lauren davis. laura, i wonder if democrats will take this deal given that it ties them to actually commit to specific debt level instead of a suspension like we saw in the trump administration. laura: democrats are signaling that they will take the deal. they are waiting to see the exact link of this. republicans will send that over at some point later today or early tomorrow. there will be about sometime on thursday. the question is, it's not so much who is winning or losing here. what happens in two months if they accept this deal? it takes -- kicks the can down the road. the fight just happens in december when there are lots of other things that will be happening. government funding will run out. my cats hope to be finishing up bidens big economic agenda. all the spending on infrastructure and childcare, the big tax portion.

this put your crunch on democrats towards the end of the year to get three or four massive bills through congress. it's a contentious time when democrats have slim margins. haidi: does that mean if they kick the can down the road, could reconciliation be an option at that point? laura: reconciliation is an option now. it's an option in a couple months if they want to use it. democrats don't want to use this fast track. they have the ability, to separate reconciliation bills. one for the debt limit and one for the economic agenda. they don't have to move in tandem. they are saying, it's in a bipartisan thing. that's what they are still holding out for. they have more time to figure out what they want to do. republicans have been consistent for months, saying that they want for this democrat deal. you need to do this on your own. this is what the debate will be for the next several months.

they will still have this conversation to or three weeks before the default day in december. haidi: president biden is planning to hold a virtual meeting before the end of the year. the announcement coming after hours of meetings between white house national security advisor jake sullivan and the senior chinese firm policy advisor. eric martin joins us now from washington. six hours of meetings. the u.s. called the meaningful and substantive. this is more of an optimistic tone. >> certainly. it continues to be a complicated relationship. we saw secretary of state antony blinken today in paris at the oecd meetings calling on china to stop its propagation regarding taiwan. the margin and the risks for some kind of misunderstanding or

miscalculation is always present. we've also seen some pretty tough talk from trade representative katherine tai about china's need to honor its commitments in the phase one trade deal that was agreed with the trump administration at the beginning of 2020. a large and multifaceted relationship. emerging and evolving on several fronts at once. shery: are one of those fronts being the imf? the biden administration is the fading -- debating the fate of the iof chief over a scandal involving china. >> certainly one thing in this report and the audit, though -- it shines a light on the geopolitics behind the bretton woods institutions. the political calculations that

went into the 2018 doing business report where wilmer hill audit found that current imf managing director krista lean agre jefe during her part as a top official at the world bank put pressure on staff to improve china's score such that the country would stay steady instead of falling. that was in the 2018 report. last week, our reporting showed that currently -- world bank president explored changes to methodology that would have actually potentially hurt china's score in the 2021 report that would later pause and finally terminate it. seeing the geopolitics between the u.s. and china playing out at these two institutions, just a couple blocks up from the white house, always mindful of the global reach of their decisions. shery: eric martin there. let's stay with china.

feeling concerns over out -- other highly leveraged borrowers and global contagion. a dozen chinese property firms have debts maturing through early 2022. that has investors eyeing repayment dates. let's bring in john authers for more on this. it has a very small waiting in the property developers indices. we are not expecting a systemic risk from here. not even from ever grand. the concern is back -- about the broader chinese economy. john: i think that's right. the point about ever grand is that it's almost made policy decision that it doesn't have to pay this debt if it doesn't want to. it's an unforced decision. that creates much more pressure on other developers not to pay. it creates great concern about the market as a whole. the problem with that is that real estate has really been one

of if not the great motors of the chinese economy. it's not so much about financial contagion beyond chinese shores. it's about economic contagion, china being less of a buyer of last resort for the rest of the world. haidi: after the initial lehman moment for china, we are not talking about those scenarios anymore. should we be more concerned about the longer-term group -- drag on growth? an entire industry being plagued by unproductive assets. john: yes. one of the critical reasons that people have cast doubts on china throughout the greater rise of the chinese economy is that there's really no precedent for

growth on the scale china has had without major hiccups, major accidents along the way. that doesn't necessarily mean a banking panic. it doesn't mean a stock market crash. but the risk that the economy has to slow down, has to accommodate, consolidate is very high. for reasons i don't fully understand, the rest of the world is much less concerned about this than it used to be. even if you look at basic economic data like ism surveys. they show china below 50 at this point. that's concerning. haidi: john authers there. let's get you to su keenan for first word headlines. sue: present light of your move -- vladimir putin has intervened in the energy market. russia could potentially ask for

record volumes of the full this year. his deputy said that quick certification of the pipeline would be one way to boost gas exports. european natural gas futures plunged on the remarks after earlier hitting record highs. the ecb is set to be studying a new bond buying program to prevent any market turmoil when emerging purchases are phased out next year. the plan would replace the existing crisis tool and complement in older, open-ended qe scheme that is currently acquiring $43 billion in debt every month. an ecb spokesperson declined to comment on the report. prime minister justin trudeau has announced details of a vaccine mandate for federally regulated industries. all for public service employees will need to prove vaccination against covid-19 by the end of october or face being suspended without pay by mid-november.

passengers on planes, trains, and cruise ships must also be fully vaccinated as of the end of october. travel during china's golden week national vacation is down by one third on pre-pandemic levels. that's as measures to contain coronavirus outbreaks weigh on tourism and spending. an -- the number of trips taken on tuesday was 34% below levels seen back in 2019. officials have advised against unnecessary travel and gatherings over china's most important annual holiday after the lunar new year. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. shery: still ahead, why the chip shortage won't ease until the second half of next year. up next, state street reckons markets will remain choppy until

there's better clarity on earnings and tapering. we discussed, just ahead. this is bloomberg. ♪

♪ >> the problem is stagflation. that's the real risk. so many portfolios are massively exposed. there are ways to hedge that risk. >> when you look at what's going on with productivity, people aren't talking about it. productivity is booming. the idea that we don't have any gdp growth, at a time when consumers have this much excess savings, i don't see that. haidi: conflicting views on the risk of stagflation returning to the global economy. let's bring in marvin loh.

when it comes to the possibility of a slowdown in growth but accelerating prices, where does that rank in terms of your investment concerns? marvin: ultimately, it's not a big concern for me. i'm not in the stagflation camp. i think in this modern economy that we have, if you wind up with slowing growth, you will have adjusted. the issue we have now is a one-off because of the supply chain. those are working their way through. there is still plenty of savings on the sidelines. there's a growth profile that still looks fairly robust as we go into next year. haidi: price pressures in energy have to weigh on futures earnings. do we know when we will have better clarity and whether the market will need to adjust for that? marvin: yeah. it is market by market. energy has less of an impact on corporate earnings in the u.s.. we are not that big of a

manufacturing hub the way we used to be. having said that, higher gas prices and fuel prices certainly affect the consumer from a tax perspective. you need to balance all of those off. you are seeing various markets adjust to higher energy prices around breakevens and inflation expectations. you -- europe has had a bigger impact on -- as a result of that. in the u.s., it's a different story where we are battling a more hawkish fed as well as higher oil prices. our view is that oil can remain elevated but certainly the big increases are behind us at this point. shery: this gdp chart showing how treasury yields have continued to rise and we are now seeing the greater correlation with oil prices. why is it important that we make that differentiation about what's behind what's happening in europe rising yields and what

is happening in the u.s.? marvin: yes. ultimately, when you look at central-bank policy, it will be driven based on sustainable inflation and concerns around sustainable inflation. that's the core discussion of cpi. you take food and energy out of it because it has to have a tax and it ultimately only becomes an issue if it increases at that same pace year after year after year. we are not in the view that we will see oil at $200 which is the type of explosive growth that we've seen continuing. in europe, it's a different story. they are more exposed to natural gas. they have more external pressure as a result of how they get some of their fuel. in the u.s., taking the curbs and looking at them differently. getting to monetary policy which is so important in our discussions these days. understanding whether it's breakevens driving these whole

-- higher overall yields. it's infinitely important to me. shery: we've seen treasuries choppy. the debt ceiling drama continues. we are waiting to see what the democrats will say to that short-term deal offered by republicans. we are hearing from mitch mcconnell saying that there could be a short him -- short-term debt ceiling vote possible on thursday. how is that being factored into the markets? what is the significance going forward, especially since a lot of these deadlines could get clustered into december? marvin: washington loves these deadlines that they create for themselves. our view is that there's a path to handle the debt ceiling. it might not be the path that democrats ultimately want. there is a path to that resolution. push comes to shove, the democrats can get it through themselves. that will rule the day. no party wants to be in control

while we wind up in either a technical or monetary defaults. it would be great if there was an agreement. it would be gratefully bought ourselves a little bit of time. we would see relief in the market and hopefully within the time, they can work on something more substantive. having said that, we've seen washington for the past year, several years. it is divisive. we are probably going to look at that december deadline with all these things coming together and having this conversation. hopefully you will have me back on. haidi: of course we will have you back to really get into the details of what's happening there. let's hope that the conversation does progress. thank you so much, as always. we have plenty more to come on daybreak asia. this is bloomberg. ♪

♪ haidi: a quick check of the latest business flash headlines. workers have attacked twitch, leaking critical data include -- including force code. it includes streaming histories, game studio products under development, and a document showing twitches top gamers ranking and six-figure payout. i.t. is said to have picked bancfirst skunk hung secondary listing. advisors include bank of america and goldman sachs. it could take place as soon as the end of this year and raise at least $500 million. saudi arabia stock exchange is said to be close to announcing plans for an ipo that could value it as is much is dollars. it could publish the help of its listing this month.

it would be one of the largest in the exchange sector since euronet went public in 2014. coming up next, the heat on european gas prices with winterfest opposing. the offer comes with conditions. this halloween, xfinity rewards is offering up some spooky-good perks. like the chance to win a universal parks & resorts trip to hollywood or orlando to attend halloween horror nights. or xfinity rewards members, get the inside scoop on halloween kills. just say "watch with" into your voice remote for an exclusive live stream with jamie lee curtis. a q&a with me! join for free on the xfinity app. our thanks your rewards.

♪ >> we are under strong pressure. that's why we have to first have short term emphasis at the national and european level. we have to build our capacity to be less dependent. >> it's a serious issue. we have to be clear that the gas prices are skyrocketing. >> international problems where we have to deal with this. we are waiting for the answer of the commission. it's for an innovative solution. >> at least partly the reason why the prices are up is the

commission. we have to change some regulations. otherwise, everybody will suffer. >> energy prices are damaging our economies. they are really harsh for our population, such as the strategic your -- reserve which can be used to moderate the fluctuations in prices. >> renewables, the prices have decreased over the last years. they are stable. for us, it's very clear that with energy in the long-term, it's important to invest in renewables. that gives us stable prices and more independence. >> we have to build our capacity to be less dependent. shery: european leaders weighing in on surging energy costs. vladimir putin is choosing this moment to use his countries leverage as an energy superpower. russia has offered to stabilize europe's gas market, a move to ease natural gas prices after

60% surge over just two days. let's bring in bloomberg energy reporter sergio chapa. with the controversial nord stream 2 play into this? sergio: definitely. vladimir putin wants quick certification for nord stream 2. it looks like he's going to get it, given the gas crisis that europe is facing right now. after last year's winter, europe and much of the world were caught off guard trying to restock their natural gas inventories heading into this winter. those inventories are supertight. driving the price of natural gas to levels we haven't seen in years. haidi: we are seeing this become a global problem. that disconnect between supply and demand. is there any strategy or way to make the transition to cleaner energy less painful and volatile for the markets? sergio: well, right now the best

thing that could happen would be a mild winter. that would see natural gas inventories undisturbed. that would allow the market to rebalance. one thing that would also help would be higher production for natural gas. obviously, that would ease supply and help with demand issues. one of the things that's going on in the united states is that, at the same time there's a supply crunch, you see the united states gas producers exercising this fiscal discipline. they are putting returns and debt payments over growing production. that has kept production flat in the united states at a time when the world needs more gas. shery: given that shortage when it comes to natural gas, we have

seen rallies towards that 12 year high. we saw pressure given the latest news coming from russia. we continue to see it around that six dollar level. when it comes to copper, we could see further pressure from here on. the power crunch crisis could actually affect manufacturing. we have seen the pullback when it comes to base metals prices. gold futures have been fluctuating. we are heading to the u.s. payroll numbers on friday. we have very strong avp numbers. it's been trading out of range, especially given that we have a little more strength in the u.s. dollar. cotton continues its rally. it has seen really positive demand, not to mention that there's also supply concern with that heavy rain and exporters like india and the u.s.. supply concerns are also showing up in other parts of the commodities market. sophia's following them. sophie: extreme weather harming

prospects across parts of the world. we are seeing spot prices gain amid that demand, flipping the board. higher energy costs pushing fertilizer prices above seasonal averages. that could lead to some farmers rethinking growth plans for next year when it comes to harvests and switching from wheat to less nutrient intensive crops. turning to china. fertilizer exports may boost global prices. the energy crisis is rippling through china's food supply chain and the processing industry is set to be seeing the worst effects there rather than staples like grains and meat. this is a concern for beijing with the autumn harvest underway. china has been slowing their purchases of u.s. crops. china talks in focus when it

comes to trade. the u.s. has trimmed its estimates for corn estimates this year and next. haidi: definitely one that will be raised in those trade talks with that shortfall being seen as one area of criticism. another area is china's actions towards taiwan. the secretary of state antony blinken has spoken about these actions, saying that they are provocative and destabilizing. he spoke with francine lacqua in paris. she began by asking him about that phone call between president biden. >> they spoke on the phone a few weeks ago. they had a productive conversation covering a lot of issues. whether they will have occasion to get together, we will see. they are likely to both participate in some fashion in the g20 meeting, for example. but they had a good, productive conversation. we will continue the work that they set out. >> we've seen chinese planes in

taiwan. is there a redline that you think president she will not crash? our tensions high? >> the actions we've seen by china are provocative and potentially destabilizing. so what i hope is that these actions will cease. there is always the possibility of miscalculation, of miscommunication. that's dangerous. in the past, we've managed to handle the issues surrounding taiwan. in a way that is actually sustaining stability. provocative actions go in exactly the wrong direction. it is very important that no one take any unilateral actions to change the status quo by force.

so we really need to see china cease some of the actions that it has taken because they are potentially a source of instability. >> with the u.s. need to take a hard line but try to find a common agreement when it comes to climate change? >> well, there are many issues in the relationship between the united states and china. it's one of the most consequential relationships in the world. it's one of the most copulated. it has different aspects to it. there's a competitive aspect that we know very well. there are adversarial aspects. there are cooperative aspects. we have to be able to deal and engage in every single one of these aspects of the relationship. climate happens to be an existential issue that affects everyone on the planet. united states, china, any other country. china has great responsibility when it comes to dealing effectively with climate change.

we are 15% of global omissions. china is 37% of global omissions. it's support for both of us to step up and meet our responsibilities. that means having ambitious targets for how we are going to curb climate change. it means making sure that we are contributing to help others deal with resilience. it means taking important steps. moving away from coal. >> there's a lot of focus on the chinese authorities dealing with ever grand. what does it tell you about chinese stewardship >> -- stewardship? >> penna has to make decisions for itself. we know that what china does economically is going to have profound ramifications and effects on literally the entire world. all of our economies are so intertwined. when it comes to something that could have a major impact on the chinese economy, we look to

china to act responsibly. into deal effectively with any challenges. haidi: antony blinken there with francine lacqua. we are counting down to the start of trade in tokyo. here are some of the stories were watching today. toyota you premium lexus brand outsold its german rivals in the u.s. luxury market in the third quarter. we are watching eon financial. it boosted its forecast for the full year. 23 to ¥26 billion.

-- the princess with them in 2019.

, saying that the ruling was unfair. global news 24 is -- 24 hours a day, powered by 2700 journalists and analysts in more than 120 companies. this is bloomberg. yousef: global semiconductor supply disruptions are being blamed for a range of shortages across several are industries. that might not change for another year. research says that the global semiconductor shortage is likely to persist until the second half of 2022. let's bring in and helper -- it's great to have you with us. when can we expect a new capacity to help this year? >> it's a great question. one thing that has become very apparent with the semiconductor shortage is that there's no quick fix to adding more capacity to semiconductors.

people have been investing in capacity. we are seeing new capacity come online. we do see more capacity coming online towards the second half of 2022. some will be even longer than that. the bill could take two to three years. while everyone is putting a lot of money towards the issue, it does take time to ramp up. we are seeing demand remains very strong across the board. we are seeing really strong demand for semiconductors across pcs, phones, data centers. it is making the shortage that much worse. shery: how much can we expect the demand side to get impacted by china's cryptocurrency ban and the impact that that will have on some of the demand of the chip sector when it comes to mining and other technologies? anne: yeah.

the semiconductor shortage, they all use similar capacity but different generations of technology. the demand for cheap use might be impacted by china's ban on crypto. the semiconductors that the automakers are needing are very focused on different technology. a lot of it will depend on the segment of semiconduyo are thinking about. there was a lot of hope among the people in the gaming industry who needed some of those gpo's -- dp use. i don't think we've seen that quite yet. that could help. where automotive is focused is the more mature technologies. it's a very different process. it has different capacity. that won't be eased by the sanctions on crypto in china. . shery: do we see structural show down -- slow down and demand that could alleviate the pressures? a big part of the story was

lockdowns, work from home, and greater demand. anne: interestingly in our global technology report that just came out, we looked at a lot of tech trends across the board. so many of those trends are fueled by demand for semiconductors. one thing that we found is that the last year has pushed forward the adoption of some of these new technologies, such as cloud-based security. this drives demand for semiconductors as well. more data sectors, more computers. some of those demands we will see continue strongly. there are some areas where you might say, we are working from home, does that dampen some of the demand for pcs? we haven't seen that yet. it could be coming. overall, we are still seeing very robust demand. that will continue into 2022. haidi: the other thing is more

of a warning. you say this is unlikely to be the last supply chain disruption we see across tech. there's great demand coming from different parts of the manufacturing chain. what are we not thinking about that could potentially be the next bottleneck? anne: that's a great question. we spent some time thinking about it and others are. what is next? one area we looked at his lithium-ion batteries. they have some of the same characteristics. many different end markets are sharing capacity. that capacity is concentrated in china right now. usually that's a lot of tech products. as automotive's shift into electronic vehicles, the demand for batteries is going to go up. were starting to see countries such as india and the you -- you pledging money to support building up capacity for more domestic supply. the u.s. has looked at this as an area where they would like to

support domestic sources of supply. that's one example. the thing that is unique about the semiconductors is that there are so many different components that different countries have specialization in, it's hard to precisely call where the neck shortage might come from. haidi: so great to have you with us. plenty more to come on daybreak asia. this is bloomberg. ♪

♪ haidi: aerial investment is warning of a bubble in cryptocurrency but says regulation could ease volatility in the sector. he spoke at the bloomberg advanced global conference. >> i think parts of the marketplace are in a bubble. i do. i've said, it's not only the meme stocks and the hot growth stocks that have done well. of course, the cryptocurrencies. everywhere i go, whether it's an uber car or whether i'm in a lift or something, my favorite pizza place, the delivery guy wants to talk about cryptocurrencies. when everybody who is not an expert in the field is like, i want to get in there, i can get rich, that's a real sign that

you are at the top of the bubble. certain sectors are worrisome. >> at this exact moment, just as you are putting the thoughts to bear, and audience question came in saying, you love bitcoin. are you exposed or is this not a game for you? >> it's not a game for us at all. bill miller is a great friend and we have a lot of respect for each other. we share stock ideas and talk to each other regularly. this is an area where we have a pretty disagreement. i'm very cautious. charlie has been vocal about this. people like jamie dimon and others have been cautious. i think it's a time to be cautious. >> why what puts you off? >> commodities, if you buy gold it doesn't produce anything. you can shine it and you can look at it and you can study it but it's not like a farm that

produces corn or whatever it happens to be. or some other manufacturing plant that produces all kinds of goods and services that can benefit mankind. that's the same thing i think, when we think about something like cryptocurrencies, there's no real economic benefit that comes from it that we can see. it's just another commodity. we can't quite figure out how to use it to buy and sell things when you could have the currency moving in such dramatic ways. i think our financial systems work very well for over 100 years. i don't think it's time for us to try to have a brand-new one. >> it's not a question of regulation. i won't stick with crypto too much. with define be more of interest? is it an element of regulation? this is it you're contrary and

idea, this is in value investing. >> certainly not a contrarian idea, that's for sure. it would be hard for us to get interested as an investor. i watched can get friend, one of our outstanding investors here, a founder of citadel. he was talking about this for economic club conference this week. saying that regulation would help because then they would be able to trade it and be able to do that effectively. i think regulation is important. it can't be the wild west out there with currencies. used -- you've seen china has been negative on it. gary gensler is focused on this. i'm confident he will come up with a program that will help. maybe that will lessen the volatility and maybe it won't be as easy to trade but it will be something with more certainty around, once you have regulations in place. shery: john rogers there with bloomberg's caroline hyde.

here's a quick check of the latest business flash headlines. kathy woods is moving its headquarters from florida from november 1. the company will permanently close its new york office when it relocates to st. petersburg. it will build an innovation center in the tampa bay region to retain and attract top talent. boeing will unveil its 777x crater within the next few weeks and it's an advanced talks with qatar airways and other potential buyers including fedex and singapore airlines. the first new jet will compete with the airbus. airasia will malaysia will allowed fully vaccinated adult passengers on its flights effective immediately. on vaccinated people under the age of 18 can board if accompanied by fully vaccinated parents or relatives. masks are mandatory and check in must be done through a super app to minimize physical interaction on airports.

coming up, we get more insight on the markets from david wong. this is bloomberg. ♪

shery: hello and welcome to daybreak asia. sophie: i am sophie in hong kong. haidi: taking a look at the major market opens. our top stories this hour. asian stocks set to climb after progress on the u.s. debt ceiling. president biden embarked on a virtual summit even as the white house warned beijing over taiwan.

after evergrande, who was next? let's get you straight to the market open in korea and japan. sophie: after an eight day drop for the nikkei, the worst losing streak since 2009, we are seeing green shoots. watch for some choppiness amid some concerns we are seeing from fed tapering prospects as well as evergrande risks and inflation. and south korea, authorities are taking note of market volatility. jumping 1%, after a three-day that brought it back into correction territory. gaining ground by 2/10 of 1% even after being cut by neutral to goldman. thomas remain bullish after a decline that wiped out 1/5 of market value. turning to australia, whitehaven falling the most after being downgraded to neutral, gaining

4/10 of 1% being higher by banks and tech. real estate climbing in sydney, bloomberg expects a retail reevaluation will get a boost from reopening, emerging from a lockdown. piercing aussie bonds snap a two-week route, check out u.s. cash yields moving above 153. we have oil under pressure, brent below $81, this as we see some supply concerns easing. offshore yuan trading at 645 ahead of china reserve data due out thursday, which may offer clues about evergrande contagion risks at a time where chinese property players expect headwinds. shery: let's talk about earnings. our next guest says the upcoming earnings season may be the first big fundamental test for markets since the pandemic began.

joining us from hong kong is david, the senior equities strategist. to have you with us. let me get started with the chart on bloomberg, showing worldwide earnings revisions under pressure. this would be the global measure of upgrades minus downgrades of office expectations, plummeting towards negative territory after hitting the all-time high in may. we continue to year despite revisions, some people saying earnings estimates are too high. what are you expecting this season? david: it's a great question, thank you for having me. we think earnings have been on a rising trend is the beginning of the pandemic -- since the beginning of the pandemic. investors may have gotten complacent and expecting that trend would continue indefinitely. having been an analyst, i know

that analysts are guilty quite often of being a little optimistic on earnings expectations. the typical earnings revision ratio of upgrades to downgrades tends to be about 0.8 20.9. we are still above one, so this is still actually elevated relative to longer-term history. we actually think the market has been to focus from the inflation debate on the p part of the pe ratio. we think that e is more important. the earnings we are about to see around the world will tell us about the shape of this debate and how it is affecting corporate earnings. shery: in the meantime, are we

headed towards volatility and how you hedge? david: that's another great question. we do think earnings came in exactly as currently forecast with no upside, the market would see that as a disappointment. we would recommend investors focus, because the spotlight is on companies where you feel like you can underwrite earnings numbers, and in and inflationary world, you need pricing power. that is why we would suggest investors took to a middle course between valuation and price discipline on the one hand, but also earnings underwrite ability on the other.

we would recommend investors stay defensive and also be global in their investment stance, especially focused on developed markets. haidi: i want to take you to our question of the day. we have seen volatility across the tech sector drive much of the price action. as we get into tech earnings, particularly samsung and semiconductors, how do you expect asia tech earnings, what would you be watching for? david: i think semiconductor companies will continue to report strong numbers. we have heard about shortages around the world in a variety of different markets and use cases for the semi industry. the question is, for the likes

of some of the korean semiconductor giants, how much of a valuation multiple do you put on those earnings, when can we expect those earnings to peak over the near term? they're obviously great companies over a long-term basis, this tends to be a part of the cycle, having been a semi-analyst myself and you start to see the multiples start to compress even as the earnings rising. haidi: great to have you with us. senior equities investment strategist. let's get you to su keenan. su: we start with the democrats who have signaled they will accept mitch mcconnell's offer to raise the u.s. debt ceiling into december. the deal would alleviate the immediate risk of the u.s. government default, but raises the prospect of another fight near the end of the year.

mcconnell says a senate vote could be possible by thursday. meanwhile, president haydn plans to meet virtually with china's xi jinping. plans were announced after toxins are rich between the white house national and senior chinese foreign policy advisor. the u.s. official called the discussions more meaningful and substantive than previous meetings between the administration and beijing. treasury department officials are said to be debating whether the u.s. should ask the imf managing director to resign amid an ethics investigation. they deny improperly pressuring world banks to adjust their ranking in china's favor. the u.s. has the biggest share of the imf voting rights. vladimir putin has intervened in the energy market, offering to stabilize europe's gas prices

and saying russia could potentially export record volumes of fuel this year. his deputy said that quick certification of the nord stream 2 pipeline would be one way to boost gas exports. european national gas futures plunged on putin's remarks. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. shery: still ahead, we hear more from business leaders at the bloomberg invest global conference to find out how they are navigating risk. catch our exclusive interviews with greg jensen. plus, the shock feels more fears of contagion as other highly leveraged borrowers in china.

we will discuss next. this is bloomberg. ♪

haidi: joe biden is planning to hold a meeting with xi jinping before the end of the year. it came after more than six hours of meetings between the white house national security advisor and senior chinese foreign policy advisor. let's bring in our chief north asia correspondence, stephen engle. meaningful, substandard -- substantive. the tone versus reality. stephen: state department parlance for that kind of meeting. it was constructed and candid in they touched on the issues. it was more constructive than perhaps the last time they met across the table earlier this year when it turned into an

exchange of barbs. this was more substantive and i guess you can say constructive, because it also produced an agreement for joe biden and changing thing to meet again, at this virtually by the end of this year. the less time they met was september 9. the fact that they are talking is a good thing. there was a statement from the chinese government saying the talks were comprehensive and candid. however, a potential source bought going forward could be taiwan, china has ratcheted up tensions of late sending scores of warplanes into taiwan. while i might add, the u.s. and several allies including the japanese have conducted neighboring drills.

this is what he told us. >> what i hope is the actions will cease. there is always the possibility of miscalculation, miscommunication. that is dangerous. stephen: on the trade front, i want to bring up the terminal which shows how that beijing trade surplus with washington has increased. it is starting to creep up again. the biden administration has pledged to hold beijing accountable on the commitments made in the phase one trade deal, by the way, the u.s. trade representative is set to meet as early as this week. her counterpart. we will see what happens on that front. shery: going back to blinken, he touched on china's evergrande crisis. what did he say?

stephen: it's not necessarily that newsworthy, other than it's just the most senior and only white house official so far to comment on the evergrande situation. antony blinken telling us that china has to make these economic decisions for yourself, -- whatever it does because all of our economies are so intertwined. he urged beijing to act responsible on containing the spillover effects. by all indications, not necessarily saved -- save the developer. shery: stephen engle.

let's stay with china. chinese real estate firm is offering to take the company private after its stock plunged to an 18 year low. this comes as the default of another developer is fueling concerns over other highly leveraged borrowers. let's begin our china credit editor. start us off with that evergrande backer trying to go private. reporter: ultimately it looks like chinese estates is trying to contain fallout from exposure to evergrande. one of the bigger shareholders of china evergrande group, although it started paring some exposure back in august. it has cost them.

haidi: in terms of this latest development fitting into the broader story, what level of concern are we seeing in the market? not a systemic lori, but certainly cross-contamination within the property sector. reporter: it feels like there has been a fundamental change for chinese developers this week. the brutal selloff we have seen in credit, shares dropping all over the place on the back of evergrande stress and broader fallout. as you mention, the surprise default has shaken people's confidence, not least because them themselves promised it had enough liquidity and just made the private bond placement over the weekend before it defaulted. the other danger is this becomes a self-fulfilling prophecy, where because borrowing costs are so high, ultimately weaker

finance companies that rely on the offshore market to continue rolling over debt are no longer able to do that at sustainable levels. eminent missed payments become inevitable. shery: credit traders rev one point blaming volumes for the scale of the meltdown. what are looking at has to -- what are investors looking ahead to? reporter: i think that is slightly true. some of the moves we saw, they were accentuated by a lack of liquidity, traders were saying there were gaps between -- it was moving bonds in a dramatic way. ultimately folks are looking to see if it's a steadying influence, more liquidity, or if it intensifies selling pressure.

haidi: ever china credit editor. the bridgewater associates co. cio says china is still investable. he spoke at our summit. >> everybody looks at the equity markets. this is across all -- >> which has performed horribly. >> is not really our perspective. we look at a balance. if you look at china equity, bonds, it's up steadily. stocks are down because policymakers have made decisions balancing several goals they have, they have goals for common prosperity, goals to make sure information security and no company becomes more important than the party. they have goals of becoming a

world superpower, for which they recognized they need to be in investable financial center. they have been moving and that direction. every once in a while they take a step backwards to achieve some other goal, and you are seeing one of those. i would not extrapolate that to mean -- they recognize that. every superpower has always had them. their plan is to be a superpower, they are moving in that direction. the health of those markets can somewhat be shown by the fact that the balance between assets has worked as it always has normally another country because interest rates are at a more normal level. when stocks go down, bonds rally.

those are the issues. unquestionably, there is regulatory risk in china. they are building, they do not have the rule by law set up that we have in the west. they are coming up with laws today and doing what we will call rule of law. they do not have a structure for how to deal with those companies. that is all happening on the fly. that is messy. it certainly creates nerve-racking situations for investors, but if you look at that, a lot of that is priced in. the same assets and china relative to the u.s. are probably at a 45% discount looking at reasonably similar expected cash flows. maybe that should be words, maybe that should be better. our point is you are better having a diversified mix of chinese assets with u.s. assets. that has been the case. >> the bond market has done

well. i guess the wildcard which could overturn the analysis you have just given is the potential for u.s.-china relations to deteriorate drastically. you certainly have the chinese authorities discouraging chinese companies from listing in the u.s., you have the commerce secretary saying that the u.s. needed to rally its allies to slow down china's rate of innovation. this feels like a potentially difficult situation for investors. >> that's right. it's difficult on both sides. the fact we are moving from a collaborative world to a competitive world between china and the u.s., not that it was all collaborative before nor that it is all competitive today, but it is transitioning. economically and financially, who will win? that is a big question. i don't think it's clear in

terms of that. you are right, it's going to be competitive. it's a competitive situation. that is going to change things a lot. that's part of the supply chain story, when china is struggling to meet production demand, it surge during covid. now it's at levels they can't meet. their goals on climate. now you have that hitting the whole world. those risks flow back and forth between china and the u.s.. it's not just china that will suffer. shery: the bridgewater associates co. cio speaking to bloomberg. you can get a roundup of the stories you need to know to be your day going in today's edition of daybreak. go to the terminal, it's also

available on mobile. this is bloomberg. ♪

haidi: sources say boeing will unveil a freighter with him next few weeks. it's an advanced talks with qatar airways and other potential buyers including fedex, and singapore airlines. the first new jet in four years is likely to be launched at the dubai airshow next month and is competing with the airbus. malaysia will only allow fully vaccinated adult passengers on flights affected immediately. on vaccinated people can board if accompanied.

that's are mandatory and check in must be done with a super app. kathy what is moving to florida. -- cathie wood is moving arc to florida, joining the financial industries to shift path. arc says it will build an innovation center to retain and attract top talent. shery: we are seeing the japanese yen hold at the 111 level, we have seen significant weakness for the currency, this coming at a time with a stronger u.s. dollar. the weakest and's february of 2020, although we are seeing a little bit of upset right now. the korean won seeing upside, this after we saw a fourth consecutive session of weakness against the u.s. dollar.

the kiwi and aussie are not doing much at the moment. coming up next, we assessed china's golden week holiday data. 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?

shery: the carlyle group says it's push to standardize data is good business, we spoke with the ceo at the global conference. >> it's not really about any one firm, it's about all of us. it's fair to say the obvious, the environment is shared by everybody. we are all trying to make a difference. it's also good business. i will tell you why. right now we have different

types of data requests coming in from different types of lps, tracking different data metrics, debiting -- contributing in different ways. frankly, none of us can make sense of the data despite our good intentions. it's not a common standard and there aren't well-defined metrics are consistently tracking. for us to come together and do this. we are all self-interested in the sense this actually improves performance, and i know this is a cultural thing. a mindset thing. we are trying to drive better performance. >> this is data, but carlisle

has gone to many of its own initiatives time come to diversity initiatives. can you speak a little to how you are seeing these changes from a business perspective? why is it important to do and what has it meant in terms of talent retention or extracting more capital? what has come of this? >> sure. it goes back to what i said. this, for us as a mindset. -- is a mindset. you can't talk about yesterday as a topic or checkbox with respect to diligence. the reason i say it in this way is, if we are focused on driving a mindset, trying to improve everything we do, you have to hold ourselves accountable to that as well.

i think it drives better decision-making and better performance. we have over 50% of our aom led by women. we have unconscious bias training for all of our employees. at portfolio companies, we are putting diversity into our boards. just a recent stat, the first six months of this year, 60% of all of the board members are from diverse backgrounds. we are putting in credit facilities at portfolio companies which are links to improvement in esg matters, we have one company where if they reduce water usage, the cost of capital comes down, or at carlisle, we have facilities where if we can improve diversity, our cost of borrowing goes down. with respect to compensation and

career tracking, we have implemented that this is an important element in the discussion as to whether or not you get promoted or what your bonuses going to be. you can't rely on one silver bullet, you have to have a lot of different action. haidi: the carlyle group ceo speaking at the bloomberg invest global conference. let's get you a check on the markets. sophie: we are seeing asian stocks -- energy names are being led lower today. supply concerns are using which is weighing on crude prices. overton tokyo, electronics helping lift. the kospi rebounding more than 1%. institutional buyers are returning to the fray with samsung having one of the biggest use. flipping the board, [indiscernible]

vaccine related names are falling after studies he -- was cut to equal weight amid safety concerns. overton sydney, we are seeing retailers jumping the most in 14 months. [indiscernible] the reopening gather strength, consumers are ready to spend going into the holiday season. shery: let's turn to some shopping in china. numbers for second biggest travel holiday are out, and the message is clear, covid restrictions way on tourism. kathleen hays is here with the numbers. not that much of a revenge shop. kathleen: it's a big deal.

golden week, lunar new year. people travel and spend money. in fact, if we look at the numbers, if you look at all of the trips taken by road, rail and other transport, the first five days of the golden week holiday, they were down nearly 40%. it wasn't like one bad day. every single day, one third below pre-pandemic levels. they were already getting lower in 2020. also, this is china's second most important holiday after the lunar new year holiday. this is when a lot of businesses count on selling hotel rooms, having people shock. it's a problem. we know what is going on. china is trying to reach covid zero. the delta variant, they are

trying to tamp that down. reinstituting quarantines, making businesses shut down. officials advised against unnecessary travel or gatherings during the golden week, started last friday. this is happening to the consumer. obviously some people laid off, housing market controls. you can see they have been hit really --

haidi: if they are not spending on travel, is that pent-up spending going summer else? kathnleen: they are going to the movies. the numbers for cinema box office sales. 3 billion yuan, or hundred $65 million in the first five days of golden week. that compares to 2.7 billion yuan in 2020, that's according to -- they track ticket sales driven by the success of a patriotic korean war movie. i guess people around the world like those kinds of movies when it puts them in a place to remember something they like to think about. same kind of pattern. getting at her, not as good as it was. let's hope covid gets under control. haidi: our global economics and policy editor.

the ceo of hsbc wealth and banking unit says the lender is continuing with its expansion and china, plans to benefit from beijing's emphasis on common prosperity. speaking at the summit, he told us how his clients are feeling about investing in the country. >> our clients, in terms of how to invest assets, are slightly more cautious. they are more cautious for real reasons. the pandemic changed expectations in terms of when the world will go into full opening. interest rates might be on the rise. there are talking about tapering. asia is slowing down in terms of growth. i would say it is absolutely normal that our customers became more defensive. if a big change. i would say, if they believe that they should stay invested, because the recovery israel, rates will stay low, and the second phase of the recovery, we

need to diversify. not all assets are going to go up. we need to diversify and make sure we go for quality assets. talking about large caps and high-yield dividends. >> common prosperity is a big theme in china. have you observed concerns? what questions are they asking you? how are you advising them? nuno: i would say common prosperity makes absolute sense. if you look into the numbers, it's happening at this moment. talking about the class in china is bigger today than the whole u.s. population. 340 million people in china are middle-class. if we talk about 30 million, 2.5 million, there is place for all. shery: the wealth and personal banking ceo speaking with yvonne

man. you can mux the full conversation from the conference at 7:10 p.m. hong kong time. coming up next, a chinese property developer could have bonds due this week, but chose not to open a pandora's box. we will discuss if there is any method to expand this. this is bloomberg. -- method to its madness. this is bloomberg. ♪

su: this is daybreak asia. antony blinken is criticizing china's action towards taiwan, saying they are provocative and destabilizing. china has ratcheted up tension around the island in recent weeks, sending warplanes into its air defense identification zone. lincoln said these could escalate the situation and result in on intended consequences. >> i hope that these actions will seize. there is always the possibility of miscalculation, miscommunication. that is dangerous. su: the ecb is said to be

studying a new bond buying program to prevent market turmoil when emergency purchases are phased out. according to officials, the plan would replace the existing crisis tool and complements an open-ended scheme that's currently requiring $23 billion every month. a spokesman declined to comment on the report. to canada, justin trudeau has announced details for the vaccine mandate. while core public service employees will need to prove vaccination against covid-19 by the end of october or face being suspended without pay by mid-november. passengers on planes, trains, cruise ships must also be fully vaccinated as of october 30. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. shery: a chinese developers debt

is minuscule compared to evergrande, but when it missed its bond payment this week, it opened a pandora's box for evergrande and the rest of the property sector. bloomberg opinion joins us with the latest. fantasia is a smallish developer, ranking number 64 in china's real estate industry. no one cared about it until this week. why is it important now? reporter: they look at a company's ability and willingness to pay. in the last month, with some with evergrande, they had a liquidity crisis. they wanted to pay but they could not. fantasia's problem is they have the money, they refused to pay. over a month ago in late august, at a conference call, it said they had 10 billion yuan of cash on its holding level.

look at fantasia's bond price. it dipped from $.99 on the dollar to $.20 on the dollar. everyone thought if they had the money they would be able to pay. they had a three day bridge loan, several hundred million yuan. it was taken out on september 30, it was due on october 4. they said they could update. they do not want to pay. that is what freaks investors out. haidi: there has to be a squid game analogy and everything we talk about. you say this is similar to the game chinese developers are playing. everything starts off civil. what happens from here? reporter: i think it's going to get very dirty. there is a chinese saying, it's the best time to catch fish. evergrande is inevitable and the smaller developers will say the

baitfish is doing restructuring, why not me? fantasia, over half of total borrowing is dollar bonds. they can take advantage of the opportunity and say i want to do restructuring. we found out yesterday that the department told investors that have already hired financial advisors. i think what happens next is a lot of smaller developers will say ok, we will pay you but we want to pay less. it's going to get very muddy. haidi: our bloomberg opinion columnist. tensions -- an australian deputy ceo says you can't disengage completely. i sat down earlier at the bloomberg invest summit to discuss his firm's current strategy. >> we have a long-term commitment to china.

as capital markets become accessible, that is, long-term view. the changes in the environment around education companies, the real estate sector, are to be expected to some extent. these things will happen in a developing country. china remains an attractive place to invest. we have $3 billion to $4 billion in china, stocks and some fixed income. i suspect that will grow. china is the second biggest economy in the world, and will probably be -- i do not think funds can disengage from china, but australia has had a close relationship with china over the

long term. i think all of our sectors will work in the long run. haidi: get something you are comfortable with the level of de-risking, regardless of what happens with evergrande in the property sector. what would you need to see to make more exposure compelling? >> i think there are two aspects. you have the stocks themselves, we are exposed to alibaba, and the regulatory environment has been changing. clarity would be useful for us, so we could be certain about future interest rates. shery: watch the full conversation at the time shown on your screen. we have breaking news. a federal judge has blocked a

new ban on most abortions, this would give a preliminary victory for the biden administration as it tries to overturn those strict laws, which would become the strictest in the u.s.. the ruling on wednesday in austin means medical professionals can once again offer abortions in texas after six weeks without fear of being sued by members of the public. this is bloomberg. ♪

shery: here is a quick check of the latest business flash headlines. hackers have attacked twitch, leaking critical data including source code. the police purport to include streaming histories, and the documents show which gamers rake in payouts, up to 9.6 million dollars. saudi arabia stock exchange is said to be closing -- announcing an ipo that could value as much as $4 billion. sources tell us the exchange could publish details this month. a successful ipo would be one of

the largest in the exchange sector since 2014. haidi: the u.s. -- said to have [indiscernible] the share sale could take place as soon as the end of this year. let's bring in our asia equity markets reporter. but do we know so far? -- what to we know so far? reporter: we know that the company is working with a few banks for this listing which is expected to happen in hong kong before the end of the year. we are talking about bank of america, goldman sachs. this could increase before the listing happens. we are talking about a deal they could bring at least $500

million here in hong kong. shery: should we see more companies doing these homecoming listings? reporter: i think it would be very interesting to see more companies doing those homecoming listings, and they should become more usual for investors here in hong kong, especially what we saw from beijing over the last few months. we have had a few very successful deals over the past few months, ev maker from china that are listed in the u.s., they did their homecoming listing. it would not be surprising to see more big, liquid companies that are already traded in the u.s., that are chinese, but are also deciding to have a listing in hong kong. haidi: our bloomberg asia equity capital markets reporter.

we will have to wait and see in terms of gauging the appetite for this secondary listing, but when you take a look at some of the biggest losers out of the new listings, perhaps it's unsurprising there has been downside pressure on some big chinese listings, particularly as we see the tech crackdown. the three biggest money losers among the listings and 2021, all chinese. we are talking about billy billy in hong kong. along the lines of the conversation we keep having about whether chinese tech companies are investable. shery: they're interesting to see the underperformance. we continue to hear more about the ongoing u.s.-china tensions, perhaps we could see more of those chinese names listed in the u.s. going back to hong

kong. we heard about these companies like alibaba and jd.com that could perhaps be listing in hong kong in the future, we have heard uncertainty and skepticism about the chinese market, perhaps the work on investable coming up here and there. let's see how these risks are being factored into the market. take a look at trading across asia right now. we are seeing the nikkei up 1%, this of course after we saw the longest losing streak since 2009, eight sessions of losses and consolidation in the japanese market. the cost beginning more than a percent, but also after entering correction territory and falling from the august peak, the asx 200 up 8/10 of 1%. haidi: some of that playing out as to what is going on in your side of the world as we get potentially, at least a short-term resolution to the

debt ceiling debacle. next, more market analysis from a chief economist at the top of the hour. there also speaking with cambridge associates regional had for asia. that's happening at the opening of trading hong kong. this is it for daybreak asia. this is bloomberg. ♪

>> this is my kitchen table and also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind i often thought was private equity and then i started interviewing. i have learned from doing my interviews how leaders make it to the top. >> i asked him how much he wanted and he said 250. i said fine. i did not negotiate with him. i did no due diligence. >>