>> good morning. i am in sydney and we are counting down to the major market opens. >> welcome today break a shout. stocks and the asia-pacific could be off to a mixed star as traders weigh the latest

earnings. ever grand faces a make or break bond payment made more pressing by the collapse of talks to sell its property management unit. and china warns europe over its support for taiwan saying it violates the one china principle. >> we have just opened for trade in australia and we have a staggered open so stocks are slowly coming online. off 0.1% that we will have more information in the next 10 minutes or so as we got going there. new zealand has been trading for a bit longer. a couple of hours. also currently looking very flat at the moment. it is kind of the theme for the day across the asia-pacific. glad to mixed. nikkei futures weekend to the -- weakened to the tune of 0.5%. we can see markets in the u.s.

flat to reasonably higher. blackstone is among the asset managers and bracing the fall hiring inflation. >> inflation is definitely becoming more pervasive, more persistent than people had hoped. i think that is happening for a couple of reasons. one is money supply has grown really significantly. by more than a third since covid. wanted terry fiscal response to the crisis and it put more money and the system and at the same time, we have structural shortages. >> inflation one of those things putting a dent in markets at the moment. we had the big -- we have the big tips auction in the u.s. today. market implied expectations for inflation in the u.s. now at 15 year highs. rafael bostic was right, it does

seem transitory is a dirty word. >> it tells you a lot when you look at the markets. traders are making huge bets that inflation will continue to rise and transitory may not be the right word. we continue to watch global bond markets, the selloff continues. and we are watching china. it is crunch time for ever grand. the grace period about to expire when it comes to the $80 million interest payment and the bond that they missed the payment on last month. with that coming up not to mention the deal in order to offload a stake in its property management arm did not go through, ever grand can ever rande continues its liquidity crunch. >> it was a month ago when i stood in front of the tower here in hong kong and we talked about, will day or will they not

pay their coupon on that bond that was due? there were more coupon due dates coming in the pipeline. on october 11, there were three due. and saturday is the 30th day of the grace period. the question is, what is going to happen? will they pay? everything over the last month has indicated that the government is prioritizing that evergrande pay off or it least deliver its properties. pay off the wealth management products. there has also been commitments to pay off the interest due on yuan notes not necessarily dollar noteholders. what we are hearing, bloomberg news is hearing that many of these bondholders/creditors of these dollar bonds that are due

these payments are seeking talks. they want to sit down to does because a more lengthy payment schedule. as part of a longer debt restructuring. essentially, some creditors would like to see evergrande reach a forbearance agreement that would help the company avoid a slew of dead soda. we have -- of debts owed. we have gotten the signal that perhaps they are ready to negotiate, they might be willing to reach a three-month extension of its $260 million bond issued by a joint venture. they might've negotiated according to media reports a lengthier payoff scheme of that which is a good signal and may give confidence to holders to

come to evergrande and say, we need to talk about this. >> all through this, the narrative from the chinese government has been, this is not a lehman moment. we have had another chinese officials say the evergrande crisis is containable. what more do we know? >> we have the pboc governor talking about it being containable. in the last couple of days, the vice premier said it is containable. we have had the deputy governor of the pboc say it is containable and now we have a senior official of the banking and insurance regulator say or dismiss the the fact that the crisis will have any impact and he said every evergrande is an individual case. and he has reiterated that the property curves in place since 2021, will stay. >> stephen engle there.

asian stocks are looking for a mixed starch. traders waiting for the looming payment for evergrande as well as the latest earnings. let's break in -- let's bring in garfield reynolds. is this going to lift asian equities? >> unfortunately, for asian equities, the aftermarket earnings that came out, snap chat in particular, were not great. and you can see this morning that nasdaq futures in particular dropped as much as 0.7%, now down 0.5%. what goes along with that especially for the asian session is the concerns driving that. i was surprised when i came in to look at where stocks work him in particular the nasdaq. hang on, you have 10-year treasury yield's up.

what is nasdaq doing gaining? i think there was always the likelihood that there would be a can -- a correction in tech. and earnings have helped that. that will put pressure on various parts of the asian complex including places like korea and taiwan that might otherwise have been less effective by the evergrande concerns that you cited. >> that was always my -- that was also my question, what is happening to the stockmarkets? are they not looking at the bond markets? and with yields surging, is this just about inflation concerns and that it is not transitory? >> i think it depends on your definition of transitory. whether you mean two months or a year. i think it is the gap between how central bankers look at the

world and how the market looks at the world. i think part of what is going on with yields is not to do as much with inflation as it is to do with what is going on with a and central banks. central banks are going to stop buying bonds. they are going to look to raise interest rates. and the obvious thing you should be doing then usually is sell bonds because bond yields will rise and prices will fall especially if the yields are low because you don't have much fixed income to protect you and that is very much the case and purchase shares. why? if central banks are looking to tighten policy, that means the economy is going well which means earnings that have held up well will continue to hold up well and it also means that shares offer a much better short to medium-term outlook then bonds do care it i think that is driving bond yields rising.

how things go further on especially if we got a situation where central bankers end up being pushed i these inflation concerns to raise much faster than might -- then they might otherwise want to because then you could kill -- then you could see some softness and shares. >> garfield reynolds. you can follow more on this story and all of the day's trading on our markets live blog on the bloomberg terminal at mliv . we have been trading for about 10 minutes in australia. one of the best performers right now is zantas -- qantas up by almost 4%. it will be bringing back 11,000

furloughed staff in anticipation of domestic state borders reopening in australia before christmas. some good news being reflected in the bump in the share price. up 3.7% right now. let's get a check of our first word news. >> china has condemned the european parliament's decision to adopt a report calling for greater ties with taiwan. the chinese foreign ministry says europe's support for taiwan could have an egregious impact and violates one china principle. the eu report seeks a two-way investment agreement with taipei calling at a partner and democratic ally. a group of 43 countries has denounced china's human rights record at the yuan criticizing beijing for its alleged detainment of uighurs. four more countries including turkey joined this year weakening beijing's claim that

the annual rebuke as part of western's efforts to keep china from rising. china called the allegations baseless pointing to and support it says it has from 60 to other nations. tencent has pulled all live streaming for boston celtic games in china as -- after enes kanter has listed a video. a chinese foreign ministry spokesman said enes kanter was grandstanding to draw eyeballs. the federal reserve will ban top officials from buying individual stocks and bonds. the move follows an embarrassing scandal that led two fed departures. senior fed officials will now be limited to purchasing diversified investment vehicles and new appointees will have to divest certain assets before joining.

global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> still ahead, we discussed japan's efforts to confront racism in the workplace with professor hwaji shin. up next, time is running out for china evergrande group to avoid default. we discussed the latest impact with jenny zeng. this is bloomberg. ♪

>> evergrande is facing a potential default as a grace period for its latest interest payment expires saturday. our next guest says what happens next for evergrande is not as important as what happens to china.

jenny zeng joins us pure great to have you back. what does this mean for the chinese economy as we into new to see more pressure for other developers as well? jenny: yes, you are absolutely right. to pay or not to pay is the question but probably a more important question is what happens to other developers? and what is the spill over the broader economy? if we look at the u.s. dollar market, this market wall small in the grand scheme of things is telling us that actually there is extreme strength in the market. over 50 developers and the country are in deep financial stress and have priced in very high default risk at the moment. if they all get into financial stress, what does that mean in

terms of property construction activity from interns of their contribution to the land sale? that is a bigger question. >> morgan stanley says --are there any opportunities? jenny: we do think so. if you think about it, china's high-yield property over the last 10-15 years has provided extraordinary return. probably double digit every year over the last 10-15 years. with zero defaults. that is counterintuitive from the investment perspective. it might be a better investment now because the risk in property is priced in. we do think for longer-term investors, if they can get through this volatile time and except a different return

profile, we do think it is a good entry point. >> that is the trick. getting through this period. looking at the evergrande bond due on saturday, that is a 8.25% , you would need to be quite brave to buy that, wouldn't you? jenny: if you know it is $.20 on the dollar, the downside is quite limited. if you buy the chinese property model, it can be a different return profile because you probably need to be prepared to go through restructuring with quite a few of them to get the return. >> it is pretty clear also that foreign bondholders are going to be at the back of the queue. our markets overestimating the

recovery rate for offshore bondholders? jenny: the market is pricing for operating -- [indiscernible] historically, the offshore recovery of chinese high-yield bonds are way higher than that. i would not say that we are there yet. historically, the chinese corporate's have shown extreme willingness to honor or workout amicable solutions with offshore investors. we need to see this time. >> aside from the uncertainty coming from evergrande, what about the global energy shortage and the power struggles beijing is facing right now? is that going to factor in especially when commodity prices are surging? jenny: the shortage apparently

adds insult to injury from the growth perspective but a power shortage itself in nature is more transitory. a power shortage -- countermeasures to relieve that and we do not think it will last long. in the fourth quarter, it will probably ease a little bit. and we will get into a more normal activity. but the structural change that beijing is facing, it looks like china has a strong intention to go along with that and grow out of this high debt driven growth market. we know it will not be easy. >> jenny zeng, co-head to the asia-pacific fixed income alliancebernstein. we will have more analysis on evergrande ahead.

we will hear from real estate advisory panel, welland associates. this is bloomberg. ♪

>> blackstone has joined other banks warning that inflation is becoming more persistent. president and coo told bloomberg the increasing money supply coming from the government aid is one of the big reasons. >> well, it is certainly trickier as values move up to deploy capital. we have some competitive advantages. we operate almost all of our businesses at a very large scale. the ups done -- we have done something like 13 public to private spirit that is a real competitive advantage. the breadth of our platform

continues to expand which helps us a lot. any of our large investments were in our new areas. but we are trying to do is find interesting areas in some of these the maddock neighborhoods that we love where we can buy -- and some of these th ematic neighborhoods that we love. we saw a huge potential and we invested in that considerably. the company has gone public and is hugely successful. we made something like 15 times our investment capital because we found a great company that people did not realize was an on theme investment. we are doing that this quarter again in the garage door opener company. it is a play on the housing recovery happening as well as e-commerce.

i would say our response to a high-priced market is to try to buy things that we like but do it in a way of one derivative off. that is the real challenge. >> do you agree with some of the competitors you have in the banking industry including john waldron at goldman sachs -- do you believe they have it right when it comes to inflation? that perhaps there are many that are undercounting how much of an issue it has become? >> i agree that inflation is becoming more pervasive and persistent then people had hoped and i think it is happening for a couple of reasons. money supply has grown significantly. by more than a third since covid. monetary physical response to the crisis. it puts more money in the system. at the same time, we have structural shortages.

in housing, we have been building 40% fewer homes than we did in the past. we have been investing less in energy because we are trying to balance that out in terms of green sustainability. and there are fewer people in the workforce. >> that is the blackstone president and coo, jonathan great. let's get a quick check of the business flash headlines. binding bids for five of city banks units due on friday. dbs and stanchart are in the running. the bank is exiting 30 markets globally including taiwan and thailand. to focus on more profitable investment banking. we have learned that garuda indonesia gets respite. the ruling ends a month-long hearing helping it avoid

restructuring. qantas is restarting some international flights earlier than planned bringing people back to work. flights to singapore will start by the end of november. domestic flights will also be ramped up. that news comes off the back of the news regarding the lifting in melbourne. melbourne has been in and out of locked down for about 20 months. this is intended to be the last locked down from midnight, people were queuing up at bars and hair addresses to get some much-needed taste of normality. >> remember how happy you guys were in sydney to exit that three-month lockdown. i guess the next one will be new zealand setting a vaccination target of 90%.

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shery: we are getting breaking news out of japan. the national cpi headline inflation number coming in at zero point 2%. we have gone into positive territory after we saw the headline index dropping into the previous month about 0.4%. it has been in deflationary

territory since october money 20. not surprising perhaps because we have had a food, electricity, and gas prices supporting the gas gauge so coming in line with expectations with a rise of 0.2%. paul: if we look at the cpi numbers with those variables, fresh food and energy stripped out, we see a decline of 0.5% so it shows the impact it has. this covers september where crude oil prices were steadily creeping up and in october broke through the $80 barrel barrier. the greenback versus the yen. futures, looks like we will have a quieter open and japan. future off to the tune of about two thirds of 1%. we do have the s&p i.s. asx 200 in weaker territory as well up by about 0.5%.

looks like a mixed picture across the asia-pacific today as we look ahead to trade getting underway. let's have a look at the first word headlines. vonnie quinn is standing by. vonnie: pfizer and beyond tech say a booster shot of their covid vaccine stores for protection. the study of 10,000 people indicated a booster was almost 96% effective against systematic covid. the fast spreading delta variant was the predominant strain during the trial. the u.s. and five european governments have resolved a dispute over digital taxes with tech giants. the deal was reached over a broader agreement. under the deal, the european countries will retain so-called digital services taxes on companies like facebook and

amazon once a global tax deal come into effect, they will refund any levies in excess of the agreed rate. evergrande's offshore creditors may seek debt talks if it fails to make a payment by saturday. the bondholders are not planning to demand immediate repayment in hopes evergrande will discuss options. china's thinking regulator has dismissed concerns of wider fallout from the crisis vowing to maintain controls on the property market. chinese regulators are nudging didi towards a listing in hong kong. the cyberspace administration of china is said to have raised the idea and talks with executives with the ride-hailing company as well as a truck alliance. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn and this is bloomberg. shery: more countries have joined an annual rebuke of

beijing's human rights record including turkey for the first time. china has called criticism baseless. let's bring in john. it is an annual event at the u.n. to criticize china's human rights record. it is different this time? >> i think the difference this time was the addition of turkey to the list of countries that sign onto that declaration. i think it speaks to how divisive the issue of whether countries should work with or should confront china has become around the world that you see this sort of split taking place at lobo, international institutions like the u.n. paul: despite this, the u.s. is aiming for an online chat between president xi and president biden. what might we expect that to go like? >> the countries did earlier, a

few weeks ago announced they had agreed they would work towards a summit between the leaders before the end of the year. it looks like that could happen in november according to this reuters reports. and with xi planning not to attend the g20 in italy or the cops some in the u.k., doing that meeting virtually would make the most sense. and obviously, there is a range of things to talk about including trade, taiwan, hong kong. there is no shortage of issues between the countries. shery: how much congress has there been on the trade side of things especially as we saw the release of the huawei ceo? >> the phase one trade agreement, china has not fulfilled its obligations to increase imports of american goods to the levels outlined in that agreement. that agreement was put into place before the pandemic,

before the virus began spreading around the world so there are some mitigating circumstances but it does make it tougher for going forward and how the biden administration plans to handle that trade agreement but there are also a number of tariffs manning on chinese goods and chinese services. going forward will be tough. paul: we are seeing relations between europe and china becoming more afraid oh -- more frayed over taiwan. >> european commission adopted a resolution that called taiwan and ally in -- an ally in the indo pacific region which has upset beijing. spokespeople coming out condemning the resolution. obviously, we have countries in the eu, lithuania comes to mind who are of the mind of strengthening their ties with taiwan. china had a spat with lithuania

earlier this year over increased ties between it and taiwan. that is something european community has not had a consensus on in terms of all the members of the eu and it has continued to upset china. paul: greater china executive editor john liu, thank you for joining as. japan being pushed to confront racial discrimination issues that have spanned across generations. university of san francisco professor hwaji shin joins us next. this is bloomberg. ♪ this is bloomberg. ♪

shery: we are counting down to the start of trading. here are some of the stories we are watching. in south korea, kakao pay will fix its price. the ipo price will likely be set at 90,000 won. an interesting story about the generational feud likely to manifest in the upcoming elections and south korea. younger voters calling themselves the "give up generation" as they grow frustrated with the pace of change. in japan, progress on the virus front.

cases have significantly dropped nationwide and authorities are looking to open more parts of the economy. we are watching how the yen will move. the fx markets reprice the central bank moves. and another eco-data point to watch out for. pmi coming out from jibun bank. services contracted at 47.8. we will have a big interview in the next hour with ranil salgado . paul: let's stay on japan. a long-standing and sometimes violent position with second and third generation koreans that have been thrust into the spotlight. the fuji employee sued when a homebuilder did not put an end to the distribution of leaflets that had racist content.

for more on this, let's bring in hwaji shin, an associate professor at the university of san francisco. one of -- he said he was the lead so relentlessly that he contemplated taking his own life. is this a typical experience for the children of immigrant families that have sometimes been in japan for two or three generations? hwaji shin: i think so. i have also experienced bullying at school because of being a korean minority in japan. but i think that experience has shifted as more of japanese society becomes more accepting but the recent incidents have been increasing in japan. shery: are we seeing any

government or corporate action against that? hwaji shin: yes. in 2016, they passed the anti-hate speech act which was a right step forward. japan to this stage does not have an antidiscrimination law against racism or ethnic discrimination to protect ethnic and racial minorities in society. this anti-hate speech act was one of the long overdue protections a minority could use against racist acts. shery: give us a little of the historical context. we know japan and korea have a troubled past together. hwaji shin: the korea was colonized by japanese in 1910 and then, the colonization lasted until 1945. during that time, many koreans

migrated to japan as a colonial migrant and some were forced to come to japan to work as a laborer. the majority of those koreans left for their homeland after the war but about 600,000 of them did stay in japan and among them was my grandparents. the offspring became second and third generation of a korean minority in japan. paul: as shery ahn mentioned, the hate speech laws passed in 2016, to your knowledge have they been used much or at all in prosecutions? hwaji shin: they have been used but the problem was how it has been used and what is considered a hate speech has been a point of contention.

just this year, a city argued that referring to korean as a parasite and society is not considered as hate speech because it is not directly referring to the korean nationality, race, or ethnicity. in the united states during world war ii, the japanese-americans were referred to as a parasite and i don't think few would argue that this is not a hate speech against asian americans. but in japan, there was considered a racist act or speech is still a point of contention. in that sense, even though it is being used and minorities that try to use it to protect their rights and dignity still face challenges. paul: do you find that the hate speech laws also bump up against japan's constitutional right to free speech as well?

hwaji shin: yes. and opponents have been citing the constitutional right for free speech. and i think this court case is going to be centered around the freedom of speech argument. paul: japan's population is shrinking. migration is often pointed to as the answer to this problem in terms of its aging work or spirit is japan though culturally prepared to welcome migrants and have a more diverse society? it is 98% ethnically japanese. hwaji shin: i think japan is already a country of migration. the difficulty and challenge is whether they are going to embrace that reality that there are a number of -- their economy heavily relies on migrant labor and the labor shortage is not going to be cured overnight.

and so, i think the younger generation, however, has accepted this is going to be the future of japan. but i think there is still a generational gap about what is considered to be the sense of the nation in japanese society whether the japanese want it to become the nation of migrants. whether to embrace diversity or not is still an open question. shery: there has been a narrative that the number of this generation is dwindling in japan. is that true or have many become naturalized and are hiding their heritage? hwaji shin: if you look at the government statistics, i think the japanese government statistic does not ask the question about your ethnicity or race. i think the statistic is purely

based on citizenship status. the citizenship status is not a good gauge of racial identity. a number -- the number declining is based on the fact that many koreans are becoming naturalized. now, we have a full fifth generation of this generation and it is only expected that many of those fifth generation individuals -- no one wants to keep their south korean or north korean citizenship. you cannot vote in japan. it is a hassle. i think it is a reflection of the naturalization rates rather than a demographic shift. shery: when it comes to diversity with other nations and races, how much is a celebrity

endorsement helping bring attention to this? we have seen a tennis star, naomi ho sakai -- naomi osaka give up her haitian citizenship. hwaji shin: the younger generation is more willing and able to embrace the diversity because they are very much in affinity with the athlete, osaka, and we saw it at the olympics. quite a few athletes are not ethnically japanese and when you turn on the tv, you see celebrities that are not ethnically japanese. and regardless of their citizenship status, they are on tv and they are a part of the popular culture in japan. shery: hwaji shin my thank you for your time.

associate professor at university of san francisco. you can watch our past interviews on the function, tv . this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪s is bloomberg. ♪

>> we spent 20 years to make an improvement. we are now using all of the learning to help others. i think we are good at proofing and we are helping other businesses grow. shery: you can catch my conversation for generation next which airs monday on daybreak: asia at 7:40 a.m. in hong kong. here is a quick check of the latest business flash headlines. google slashing the fees it takes from subscription services on its app store after pressure from devil uppers and lawmakers. getting january 1, the play store will charge third-party apps if it percent commission. previously, they were charged

30% for the first year and then 15% thereafter. snap shares tumbled by as much as 27% after hours after it lowered its earnings forecast for the fourth quarter. warning the changes to the apple supply chain issues are weighing on spending. a snap chat owner is expecting revenue of $1.2 billion in the final three months of the gear below analyst projections. intel fell after the close as the chipmaker gave a lackluster outlook for the period. the ceo forecast margins to be lower for the next 2-3 years and said they are spending to regain industry leadership. the company has also gone into talks with sifive without reaching a deal. the startup will seek outside investment instead. paul: we work has finally -- wework has finally gone public.

companies -- the company is listed at a fraction of the 47 billion dollars it was valued at in 2017. joining us is and vanda may. -- is ann. >> it is a different company now. in 2019, it was a tech company trying to do a lot of things. it had a school and a company that generated waves you could surf on and now it is focused on office rental. it got rid of its charismatic ceo, adam neumann. and it is much smaller and more modest. shery: what does this mean for a softbank that poured a lot of money into that company? >> i think the question now that

people are asking is can softbank recoup the $17 billion it has poured into wework? it is too soon to say but is possible. if wework is able to get a lot of the people that have gone to distributed offices, if it can continue to grow and is market cap increases dramatically, it is not inconceivable that softbank all make its money back which is saying something tense it looked close to death in the last several years. shery: adam neumann did not make as much as expected but he is weaving with a couple billion dollars. >> yes. he is walking away according to the bloomberg billionaires index with $2.3 billion. it is less than the $14 billion that it looked like he might make. at one point, he was describing himself as the world's future first trillionaire. considering the company really

struggled in 2019 and then again during the pandemic, two point $3 billion is remarkable particularly for a figure like adam neumann who is considered to have led this very dramatic implosion of the ipo in 2019. shery: our bloomberg tech editor with the latest on wework. take a look at the markets right now. we are seeing the asx 200 down and under some pressure. down 0.2%. kiwi stocks -- a mixed picture. he also have cpi numbers out of japan with core consumer pricing rising 0.1% year on year and in line with expectations. nikkei futures holding at the contraction of about 0.5%. when it comes to japan, it is all about the japanese yen.

we continue to see the levels that we have not seen since 2018. we are seeing some upside today against the u.s. dollar kospi futures down 0.2%. we are watching crypto and they are under some pressure but this is after bitcoin reached a record, $66,000 reaching a level and the optimism about crypto husband the launch of this u.s. bitcoin futures linked etf but now there are some warning signs ahead as we are now hearing from more people really warning about the risks of bitcoin and this etf reaching the limit on the number of futures contract it is allowed to hold by the chicago mercantile exchange. paul: jp morgan among those warning that the etf could tures market bidding up the futures curve relative to the spot price and intern that

would lead to a larger kerry cost as well. they are seeing the bitcoin etf pullback about 5.5% in the past days trade and taking bitcoin along for the ride. bitcoin trading at about 62,000. still to come, we are going to talk to ims japan mission chief, ranil salgado about why the imf says southeastern nations need to boost investments. that conversation in a moment along with banny lam. ♪

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shery: welcome to daybreak asia from new york. i am shery ahn. paul: i am paul allen. asia's major markets have just opened for trade. stocks in the asia-pacific look

set for a mixed starch. chips in focus. evergrande faces a make or break bond payment as the developer teachers on the cusp of default japan's key consumer prices rise for the first time in more than a year. we will discuss the economic outlook with ranil salgado. shery: let's start there because the japanese markets are coming online and we are seeing the downside pressure when it comes to the nikkei. being led lower by energy and materials stocks. the topix is also losing 0.4%. we are still seeing a weakness for the japanese yen. gaining ground today but falling to the december 2018 low. a little in the oversold territory for the japanese yen so seeing a rise for the third consecutive session but goldman sachs analyst and rank of america analysts say perhaps we will continue to see the yen

stay weaker given the differentials. we are also watching jgbs. the tenure yield and japan topped the highest level since april with the global bond selloff. that is what you will want to be watching especially given the cpi numbers coming in today. really entering expansionary territory and out of deflation for the first time since march 2020. look at the kospi peered unchanged at the moment after losing for the last two sessions. the korean wan is also trading in the mid 1170's. korean bonds continue to rise given what is happening and the rest of the world so we are watching that very closely. paul: let's take a look at how we are doing in australia. the a sx kind of flat -- the asx

pretty flat. now only higher by a third of 1%. qantas provided a pop early on. web jet is still one of the best performers in australia. it is the material sector dragging the asx lower. in new zealand, higher by 0.4%. the aussie and the kiwi dollars looking pretty steady. let's look at the earnings results. banny lam's head of research at ceb international investment corporation. corporate earnings results pointing to an upward trend for markets. a mixed picture so far though. banny: it is a mixed picture but in general because a lot of people like to believe that the

delta variant will affect the momentum of the economy which would affect the earnings. countries are adopting the policy. recovery is quite good and will continue. earnings are in line. i would say we are back on track in the next couple of quarters. paul: how closely you think equity markets are paying attention to the bond markets because the action there suggests that inflation is increasingly becoming a concern? if i look at the bloomberg question of the day --how high will break even rates rise? what do you see? banny: with inflation -- you can see the bonds going up but i think the momentum of growth is not as much as we think because we still have a loss expecting the bond market.

i would say for investors, moving back a little bit would perform much better. shery: what about evaluation concerns especially if we see yields rising? i find it odd that we have seen tech take a hit in the past but not so much recently. what is happening? banny: i think from the evaluations point of view, the market is affecting the evaluations. one thing is the recovery momentum. if the recovery momentum continues better than expected -- the valuation side will go up and investors would still love to make investments. i say it will be expensive in most major markets right now but the most important thing is that the growth momentum continues for the earnings.

shery: is it a different story where there is no valuation concerns for chinese tech giants? banny: i think there is a loss of opportunity. most of the big tech giants have fallen from the highest to the lowest, 50% or more. the devaluation is quite low for the moment compared to the past. this is very attractive. and one more thing -- china in the fourth quarter is more focused on energy issues right now. and i think for the regulatory crackdown, those things are already in the market. i would say the tech sector, things will be much better for the fourth quarter. paul: i want to get your

thoughts on china evergrande with another big day looming tomorrow. we had evergrande trading again in hong kong yesterday after a long halt. do you think the market is correctly assessing the recovery rate for bondholders? banny: i am not quite positive about evergrande. the depth issues will be uncertain. and i also think they would like to deal with their own bond holders first rather than the offshore bondholders. shery: banny lam, always great having your thoughts. head of research at ceb international. vonnie: china has condemned the

european parliament's decision to adopt a report calling for greater ties with taiwan. the chinese foreign ministry says the support for the self ruled island could have an egregious impacted by light the one trying -- violates the one china principle. calling it a partner and democratic ally in the indo pacific. a group of 43 countries has denounced china's human rights record at the united nations it is icing beijing for its alleged detainment of uighurs in the western region and four more countries including turkey joining this year it weakening beijing's claim that the annual rebuke is a western effort to keep china from rising. china calls the allegations a slice. pointing to the support it has from 60 to other nations. the federal reserve is preventing top officials from purchasing stocks and bonds of following an embarrassing

scandal leading to two fed departures. senior fed officials will be limited to purchasing diversified investment vehicles and new employees will have to best of certain athletes -- certain assets before joining. the study of 10,000 people indicated a booster from pfizer or biontech was on was 96 percent effective against symptomatic covid. trial participants received a third shot on an average of 11 months after their second dose. the delta variant was the primary strain during the trial. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. paul: still to come,, we will speak with imf japan mission chief, ranil salgado about his outlook for the economy as the supply crunch weighs on exports

but up next, chinese regulators are urging didi global to list in hong kong. we have the latest. this is bloomberg. ♪ bloomberg. ♪

shery: it is crunch time for evergrande again as the grace period for repayment of an 84 million dollar bond coupon expires saturday as creditors are said to be seeking talks with evergrande on a more lengthy payment structure. for the latest, we bring in stephen engle. why do we know about these debt talks? >> we are coming up to a make or break weekend again for evergrande as the grace period expires on the first coupon payment that they missed 30 days ago or 29. tomorrow is the deadline. and the expiration of that grace

period. you have to look at the obligations. the government of china wants them to pay back some of their more socially sensitive liabilities like getting houses completed and getting them built or handed over to buyers. they want to pay back the wealth management products. evergrande has made some commitments to fulfill their obligations on onshore bonds but what about the foreign bondholders? we are hearing from several sources that a group of creditors, dollar bondholders are trying to seek talks with evergrande to pitch an idea to extend the deadline. so there is not a cascade of claims coming all at once on evergrande. essentially, some creditors would like to see evergrande and its bondholders reach a formal forbearance agreement that would shield them from a slew of investor demands all at once

while parties take a longer period of time to try to work out a debt restructuring. they gave -- evergrande has given signals to the market that they are willing to negotiate. there are reports from the news source read saying evergrande might be willing to or has reached a three month extension for repayment on that off-balance sheet guarantee of the jumbo fortune bond, a joint venture with its domestic unit. there is a lot of speculation with the market as we hit crunch time tomorrow and then the other coupon's 30 day grace period expires in the next couple of weeks. paul: the narrative all along for the chinese government has been don't worry, we have it and it is controllable. we have another chinese official saying the evergrande crisis can be contained. what more do we know? >> last weekend, the central

bank governor said it was controllable. we have the vice premier saying it is controllable. we have the deputy governor of the pbo say -- pboc yesterday saying it is controllable and now we have a senior official at the banking regulator saying he is dismissing concerns the crisis will have any major impact on the credit profile of the property sector as a whole and he basically said evergrande is an individual case and this seems to be the narrative coming out of beijing. evergrande is a unique, individual case and we can ring fence it and the property sector as a whole is fairly sound. cbirc -- keep in mind, the less financially healthy property developers are facing their liquidity crunches and the cbirc is saying that property curbs that have been in place under

the three redline push will stay in place. paul: chief north asia correspondent, stephen engle. chinese regulators are nudging didi. the cyber -- said to have raised the idea in talks with executives of the ridesharing company. we have been tracking the story. what do we know? >> a report yesterday suggested [indiscernible] it is part of the investigations and talks with the company. suggesting it look at exploring a listing in hong kong. in the run-up to didi's listing

last june, the company had explored listing in hong kong and the decision [indiscernible] mostly because of regulation disclosure concerns. there is a concern about cybersecurity risks. that the data would get into the hands of the u.s. shery: our asia tech editor. coming up next, china has changed the rules on power prices for industrial users. will that help the energy crisis? we discussed. this is bloomberg. ♪ is bloomberg. ♪

paul: breaking news out of australia. the bank of australia buying bonds to defend its yield target for the first time since february. the rba offering to buy up a billion dollars of government securities as it seeks to maintain a target for the three year yield. we are expecting the rba's qa policy to remain in place until february next year but this is the first time it has bought bonds to defend that target since the start of this year. shery: not surprising given we continue to see the global bond selloff and yield surging around the world so we will continue to watch those developments. we had seen some indication that the rba might eventually end up doing this given their target is due april. they have now in fact stepped into defend the yield target for

the first time since february. let's move on to another big issue. china. the surge in commodity prices. perhaps playing into inflationary concerns around the world. the southern province eliminating government fixed electricity prices according to a document seen by bloomberg issued by a local planning agency. let's turn to our energy and commodity editor. we have seen inflationary concerns around the world and we see the cash shortage around the world. the surge in commodity prices. what is happening in china now? >> over the past week or two, we have seen a rash of policy changes and initiatives from central government and local government officials across china all of which have been aimed at easing the energy crisis. it is still the case that energy supply, supplies of gas and other fuels are still too tight with supply -- with demand high.

this is intended to help some of the big companies in that region. a key manufacturing hub. they will be forced to pay market price for electricity which should incentivize them to reduce consumption. even more importantly is that because power generators cannot pass along -- some of them have not been generating to their full capacity. they have been wary of making losses. they will be able to charge more and that should free up more power generating capacity which should help the crisis. shery: hold on a second. we have breaking news. president joe biden is speaking at a town hall and right now he is saying he does not think there will be on enough votes in congress for the tax rate hike that might be coming given

his massive spending package he has been trying to get through congress. we know congressional democrats have been at odds over both the tax and spending issues of the bill that has been stuck in congress right now. the president saying he does not think there will be votes for that tax rate hike. in other comments from the president, he is focusing instead on boosting grants for tuition, free community college, unlikely to pass. as we continue to see the spending package the president is trying to pass in congress. paul: let's get back to david stringer. china has been blocking informally imports of coal from australia. is this offering a potential circuit breaker here? >> at this stage, we do not think that is the case. the reporting we have done to

just that in terms of imports, there have been discussions and questions have been raised about using the band but it has not gone further than that. it has not gained support from senior policymakers. and the truth is imports account for just a fraction of china's cold dimming -- coal demand. it is focused on domestic mines. there is a push to produce more coal domestically. a massive task. we have been talking with engineers and miners. it is a steep challenge. there is no guarantee that they will deliver on that target. paul: our editor, david stringer. let's get a quick check of the headlines. sources tell us top -- a top bytedance investor is looking to

sell about $500 million of its shares. it is trying to diversify its portfolio during china's tech crackdown. it initially tried to sell the stake that valued bytedance above $400 billion but it has since lowered the offer. binding bids for five of the units are due on friday. the dbs and stanchart are in the running. the bank is exiting 13 or gets locally including indonesia, the philippines, taiwan and thailand to focus on more profitable wealth hubs. garuda indonesia is tackling its mounting debt. the ruling ends a month-long hearing and helps it avoid entering court led debt restructuring. it has about $5 billion in financial liabilities. qantas is restarting some

international flights earlier than planned and bringing back 22,000 people to work. flights to singapore will start at the end of singapore. other flights are planned over the coming months. domestic flights will also be ramped up. shery: just to recap the latest headlines. we are hearing from president biden speaking at a town hall that he does not think there will be enough votes in congress for a text rate hike. the number of democrats have been split on taxes. on odds over the tax and spending sides of the bill which is the signature bill from president biden's economic agenda. we have seen some signals that perhaps this agreement was not coming with democrats and in surge for alternatives. they had worked on it for months. we had seen some opposition from one senator in arizona. now, we are hearing from the president that there will be potentially no votes for that

tax rate hike. as we continue to see that congress working towards that huge spending package from the president which includes public work plans including money for roads, bridges, trains. the infrastructure bill is also at play right now so that spending package plus the infrastructure bill need to be passed in congress later in the year. paul: just recapping some news we have had from the reserve bank of australia. the rba buying bonds to defend its yield target for the first time since february the rba buying up to a billion of securities which is about $700 million u.s.. this is a -- the target is a 10th of 1%. it surged to -- the yield has already dropped two basis points

on this announcement but this is the first time the rba has bought ponce to defend their target for the first time since february. the action on the bond market, the yields on the 10 year creeping up a little by

shery: we have an alert on the bloomberg. we are getting the manufacturing pmi numbers out of japan, coming it at -- in at 53 for the preliminary numbers in october. they have been in expansionary territory since february of this year, and it's gotten even better, jumping from 51.5 earlier in the previous month. when it comes to services pmi, this is the headline. it has finally entered expansionary territory. they have been in contraction

since december 2019. it was 47.8 input -- in september. services pmi finally entering expansion territory for october, 50.7, the composite at 50.7. we can bring in our global economics and politics editor kathleen hays standing by. reporter: the imf, speaking of growth in japan, cut its 2020 one gdp forecast for japan as the impact of pandemic driven lockdowns weighed on growth this year. what is next for japan's economy as the new prime minister develops a plan? let's get to ranil salgado. in terms of what we are seeing in the economy now, gdp was cut to two point 4% from 2.8. exports then, we get them this

week and they decelerated sharply. they are still growing, but the speed and momentum is going away. how much does this do to chain constraint? how much of a weight are they going to be on japan gdp growth, and how long will they last? >> thank you. good to see you as well. i think japan is -- it was a good pmi number today, glad to see services are in the expansionary territory. that is a bit of the story going forward for japan. due to the positive developments on vaccinations and reduction in covid cases, we expect somewhat of a shift from manufacturing to services as japanese consumers feel more comfortable to spend substantial savings they have built up. manufacturing had improved earlier in the year, but there

had been some supply constraints and we've seen it also in some industrial production numbers, particularly for the auto sector. partly it is the chip shortages we heard about earlier. reporter: how long will this last? 40% drop in auto shipments last month. the supply constraints are not just chips, they have so many ways they slow things down. do you see this over by the end of the year? does it go into 2022? >> right now, there is some uncertainty. earlier, when we had discussions with people in japan, the expectation with some of these shortages, at least chip shortages, was resolved by the end of this year in 2021, but we are under supply constraints as well. that provides some uncertainty, at least with the manufacturing

side of the economy. pmi numbers are still improving so that is positive. reporter: you mention vaccinations, 60% of japan's population now vaccinated with the emergency lockdown, the fourth one ended. do you think japan can put this behind them? that the economy can put covid behind it, or are you concerned there could be another resurgence? >> another substantial uncertainty. the positive sign is that actually, japan is closing in on 70% vaccination rate for the population as a whole. after a slow start relative to most industrial companies, -- countries, japan has now moved ahead of many. that is the positive part. but covid has been quite unpredictable. not as a potential downside risk , but given the relatively successful vaccination program,

we think that would mitigate downside risk. shery: reporter: reporter: let's move on to the new prime minister. he has a new capitalism plan to distribute wealth equally. wages have been stagnant for years in japan. could there be a growth cycle, one that could have you raising the gdp forecast for japan for 2022? >> right now, we have a pretty optimistic forecast for 2022. we raised that to offsetting some declines in 2021 over 3%. i think longer term though, there could be a virtuous cycle. there's always a balance between growth and equity, but we think certain policies can promote both growth and equity. part of that is, in japan, you have formal and informal

workers. japan has already begun the process of what they call work style reforms to better balance between formal and informal workers, which will help reduce inequality. continuing progress on that, including hoping to see higher wages we think would help growth by leading to better my stick demand. . reporter: prime minister key should i was talking about raising capital gain tax. do you think the capital gains tax should be raised to improve the country's fiscal health, wealth distribution, or do you think that is the wrong tool? >> first of all, we think it is important japan continues to support the economy until the pandemic is over, but longer-term, japan has to think about fiscal accommodation.

i think you had a graph earlier showing high debt in japan. we think there are multiple options to be considered. one of those could be capital gains financial tax. reporter: in terms of the administration, some members of the administration have made comments that make it sound like there will be a move away from abenomics. has it outlived its usefulness, or does it need a bit of an overhaul to fit the current economy? >> i think it is more the latter. a large part of abenomics has been helpful for japan. if you think back to 2013 when it started, japan was facing a risk of deflation, so he took that off the table. even during covid, although inflation rates were low or deflationary for a time, that is due to the direct impact of covid. underlying inflation in japan is by our estimates, slightly

positive. abenomics overall was successful, but what i think is changing is the structural reforms component, which will be more focused going forward i think with distributional aspects that prime minister kishida mentioned. reporter: japan's governor has a goal of balancing the budget, reaching a primary balance by fiscal year 2025. would it hurt japan's standing if they were to temporarily halt this or do away with it altogether? with the imf be concerned? >> our view is first, it is most important to support the economy in the near term. in the medium-term, we do expect to see fiscal consolidation in japan. a specific date by with the primary balance -- reaches balance, i should say, is not

what we focus on this moment. it is mainly that once we get past the covid pandemic, to have a credible medium-term consolidation. reporter: i would like to ask you, what is the most important change that needs to occur as a response of covid, in other words in the aftermath of everything going on, what would you like to see next? >> i just the first question continues to be, of course, support the economy. as we move, it is to think about how resources in japan need to be reallocated to promote growth over the longer term. certain steps i think i've already begun in japan. we think it's very good this focus on digitalization of japan and the creation of the digital agency. part of the reason is we find that japan, despite it being a

technology leader in many areas, it incorporates the adoption of digital technologies that has lagged behind relative to many other advanced industrial companies -- countries. we think that is the key. also, green investment we think is key. reporter: in terms of the 2013 statement between the government -- the abe government, in fact, and the bank of japan, do you think that it is going to be tweaked at all? there was an agreement to fight deflation, the 2% inflation target taking aggressive monetary steps -- that is what kuroda has been pushing for so long now. with a new prime minister, is that going to change, do you think? >> i don't know if it will change, but we think it should stay as it is. we think it is important that

the boj and government cooperate towards achieving the 2% inflation target that is in place and we think that should continue. reporter: thank you so much, ranil salgado, japan ration chief at the imf. look forward to seeing you in person next year. paul: thank you very much. let's get a quick check of how markets are tracking in the asia-pacific. here in australia, higher by 1/10 of 1% after what has been a sluggish start. the nikkei also higher by a similar amount. we are seeing the cost be a tad weaker in new zealand in positive territory, but all in all, a plenty -- pretty flat and mcstay across the asia-pacific. still to come, toymaker mattel's. our interview with the chairman

and ceo is next. this is bloomberg. ♪

>> the choice of doing nothing is not an option. >> we see accelerated increase month after month of a surge in demand for good driven by e-commerce, but also this chips away from services toward goods. >> it is definitely a market in

flux. unlike the recession or the bankruptcies or the tsunami that caused inventory shortages, it's different because it is a supply issue, not demand issue. >> the volume is running up probably 20% now and will be even more as the year goes on or as the fourth quarter peak season hits us. >> the big issue is the labor force in the united states, specifically getting more truck driver and capacity and more labor in the distribution centers. shery: key voices speaking about the supply chain squeeze. the ceo of motel saying his company is working bottlenecks that are hobbling numerous industries. ynon kreiz joined us earlier following the earnings call. >> it was another short quarter for us with continued consumer demands for our products. we achieved growth and gained market share for five consecutive now.

we expect to gain market share and have a strong holiday season. it's not that we don't have supply chain issues, but we were able to work through them. we anticipated short supply and longer wait times. we factored that into specific mitigating actions. this is really where the scale, expertise, and flexible supply chain model that we restructured over the last three years is playing to our advantage, and we are ready for a strong holiday season. >> when you say you will have a strong holiday season, how much of the orders were frontloaded because people were scared about these supply chain issues? are we going to see a bit of a fade for the fourth quarter, when we saw frontloading already? >> we are entering the fourth quarter with great momentum and

off to a good start already. we are seeing that consumer demand continues to be strong, written orders are strong. promotional plans are in place. we have an exciting range of new products we are introducing to the markets. it's always hard to tell exactly with phasing of consumer behaviors, but we look forward to a happy holiday season with lots of toys for children to play with. paul: you did mention you managed to successfully reorganize your supply chains, but we heard from numerous other companies that have had to pay the yards and getting things moved around has been costing more. are you having to burden any additional costs because of these issues? >> we did see inflation. it is affecting our

profitability. even with that, we raised guidance for a full year, adjusted to be between 900 million dollars and $925 million. it is the third raised this year and we continue to expect that. shery: you mentioned inflation. how much of the price hike of the materials prices are being passed to the consumers? give us a sense of whether consumers will have to pay more for toys? >> we already put the pricing action in play. this is part of the third quarter results. we have not seen impacts on the consumer behavior with consumer demand. i can tell you when we raise prices, we always have the consumer in mind and we always make sure it is thoughtful and we balance quarterly and value

for consumers. paul: that is the mattel chairman and ceo ynon kreiz speaking to us earlier. still to come, we will discuss supply chain issues with the man u -- major manufacturer of two wheelers. for now, let's go to vonnie quinn for first word headlines. >> thank you. the u.s. at five european governments have resolved a dispute over digital taxes on american textiles. the deal was reached after a broader agreement to overholt levies on bank corporations -- big corporations. . the european companies will have digital services taxes on companies like facebook. once the global one comes into effect, they will refund any levies. offshore creditors may seek debt talks if they fail to make an interest payment. the bondholders are not planning

to demand immediate repayments in the hopes ofgrande -- evergrande will pay. tencent has pulled all streaming for the boston celtics game in china after a player posted a nearly three minute proto met video on twitter. the nba -- pro tibet video on twitter. chinese regulators are urging didi towards listing. they are said to have raise the idea in talks with executives -- executives. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

i'm vonnie quinn. this is bloomberg. paul: china's wealthy are shifting their focus from making money to protecting it. to get more on this, we got our finance reporter. what impact does this common prosperity drive have and what are china's wealthy people doing differently? >> it is making certain people nervous, trying to see where this will go and where it will end. all of that is -- one of the things they do is keep a low profile. one way is to avoid being

critical of the government. another way is to avoid being in the limelight or in the press. as we mentioned, they protect their wealth and set up options like trusts, onshore and offshore. shery: how difficult is it for wealthy chinese to move money offshore right now? >> anecdotally, it has become quite difficult, very much more so. it has become difficult over many years. the clampdown, that used to be a way to build capital. additionally we are hearing some advice that it is costing as much as 20% to make changes.

it's definitely become higher and more expensive. shery: we have chinese textiles -- tech giants carrying out more philanthropic ventures. is that something we are seeing, to buy the goodwill of policymakers? >> it sort of seems that way. [inaudible] shery: bloomberg finance reporter denise wee. you can find more on that story and other chinese billionaires on the terminal. find out more about those chinese billionaires and global billionaires around the world. this is bloomberg. ♪

paul: a quick check of the latest business flash headlines. google is slashing the fees on subscription services after pressure from developers and lawmakers. beginning january 1, the google play store will charge third-party apps 50%. previously they were charged 30% for the first year and then 15% thereafter.

snap shares tumbled as much as 27% after hours after it lowered earnings forecast for the third quarter. supply chain issues are weighing on advertising spending. they are expecting revenue of as much as $1.2 billion in the final three month of the year, below analyst projections. intel has a lackluster outlook for the current period. the ceo forecasts margins to be lower for the next two to three years. the company has also ended talks with a chip designer without reaching a deal. shery: breaking news. we are hearing from china security times that evergrande has paid the bond interest due september 20 third of $83.5 million.

they had missed that payment, they were heading toward the expiration date of the 30 day grace period if they had not paid and we would have seen evergrande actually defaulting. security times saying evergrande has paid that $83.5 million in bond interest due september 23. these would be the 8.25% notes. they have been trading around $.22 on the dollar. the grace period was expiring saturday. now we are hearing from the security times that they have gone ahead and made those a bond interest payment. this of course as we saw that those talks ended trying to evade liquidity and sell their property management arm, so perhaps relief for the company and bondholders. paul: that is a crucial development and should stop a

cascade of other claims from happening, an important deadline met. we will have more important analysis in the moment. we will hear from real estate capital advisory firm hodes weill and associates. we look ahead to the start of trade in hong kong, shanghai and shenzhen. ♪

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david: hello, everyone, it is 9:00 a.m. welcome to "bloomberg markets: china open." i'm david ingles. the biggest story, evergrande is settling this $83.5 million. it is a bond interest payment due 30 days ago and it seems, based on the headlines, that