haidi: a very good morning. i'm haidi stroud-watts in sydney. counting down to the major market open. shery: i'm shery ahn in new york. our top stories this hour. asian stocks set to extend declines after jay powell flagged faster tapering and admits inflation is no longer transitory. the omicron variant also weighing on sentiment as a

cure makers are looking for vaccines. bear market territory as the u.s. moves to cool tensions with saudi arabia ahead of opec-plus talks. haidi: let's get you to the start of trading in australia. a torrid session over wall street. concerns of omicron, fears over vaccines to address the new varied that can take longer than expected, and very hawkish remarks from jay powell speaking in front of the senate banking committee. stocks looking flat at the start of the open on the aussie gdp day. we are watching the aussie dollar. holding steady after plunging to the 12 month low. that was the worst monthly result of november since march of 2020. downside when it comes to trading in new zealand. nikkei futures showing positivity. but we are looking like a down session overall. shery: u.s. futures are, but we

are seeing a rebound. this after the s&p 500 erased all of the gains for november. continuing to see volatility spiking. the third session of 1% plus swings in either direction. when it comes to treasury futures, marginally changed. the yield curve flattening. two year yields rising as we expect inflation of a faster fed taper. longer maturity with the 30 year yield. the lowest since january. the dollar index was under pressure, really giving up the earlier gains we saw after jay powell's testimony. the japanese yen unchanged, perhaps frustrated against the u.s. dollar. this after rising in the previous session. continuing to see the japanese yen acting as a safe haven of choice. but of course, it is what chair powell has said, how he is retiring the word transitory.

let's get more with kathleen hays with the insight. chair powell turning more hawkish. kathleen: you have to tie those things together. now he is finally saying it doesn't look transitory, it is longer than expected, and he will consider speeding up the taper at the december meeting. here is what he told the senate banking committee. >> the economy is very strong and inflationary pressures are high. it is appropriate to consider wrapping up the taper of our asset purchases, which we announced at the november meeting perhaps a few months sooner. kathleen: look at the speed up, the december meeting, he said the taper can be moved up a few months. people think it could mean march. it is interesting the testimony asked about -- why are you worried about expectations. he said it may be temporary, but it is not looking that way.

it is persistent, we have the supply chain constraints. his exact quote was it probably is a good time to retire that word. as for omicron, he says it does the economy, but more importantly, he said it is not like the impact of the virus in 2020. we are not expecting that. we don't see lockdowns that can hit the economy. this is very important for investors to understand. he also said the next meeting, there will be more information on the latest economic numbers. jobs report on friday. more information on what the variant will look like, how it will behave. doubling the $15 billion of bondage is a month. that would exceed from march. in terms of powell's hawkish turn, he is clearly more worried fed officials are more worried about inflation being so high

and staying so high. it has become a political hot potato for the president. people are worried about this. and he just got the nod from biden. there was concern powell might hold back because he did not want to get any opposition in congress for being too hawkish. maybe it's another reason why he is able and ready to see what needs to be done and take a step needed. haidi: kathleen hays. more countries have detected the omicron variant in brazil, seeing its first cases in latin america. japan had only one positive test as it closed its borders. it was just a matter of time. even as we see these countries shutting borders to contain it, this spread globally is not terribly surprising for the variant. >> you are right.

in fact, from the netherlands, they went back and looked at all of the specimens, sure enough, they found cases of omicron infection a couple of weeks ago. in fact, they were present before south african scientists recorded the variant. it will be dispersed around the world, and it is time to understand more about that. haidi: what do we know about this virus and how we can really fight it? there has been back and forth on whether or not vaccines would work, now we hear the merck covid-19 pill, as well. >> merck has said it is quite possible that antiviral will work. it needs to do more investigations to confirm that,

it is likely to be effective still, which is great news. we have had fairly conflicting reports about whether the vaccine will need to be tweaked, or how the efficacy will be. it will be a matter of time for them to do the right study, understand the levels in neutralizing antibodies and the vaccine and prior infection eliciting to omicron. so it is a matter of time before we get more details on that. haidi: is it yet another wake-up call vaccine equity needs to be more of a focus? will it change the way governments and manufacturers supply the vaccines to the rest of the world, not just developed countries? >> it is really important the whole world gets vaccinated and we focus on the areas of the world where there is a very low ability of vaccines to improve

the uptake. stopping transmission will be what stops the emergence of these worrisome variants. shery: jason gail with the latest on this variant. let's get to vonnie quin with the first word headlines. vonnie: the congressional budget office says the u.s. treasury might run out of cash before the end of december. $118 billion to the trust fund on december 15. the payment goes ahead of the federal debt that remains unchanged. democrats and republicans remain deadlocked on any plan to raise the debt ceiling. bloomberg has been told they are posting vp gaming rooms in macau casinos from today. it will no longer pay for staff and say some workers were also told november salaries may not be paid on time.

the move comes after the ceo was arrested over the weekend. the judiciary police says he confessed to illegal betting activities. bill gates and melinda french gates have laid out individual plans for giving away their fortunes almost seven months after announcing their divorce. bill gates will continue to focus on the bill and melinda gates foundation. melinda french gates also has her own firm, saying she wants to do more than write checks. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

haidi: let's get you a look at how stocks are trading in the first minutes of the staggered open. looking like a rough start to december for australian and broader asian markets. fed chair powell sees relatively hawkish ending the previous month pretty badly. the flattening of the treasury curve, as well. we are watching the aussie dollar, as well. it managed to regain the earlier losses as we saw the worst month for november since march of 2020, falling to the 12 month low earlier. the $.70 level is the resistance. the impact of months of covid on the australian economy would be

clear in the next hour with release in gdp data. despite the pandemic, it roared back to life in 2021. current conditions paving the way for another busy year ahead. that is the view of the head of corporate funding who joins us now. great to have you with us. one of the pieces of how we see so much exuberance is monetary policy conditions. the rba is not going to be as hawkish as the fed. will this environment support the next 12 months, as well? >> i certainly think so. i think the reason it has been such a bullish sect there is because the hunt for yield continues. in interest rates are low, there is limited returns. and buying equity and is misses is is one of those. haidi: the other thing in australia is long-term lack of

quality assets, particularly infrastructure. a pretty big premium being paid? >> yes. across the board, we see high premium numbers compared to prior years. i think it is a result of capital going down in these areas, particularly in large, institutional investments, the classes are stable and providing a return. i think we will see their dynamic continue into 2022. shery: what sectors are you focusing on for next year? >> infrastructure is one of those. the other areas have been key our technology, media, and telecommunications. a lot of activity also in the health care space. it is still a significant component of australian deals.

it has started to tail off, but we see a much interesting environmental and social governance driven position activity. shery: tell us about the geopolitical climate and how it is impacting those esg views, given we know australia has not been at the forefront when it comes to the climate crisis. >> i think business has just taken the lead in this area. we are not waiting, market participants are not waiting to set the agenda. in the esg space, there are a number of board meetings in the past few weeks where discussions around what you by, sell, and your strategy will be centered among the esg outcome to see what he or the company would like to achieve. what is interesting in terms of the dynamic from a policy perspective is our foreign investment and its approach to

investment from not just a particular jurisdiction, but interestingly, in respect of particular sectors. they have taken a particular interest in esg related matters, as opposed to the nature of the current investors investing in the country. investor dynamics we had not previously seen before. haidi: doesn't mean you're handling less cross-border transactions if you are dealing more with australian bidders who are successful in the face of tightening? >> that is a really good question. statistically, and we have done this for 11 years. 10 years ago, australian bidders constituted something like top 39% of the bids. this year, australia at 70%. that is a remarkable shift in the competition of cross-border investment. i think part of it has to do with tightening of foreign investment into the country as a

result of that firm policy setting. a huge part is covid related. when borders close, it is difficult for foreign investments to do due diligence unless you have boots on the ground. you're unlikely to make a significant investment. haidi: if financial conditions are expected to tighten, do you expect it craves to come down somewhat? >> i think the spac craze, in terms of fundraising, that has occurred. there are some 500 spacs in the u.s. looking for a home for billions of dollars of investment. i think that money has to be deployed, and it probably means we are going to see high-end m&a activity, especially in a low interest rate environment. i think there is a long way to go in terms of it playing out.

>> in 2022, are there areas of underperformance sector wise that you expect to outshine year? >> it is really difficult, because the day we launched our view, omicron became a factor. the question is how any of our predictions get affected by the result of these areas. my instinct is we will not going to go back. the airport takeover, for example. i think all of it will continue, it will be an interesting sector to watch in the next couple of weeks and months. that is my hunch, and i have in wrong before. i think we will still see continued levels of heightened m&a activity, infrastructure, even in the vision sectors, it will continue to be a robust level of investment. i'm very hopeful we are not

going to go back to square one, in terms of business dynamic. shery: we will have you back to give us an update on the hunch you had. thank you. counting down to the start of trade in tokyo. some stories we are watching over japan. a health authority has confirmed the first case of the omicron covid variant. orders are shut -- borders are shut to foreigners as strict quarantine rules are in place. another softbank back company preparing to go public. an indian online retailer. sources tell us it is early next year. -- they could list early next year. they will be dealing in brazilian, which scale back its ipo. nippon steel says it is close to superior -- securing price hikes from domestic manufacturing giants per in south korea, a big day for data.

trade numbers on top of the hour. trade numbers expected to rise more than 27% in november on year. automakers set to release sales figures. local media reporting samsung electronics may announce its annual top management reshuffle. three co-ceos may return their posts with no promotion of vice ghi -- j wiley. haidi: breaking news when it comes to how the u.s. might be planning to handle the threat of omicron. planning stricter virus testing for travelers to reporting from the washington post. this is coming on the back of what we saw previously from canada about two hours ago. the announcement it would ask air arrivals to take covid tests, except on u.s. flights. really seeking to halt the arrival of the crisis, people arriving by air from all nations, except the u.s..

we're hearing from reporting to the washington post the u.s. is planning stricter virus testing for travelers in the country as well. more details. but the hearing from the ceo john pearson saying a new coronavirus variant should not work with supply chain disruptions. this is bloomberg.

haidi: airfreight prices have climbed to near record highs as supply chain bottlenecks continue with the omicron coronavirus variant potentially a new threat. they say should not worsen the disruption. we spoke about the outlook for cross-border trade. >> neither of us -- this is the report card we have all been waiting for.

the 10th year of participating in the study of global connectedness. a tradition and the study of 3.5 million data points suggests the world is more globalized and connected than ever before, and trade has bounced back significantly to higher than pre-pandemic levels. speaking about the regionalization taking over from globalization, one of the most fascinating parts is that is simply not the case. the average distance traveled for trade has continued to increase and further distanced itself over the course of the study. within that point, the 83% of the leaders polled about a year ago said localization was one of their most important agenda items.

it has gone back to 23%. that does not surprise me, but the same after the icelandic crisis, which was quite a significant event. >> for me, that statistic was surprising, considering we heard an executive talk about the supply chain issues caused by covid, wanting them to change supply chains, governments wanting to bring them closer to home. why didn't that play out in the data? why has the opposite happened? >> i think the supply chains have been tried and tested over the many decades. they have built a combination of efficiency and economics, and the supply chains that existed pre-pandemic have served companies and industries extremely well. on top of that, it is complex to change and adapt your supply as tier one, two, three suppliers.

i think the supply chains have served everyone extremely well over a long period of time, and even during the pandemic. in the first two or three months, a lot of chaos, the biggest that ever happened for 102 years. 5% higher than pre-pandemic levels, and supply chains working well. bringing some traffic down. but from an express point of view, people getting what they need pretty much when they need it. >> quick check of the business flash headlines. semiconductor supply remains difficult until at least mid-2022, complicating the turnaround plan. the ceo told bloomberg the carmaker has been forced to "send someone to asia to get the chips" and called the situation a mess. he reiterated the company

expects to produce 500,000 due to the shortage. hp enterprises quarterly forecast missed expectations as chip shortages make it difficult to meet demand for computer equipment. profit will be 42 to $.63 a share compared to the analyst estimate of $.49. they are trying to lessen reliance on hardware sales, persuading customers to pay for add-on services. deutsche bank ceo said his overriding goals for next year is profitability ahead of other issues, including the scale and pace of job cuts. he told the virtual conference that he set the most important target is 70% cost income ratio. a german bank is over two years in restructuring to reduce costs. coming up, asian stocks are in for a rough start. we will chart the move with chair powell's comments and

omicron weighing on investors. this is bloomberg.

bonnie -- vonnie: federal reserve chairman jay powell said they should consider removing accommodation at a faster pace. he said it is time to retire the word transitory to describe inflation. investors took his comments as a hawkish pivot. the fed is due to start its next policy meeting december 14. >> the test we articulated has been met. inflation has run well above 2%

for long enough. the word transitory has different meanings to different people. i think it is a good time to retire that word and try to explain what we mean. vonnie: the chinese vice premier says his country's economic growth is expected to exceed the official target of more than 6%. in a speech to the hamburg summit, he said china's economy has continued to recover with growth, employment, prices and payments returning to normal. he promised beijing will create a better environment for small and medium-sized businesses. disagreement among drugmakers over how well covid-19 vaccines will work a grants -- against the omicron variant have rattled markets. oxford university said there is no evidence vaccines won't work. earlier, modernity's ceo raised

alarm by saying the many mutations in omicron suggested new shots would be needed. as the world grapples with the omicron variant, the uae has taken the top spot in covid resilience rankings. daily deaths have been under 100. india has jumped up 19 spots to number 26. local news 24 hours a day on air and on bloombergquint take powered by more than 27 hundred journalists and analysts in more than 120 countries. i am vonnie quinn. haidi: we are seeing some downside pressure across asia. we are seeing the asx 200 unchanged, but it is paring back some of those declines. kiwi stocks are down 2/10 of 1%, reversing the gains we saw in the previous session.

we have some big numbers coming out of those economies, including the australian third-quarter gdp numbers. mckay futures on the upside, but this is after we saw the nikkei fall to the lowest since early october. we had a stronger japanese yen weakening right now, so we will keep a close eye on the open. u.s. futures rebounding after the s&p 500 erased its gains for the month of november. for more on the markets, mark cranfield joins us now. for markets across asia, we've seen so much divergence already this year. this gtv chart shows it. entering december, what are we expecting? mark: it is going to be tough for asian stocks. they take some of their direction from what they see offshore, and it has been a difficult period for asian markets particularly because china has been dragging down the rest of the region.

if you look at this seasonal basis, the msci asia-pacific index over the last two decades, it has risen more often in december then it has fallen, but in the times it has fallen, which is seven times in the past decade, it has dropped by an average of 2%. that is a warning for people in asia. they are expecting it to be a week month. -- weak month. if you think people already would've had a very difficult and to november -- end to november, they had to book some losses they weren't expecting late in the month, and that clouds things as we go into december. you put into that the fact that jerome powell is more hawkish than expected, and that sets up a negative situation. it will be pretty surprising if we are able to get a strong rally in december.

we would need the u.s. market to come back into a strong period of strength that would spread across the world, but that does not look very likely. haidi: we also have bond traders scrambling to deal with this powell pivot. what do the yields tell us about the outlook, and what can we expect from the flattening curve? it'smark: it -- mark: it looks as though the fed may frontload its rate hikes. it is significant that jerome powell dropped the word "transitory," he acknowledged inflation had been running higher than the fed expected. he said they will discuss the fact that they can speed up the tapering process. it is with jp morgan are calling a turbo tapering, and it could be done by the second quarter of next year. that opens the door for an early rate hike and a serious one. if the fed want to get ahead of the inflation situation, they may start to do rate hikes in

quite quick succession. rather than wait every quarter, they may make it on an every meeting basis, which would bring them up to the 1%, 1.5% level for the fed funds, and then maybe they will take a pause. the market is beginning to rethink the idea that we could get more hikes earlier and fewer hikes further down the road. that is a significant change. it is not very helpful for equities, probably a dampening for commodities, as well, so all asset classes are rethinking where the fed may be going. shery: what is happening in hong kong? assets are under incredible pressure, whether it is the dollar or stock. mark: it is a difficult time for hong kong. you've had a number of crackdowns from china, which affects them badly. the property market obviously

affects hong kong, as well. on top of that, we've seen a split between the direction of the s&p 500 and the hang seng index. if you look back over a long period of time, the hang seng would take its direction from what happened with u.s. markets. that has not been true for several months. it means the hang seng has fewer support levels than it had in the past. it is looking to china for direction. that is a bit of an opaque situation right now not helping it very much. hong kong has shut itself off from much of the world. there are local factors, and the external picture is not good either. you put those things together, and for once, the hong kong market is quite isolated. it will need some sudden good news for it to get out of its funk, which it is in appeared the outlook for the time being

is not that good, and we need more open travel between china and hong kong to get it back on its feet. haidi: mark cranfield, are strategist there. -- our strategist there. investors are eyeing australia's latest gdp data due out in an hour. economists have forecasted the country could see it second-biggest contraction on record. we are joined by our economics reporter. this is very backwards looking. more importantly, how do we see this rebound, which from previous lockdowns has been very robust? >> the expectation is that the economy will rebound sharply in the current quarter, and here, the reserve bank is expecting 5.5% growth in 2022. the q3 data is showing a 2.7%

contraction appeared it is not close to the size of the contraction we saw last year because the economy was in good shape when we got into the lockdown. the partial data has been positive in terms of jobs vacancies, spending for the october, november period, so the expectations are strong that the economy will bounce. shery: what does that mean for the rba? swati: the rba was expecting the lockdowns to be temporary, and they were optimistic about growth and rebound. the only problem is that the rba does not expect to see price pressures emerging appeared they are not optimistic on inflationary pressures. they want inflation to be within the 2% to 3% target band.

the rba does not expect that to happen until 2023, and that is when they expect rate hikes to start happening. shery: coming up next, petro grass unveils a new strategic plan. hear our conversation with the ceo just ahead. this is bloomberg. ♪

haidi: this is "daybreak asia." we are tracking the fallout of the global supply chain crump -- crunch. fed chair powell says they missed inflation a buy supply-side problems. pmi reports detail the monthly struggles of supply chain professionals, and the readings are fresh and forward-looking. a growing cohort of smaller companies that survived the depths of the pandemic say they are in danger because the economy is running too hot. flooring manufacturers and makers of clean energy equipment are warning that stretched supply chains and runaway freight bills have pushed them to the brink of default. unlike global giants who have the cash and scale to pass on

the soaring costs. hp enterprise has given a lackluster profit forecast, held back by shortages of components, making it difficult to meet demand for its computer equipment, ceo antonio nares says. supply will continue to be a problem in the short-term a while demand accelerated in the fourth quarter. shery: taking a look at airfreight prices, specifically east-west air prices, it is nearing a record as long-haul travel continues to see logjams at seaports, and importers are opting to transport cargo by air. bloomberg terminal users can read more in our newsletter. haidi: powell's comments really weighing -- shery: powell's comments really weighing on the new york session. earlier, i spoke with brazilian

state owned oil giant petrobras, which will continue to selloff it's less profitable assets. their ceo told us where he sees prices next year. >> our base assumption for 2022 is $72 as an average, but for the long run, 50 dive dollars per barrel -- $55 per barrel. we work with a base case of $55. shery: some lawmakers have raised issues about petrobras adjusting fuel prices. will you have to cut prices in order to help out the government with inflation? >> the company is independent, and we have state participation, but the brazilian market is getting more open and more competitive. we are selling 50% of our refining capacity and attracting new players to the brazilian market.

to have a strong market in brazil, we need to have market prices. of course, we've seen a lot of volatility recently, but the brazilian market is getting more and more competitive, and we think it is positive for the company and country. >> you've done a good job of trying to reduce debt levels, but i'm curious where the trade-off is. could you talk about further asset sales? you've done a good job of reducing debt and not having to do further asset sales. what is the right balance? >> portfolio management is a continuous part of the strategy. if you look at our peers, usually 16% to 20% of the business plan of other companies come from portfolio management. we think that is an important part. we've been working on more environmentally friendly assets, assets that have lower emissions

of carbon dioxide. we are focused -- we have the largest carbon capture program offshore in the world. we have to have portfolio management getting out of offshore assets. artfully a management is a part of our strategy -- portfolio management is a part of our strategy. shery:shery: our asset sales going to be more difficult during an election year? superquick. >> if you think about upstream assets, they are not so effective. most of our asset sales that are occurring in 2022 come from upscale assets. we expect we can deliver over 2022. shery: let's discuss the broader oil markets with our energy economist vivek. what is your outlook for oil

when we have omicron and the opec-plus meeting coming up? >> in terms of what we are seeing, the omicron variant has changed projections and expectations. in terms of the impacts, we were already seeing the big selloff friday, and then we saw the comments from moderna's ceo yesterday, but the question will be over the next two weeks what actually comes out in terms of the studies, in terms of how omicron behaves. we have reports out of israel where a study has shown vaccine efficacy is actually pretty good. it dropped from 95% to 90%. this is the kind of news flow we will expect the next couple weeks, which will determine how markets respond. it has assumed a worst-case

scenario, but the situation is very much evolving. shery: what about opec-plus? how will that factor in? vivek: with opec-plus, i think there is a clear argument they should pause an output hike. the situation for us was already 60/40 after the u.s. and other oil consumers released strategic oil stockpiles. now the case is even more firm. we can see with how opec-plus has responded to the crisis, the pandemic. they have always been very conservative and concerned that outbreaks can happen, and that would make the case clearly for them to pause output hikes right now. haidi: when it comes to the broader commodities market, it

has been such a strong year. are we seeing the end of that? vivek: with iron ore, we've seen volatility the last couple weeks. we saw prices drop to $80 per ton. there's been volatility, but with iron ore, it is going to be leveraged by china more than other commodities. 75% of the world's iron ore imports go to china. they really hold the key. the key thing to keep in mind with china is margins and what is happening with steel. we saw the pmi reserved -- result, and what was concerning was we saw infrastructure accounting for 30% of china's steel demand. that could be offsetting what is

happening in the property construction sector. it accounts for 30% of chinese fuel demand. key thing to keep in mind is how china's policy works out over the next 12 months, and we have a key meeting in mid-december where we will find out where chinese policies are for 2022. broadly speaking, we should see a gradual decline as china's demand eases. that is our expectation. china's output will be very critical. it's an indicator we are watching closely. haidi: give us your expectations for gold demand. vivek: when it comes to gold, our forecast is for prices to move down to about $1700 per ounce by the march quarter and remain flat for the foreseeable future. what is driving that is exactly

what came about this morning. we expect what is coming from fed policies is a more hawkish stance, and clearly, that is going to be negative for gold. that is something we expect to be a near-term rate. come early next year, a lot of that will be factored into the price. we expected that news flow to be critical. haidi: vivek, always great to have you with us. japan's third quarter capital spending numbers coming through. excluding software, that number missing expectations of 3%, coming in at 2.2%, a slowdown from the previous quarter. that takes it to 1.2%. a pretty big slowdown for those year on year numbers.

company profits coming in at 35.1%. we have been seeing some optimistic numbers when it comes to capex spending for japan, companies with machine audits very strong, but that recovery not an even one, given that we see that softness still playing out for those capital spending numbers. shery: a very choppy graph. we are hearing from democratic senator elizabeth warren speaking at georgetown university. she is reiterating her opposition to chair powell's renomination appeared the senator has raised her opposition, calling chair powell a dangerous man, especially given she's not happy with his

track record on financial regulation. don't miss our exquisite interview with loretta mester tomorrow. she will weigh in on the policy path forward at 10:10 a.m. sydney time. this is bloomberg. ♪

shery: a quick check on the latest business flash headlines. that is marking the first time that a global regulator has forced big tech to unwind a completed deal. facebook's parents played $350 million for the search last year, raising concerns from british regulators. they say the deal reduces competition. it said it is considering all options, including an appeal. softbank is investing $150 million in the peso. it is asia's busiest virtual ecosystem. the platform sells high-fashion items from gucci, dior and ralph lauren. investment marks softbank's second metaverse investment.

a brazilian bank has trimmed the valuation of its ipo while attracting the interest of softbank. it cut its rate to eight dollars per share. that values the company at a $2 billion, and the deal could raise -- at $42 billion, and the deal could raise up to $2.5 billion. the operator of china's largest crypto currency exchange has chosen singapore as its regional headquarters. the move is part of the shift away from its home country where all crypto transactions or services are banned. it's co-founder says the southeastern market is attractive. shery: this is what the picture in the market looks like. we are seeing downside pressure for australia, down 2/10 of 1%. we see real estate and consumer staples leading the declines.

the japanese yen is weakening a little bit, but after significant strength in the previous session, nikkei futures gaining at the moment. coming up, more markets analysis with our guest. this is bloomberg. ♪ every day in business brings something new.

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shery: welcome to daybreak: asia. sophie: pages market -- haidi: ages markets have just open for trade u.s. futures are higher after jay powell's faster tapering and he admits inflation is no longer transitory. drugmakers disputing the effectiveness of current vaccines.

plus, breaking australia's third-quarter gdp numbers. economists are expecting the second-biggest contraction on record. shery: breaking out of south korea right now. we are seeing exports for the month of november rising 32.1%. this is much higher than estimates of 27% gains year on year. it comes to the import number, 43 .6% gain year on year, which is higher than the expected 39%, leaving a trade surplus that has widened to $3 billion of the estimate was only for 2 billion. not surprising -- to $3 billion. the estimate was only for 2 billion. the question is, what happens now given the variant and the base of comparison becomes less favorable. exports rising 32% year on year for the month of november. take a look at the markets

because we are seeing a rebound for korean stocks gaining 8/10 of 1%. this after erasing all of the gains for this year. it was down about 14% from the july record high. given the uncertainty around the world. we are seeing the korean yuan gaining against the u.s. dollar. this as we have seen strength in the korean yuan this week. take a look at japan because it is a rebound of a quarter percent. this putting the context we have already fallen to the lowest level since early october. we did have some strength in the japanese yen, which did not help the previous session but that has set but -- but that has subsided a little bit to we are what -- a little bit. we are watching bud markets closely given the changes with the treasury -- watching bond

markets closely given the changes with the treasury. hawkish comments coming from chair powell. haidi: we are seeing volatility when it comes to the equity session in australia. swinging between gains and losses. seeing a bit of downside at the moment. advancing by some of the energy names. real estate and energy dropping ahead of the energy data, which is going to be the second-biggest contraction on record. the aussie dollar heading steady. -- holding steady. it dropped 5% in november. worst monthly result we have seen since march 2020. traders sang the bearish momentum means we should be looking at the $.70 level before finding some sort of consolidation. new zealand trading a little bit lower. the kiwi dollar holding steady at this point. when it comes to u.s. futures, we are seeing a little bit of the tick up after a horrible

session for equity futures. market participants continue to digest fed chair powell ditching out of transitory. we see treasuries continuing to retreat from the session highs. the curve flattening sharply in the session. it's bring in a -- let's bring in our guest pin i think for -- our guest. i think for a lot of people, it was not so much jay powell had ditched out of the transitory narrative. but that he chose the week where we are grappling with a lot of unknowns over this new variant. was that surprising to you? how does the retirement of transitory move asset pricing? >> good morning. it is not too surprising given

the fed is always behind the curve. what chairman powell is addressing here is the market and playbook is that there are variants out there from covid and the variants will continue into 2022 and 2023. the big change and it is good he is transitory but the big change is the real rights. that is a consistent message for the fed to reflect on. why the tapering might start early. it is extraordinarily rational what he is doing. aggregate earnings -- we are

still in an environment where there is pro commodity. it is still a proactive good earnings expanding -- still pro aggregate earnings expanding. haidi: where you find opportunities for hedging in the bond market? >> blimey. asset allocation -- this is why you hold treasuries in your portfolio. that is what you have an allocation to treasuries. -- why you have an allocation to treasuries. the treasury message is there are rate rises around the world. that is maintaining.

it makes a lot of sense. the five to 10 year and five to 20 year. conditions are expansionary one year forward. they are increasing and decreasing at a rate we thought previously. rate rises naturally because the real rates are accommodative. when the risk on comes back in early next year, you might get the five to 10 or five to 20. that is the playbook of the risk on, risk off. i could get earnings are going to be moving around so much, which equals volatility. shery: where does all of this leave asian assets? we are seeing central banks old and steadfast to the fact they are not moving on policy just because the fed did. >> i will say the fed is not

hawkish. it is accommodative and behind the curve still and pragmatic. the federal reserve partner with genia yellen -- of janet yellen -- it has been quite a good combination. tapering could have been much worse. the shock to the market. other banks in asia, the central bank of new zealand, new zealand are doing their own narrative. australia is trying to be pragmatic. the reality is the bulk of the central banks are to remain behind the curve. dealing with the biggest issues of quarter by quarter or year by year with the input prices. that is not going away until supply chain disruptions go away. we have this concern from cpi and ppi until mid-2023. a market is going to have to

adjust to that. equities is conducive to expanding price environment as long as it does not get out of control. central banks understanding of it -- central banks our understanding of it. with the variants challenging us more so and it is front and center, which is a good story where we get to explore that. that is your playbook for 2022 and 2023. shery: what happens to inflation will depend on what happens with commodities. you said earlier you are pro commodities, but which ones? >> the beneficiaries of the biggest transition we are doing in the economies globally post cop 26.

base metals like the rest of the world. still very conducive in 2022, 20 23, 2024. bulks -- coal and iron ore coming forward. that is based on china. when you saw the imf risking -- looking at for pointing percent gdp, that is predicated on china. commodities are linked to the narrative. in energy, tell me what opec is thinking. high energy prices, one would think the supply chain's disruptions by mid next year. shery: thank you for all of your insights. let's get more into the jay powell's comments. kathleen hays is here with the highlights. what is driving chair powell right now?

kathleen: the main thing that has happened here is inflation has become persistent. the fed can no longer ignore it. they keep fighting -- admitting you are wrong on inflation. also listening to some of the voices that have been saying so loudly like larry summers, you have got to get going now. you are behind the curve. i was surprised when jay powell made it clear he is also on board with a handful of other officials and publicly said he is ready to speed up the taper. let's listen. >> the economy is very strong and inflationary pressures are high. it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we announced at the november meeting. perhaps a few months sooner. kathleen: also notable the taper only starts out on december 21 and powell says we will consider

speeding it up on the 14th and 15th of this month and it could be moved up a few months. people figure that could mean doubling the 15 billion a month taper purchases -- reduction i should say to 30 billion. get to march with the taper being over, do you want to start thinking about rate hikes? that question is completely unanswered. very important that when jay powell was asked about inflation, he was not defensive. he said it is not transitory anymore. we got it wrong. supply chains were ahead fake for us so it is time to retire that word. this idea, why is he moving with the omicron suddenly -- omicron variant suddenly surging? doctors say they do not expect big lockdowns. this is not march of 20 20. that is when jay powell also said. are we are now is not comparable to the kind of lockdowns, the

kind of disruption the pandemic caused the economy. as the guest just said, markets have to go on. we are going to have this variant around possibly into 2022, 2023. haidi: kathleen hays there. don't miss our interview with the cleveland fed president. she will be weighing in on the new policy path forward. let's get you to vonnie quinn. vonnie: disagreement among drugmakers over how well covid-19 vaccines will work against the omicron variant has rattled global markets pre-oxford university says there is no indication existing shots will not provide some protection. the beyond tech ceo -- the biontech ceo said current vaccines are likely to shield against the vaccine. -- against the disease.

chinese -- the chinese vice from your says his countries economic growth that his countries economic growth is likely to exceed -- he said china's recovery -- china's economy is likely to recover. he promised beijing will create a better environment for small and medium-sized enterprises as well as foreign funded businesses. bloomberg has been told macau's closing all its gaming rooms at macau casino. sources -- workers were also told the november salaries may not be told on -- may not be paid on time. bill gates and melinda french gates have laid out individual plans for giving away their fortunes. almost seven months after

announcing their divorce. bill gates says he will continue to focus on the bill and melinda gates foundation. melinda french gates highlights her own investment firm, which focuses mainly on gender equality. 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. in vonnie quinn. this is bloomberg -- i'm vonnie quinn. this is bloomberg. shery: still ahead, more countries report cases of the omicron variant. the latest on the global response next. this is bloomberg. ♪

>> it is not to the same level of downside we have seen. there have been restrictions introduced. what will happen is it will take some three or four or five days. >> i think investors should count to 10 before moving again.

>> in the new term, a resurgence would be larger than the reflationary ones. >> if there is going to be a repeat of the winter lockdowns or lack of ability, it would be a surprise if central banks continued on course. more likely, they will delay pace of the start of their tightening process. shery: some of our guests weighing in on the omicron impact appeared more asian governments tightening their border controls as the new variant spreads further around the world. let's bring in our chief north asian correspondent. to the latest measures we are seeing out of asia? -- what are the latest measures we are seeing out of asia? dark as we get word that the biden administration is looking at tightening restrictions, in asia, we have seen a number of nations imposing preemptive measures. tightening the borders and also

requiring or blocking actually people from countries that have omicron variant infections from coming into their countries. the latest in hong kong, we are seeing a tightening of the high risk group adding japan, portugal and sweet into the high risk group starting friday, december 3 after those countries had omicron infections. that would mean for residents, 21 day quarantines. nonresidents coming from those countries within the previous 21 days will not be allowed in. india has boosted its you numb sequencing effort. they want early testing to avoid what they saw earlier this year with their second wave of the delta variant that really put the health system on the brink of collapse. they are bolstering those testing capabilities. to national travel had just begun in recent weeks --

international travel had begun in recent weeks. they're looking at putting those plans on hold. malaysia, just name a few countries, malaysia imposing tighter border patrols after four countries had omicron variant. in the last day or two, they just opened up this vaccination travel lane with singapore and had plans for further opening up. they are revisiting their plans to move to an end make phase -- to an endemic face. haidi: is the variant giving some justification to the hard-line covid zero strategy? we have seen a bunch of bids saying this is the case. >> you're hearing from the global times, which tends to be very nationalistic and strident, a state run newspaper. they called the fact that covid

zero strategy in china is working. they say because of the covid zero strategy, china is an impregnable fortress. not the best tourism slogan but they are kind of touting their efforts at keeping new infections. they have had pockets of outbreaks but daily average infection rates in china around 100 new cases compared to tens of thousands in other places. they are kind of touting the successes of their covid zero. what option did they really have? there was that new study out of peking university funded by the bill and melinda gates foundation that showed if china had opened up like the united states, they would have 600,000 plus cases per day. china is sitting back and saying, we understand in are densely populated cities the risks covid-19 and the variants

post to these densely populated areas of china. haidi: stephen engle. one more countries report detections of the omicron variant, the bloomberg team has been tracking the best and worst places. let's get the latest from emme. the european countries have been pushed from the top of the covid resilience rankings. what are the main takeaways? >> winter really has been weighing on what were some really top performers in the covid resilience ranking, which does use 10 data points to gauge the best and worst ways is to be in the pandemic era. number one, ireland. it has been dethroned. places that are warmer that had prioritized vaccination even more than some of these european places are coming to the fore. we have a new number one in the

united arab emirates. number two, chile in the southern hemisphere and in summer. they have pushed quite aggressively ahead. already vaccinating quite young children. number three, finland, which still being a european nation but a little more insulated from these big upticks in cases weighing on places like austria, germany, which are reverting to lockdowns. shery: given what we know about the omicron variant. >> they are looking at the toolkit they had in the past and wondering what they deploy now. there is a lot of opposition or more opposition then there was a year ago to any sort of restrictions. lockdowns do stop transmission. they do slow it down if you are

concerned about an explosion that will really weigh on hospitals and hospitals being overwhelmed. that is typically when you see countries -- western countries doing it. it is a different case in asia. china reverting to lockdowns quite easily when they have a couple of cases to try to nip it in the bud, these short lockdowns. there is still a case for lockdowns with the opposition to them has increased in the two your course of this pandemic. shery: the latest on the omicron variant. we are seeing the again we saw in japanese markets variant short-lived. -- markets very short-lived. the kospi fluctuating a little bit between gains and losses. small-cap tech stocks losing a

quarter of 1%. this is bloomberg. ♪

haidi: a quick check of the latest headlines. the deutsche bank ceo says his goal for next year's profitability ahead of other issues including a scale of pace for job cuts. his second most important target is hitting the 70% cost income ratio. hp enterprises forecast missed expectations. chip shortages making it ethical to meet demand of future equipment. renault expects semi can address applies to remain difficult until mid 2022. the carmaker has been forced in some cases to send someone to asia to get the chips and called the situation a mess.

he reiterated the company expects to produce 500,000 cars. australia posting first quarter gdp data it expectations are for the second-biggest contr

haidi: we do have breaking news when it comes to all trillion third-quarter gdp. the year on -- two australian three-quarter -- australian third-quarter gdp. it is of course still the pull back from the 9.6% in the previous quarter. the seasonally adjusted quarter on quarter number for the third-quarter is at a trip -- at a contraction of 1.9 percent. that is slightly better than expectations of a fall of two point 7%, reversing the gains of 7/10 of 1%.

see the lockdown weighing on growth in that part of the country. compared to the previous periods where we had seen a strong bounce back from those lockdowns. let's get some reaction. we are joined by our economics reporter. these numbers, and extract -- a contraction is expected. not as bad as some have been bracing for. >> number is a positive surprise. i think it will be a small boost for the bank of austria, which was expecting -- it also underscores the fact he owes billion economy was in strong position when we entered the looked out and probably the recovery from here is going to be pretty strong. shery: can we start factoring in the evergrande variant and potentially -- factoring in the omicron variant and potentially more restrictions?

i will this affect the economy going forward? >> it is not clear how omicron will affect the australian economy. right now, there is a restriction on overseas travel and a lot of restrictions are in place. otherwise, we don't have a locked down and people are out and about. restaurants are open. people are going about their business as usual. there are a lot of indicators pointing to the fact that people are spending. companies are hiring. there also some early signs of price pressures in the academy. all of that as well for 20 for 2022. -- for 2022. the property market is going pretty strong. we had credit growth data yesterday, which was also very strong. economists are expecting some puking to happen -- some peaking

to happen in 2022. the fact that some economists are expecting rate increases to start from 2022. if that happens, we will see stock at least flattening. shery: the latest on those gdp numbers out of australia. we have more data out of asia. we are seeing the south korea pmi coming in at 50.9, which is slightly higher than in the previous month of 50.2. still in the expansionary territory. this as we continue to see strong numbers out of south korea. taiwan also doing a little worse , coming down from the previous month. taiwan has been gradually losing momentum earlier this year. the pmi was about 60.

vietnam slightly changed. indonesia, a strong deceleration of 53.9. all in expansionary territory. same thing with japan where we are seeing it coming at 64.5, which is slightly higher than any the previous month let's delve into -- higher than in the previous month. kathleen, is there anything standing out to you? kathleen: all of the countries on my list are at or above 50. if you go to 55 to 5453 to 52, it is still a pretty good number. the big question after so many of these countries have pulled away from all the damage of the pandemic, can the keep going? -- can they keep going? look at korea at 50.9, they continue to improve. look at the exports we got from them. 32% from a year ago. that was beating the estimate. the previous number was 24%.

this is a strong economy. that is why the bank of korea is looking at more rate hikes. you have the question of supply chain shortages. did not seem to stop korea last month. same to be dealing with -- they steam -- they seem to be dealing with it well. and the omicron, is it something that it will cause lockdowns? as you heard jay powell say today, he does not seem to think so. it will not be like it was a year ago. haidi: let's get you a check of the markets where we are seeing the sharp reversal of sentiment. take a look at the nikkei. japanese equities are continuing to fall. we still have some way to go when it comes to the selloff in equities. not just now over the omicron variant but also the timing of the fed sounding ever more hawkish.

watching downside when it comes to australia and new zealand reversing modest gains. we had a better-than-expected reading when it comes to the third-quarter gdp number. we are seeing the two year yield on the short end dancing as much as nine basis points after the gdp release. seeing some relative resilience in the aussie dollar after suffering its worst monthly result should come got monthly result. -- worst monthly result. plans to hold operations. that is up next. this is bloomberg. ♪

vonnie: this is daybreak: asia. fed chair jay powell says officials should weigh removing pandemic support at a faster pace pretty told the senate banking committee it is time to retire the word transitory. the new covid strain remains a risk. investors took his comments as a hawkish pivot. the next policy meeting is december 14. >> the task we have articulate it has been met now. we are absolutely right. inflation has run well above 2%

for long enough. the word transitory has different meanings to different people. i think it is a good time to retire that word and try to explain more clearly what we need -- what we mean should vonnie: as the world grapples with the omicron variant, the uae has taken the top spot in the covid resilience ranking. deaths are rare and it is one of them both -- one of the most fascinated places on earth. india has jumped up 19 spots to number 26. a panel of advisors to the fda voted to back merck's covid treatment pill. the antiviral drug is intended to treat covid in adults at risk of developing severe illness and be -- and can be taken at home. regulators have already given it the green light. 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. haidi: gimmick stocks are under pressure after -- gaming stocks are under pressure. the big drop in the stock on tuesday. what are we expecting? >> things pretty much went down pretty fast. ever since the boss of sun city was arrested, all of the vip clients we heard from sources stayed from the vip rooms in macau and yesterday resumed trading. their stock plunged 48%. we learned yesterday from sources sun city has decided to close all vip rooms today.

at least one third of their staff in macau, their salaries are disbanded, affected by the closure of the vip rooms. shery: what is the implication on the casino operators more broadly? >> this is another blow on macau casino operators. ever since the government proposed to increase oversight on casinos in september. because casinos rely on junkets like sun city for the majority of their revenue. the crackdown on sun city over seemingly typical things all junkets are doing like recruiting vip clients in mainland china and extending credit to them means that this model may no longer work. that is going to greatly affect the vip revenue.

haidi: what is the policy messaging from beijing? >> adolescents we spoke to said that they see signs of china's economy slowing down. beijing looks determined to stop capital outflow. analysts are saying macau is a nine port and means of cap -- is an important means of capital outflow. that is why beijing wants to crackdown on money laundering in macau. beijing is telling the macau gaming industry to stay clear from soliciting chinese gamblers and to diversify into non-gaming elements to attract non-gaming taurus. that is beijing's message -- gaming taurus -- non-gaming tourists. that is beijing's message. shery: joining us for more insights on the slow recovery and the impact is a gaming

analyst. as this crackdown on casino marketing goes on, it will be the major driver for the post-covid recovery? >> the revenue is going to continue to be the driver for the macau gaming industry. obviously driven by the foot craft -- foot traffic. the near term, especially after the border reopens between hong kong and macau province. it will drive up the gaming revenue in the four border -- the fourth quarter and the first quarter of next year. haidi: how is the broader recovery looking? casinos keep saying this -- keep saying there is pent-up demand but is there? >> yes, if you talk about the mainland china side, the per capita spending is still entered pressure. the leisure spending recovery in

china, the recovery is losing the strength after each wave of covid cases. capital spending in macau might remain under pressure. the other thing i think we should be more cautious about is the pent-up demand is there but those gamblers have stopped coming to a motel two years. -- coming to macau for two years. that might be a challenge next year for the recovery. haidi: does that made the downside is limited on earnings? >> yes. the driver is the mass market. our scenario is heading for the recovery of -- revenue might be recovering to 55% of pre-covid

level next year. we think there might be some downside in the forecast for the market. shery: the latest on the macau gaming stocks. the world's largest hotel chain facing more challenges as it looks to navigate the latest virus bike and pandemic era shortages -- latest virus spike and pandemic era shortages. the digital future is already in place. transforming everything from the check in process to the traditional room key. but even as technology creates efficiencies, there are areas of rising costs on the horizon. after making deep staff cuts in 2020, marriott needs to rebuild its workforce. >> the most painful part of the

pandemic was about the furloughs and the layoffs we had to do. it was necessary to survive, to make sure we got through to the other side. shery: now the company not only faces competition for workers in an economy shaped by the pandemic. it is trying to do this while wages in the industry are rising and well customer and employee expectations are in a state of flux. >> one of the things that sets a hotel apart from home sharing platforms like airbnb is the services they offer to guests. there is an incredible tension as they work through what those expectations are, what their tricky tick placement in the market is and what their -- what their strategic placement in the market is. >> i do think they need to leverage technology to reduce the number of jobs. they need to provide jobs that

require high enough skills so that they can reallocate part of their payroll to fewer workers and pay them better. >> we have been able to hire 40,000 people since the beginning of the year in 2021. where you see it is in hot markets. you can see the shortages. but generally overall, it is improving should shery: technology -- it is improving. shery: technology may help marriott meet this challenge as well. the company is rolling out a new labor-management system that will more precisely match staffing to customer demand. >> this labor-management system allows hotels to assign labor in time should you are able to say what is coming over the next couple days paid i can work the shift in a way that gives the associates more flexibility but also makes the staffing levels more appropriate. it used to be prior that it would be more like, ok, i'm

going to plan for all of next month. your work shift, you know what it is. other is more adaptability to what is happening in the business of the hotel. haidi: the future premieres at 7:30 p.m. hong kong time on thursday. let's take a look at one of the stocks we are watching at the moment did we are continuing to see -- at the moment. we continued to see the expansion of sun city trading in hong kong going into the start of trading. we are also watching posco. downside about five and 3/10 of 1%. we had seen the upside -- seen the most in 17 months. beating overall gains, which have been modest on the kospi as

well. that stuck is the best performer out of its peers. shery: coming up next, one of the largest spac deals ever. we will get you the details. this is bloomberg. ♪

shery: here's a quick check of

the latest headlines patheon operator of china's are just cryptocurrency has chosen singapore as its regional headquarters. the move is part of a shift away from his home country. the cofounder said southeast asia is an attractive market edit plans to set up a european base in 2023. u.k.'s antitrust watchdog has ordered middle platforms -- working the first time a global ventilator has forced big tech to unwind a complete a deal. facebook's parent paid 350 million dollars for the search engine last year, raising concerns from british regulators. they say the deal is a competition between social medio platforms p -- social media platforms. meda says it is considering all options including an appeal. softbank is investing into a south korea metaverse platform.

it is ages busiest virtual ecosystem with about 2 million active users a day of whom 70% are female. the platform also sells high-fashion items for virtual avatars. a brazilian digital bank has attracted the interest of softbank had new bank cut its proposed price range to nine dollars per share -- cut its proposed price range to nine dollars per share. the deal could raise 2.5 billion at the midpoint of the range. allete american fund -- to let american fund is among investors willing to weigh in. haidi: one of the largest ever

spac deals. joining us for the details is our asia stocks reporter. tell us about this listing. >> this was a much awaited listing. it is valued at 20 billion. grab can start trading on the nasdaq tomorrow. it was delayed from the fourth quarter to the first quarter because the company had to audit . it is good to see -- shery: what are the challenges for the company? >> the company does face a lot of challenges especially with the omicron variant. it is going to hit the opening of a lot of southeast asian economies.

they have been hit by the delta variant because of lockdowns. in the fourth quarter, the loss widened. i would think -- shery: this is another marquis southeast asian listing should is there a homecoming -- southeast asian listing. is there a homecoming plenty? -- homecoming plan? >> the exchange has been trying to get new companies. that has not really come true yet. i think it will be a really -- for the market if singapore manages to attract any of these companies. we have not heard more on this yet. haidi: our asian stocks reporter

with the latest. let's take a look at how asian markets are faring. we continue to see the downside when it comes to trading in japan. this is what it comes to the nikkei 225. downside pressure telling us there is further to go. these renewed risks from fed chair powell sounding a lot more hawkish. this is what we are seeing when it comes to here in australia despite better-than-expected numbers for gdp. as we go toward the start of trading in china and hong kong, chinese currency is at its strongest in about the .5 years. when it comes to office -- in about 3.5 years pay when it comes to offshore trading, bell 10th of 1% away from the same of -- about a 10th of 1% away.

a very divergent picture when it comes to trading in the hong kong dollar. shery: exactly. the resilience not showing up in the hong kong dollar, which has been under a lot of pressure for the past month or so given the only we have had a strong u.s. dollar but now the resurgence of this new omicron variant. we saw the hong kong dollar falling for the fourth time since december of 2019. right now, holding at the 779 level. we had seen it at 780. passing the midpoint of the 775 to 785 trading range that is allowed. haidi: if it makes the hong kong dollar holders feel any better, we had seen the aussie dollar, the thai baht, some of the biggest losers this week should coming up, -- this week.

a senior market strategist will be with us. you don't want to miss our interview with the cleveland fed president tomorrow. she has been weighing in on the new policy paths forward. that is it for daybreak: asia. we look ahead to the start of trading in hong kong, shanghai and shenzhen. ♪

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david: good morning. welcome to "bloomberg markets: china open." we are counting down to the open of trade on the chinese mainland and here in hong kong. yvonne: retiring transitory fed jay powell paving the way now for a faster taper and potential rate hikes. >> the word transitory has different meanings to different people.