shery: hello. i'm shery ahn in new york. haidi: we are cap -- sophie: we are counting down to asia's market oceans -- major market opens. haidi: warnings of a dangerous diversions in the recovery with

inflation and said -- accelerating. apple delaying trading after it may/iphone production targets. traders trying to calibrate shortages of coal and natural gas. shery: we start with breaking news out of south korea. we are getting the unemployment rate coming in at 3%, matching expectations for the month of september. this, after we saw the record drop of the jobless rates in the month of august at two point 8%. a slight increase in the rate now. not surprising given the economic recovery may have drawn more workers back into the force. 671,000 jobs were added in september from one year earlier, sending the jobless rate to 3%, matching expectations. haidi: let's take a look at the sydney open. what are you watching? sophie: we get australia's

consumer confidence gauge at the bottom of the hour. teeing up the trillion economy for a consumption boost. you have the a6 200 little changed after a two day drop as we saw the iron ore rally being halted amid volatile trading. the aussie dollar looking little changed as well after rising overnight. we see it holding above $80. at ubs, they boosted their price forecast for brent and new york crude. with the spike in energy prices combined with softer global outlook, that makes the u.s. dollar even more attractive as a wager, especially with defensive plays like the yen and sees more people joining the short yen

trade. the offshore yuan holding steady ahead of the trade data yea to her -- trade data later. it has also added to headwinds for players like apple. flipping the board, heads up today, we are seeing the premarket session. haidi: you are still in the office, so investors weighing inflation risks across markets. here in the u.s., we saw consumer inflation expectations rising to new highs on the new york fed survey. >> my baseline case is not for stagflation. i live through as a college

student the great stagflation of the 70's and i think there are a lot of differences. haidi: as a result, you saw choppy trading on that inflation outlook and we continue to hear from the likes of raphael bostic transitory is a dirty word, but janet yellen also reiterating her call, saying she feels like it is transitory. she sees isolated pockets of overheating, but sticking to that narrative we see clearly in the markets investors are deciding to get concerned about how this will play into the earnings outlook. shery: this, as we continue to see more disruptions coming that could send inflation even higher. we are talking about apple cutting potential iphone 13 production targets by as much as 10 million units. this ongoing chip crunch around

the world and this is weighing on the after hours trades. we have seen a hit when it comes to chipmakers with the philadelphia semiconductor given that we continue to see these concerns over supply shortages and rising treasury yields. haidi: when it comes to leaving some of these inflation targets, issues for the philippine central bank as well. we will be speaking to the man himself on how he sees the inflation risk and how useful rate increases are to deal with that as we continue to see downgrades from the imf. the philippine central bank governor will be joy hanging us -- will be joining us. shery: take a listen to at the imf was saying when flagging the risk of inflation running hot. >> we would like to see

broad-based inflation again at the kind of levels we are used to seeing. the question is, if that spirals out of control and you are ending up with high inflation numbers much above the conflict range of central bankers, we are not seeing that yet. shery: this coming at a time when the imf has trimmed its global forecast. kathleen hays is here with a recap. there was so much to go through with the imf outlook. give us your takeaways. kathleen: it wasn't the roseate outlook we could have gotten. the delta variant is continuing to take a toll and that's part of the problem. 5.9% for the world this year, a small downgrade, but down to 4.9%. 5.2 percent, china 5.6 next year , low income countries, the only one where the outlook is

brighter. vaccine rollout getting the lock down out of the way. 2.8% inflation for 2021, going down to 2.3 in 2022. we just heard about the risks of inflation when it comes to that part of the world, they see a risk and sizable selloffs and stocks in housing prices that have been bid up so much and they are wondering how this could feature more broadly and cause instability. haidi: we continue to hear from some of these high profile voices on ever grand. take a listen to what bill winters had to say. >> as a bank, we are relatively underweight commercial property. we've always focused on top-tier developers. i'm not particulate concerned

but the first impact for us. if there's a contingent effect, it would be a concern for everybody. this is a sort of lehman moment for china that i don't think they are bent on. haidi: the imf had some interesting comments on containing the crisis and addressing moral hazard. kathleen: they did say that they see a tough trade-off because you don't want to look like your backing away, on the other hand, if you are too slow, you could cause financial shock waves that spread through the system. karma and -- carmen ryan howard just an hour ago said she sees the risk of a further china slowdown. she said they bolstered emerging market economies. if they slow down further, that's going to be a problem for emerging markets.

pulling out of the pandemic, getting enough to get it under control. the imf has been saying ever grand is a problem and they are not saying china is a problem, but china has to get it right and that is what is important now. haidi: kathleen hays there. the chip crunch continues. bloomberg's scoop on apple and how they are being effective -- being affected. production for the iphone model will probably be cut this year. we are hearing this news ahead of a key demand season. what do we know? >> we know apple originally intended to produce 90 million units for the final three months of 2021. according to reporting out of taiwan, that's going to be reduced by 10 million and change, down to 80 million units. it's still a lot, but it is indicative of the supply chain

crunch we are seeing. broadcom and ti are struggling to produce as many chips as necessary for apple to finally manufacture their iphone 13 models, so that supply chain crunch is hurting the ability for apple to output those new devices. haidi: any idea how that would affect apple's bottom line? >> we are already seeing if you order an iphone today, you are not going to get it for about a month and change. if you walk into an apple retail store and asked to buy a 13 model, you're probably not going to have an easy time, so that's the result of the supply chain. the company did not put out forecasts for q4 or q1. they stopped doing that when the impact of covid began nearly two years ago at this point. so they are not guiding.

according to bloomberg analyst estimates, they are calling for about 85 billion in the fourth quarter which will be announced later this month. for q2, they are projecting around 120 billion. i would imagine apple will probably get close to those. one of the important things to note is the a series chips produced ip smc are not seeing production issues. production issues are coming down to those two components from broadcom and texas instruments. if you miss one component, you can't produce the whole phone, so it is very intricate. haidi: the latest on apple and supply chain issues. let's get to vonnie quinn with the first word headlines. vonnie: the federal reserve vice chairman for supervision will be removed from his role as the main watchdog after his tidal

expires. president biden has not yet nominated a replacement and he will be subject to senate confirmation. u.s. house speaker, nancy pelosi, is signaling president biden's nature economic plan may be scaled-back focusing on fewer programs. democrats must trimmed out a bill sponsored by house committees last month. $2 trillion is the figure biden has floated as a potential compromise between progressives and conservatives. north korean leader kim jong-un has showed up with a variety of missiles designed to frustrate defense officials. the rare indoor display appears to be the latest effort. state media released photos of the event. kim blames the u.s. for creating

regional tensions and promised to keep expanding's nuclear weapons program. lou origin is on track to launch its second human face -- human spaceflight mission on october 13 after delaying one day due to weather conditions. it will carry four passengers, among them, star trek actor william shatner, who at age 90 is set to become the oldest person ever to go into the final frontier. 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'm vonnie quinn. this is bloomberg. haidi: sylvia jablonski joins us next. ubs wealth management seen both management practices stabilizing. this is bloomberg. ♪

haidi: the world bank chief economist expects a recent spike in inflation to continue. she told kathleen hays that the banks are a very tough vision. >> post-covid is not just about the kind of decline in aggregate demand, sharp declines in aggregate demand we had after the global financial crisis and even more forceful ones after covid. it's about aggregate supply shock. they are not tightly bundled, like they were in the 1970's. many supply shocks are manifesting themselves in all kinds of pressures and and bottlenecks and shortages and the like, which make for a more

persistent and stubborn inflation. kathleen: are central banks waiting too long to address this? >> i gave a lecture a couple of weeks ago on the issue of central banks and my sense is central banks are in a tough position in which they don't want to derail what could be a fairly uncertain recovery given the cycles we've been through with the variations and gyrations of covid. they are concerned about pulling back but i think the endpoint may be that central banks are

more likely to follow markets rather than lead them. i would point out following markets and acting on the later side was an issue back in the 70's, even before the drama of opec and high oil prices. in the late 50's, inflation was higher and part of that was delayed action. we are in that moment now. kathleen: how about the global risk from spillover trying to deal with evergrande and hit that balance between not too tough and not too easy? is at risk for the global economy? >> absolutely. china played a critical role for emerging markets at the end of

the global financial crisis. the u.s. went into recession, europe was in recession and china between 2003 and 2013, you had double-digit growth which kept commodity prices very high. this was a big boon for emerging markets, especially commodity producers. apart from the risk associated with a titer, should central banks move to titer financial conditions, another significant risk for emerging markets is further slowing in china. the chinese slowdown of 2015 had a big hit and i think one cannot underestimate what further

slowing in an environment where there's a lot of vulnerability from the covid legacy. shery: carmen reinhart speaking with bloomberg's kathleen hays. our next guest says she remains bullish on markets given the economy's progressing. as always, great having you on. i wonder with these inflationary concerns, markets are starting to become a little anxious. how are you positioning? >> great to talk with you today. we are back where we've been every couple of weeks or so where we get back on worrying whether inflation is transitory and markets try to recover and end up trading sideways and then we see these opportunities to buy in the dips and the rallies. when we get these 3% to 5%

pullbacks in major industries, particularly in the nasdaq leaders like alphabet and amazon comedies are great opportunities to buy on the dip because these companies are flesh with cash. that's not going to change. they have loads of balance sheet, they are increasing buybacks and dividends and things like that and the outlook and innovation for these companies in terms of going into cloud and ai, if anything, these are good opportunities to get those on your shopping list. shery: what is the time horizon? with apple, the immediate concerns -- immediate concern is they will not have enough chips to make the iphones which could hit them in the short term. >> absolutely, and at a great point. for that reason, these are the times to buy on the dip.

a lot of the news coming out about the supply chain issues, particularly the chips screens and the weight on the apple product is something that is going to pull the stock price back. if you can get an entry point below the 52-week high, that is something to consider. what will happen as the semi conductor space will free up all of these chips and when you get some's debility and the chinese market, that is going to change and all of the sudden, that's a name that could be poised to rally. apple is not going to keep the extra weight to get a cell phone. could there be a slow down because of it? absolutely. but long-term, these are the times when you get into a stock like that. haidi: potentially a further slowdown when it comes to the consumer as a result of the supply chain issues or just a perception of how the an -- economic economy is progressing,

does that affect your allocation when it comes to big consumer facing tech? >> it doesn't. what remains with the consumers we have trillions of dollars of cash sitting on the sidelines or money market accounts. consumers are earning a zero on that cash. so there are a few ways they are going to spend that. number one is to go back into the market and buy on the dip opportunities. consumer discretionary is going to be one of the top areas to look at, particularly if you want to throw amazon and their. the second thing is crypto. we've seen so much flow going into bitcoin and theory amend the nft space, i think consumers are going to start to allocate their. essentially, i believe this much liquidity in the market, a supportive and accommodative fed is going to carry us forward to the next two years or so.

that doesn't come without volatility. some of these topics like inflation and the covid variant could weigh on the market but i think we are in an economic recovery. haidi: always great to have you with us. we have lots more to come on daybreak asia. this is bloomberg. ♪

shery: let's take you live to the u.s. congress with the house of representatives has the vote to raise the debt ceiling. vote is ongoing, but this is after the senate approved the legislation that would raise the ceiling by $480 billion until december 3. that's the time when the stopgap funding bill also runs out, so it will be a busy december.

the u.s. government is staving off a default. the house of represented has the vote to raise the debt cap while the vote is ongoing at the moment. haidi: let's get you a wrap of the other business flash headlines this hour. apple is set to cut production of the iphone 13 because of the chip crunch. component shortages from broadcom and texas instruments forced the target to be cut. the average price of chips rose for a ninth straight month in september. tesla's china made car notched up another delivery in shipments for september as general auto sales declined. shipments for the month were up 27%. that follows a near 50% jump in august. at last week's shareholder meeting, elon musk said shanghai factories out producing the

fremont, california plant. the -- shin jen targeting a listing that could be the world's largest this year. 20

haidi: we are just getting consumer confidence numbers out of australia -- consumer confidence falling to 104.6, falling 1.5% month on month. this coming as we have just started to see city -- sydney emerging from the strictest

levels of lockdown but other parts of australia, including victoria state and melbourne remaining under lockdown. we continue to see that impact on consumer confidence and we will watch that going into the key holiday season. let's get you to sophie with a look at the markets. sophie: the australian consumer looking relatively upbeat as they look forward to those openings and after an contraction the third quarter, lower by .2% as we see minors under pressure. rio tinto with a gain, but we are seeing interesting ground so far in sydney. some flattening for a second day wally aussie dollar is under pressure after boosting commodity and currency. this after a four day drop

trading near a three day low and momentum for the dollar is anticipated to pick up ahead of the u.s. inflation report. shery: relevant inflation continuing to be a top concern for economist like. the asian development bank a warning that accurate in developing jet art peck erectile picnic care. bespoke managing director. -- >> there's going to be upward pressure for inflation. next year is going to be 2.7%, which is well below the average for the last decade. you do need to monitor and see if it really is a transitory situation. shery: do you buy into the stagflation debate?

>> that is a difficult one to call. our colleagues in the previous session have much more insight on that issue. shery: but economic growth, how could it be impacted as we continue to see reopening and more variance of the disease? >> that is a big deal for our region in asia. we predicted growth to be about 5.2%, but it and that being negative 0.1%. the vaccine rollout, we've seen a lot of encouraging signs of activity, so we are presenting the growth this year and for 2022, we are expecting the growth to be 5.4%. so we are seeing some promising signs. haidi: how deep are the effects

of a fractured labor market as a result of some of the migration flows that stopped because of covid as well as the broader supply chain issues? are you seeing that play out in the full forecast? >> there is going to be increased trade activity as economic growth is picking up. it really depends how the vaccine is rolled out in our region because many economies now region are dependent on tourism, for example. with the global restriction on travel still putting downward pressure on economic activity as well. haidi: when it comes to agriculture, that's a hot theme, and overheated theme when it comes to food prices. are there structural problems across the asia region in particular? do you see longer-term changes that would be able to avoid the

price fluctuations are market fluctuations we've seen this year? >> some of the food security -- the production itself is not an issue, but it is the transportation. in terms of transport, it has been put ok. we don't expect a downturn in the near future. shery: what about the pressure coming from the fed starting to normalize? >> that is one of the possible risks we are facing, the potential market turbulence resulting from the process u.s. monetary policy and normalization happening. that's an issue we need to monitor. and the possible geopolitical tension going on in the region would be something we need to watch. haidi: our conversation with the

asian development bank managing director. our next guest says concerns about stagflation stoke by rising energy prices are overstated. great to have you as always. one of the things chairman reinhart said earlier was these supply-side issues are not as a result of one factor. we are seeing broad-based pressures as a result of the conflict of different factors. does that make projections of when this will ease more difficult? >> i definitely agree with that. the interesting thing from our side is clearly shortages of coal in places like china and india continue to hold markets up at extremely high levels.

but when we look at the oil side, what we see is we have upgraded our oil forecast. we had it at $75 a barrel next year but now we are sitting around the $80 a barrel mark for brent crude. part of that is a pickup in demand for crude oil for the production of power. many countries will have the opportunity to switch between fuel, somewhere around half a million barrels on the demand side for oil. haidi: in terms of how much we will continue to see outperformance, how long does this run last as you see other commodities continuing to rally as well. where do you see pockets of less fundamentally driven strengths? >> at least from the coal side,

that's probably the market that looks the most healthy. what we find is, to be fair, they will consolidate at elevated levels. we haven't had significant cause in most places, so really, how prices trade from here will be dependent on the weather for the next couple of months. particularly in china's case, they are trying to ramp up reduction and try and improve the situation overall. india is doing very much the same. what we know is when the mind start up and we are expecting to see material increases in

production from india and china to the world biggest consumers. so you imagine a warm winter, we don't know that yet, you could see higher production and relatively ok demand until prices come back very quickly. shery: so how do you traded commodity-related assets? energy stocks have really lagged crude prices. >> we are very positive on energy equities. we have a long position in global equities. we think it will continue to pretty spare capacity. you will probably see additional supply coming into the market from the opec countries.

that means it will be drawn more quickly than would otherwise be the case. the consequence of that is we think the long end of the oil curve is actually outperform the short and and that's positive for many of the equities as we look forward. the second point i would make is a lot of asset managers have been reluctant to add commodities in their portfolio but they are starting to talk about energy and particularly the hedge against inflation. so we think there is still upside for these companies going forward. shery: how much are you considering the strength of the u.s. dollar? >> when we are looking at the u.s. dollar, we did upgrade our

expectations for the u.s. dollar in the short-term. we do expect it weakening toward the end of the year. we have moved that out largely because we think the fed is going to perhaps move more quickly on the qe side in the reduction of qe, so we've felt u.s. rates would start to rise and that indeed has happened. traditionally, yes, a stronger dollar has been a negative influence, but what we are seeing at the moment is very much supply-side driven markets. so at least in the next few months it can be resilient. shery: great having your insight. the executive director for commodities and assets at ubs global management. coming up, commodity -- commodities on the supply chain disruption, a big story for brazil. they are a major oil exporter but they see inflations in the

double digits for the first time since 2016. our conversation with the economy minister at -- ahead. this is bloomberg. ♪

vonnie: this is daybreak asia. i'm vonnie quinn. a signal eight storm warning will remain in force, disrupting

trading on the stock exchange. the latest warning session under severe weather trading. warning trade will be canceled if the warning remains in place. all services are suspended. the national monitor reflect says the economic recovery has lost moment and is growing increasingly divided. but it does see a robust rebound from the pandemic with output expanding five point 9% worldwide this year, down .1% from july. when chief economist says she sees inflationary portion -- inflationary forces as transitory, but skewed to the upside. the fed vice chair says the u.s. is not headed for that kind of stagflation that developed in the 1970's. he told the institute of international finance he does not see it as a policy mistake

that led to that. >> substantial further progress standard has been more than met with our price mandate and the september meeting with regard to our employment mandate, the committee indicated that if progress continues as expected, we judge a moderation the pace of our purchases might soon be warranted. vonnie: a race to buy supplies of mark's covid pill is raising concerns that poor nations could be left behind. countries including australia, singapore, malaysia, and thailand have followed the u.s. in seeking the drug. merck says it is taking steps to ensure wide distribution, including licensing to generic drug makers. 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'm vonnie quinn. this is bloomberg. shery: the imf has cut brazil's economic growth forecast for this year and next with inflation in the double digits for the first time since 2016. the nations the economy minister says he expects growth at 5.5% this year thanks to progress on the vaccination front. >> forecasts about brazil have been consistently wrong. brazil's gdp dropped less than advanced countries during the pandemic crisis. we recovered faster and we are growing at a higher rate than average, not only latin america, but eurozone and invested countries. i think forecasters will be wrong again. brazil is facing a very sharp

recovery. we are probably growing 5.5 this year. and it's true, inflation is going higher. half of inflation's food and energy all over the world, so there is new about it in brazil. but we allow structural reforms in the midst of the pandemic, we launched an independent central bank. the political cycle will not be operating during elections. at the same time, we had expenditures. just to give you an idea, we were spending 19.5% of gdp before the crisis. when the crisis hit us, we went to 26.5. now we are back to 19.5 again. shery: but you are trying to kickstart the program and that could be a problem. >> true.

we are reviewing the problems. with direct income transfers during the pandemic. we fully vaccinated 60% of the brazilian population. we are ahead of the u.s. and we vaccinated 90% first shot my first doses. so, we are getting a very sharp rebound now because people are getting a safe return to work. shery: at the same time, doesn't that mean you have stronger growth and you will see more price pressures? are you expecting inflation to have peaked or could it get worse? >> i don't think it could it worse because we are moving with the fundamentals. fiscal policy, we are moving from a deficit of 10.5% to 1.5% this year. we control public expenditures

in general. we had a temporary increase in health expenditures, not permit increases like used to happen and other items of public expenditures. we made this social security reform and and independent central bank and most of all, we changed the regulatory framework in brazil. oil, gas, natural gas, brazil is open for business. shery: are you concerned about political noise affecting the markets next year? >> certainly. this is what it is all about. the fundamentals are in place, the central bank is raising rates. the fiscal side is under control. the auxiliary grants we give, the vouchers for poor people,

they are under the spending cap. observing and respecting the fiscal responsibility law, but there is a huge political point. people who lost the election three years ago did not accept the results. they kept beating their drums. haidi: the brazil economy minister. let's look at the fx space starting with the aussie and kiwi dollars. you can see the diversions play between the aussie and kiwi on account of sydney coming out of lockdown. lock down being extended for auckland. the kiwi dollar trading a little lower this morning. the aussie dollar also softer. we see broadly commodity prices pushing higher. we are seeing the yen holding steady at 113 and little

weakness in the korean currency as well. shery: i don't remember seeing the japanese yen this week against the u.s. dollar in quite some time. i'm going to say about three years. very close to that 114 level. we saw a little rebound in the previous session given concerns about inflation but concerns are very weak. you're finally getting core machine orders. month to month, a contraction of two point 4%. the expectation was a gain of 1.4%. really missing to the downside after contraction in june. we saw a rebound but we fall into contractionary territory. month on month, a contraction of 2.4%. not surprising given the extension of the state of emergency to curb those virus cases. the year on year is finally out. it is a beat of expectations and

a surge of 17%. the year on year number coming in strong. we've seen that double-digit gain on year on year orders for the past four months and we see it again in august, a gain of 17%, not surprising. also that low base from last year being factored in. plenty more to come on "daybreak asia." this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines this hour. purchases of louis vuitton bags and other luxury items surged after stores reopened from lockdown. asia, excluding japan is the biggest region, coming for 36% of sales, followed by the u.s.. general motors has reached a deal with lgt recruit $1.9 billion linked to a mass factory recall. gm had to recall 130,000 chevrolet volt ev's after batteries caused a fire. it cost the carmaker $2 billion. the company say they will continue working together on new race. glaxosmithkline is said to be joining by off interest in what could be the biggest private equity takeover on record.

the business could be valued at $54 million or more. cbc r is among the potential suitors. shery: take a look at the commodities space. oil still above that $80 a barrel level. we saw pressure on copper prices given the imf just cut their growth forecast for the global economy. coffee soaring to a seven-year high. surprise concerns whether it bad weather or shipping disruptions. perhaps a bullish sign when it comes to prices on wheat because we did get the agricultural supply and size smaller than expected supply. i know that was happening with avocado very closely. haidi: avocado glut slumping australia. this is a fruit or vegetable -- i know it's controversial what you define it as. it is close to australian hearts. that -- there's been

supermarkets awash with supply of avocados, like a dollar each. as i know you know how expensive avocados used to be when we bought them in hong kong. shery: whether it's veggie or fruit, i'm always happy to have avocado on the table. let's turn to sophie for what to watch in the markets. sophie: japanese utility stocks after a key to affirmed restarting a nuclear power plant. switching out the board, keeping an eye on vaccine-related names. the government easing -- switching out the board, keeping an eye on apple's suppliers as the company is expected to cut iphones on its chip shortage. haidi: the market opens are

coming up in seoul and tokyo. this is bloomberg. ♪

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haidi: -- shery: hello, and welcome to "daybreak: asia." haidi: take a look at the major markets opening in asia, the top story is our. the rbnz downgrades global

growth forecasts. the outlook for monetary policy as the economy slowly reopens. shery: let's talk to sophie for what to watch. sophie: the nikkei to 25 off by about .6% this morning and the yen staying near a three year low. saying there are rising yields as far as energy costs and checking on the open in seoul this morning, the latest eco-data showing the jobless rate did rise 3% in september and the country did add the most jobs since the vaccinations.

investors exiting korean stocks, testing the 200 level once again this morning. apple expected to cut its production targets for iphone 13 on supply issues that have been exacerbated which will affect demand going into the winter. and downside pressure with brent staying above $80. part of the reason for the morning on slowing global growth when trade growth for september comes out later this wednesday. the power crisis on the mainland hits domestic demand. that picture is part of the inflation data and checking on

10 year yields, over at goldman, the urine target for you and benchmark deals if inflation continues to tighten. haidi: our next guest is wary of bullish market calls. he is the head of asia-pacific financial research. great to have you with us. the problem with the scenario we're facing is a confluence of different factors affecting different commodities and different assets. does that make it more difficult to say it will be over by x time? >> it does. it's a very complex issue, but at the same time it's actually quite simple to understand. when you have a structural bottom, which is what were talking about when we say

supply-side is structural, whatever you do on the demand side, whether raising or lowering rates, more or less qe, or taxing more or cutting taxes, none of those will make any difference at all. they will all make things worse in different ways, until you address the structural issues. haidi: what are the structural issues and what would have to be done? michael: that's where it gets complicated. number one, it's not a national issue because we have an integrated global economy. you have to look at what's going on in labor markets. all major central banks are scratching their heads about whether labor markets are strong or weak right now. they are not quite sure what is actually happening there. governments need to get more of a handle on that too. they are still distorting things with various different

incentives and carrots and sticks and different matters. you also have to recognize that involves looking at the logistical infrastructure of the supply chain which is creaking and groaning and straining and giving people more money in their pockets are changing interest rates will not physically put more goods on shelves or on tables. that involves oh logistical or military style effort to change how we do things and perhaps where we do things. nobody in power has the wherewithal to actually recognize that they may need to introduce structural changes almost as radical as the ones seen 40 years ago when we had the initiation of globalization and deregulation to deal with the previous bout of supply-side inflation on energy. shery: how well are the markets pricing all of this in right now?

michael: they are not, they are incomplete denial. i talked to quite a few people around the world on different aspects of the market and there are certain people who get this and they are pulling their hair out. the majority is just saying it's all good, it's going to be fine, don't worry, it will all be priced in. no, it isn't. unless you been talking to people on the logistics front who are pulling their hair out and worrying about a collapse, to the point where everywhere will be like the u.k. where the headlines scream, christmas is canceled, by your turkey and freeze it now because there won't be any available or toys for your kids, nothing is going to change. the majority of the market still seem to think all this will just disappear. transitory is a dirty word, but congratulations in saying that. shery: what about inflation in china?

where does the economy go from here? michael: it depends what they do with ever grand. it's a separate conversation which obviously we've had before. it's a massively deflationary impact that is happening there. gdp is flat on its back and local government revenue collapses as a result, we saw that in car sales yesterday, for example. it's hard to be optimistic about chinese growth until that problem is sorted out. but i don't see how that problem can be sorted out. that doesn't mean you don't still get severe pockets of inflation because of the supply-side. it's got to be swallowed by someone. someone's going to take that loss or pay that price. even if the economy is slowing down, that could still mean higher inflation for quite some time. haidi: what is the long-term

legacy of what happens to evergrande and the property sector? this is something that has obviously been building for many years and coming to a head now. what is it look like in the next 5-10 years when it comes to the productivity of assets in china? michael: to be blunt, nobody knows, obviously. we will have to wait and see. but to refer back to the point i just made, the majority in the market are refusing to do their own work, the same people who will happily spend months and months of their own time studying for the cfa, for example, won't spend minutes on the internet reading up on markets to actually understand what that ideology may be pushing toward regarding evergrande and regarding a property sector that did try for

-- were property sales were for people who already own more than one home. so you're building empty properties that just sit there which are completely unproductive. everybody wants gdp to go up, but how? i think this is a serious attempt to try and stamp out that entire growth module. that's what they openly say. it's shocking because every other country in the world embraces it openly, and china is rejecting it. shery: always great having your insight, michael. let's get to vonnie quinn with the first word headlines. >> hong kong says a signal eight storm warning will remain in force when you say morning. it has delayed in the morning session under severe weather. the morning phase will be canceled if the warning remains

in place at 9:00 a.m. local time. all hong kong schools are suspended. rail service will operate unlimited time schedule. nancy pelosi is signaling that president biden's economic plan may be scaled back by focusing on fewer, well executed programs. democrats muslim down a bill that was crafted by house committees last month to roughly $2 trillion. a potential compromise between progressive and conservative democrats. the federal reserve vice president will be removed from his role as the main watchdog after his role officially expires wednesday. about their -- their questions about how the error of oversight will in. president biden has not yet put up a nomination which would be put to congress.

in a potential repeat of the unequal vaccine rollout, some countries have followed the u.s. in seeking to obtain -- global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: warning of a dangerous diversion in growth. will hear from a chief economist. plus we will hear from the philippine central bank governor on the policy direction as the country eases pandemic restrictions. this is bloomberg. ♪

haidi: the imf have trimmed their forecast for global growth again over a dangerous divergence even after predictions for robust rebound. >> next year we project the economy to be back to pre-pandemic trends, the way it would've been in the absence of the pandemic. with the magnitude of 5% of output lost or even 10% relative to where it would've been. it's a divergence we are extremely worried about, and has two factors. one is the inequitable access to the vaccination and the fact that policy support is much

larger in advanced economies as compared to emerging and developing economies. >> in terms of what's happening in developed markets, the fear of the moment is that were going into either inflationary world or a stagflationary world. you don't see that. what gives you confidence that inflation is going to fade as we work our way through next year? >> first, when you look at the facts in terms of how countries are rebounding back to pre-pandemic levels and trends, this is not the best recovery. we still have the global economy , in terms of inflation, our view is that for most countries, you're coming back to more pre-pandemic levels, their upside risks. the u.s. is one such country, but as of now, if you look at

month on month core inflation, it has moderated over the last few months. we will see what happens when the data comes in tomorrow. it comes with supply-side pressures as energy prices go up. it's expected to revert by the middle of next year. again, there are transitory forces and as long as we see expectations remain anchored, we expect to see a return to normalcy by next year. >> what would have to happen for you to think those inflation expectations were not anchored? is the highest level here in the u.s. in four years and the nikkei at over 4%. it feels like it's becoming a stickier environment for

inflation. >> we do want inflation expectations to be at a level consistent with inflation mandates of countries. it came down quite a bit last year and we should see it go back up to the level we like it to be. we would like to see broad-based inflation at the kind of levels we are used to seeing. we could end up with very high inflation numbers. we are not seeing that yet. we are looking closely at what develops in middle markets, were seeing what happens with shelter inflation, what's happening with long-term inflation expectations. these indicators will give us some signs of where we are heading. >> i want to get your help in

addressing the doing business scandal that has erupted, do you feel like your research is going to have a credibility problem, and what do you feel like you need to do to backstop it? >> as you saw, the board came out with a strong statement expressing confidence in the managing director. the issue about the data had nothing to do with the imf, it was about the world bank doing its report. we placed an incredible amount of importance in data with the imf. we have multiple checks and balances. i feel good about where we are. >> you have been put under no pressure to make the data fit the narrative, the narrative being delivered further up. that has never happened, there is no instance of that ever happening at the imf? >> absolutely not.

i have personally never faced that pressure. shery: let's get more on the imf global outlook. kathleen hays is here with the recap. what are some of the key takeaways, that was a very broad outlook. kathleen: explaining so eloquently the difference between developed and advanced nations. the delta variant has not gone away. it has continued to extend lockdowns in some countries, and you have supply chain write-downs is a problem, too. you're seeing a bit of a loss of momentum. the u.s. at 5.2%, still very strong, just not superstrong. china at 5.6 percent, that is mediocre territory for the chinese. low income countries, some are experiencing a pickup expected

in 2022 because of the fact they will finally shake off the lockdowns, etc. because of the rise in inflation , they think central banks will start tightening. they do see some potential for financial instability there. haidi: we are also hearing more commentary on evergrande from high profile voices. >> is a bank we are relatively underweight commercial property because of china. i'm not particularly concerned about the first order for us.

the idea that somehow is a lehman moment for china, i don't think china is that dumb. haidi: the imf also weighs in on this kind of alan finkel act for beijing. kathleen: they said they don't see any contagion at the moment, however it is well contained. if the chinese did not communicate well or take necessary steps, then they see it could be a spreading and bigger problem. it's a tough trade-off for china right now because if they jump right up and provide support to evergrande and property developers that are under stress, i guess they are not deleveraging. and if they show they are tough and loudly these financial stresses to build, that could spill over into other industries in china and potentially spill out into the rest of the world. the president of the world bank told us in the 6:00 hour she is very leery of any slowdown in

china because in the great financial crisis previous to the slow down, the ongoing strength of china kept other emerging markets going. with the concerns expressed about the emerging markets and how far behind they are in economic scarring, that will be important as well. haidi: kathleen will be back later on talking about the post-covid recovery. the philippine central bank governor will join us then. this is bloomberg. ♪

>> do i see persistence in inflation? yes.

history will show it should straighten out. >> people are very confident that they are transitory and they will be solved. whether it's three months, six months, nine months, i don't know. i don't personally think it will be longer than that. i have confidence we will get past this. haidi: discussing the ongoing supply chain woes. shares falling in the trading session today. we're seeing downside across the board with modest gains. our asian tech editor has been tracking this. what are we seeing as behind these production cuts? >> apple of course has this very

carefully orchestrated system of introducing new products, particularly the iphone, when it comes out every fall and they rushed to market and consumers come in and by this is not a demand problem. people are trying to buy the iphone 14. what is happening is the chip crunch that has affected many companies, particularly automakers, is now hitting apple, where they are not able to get enough of the components they need to build as many phones as they had originally planned. the target was 90 million phones in the past and our sources say they may have to cut that by as much as 10 million devices this year. it is important because they have an extensive supply chain where many suppliers depend on being able to sell to apple. texas instruments is not able to produce as many chips as apple needs for its iphones.

shery: this is a global tech giant with huge buying power. if they are suffering, what is it mean for their future strategy here? peter: that's exactly right. apple is the most valuable company in the world and for many of these companies it is the most important customer they have. if these companies are not able to deliver to apple it is skewing things for the others who cannot get chips out right now. it means probably even more difficult circumstances for automakers that have been racing to get enough chips like ford, bmw and toyota. they have all talked about the chip shortages hitting their sales. electronics makers like sony are struggling to get enough components to put out -- components to put out the devices that people want. shery: peter with the latest

supply chain issues concerning apple. coming up, will last the philippine central bank governor if the situation will remain manageable. this is bloomberg. ♪ 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 would like to see broad-based inflation again at the high levels we are used to seeing. the question is, if are ending up with high inflation numbers -- we are not seeing that yet. >> many are manifesting themselves in bottlenecks and

shortages and the like which make for more persistent and stubborn inflation outlook. >> our current projection for inflation for this year is about 4.2 per -- 2.2%. next year will be about 2.7%. we feel there still a question vote we need to see if it is a transitory situation. shery: let's get back to our global economics and policy editor kathleen hays who is standing by with the special guests. kathleen: another place where a central bank is targeting inflation is the philippines. it is great to have you back. it's a twice a year treat to talk to you during the imf world

bank annual meeting. i want to start with all those comments on inflation. the higher it gets, the more worried everyone gets. i know recently you have said you expect it to be coming down by the end of the year but as you see what is happening around the world, supply shocks persisting, do you still have that you? >> yes, there is a good track record in inflation targeting. we recognize there are some items in the consumer price index driving inflation, it is mainly food prices. corn, for example. we are confident that while inflation is slightly above our target range of -- right now

it's 4.8%. inflation will slowly go down to where we want it to be. it will average 3.3% next year and 3.1% in 2023. kathleen: are you concerned that as inflation rises in other countries and countries who have -- feeling it is something they must respond to, others like korea and the reserve bank of new zealand, are you concerned that the economy is shrinking a bit, and in particular, do you expect the fed taper, which could happen in just a couple of weeks, that that could materially affect your outlook? >> the tapering toward the end

of the year, we are less concerned with what is happening in the u.s. i have seen many crises in my life. this crisis is different from previous crises. can you hear me? kathleen: we had a little bit of a glitch, we missed a little bit of what you said, if you want to repeat that. >> i have seen many crises in my life, for example the asian financial crisis. in the past, whenever there is a crisis like this, there's a threat on the valuation.

so we run out of dollars, we service our debt to stem the outflow of foreign exchange. now we don't need to do that. in fact we are able to cut by 200 basis points at the same time. i'm very confident with where we are. we have almost one year's worth of imports. three months worth of imports is good but we have more than one year's worth of imports. we continue to get inflows and

receipts from business process outsourcing. in the midst of the crisis. kathleen: another piece of news from the imf today was the downgrading of the philippines gdp for the gear. i believe is now seen at 3.2%, down from the previous look of 5.4%. is that in keeping with what you are expecting? do you think that is an accurate view? >> that is fair. what is happening is global. we have adjusted downwards are forecast of 6% for this year. we have downgraded it to 4-5%. so the imf downgrade to around 3.4% is within that. it is lower than our revised

forecast, but i don't see where there's a lot of ways you can forecast nowadays because things are subject to a lot of uncertainty. but we are very confident with our revised forecast because we have accelerated our vaccination program. if i remember right, we have vaccinated around 80% of the adult population and were going to start vaccinating the young ones from age 12-17.

we have 107 million doses. so we are doing well. so that forecast from the imf is based on past numbers. kathleen: the second quarter was negative on a quarterly basis. what do you think of the third quarter? are you going to get positive growth, or a lot of people are worried it might be negative again. >> the gross domestic product grew by 11.8%. we are confident the third quarter will be positive. kathleen: do you have a number on that? >> it's too early to say, but we

are confident we will hit our reside -- revised forecast of 4%-5%, and 7%-9% for next year. kathleen: the peso is down to a 17 month low. the idea that the fed can taper and is moving away from stimulus to strengthen the dollar, what do you make of this weakness in the peso, fundamental speculation, and is there any point where it would incline the bsb to give it support via interest rates? >> we have our own macroeconomic assumptions and we assume the peso will be something like that. when you see 51, it is

consistent with the trend. we are not word about the peso depreciation. we do not intervene, that is our policy. there is a lot of fluctuation but as i said, we have a lot of buffers. kathleen: in the event you might decide you need a little more support if the third quarter doesn't pick up as quickly, etc., are there any other tools you could use? you don't want to move the key

rate right now. is there any other tool you can use to get a little forward momentum? >> it's not that we don't want to move the rate. there is a strong recovery i would say, exports grew by 21% for the first half of the year. imports have grown by 51.4%. foreign investments grew by 14.7% during the first half of the year. so on the interest rate, we feel that rose is still nascent. it is still sustainable. the board has decided that the

current rate is -- we think that inflation is manageable. kathleen: final question, do you see the upcoming 2022 presidential election having an impact on the market? what do you expect on that front? >> since 1986 up until now there has been no major change in policy from one president to another. i'm glad to say that we have implementation ready projects for the next government. that means several be no long review of projects [indiscernible] and there is a long list of projects. that is consistent with our

build program. there are projects that have been done even during the crisis. if i remember right, during the last 50 years, infrastructure as percent of gdp is only 2.6%. we have done a lot of projects that will make a big difference. kathleen: thank you so much, the philippine central bank governor. back to you. haidi: we do have more big interviews coming up, hearing from the first female executive -- she will be joining us.

later on, an exclusive conversation with one of india's leading ev manufacturers. sophie: we've seen fluctuations for asian stocks, while the kospi -- internet names providing a boost for korean stocks. some saying we should be concerned about supply chain disruptions and trying to understand why they could be resolved. supply chain concerns, calling after -- the packaging company had just ended its process for its manufacturing unit. shares of tumbling 18%.

jp morgan raise the stock on a solid demand future for consumers. i want to highlight lg electronics this morning, it's under pressure after agreeing to reimburse gm for cost related to the recall. and a report card registering of far narrower loss for the first quarter. he did keep its annual profit outlook intact. shery: coming up next, the standard chartered ceo says he doesn't pick china will allow the evergrande situation to turn into a systemic crisis. we'll bring you are exclusive interview with bill winters. this is bloomberg. ♪

bonnie: this is "daybreak: asia." the imf says the global economic recovery is becoming increasingly lighted. output expanding 5.9 percent worldwide this year, down just .10% from july's view. the chief economist said she sees inflationary forces

transitory, although skewed to the upside. the fed vice chair says the u.s. is not headed toward the stagflation on the 1970's. he tell the institute of international finance he doesn't fear on terry policy mistakes that led to that crisis. he also said the time is almost right for the fed to begin scaling back its bond buying program. >> the substantial further progress standard has more than been met and as of the september meeting in regard to our employment mandate, progress continues as expected. we judge that in moderation and the pace of our purchases might soon be warded. >> u.s. federal judges have upheld covid vaccine requirements in three separate decisions as it winds its way through the court system. the ruling rejected claims against racial and religious

grounds. north korean leader kim jong-un has an increasingly varied arsenal of missiles. a rare indoor display appears to be the latest effort to break a diplomatic stalemate over his atomic ambitions. kim blamed the u.s. for creating regional tension and promised to keep expanding his nuclear weapons program. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: bill winters does not expect the chinese government would allow -- the ceo of standard charter joins bloomberg. >> i think the biggest word we

hear about is stagflation. the narrative from pretty much any policymaker you speak to is transitory and i think the inflationary pressures are transitory. it's building on the back of a reasonably strong economy. the inflation trend, to say it is purely transitory i think would be a little bit dismissive. as we withdraw the stimulus plug , pulling back from monetary stimulus, and the inevitable contraction in terms of fiscal stimulation, both of which need to happen. thankfully the momentum is quite good. we talk about growth dropping to 5% and then coming back up in the second biggest economy in the world is pretty good. it is tremendously resilient and

will recover so i'm not desperately concerned about the economy. >> that means a correction for the market? >> i think the markets are extremely interest-rate sensitive right now. i think we will have a correction at that point. the underlying earnings look ok. even if we have down in the 3% zone for a while, the underlying pressure that comes from the pandemic receipting is pretty supportive for the global economy. so we feel pretty good about it. >> energy prices put a lot of pressure on the margins. >> it's part of the inflationary dislocation. economists and others will debate at some links whether this is transitory or not. it feels a little stickier than complete dismissal. you have brent oil above 100 consistently.

thankfully the world is becoming a little less dependent on fossil fuels. >> how should we read china? how do you look at it day today? >> it has a social agenda. they've been very transparent about it for some time. the social agenda is to promote youth employment, to promote youth engagement, and when you look at the specific actions taken around video gaming, around the tutoring industry, these aren't random attacks, they're saying, are you employed and engaged? they are not tactics that would be used in different parts of the world, of course not. the big tech company simply

became quite powerful and are beginning to raise some concerns around the ability to attract more. >> what does it mean for the banks? >> not much. the opportunity for us to fill the void that might've been filled by big tech companies in the past is now reopening to us. a competitive environment is good for the structure. we have a fabulous business in china. it is our fastest growing market. it is big and it is profitable. we will continue to invest in china. we believe the country is going in the right direction. shery: the standard chartered ceo bill winters speaking exclusively to francine lacqua. more ahead. this is bloomberg. ♪

haidi: seeing some upside across markets in asia. let's turn to sophie for what is up to watch. sophie: we're watching chinese education stocks, the government introduced plans to develop the sector through 2035. citigroup says it will benefit companies that have bigger revenue exposure. keeping an eye on those stocks. keeping a close eye on chinese property developers, one warning

of imminent default there as we are seeing it unlikely to pay off dollar bonds. haidi: the morning session being canceled in hong kong on account of the number eight typhoon morning. the stock exchange delaying the morning trading session. strong winds and rain lashing the city from the typhoon passing through there. we remember what those warnings art like. it could end up being just a light drizzle. shery: i'll never forget my 1st avenue working at bloomberg. i had to get it cap at 3:00 in the morning. there were no cabs. they were saying it was a t8, and i learned the hard way. depending on what it looks like,

there might be some very strong winds. that's it for "daybreak: asia." our market coverage continues on a very rainy day in hong kong. standby for bloomberg markets, china open. this is bloomberg. ♪

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>> 9:00 a.m. in beijing and shanghai. welcome to bloomberg markets china open. we are counting down to the open of trade and the chinese mainland. hong kong exchange scrapping the morning session due to the typhoon concerns we are seeing in the states. top stories,