♪ >> welcome to daybreak: asia

counting down to asia's major market open. taylor: asian stocks are heading for a big straight weekly drop. watching whether chinese officials will allow the yuan to keep falling or take steps to slow the slide. the chinese president says he and russian counterpart vladimir putin can inject stability into a chaotic world. shery: out of south korea, unemployment numbers for august are coming in at 2.5%. this is the lowest on record for the adjusted jobless rate, beating expectations that it would rise to 3%. 2.5% is really low. we have touched 2.7% for february march, april, slightly higher. now we are back and 2.5% is the

lowest jobless rate on record for south korea. perhaps getting a little boost to the government has seen extra budgets and of course the government is planning to raise the minimum wage by 5% next year. we will follow the south korean open in about an hour. in the u.s. futures falling .6% for the s&p after stocks declined and there was choppy trading in the new york session. for new york, two months lows the lowest since mid july back towards a 3900 level. that is an important threshold. now it is at 100 and underperforming. this as we watch oil prices also down. the department of energy says it plans to restock u.s. emergency oil reserves and will only allow for deliveries past 2023. that sent a little pressure for oil prices. we will watch treasury yields rallying. the inversion of the treasury

yield curve continues. haidi: that continues to be in focus. our focus today in australia, the rba government commentary and testimony to parliament. also, we are setting up for a fifth straight week of asian equities going into the friday session. australia looks like a downside of 1%. we are watching gold miners today after gold fell to the lowest since april 2020. the aussie dollar taking a beating as well, a low we have not seen through the depths of the pandemic. we are seeing a lot of risk related currencies, commodities currencies. new zealand has been muted. across future trading, not only in astoria, but in korea -- australia, but in korea, the next hour or so we are seeing a picture of retreat.

let's get more with garfield reynolds joining us now in sydney. garfield, there is so much to process at the moment. perhaps not a lot fundamentally has changed. goldman sachs says they think we will be further downsized. that the bear market is not likely over yet. garfield: one of the things about the combination of elevated inflation switching central banks into rapid rate hikes, even those like australia who were may be considering slowing down, they have still already put a lot of monetary tightening into the mix. so, you have that downside. you have inflation hurting companies' outlooks and demand coming off and a promise from central banks that if they see demand is not coming off fast enough, they will move further and keep rates higher for longer.

so, in that set up, it's difficult to see a sustainably higher path for a lot of equities. broadly, there might be particular equities that could do well, but, the broader indexes, a lot of metrics say they can't go much higher. what you are pointing out was commodities, that is obviously a big part of that. when you have got commodities declining now, even though a lot of supply shocks helped drive commodities higher are still around. commodities are weaker and that signals global demand is weaker as well as pointing to a stronger u.s. dollar which is a direct result of the fed tightening. even arguably, other central bank tightening. a higher u.s. dollar is tighter financial conditions for the world and that's the aim for central banks. taylor: on the others of the strength of the u.s. dollar, the weakness of the chinese yuan and japanese yen.

the yuan at the seven level. what are you watching in trading today? garfield: it's interesting for chinese authorities. they never liked to see strong one-sided moves, as they like to put it, in the yuan. we have had a strong one-sided move against the u.s. dollar. they continue to push against that. it is obvious they want it to slow down. they don't think they can necessarily stop it. there is the question of whether they would want to stop the you want --yuan against the u.s. dollar altogether, because the success they have had in slowing the eu wants decline --yuan's decline means the yuan is higher against other trading partner currencies such as the yen and the won.

that makes it difficult for the pboc to be as hard line when it comes to china's currency's decline. japanese authorities have made it pretty clear they don't want to see a weaker than ¥145 per dollar currency. shery: geopolitics is front and center. xi jinping and vladimir putin met for the front time since the russian invasion of ukraine, vowing to support each other amidst what they see as provocation from the u.s. and its allies. let's bring in our chief north asian correspondent stephen engle's in hong kong. it is interesting to see this playing out. this idea that the chaos in the rest of the world, these two powers can help inject positive energy. season: -- stephen: there is a

no limits partnership they agreed to before the war. there are definitely limits. i am reading comments from experts that are trying to parse the words by putin and xi jinping in brief comments they made before cameras before retreating to closed doors. i think this relationship is not as rosy and positive as it seems on the surface. because again, the war does not necessarily play to china's needs. china probably is waging significant concerns about the disruption and volatility of energy markets, definitely food markets, that is caused by the war. any hope for a quick invasion and resolution of the ukraine more is long in the rearview mirror now. it's been going for more than six months. i'm sure xi jinping is questioning the reasoning as well as the sustainability of

such action, especially after recent defeat on the ukrainian battlefield by the russian military. i think vladimir putin in comments before the camera expressed concerns that xi jinping probably had. xi jinping in his comments did not mention the war once. that tells me he is probably talking about it considerably behind closed doors with vladimir putin. vladimir putin says he understands beijing's questioning and concerns about his invasion of ukraine and offered to explain in detail moscow's decision on ukraine. vladimir putin hailed china's balanced position on the ukraine crisis. before the camera, xi jinping remained steady and vague. he said for his part, china and russia could inject stability and positive energy into a world in crisis. yes, he used the term "old

friend" for vladimir putin but i would not read too much into that. he called joe biden that as well in a recent video conference. i think there are probably tough words bandied between them behind closed doors about the war in ukraine. shery: stephen engle there. the u.s. economy is sending missed -- mixed singles -- signals ahead of the fed's meeting next week. we will get more from kathleen hays. there were 20 of data points today. what's important to the fed? kathleen: to see how much the economy is slowing down and how resilient it is. they would like to stop inflation without having to slow the economy, but they know they have to do that. they are very wary of causing recession. they want to avoid that if they can. retail sales. let's start there. that's the consumer. the money number was up .3% in august, july down .4%.

you get a flat rate for the past two months if you average them. inside the report you see eight of 13 categories were actually stronger. new cars is a big example of that. on the other, weakness in the control group that feeds into how the government calculates gdp. food services, gasoline, building materials. those were all week and bringing down the number. you step back and say, well, with consumers resilient, other people say it's not as strong as it was and is definitely getting weaker. in terms of the labor market, jobless claims were an outstanding number down to 200 13,000, below the pre-pandemic level in the latest -- 213,000 below the pre-pandemic label -- level in the latest week. manufacturing. industrial production is weaker than it has been.

you had entire estate manufacturing index recovering from a huge plunge and the philly manufacturing index getting weaker. with europe's energy crisis, many economists are saying, do not expect much from u.s. manufacturing now. you have a mixed bag. certainly a reason to raise to 75 maybe instead of 100. haidi: when it comes to the chinese economic output, we have problems. not least of which, the precarious situation for the currency. kathleen: the currency is of course tied to this. how the economy is doing and how the government will be supported , these are all questions for people treating currencies trying to decide what to hold. if you look at what we expect in the chinese data dump, the economic activity numbers coming out, retail sales are set to get stronger.

covid lockdowns are not across the entire country. two point 2% year-over-year. industrial production holding steady at 3.8%. holding up against some pressures. the property investment, the fixed asset investment is looking pretty bad. overall success in investment 5.5% in investment year-over-year, down a little bit from 5.7 percent. property investment is expected to show a drop of 7% on top of 6.4% the month before. so, the property crisis, all of these things, along with the covid zero lockdowns, energy shortages, it is a tough time for the chinese economy. on the other hand, definitely, there is some weight there. it is an asymmetric whisk -- risk. risk to the downside seems bigger than risk to the upside. haidi: let's get to vonnie quinn with the first word headlines.

vonnie: the world bank says the global economy may face recession in 2023 due to aggressive policy tightening which could be inadequate to temper inflation. investors expect central banks to raise global policy rates over 4% next year and they expect policymakers to boost production instead of reduced consumption. u.s. has fresh sanctions against russia in a push to affect the country's ability to wage war sanctioning 31 defense, technology, and electronics industries and imposed regulations on 22 officials. it is part of more wide-ranging sanctions at the u.s. has taken against russia in recent months. the u.s. has potentially averted a rail strike after freight companies and unions reached a tentative deal after 20 hours of talks that included president biden.

rail operators are working to resume normal operations after halting some shortages -- services in anticipation of a strike. the strike could still cost the u.s. $2 billion a day. >> today is a win for america. together, you reached an agreement that will keep our critical rail system working and avoid disruption of our economy. vonnie: ethereum completed an upgrade of its network, making it the most ambitious crypto software company today, making the blockchain more energy efficient for a to scale up. digital assets lower after you update, dropping almost 9%. global news --global news 24 hours a day on air and on bloomberg quick take powered by more than 2700 journalists and anaylsts in over 120 countries. . i am vonnie quinn. this is bloomberg. shery: ahead, quiet quitting

maybe a solution for gen z replace burnout. not everyone can afford to do that. we get more from chief economist julia pollak later this hour. then we tarp mall right -- talk market strategy with brian jacobson who says there is more downside for u.s. stocks. this is bloomberg.

u.s. futures exciting -- extending declines on the new york session now rallying at the 3900 level. our next guest is expecting more downside for the markets and has an inversion trade on with us now. brian jacobson is senior investment strategist at all spring global investment. it's good to have you back. almost every part of the curve is now inverted. we are talking the 230, the 530. is it is a signal to you we are headed to recession? what do you expect the fed to do about it? brian: the simple answer is we should not ignore the predictive power of yield curve inversion. the yield curve has been heavily manipulated by the federal reserve with quantitative easing. they are slowly getting to remove some of the manipulation. as we begin to see the market

priced in the reality that the fed wants to hike and pull at a fairly high rate, let's say, close to maybe 4.2 5%, 4.5% for the fed funds rate come march. we expect the two-year treasury should probably reflect that reality. if you have 4%, 4.5% on the two-year, with the 10 year, if that starts pricing in more risk and reality of a recession, that could move down to 3% and we could actually get to something about 100 basis points of yield curve inversion. we have not seen that basically since the 1980's. shery: with this inversion trading and positioning ahead of the fomc meeting, how have portfolio allocations changed and what can we expect next week? brian: our systematic multi-asset team was expecting going into the inflation report

that the market was getting a little ahead of itself as far as enthusiasm that we would see another big move lower with the pace of inflation. we position things more defensively. then we got prepared for the inversion trade. this is really related to what the fed might do. it's not necessarily what they will do, but what they will say that is really worrying us. a 75 basis point hike is probably baked in. it's just what might they say with their summary of economic injections? for their dot plot. at the june meeting it showed for the end of 2023 the fed funds rate should be about 3.8%. we think there is a chance they want to put -- push the expectation to 4.5%, and that is where we think there could be downside risk for the equity markets, and eight further inversion for the two tens part of the yield curve. haidi: you see opportunities in

emerging markets. i wonder, what opportunities are in asia? i want to look at the correlation between the strength in the u.s. dollar and the negative impact, the way it hurts asian stocks. how does that factor into positioning? brian: it might be a little contradictory that we are somewhat bearish on the outlook for equities, but bullish on emerging markets. it's somewhat a matter of the timeframe we are looking at. relative to u.s. equities we are overweight in emerging markets. think about that from a traders perspective. you could long emerging markets and a short the s&p 500. that way you are not really beholden to the overall direction of the markets. we think there has been a lot more adjustment in the emerging markets with terry policy area -- with monetary policy. it used to be they would lag the fed. now they are ahead of the fed when it comes to raising rates. with all the monetary and fiscal stimulus coming out of china, we

believe that will pick up the pace, and it could lead to more positive surprises with gross out of china. -- growth out of china. we are broadly overweight on emerging markets but bullish on the outlook for china in the wake of some stimulus that we expect further down the road. shery: the question of stability in china is building up to the events of next months, going in and out of the party congress. you have expectations of polity -- policy changes? brian: our expectations around there are probably no better than anyone else's. we think it's more ceremonial. to allow president xi jinping to have his next term. as far as policy goals, it might be a reiteration of what we have already seen. with discontinued reorientation towards last time, more what they try to have as an inclusive role model.

not necessarily growth at any cost, but more, to have at the inclusive, where it is more focused on household and consumer expenditures, not necessarily businesses. that is not necessarily have to be bad for businesses, especially considering where some of the valuations are. that has us relatively more optimistic about the outlook for china. it is more valuations. shery: brian jacobs, the senior investment strategy met at allspring global investors. daybreak terminal subscribers can find that at dayb . it is also on mobile and anywhere on the bloomberg app. you can customize your settings to get the news on the industries and assets that matter to you. this is bloomberg. this is bloomberg. ♪♪ energy demands are rising. and the effects are being felt everywhere. that's why at chevron, we're increasing production in the permian basin by 15%.

and we're projected to reach 1 million barrels of oil per day by 2025. all while staying on track to reduce our carbon emissions intensity in the area. because it's only human to tackle the challenges of today to help ensure a brighter tomorrow.

shery: a quick check of the latest business flash headlines. bank of america started a program to reward long-term employees. the employment starts with four weeks off for workers and six weeks for those with over 30 years. beginning next year the bank will offer time off to let employees reinvest in priorities in life. bank of montreal's capital market position is cutting jobs because of weakening market positions. for percent of the firm's personnel. the bank is managing dynamically, but declined to comment on job losses or individual departures. fedex called its earnings forecast for fiscal year 2023 after disappointing results. $.44 a share, well short of estimates of more than five

dollars. said when -- fedex warns if conditions worsen in the second quarter. boeing is chopping some planes in route to china to other buyers. the plane maker installed deliveries to overseas markets. it is facing some cancellations. chinese airlines are dealing with covid lockdowns. the boeing ceo says the move will affect the smallest members of the crash. some analysts are forecasting more weakness on the way. we have more details i had. this -- more

♪ shery: currency traders will be on high alert the pboc announced

the reference rate in a couple of hours. the offshore yuan as weakened offshore for the first time since 2020. we are joined by bloomberg rates reporter matthew burgess. was the topping of the seven level inevitable at this point? the dollar has been slightly stronger the last couple of session, but seems the policy divergent story is not going anywhere as well. matthew: very much so. good morning. there are three things driving this at the moment. there is concern over the health of the chinese economy, particularly with covid zero and the property market issues. we should get a better reading on the chinese economy when the data dumps out today, production and retail sales among others. the other part of this is the u.s. dollar, and absolute bulldozer across emerging and developed markets. the weakness is not just contained to china.

we have seen the japanese yen heading towards 145. the korean yuan is being smashed, a fresh two-year low. the aussie dollar is heading to another fresh, two-year low at the moment it it hasn't hit it already is we are talking. this is because rate expectations in the u.s. are going up and there are bets the fed is going to maintain it hawkish stance and hike it by 70 five basis points next week, and a potential move in stock lots -- stock lots -- plots. it is bad news for currency globally because the u.s. dollar is getting stronger. haidi: you mentioned trading payers and if you look at the yuan u.s. versus the yuan --look at the u.s. versus the sue trinh and the u.s. versus the yuan and

yen, that made the pboc will have appetite for we? matthew: yes, that is the type of thing we are seeing from strategists as well. today, there was a call for fixing. the pboc probably won't fix it as strongly as expected. it was expected to be much stronger than today and this is all basically to smooth out the yuan slide. on it trade-weighted basis, the -- on a trade-weighted basis, the yuan is holding up well. the korean central bank is a perfect example of using fx reserves and job owning, they are worried about the one point movement in it, but they are trying to smooth out the slide in the yuan, and capital flight is what is going on.

haidi: our asia fx and rates reporter matt burgess. it this point in the early part of trading, after a choppy session overnight, we are seeing a downside of .6%, .7% in the s&p 500 futures, nasdaq down close to .8% and the dow up by .5%. asian stocks are heading into a fifth week of weakness. yet more weakness overnight from the u.s. session, a next bag of eco-data really not changing expectations either way as we go into the next three or four days going into the fomc meeting. . let's look at crypto. the merck -- let's look at crypto. the merge has happened without much of a hitch, this energy-saving merge upgrade has happened. bitcoin is 2% lower, trading in

either lower, and index is down by close to 3% after a key revamp of the ethiopian network, the most ambitious software update to date. let's get bloomberg across asset editor john dawson. -- john dawson jet -- jon. what happens now? >> good morning. we are seeing a lot of downside at this point. this is a sell the news event. we had the merge. people were excited. now, people are taking a little money off the table. it isn't just either, it is bitcoin and other crypto currencies as well, which tells you there is weakness in the overall market. but the merge didn't bring a lot of attention. so, there is a lot of hedging and other things going around on the side, but overall, it is a

kind of sigh of relief, but a little bit downside. shery: the merge itself has changed the properties of either, becoming more akin to-bearing securities. what is next for ethereum and crypto overall? joanna: there is a lot left to go on. i was talking with one of the top players in ethereum, he is looking for more institutional purchase. not only because of the est properties, but he thinks there could be a lot more in, so he's looking for more bigger players to come in. there is more to do on the esg front. there will be a lo to watch for like little glitches. it will be interesting to see what happens with efforts to keep a proof of work presence within it area, but what they had been doing before, can they keep some of that because people

were trying to make profit off it. so, there are a lot of moving parts that we may see in the next few weeks on this. shery: cross asset editor joanna lawson your with the latest on crypto. vonnie quinn with first word headlines. vonnie: the argentina central bank raised its benchmark interest rate by 550 basis points, taking it to 75% in a bid to prop up currency and curb inflation. the move comes one day after consumer prices jumped 79% year on year in august, the fastest pace in 30 years. economists expect argentinian inflation to accelerate to 95% by the end of the year. russian president vladimir putin says he understands china's questions and concerns on the invasion of ukraine. putin met with xi jinping for the first time since the war began. he talked about what he called provocations by the u.s. and his allies in the taiwan straits. the chinese leader called putin

an old friend and highlighted the strength of ties. sec chair guy gensler says inspectors are about to fly to hong kong to review chinese business -- chinese businesses listed in new york. it is to avoid delisting on the u.s. stock exchanges. they are checking documents on firms based in china and hong kong. tennis star roger federer is retiring. the 20-time grand slam winner made the announcement on twitter . he has not competed since 2021 end had a series of knee operations. he plans to pay more tennis in the future, but next week in london will be his last competitive tournament. it will be days after serena williams ended her career at the u.s. open germany is said to be in talks to take over large gas importers to avoid a collapse of its energy market. sources say state ownership of

the companies is under discussion. we are told germany is considering buying up a controlling stake, investing billions of euros in the company for a capital increase. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ haidi: we are hearing from the avia governor talking about the psychology shifting, the impact of the past pressures of inflation. he has agreed rate hikes need to slow at some stage, but to do it is necessary to ensure that high cpi is not intransigent. this is a narrative we have heard from many central banks fight the same fight, including the risk of allowing inflationary expectations to become entrenched. some of these central banks, including the rba in the fed, some say they may not have acted soon enough.

some say there is a need to return inflation to target within a reasonable time and it is important to avoid the cycle of high inflation and high wages, also making narrative for the rba. he noted rate rises had been larger and faster than expected, but median-term inflation expectations remain anchored. speaking of the global economy, he says that is the key source of uncertainty and he reiterated the need to return to inflation to target and that the inflation increase is not welcome at this point. we had expectations that perhaps australia's economy would avoid recession in the coming year even as we see weakness in china, even as we have potential demand disruption given we still have very favorable terms in trade and a weaker currency as well as patching us in the job market which could potentially alleviate -- patchiness in the

job market which could potentially alleviate the burden on the rba. there could be -- shery: coming up, why the working world is buzzing with quiet quitting. we make sense of the emerging workplace trend, next. this is bloomberg. ♪

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media are abuzz with the term quiet quitting. it is a remedy for burnout and is suggested it most disadvantages the people in the workplace a call it quits. ziprecruiter chief economist julia pollak joins us to discuss. this piece of data was fascinating, more support for quiet quitting by women, people of color, who at the same time are more prone to burnout for having to work harder to achieve even close to the same levels of achievement as their white and male counterparts. julia: definitely, this is not driven by race or gender. this is driven by differences in

industry where women and minorities are turn -- traditionally employed. these jobs pay less and have less equity, so younger workers and minorities and women feel like they have less stake in the labor market. shery: -- haidi: being beneficial ultimately -- do you see this idea of quiet quicktake being beneficial -- this idea of quiet quitting being beneficial? julia: no. i encourage women not to be quiet quitters. an hr social influencer has been saying, be a quiet quencher, make my day, and i will wind -- a quiet quits or -- a quiet

quitter, make my day, and i will wind up making more. when employers are producing requirements, the berries to entry in the labor market on lower they would have -- lower than they would ever become a so this is a wonderful opportunity for women and people of color to rise i have, not on -- rise ahead not on the basis of their degrees or their connections, but on their hard-working character and skills. shery: we are hearing from the latest survey that employees do not feel like they have the right to reject the returns office drive being pushed by employers. what trends army go to see emerge post-pandemic -- trends are we going to see emerge post-pandemic? julia: there are employers trying to get workers back. but the turnover tsunami

unleashed by the pandemic is still here. 20% more workers are putting the jobs each month before that -- each month compared to before the pandemic. i don't think employers will decide whether employees come back to the office. the market will decide. this is a tight labor market and workers hold an enromous amount of levirate -- enormous amount of leverage. shery: women and minorities, we are seeing more data that they are more prone to burnout and satisfaction in the workplace, what can be done? julia: one problem during the pandemic was that so many industries were understaffed and under resourced. it is a natural reaction in the moment to the incredible burnout workers have experienced to say, enough is enough. we do need to see companies make a solid investment in their functions, so they can be done

under humane and appropriate conditions. that is something many companies do appear to be trying to do. i have never seen this level of creativity among managers and leaders in trying to find solutions that make their jobs more attractive to workers. haidi: in addition to quiet quitting, we are looking at this theory of quiet firing, which isn't necessarily new. companies that fail to invest in their employees, we are seeing women and people of color most impacted by that because they are underrepresented in leadership roles and tend to receive less support for managers. is this something you see being exacerbated after work from home in the pandemic? julia: i think the pandemic has broken many institutions and organizations. there is a gap in the investment

that should have taken place. i would think many workers -- many employers are worried about investing in their workers, especially during this great resignation. because they are worried about investing so much in workers, only to see them leave. the best thing to do is invest in their people so it is possible for them to leave, but treat them as if they will stay. shery: added pressure on the boj rate policy. we preview the market open in japan. this is bloomberg. ♪

♪ shery: a quick check of business flash headlines -- the shell ceo will step down at the end of the year after nearly four decades at the company. he will be replaced january 1 by the company's head of gas who has worked at shell for 25 years around the world. burton will continue as an advisor to the board until june 30.

adobe is buying a software design startup in a deal valued at $20 billion. the acquisition will help adobe expand its tools for creative professionals. figma shares tumbled in new york after the news. a capital company and singapore have agreed to acquire capital company for $14 billion. store shareholders will receive $32.25 per share in cash. the real estate investment trust accounts berkshire hathaway as an investor and its portfolio totaled $11.4 billion at the end of june. haidi: demand is collapsing for japan sovereign bonds with foreigners selling out and a poor showing at an auction, testing the central bank's yield

curve control. our guest joins us now. when you look at the depth of the bond selloff, do you think. >> there are signs of stress in the bond market at the moment. yesterday, the 20 year options -- auctions were quite bad. the whitest since 1987 -- the widest since 1987 dan -- 1987 and the worst for many bond traders. clearly, the bond market is coming under stress. in june, there was speculative attacks on the boj to resolve its policy.

i would say it is coming again. shery: we are heading towards the market open in japan. how are we position for the week, given we have the boj meeting next week as well? >> at the moment, there has been no indication from any boj members that they are going to tweak the policy, including curve control. also, they have shown that virtually no one expects any policy changes. on the other hand, the idea that the boj is going to fix its policy, this policy has been in place for such a long time that it is hard to imagine a world without it. some people jump -- joke that

the policy is like hotel california, you can check out any time you like, but you can never leave. so, yesterday's auctions were showing that at least some investors are getting nervous ahead of the boj policy meeting that is partly because of the yen -- boj policy meeting. and that is partly because of the yen. the yen has weakened so much, the boj's worried about it. we have seen the boj doing rate checks. that is a sign of concern on the part of the government. the boj might need to take that into account next week. haidi: goldman sachs is saying it sees further weakness possible for the yen. how do you see positioning when

it comes to fx as well as japanese equities? >> basically, the status quote is what people are expect -- status quote -- status quote o is what people are expecting. if the boj sticks with this policy framework, i was at the yen is going to weaken. the stock market is also expecting the boj to continue its policy. if there is any change, that would be a huge shock. shery: our senior asia stock reporter. the hotel california analogy, amazing. we are watching trade in japan,

and australia. coming up, annual procurement plans and deepening cooperation. and we have the bernstein report listing that top iron ore miners will ship two point 25% less than a year ago. sony is opening a themed waterpark in thailand next month. fedex has pulled its earnings forecast on disappointing preliminary results in the first quarter. we have market opens in sydney, tokyo and seoul next, do stay tuned. this is bloomberg. ♪

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♪ shery: this is "daybreak: asia,"

counting down to asian major market opens, next eco-data, retail sales, jobless claim numbers and we are looking forward to numbers out of singaporean exports and china activity data. haidi: yeah, watching the seven handle on the yuan, looking at other pairings as major trading partners, a 13-year by the, doesn't mean the pboc has then appetite -- has adapted -- has an appetite for further yuan, it is the yen-yuan pairing that we are keeping an eye on with the japanese yen weakening a little against the u.s. dollar, still at a 140 level.

the nikkei under pressure after gaining ground. and the yield curve control by the boj, we are watching the 10 year jgb which is around the upper lip bent up tolerance for the central bank. and we continue to watch the treasury space because the rate differential story is affecting all the asian markets. we continue to see the two/10 deeply inverted, a harbinger for recession. we continue to watch that after yields rally ahead of the fomc meeting next week. look at korean stocks, because the korean yuan has been pretty weekend is weakening further against the u.s. dollar today. very close to the 1400 level. the kospi and cons and are losing ground. jobless numbers today, falling to the 2.5 percent rate. that is the lowest on record. perhaps government subsidies and

extra budgets are helping, but that paints a tricky picture for the boj -- be ok as we continue to see inflation numbers high. haidi: a tricky picture for global central banks. we are listening to the rba governor testifying in canberra today before the house of representatives in a committee on economics. he is reinforcing the importance of not allowing inflationary pressures and expectations to become entrenched. says there are expectations that the hiking pace will slow as we see a key interest rate rising to its highest level. we have seen the rba deliver rate increases, quarter percentage point moves and that is potentially what it would be after we had the excessive half point hike to try to rein in the inflation. we have seen criticism and a review into monetary policy measures that the rba is taking, given the rba was forced to do a

u-turn. if they didn't expect tightening to begin in 2024 and just months after, delivering their first right hike was spent,. we continue to listen as he speaks, talking about the property markets, saying he would not be surprised if there is a 10% downside in property prices. he suggests the economy is still doing very well, that spending is still pretty strong, but the prices have gone up 25% in two years. he says the rba is closer to normal settings. at the next meeting, he says there will be discussion around whether it is a 25 basis point move or a 15 basis point increase. it is suggesting that perhaps, unlike the fed yet, we are starting to see a slower pace as we see the transition of the tightening play out. over next guest says the full impact of tighter financial

conditions is yet to come and she expects inflation to material decelerate only by the middle of next year. sue trinh is the head of global microstrategy at manulife investment management. we see these rates confounding central banks just about everywhere, except for the pboc. what is the next step? should we be waiting longer for the transmission of natural monetary conditions to play out? or is the risk of entrenched expectations of higher prices the bigger risk? sue: great to be back. good morning. policy missteps, i would start with the inflation that we are seeing in the global economy. it is largely supply driven. it is the kind of inflation central banks are not apt to deal with, and yet they must keep moving. we have a very toxic cocktail now as we head into the final

quarter of 2020 the macro outlook remains challenged. characterized by high inflation supply driven as well as weaker economic growth. put that together with stagflation and it is challenging because that is a difficult regime for risky assets. and adding insult to injury in the financial markets, central bank's are amplifying recession dynamics by deliberate leak tightening financial conditions into the material growth slowdown. shery: not to mention you have yield differentials creating additional strength in the u.s. dollar. how much of a headwind is that for equities and emerging-market? sue: it is extremely challenging, but context is important. there has been a systematically bearish u.s. dollar for the longest time. go back to the middle of 2020, you have calls for the dxy to drop 30% and now, you have the dxy significantly outperforming

that by about 80%. around market expectations, the u.s. dollar has surprised significantly to the upside is the global economy remains challenged, as collateral calls start liver lift everything. i did stronger u.s. dollar is difficult for emerging markets, first and foremost. and for asia, when we look around those most exposed to liquidity risks emanating from a stronger u.s. dollar are concentrated in the likes of china, for instance. it really stands out. shery: what is your outlook for renminbi when you have it at the seven level against the u.s. dollar but a 13-year high against the korean yuan and a 29-year i against the yen? sue: the witness we are seeing in the yuan and japanese yen are meaningful to china given the export economy. china is losing a lot of

competitiveness to korea and japan and that does keep pressure on the pboc to allow for at least some kind of gentle depreciation. we are seeing dollar china rising above seven, but bear in mind, that is on a basket basis. the renminbi is pretty stable today. that underlies the lack of competitiveness but domestically come of the chinese economy is under a lot of usher. not just covid zero, it is supply shortages, deterioration of the property sector, continued capital outflows and most importantly, insufficient policy support given challenges china faces. as a result, we are seeing growth differentials continuing to narrow out of renminbi as chinese growth forecasts continue to be cut. shery: are you factoring in geopolitical risks, especially as we had ordered the party congress? not only in china, but midterm elections in the u.s. at nearly the same time. sue: a multitude of geopolitical

risks, we have got the ukraine crisis in the background, but absolutely we are watching the headline risk as we progress to the party congress as well as midterm elections. certainly rhetoric from both sides is far from warm and fuzzy, so that definitely remains a risk. haidi: you mentioned you didn't think there was enough policy support coming from china, what more can they do that is effective and productive given weakness? sue: there is little pboc can do. one of the main sticking points if you look at the credit intensity of gdp in china, it is off the charts. looking at renminbi renminbi 55 with credit required to create one extra renminbi, and that is a ratio of4-1 around the pandemic at 3-1 but when the

financial crisis and the pandemic and almost 1-1 if you go back to pre-dfc. there is significant credit deficiency in china, which makes the job of the pboc difficult and loans remain exceptionally weak. it is a tricky time at the moment. and it is very difficult to see a light at the end of the tunnel. shery: sue trinh, global macro strategist at manulife investment management. vonnie: south korea has listed in slowest job i on record, unemployment rate falling to 2.5% in august. not boasters the case for the central bank to keep desk to keep key -- the case for the central bank to keep key interest rates. a new report from the world bank says the global economy may face

recession in 2023 due to aggressive policy tightening that could be inadequate to taming inflation. central banks are expected to raise some policy rinsed almost 4% next year. the report called for policymakers to reduce production instead of reducing consumption. germany is said to be in advanced talks to take over gas importers to avoid collapse of its energy market. we are told germany is considering buying a controlling stake in one company for a nominal price and injecting billions of euros in the company for capital improvements. the u.s. has potentially averted a rail strike after freight rail companies and unions reached a tentative deal. there will be a vote or the agreement comes up to 20 hours of talks which included resident divided -- concluded president but -- which included president

biden. a strike could have cost the u.s. $2 billion a day. >> today is a win for america. together, we reached an agreement that will keep our critical rail system working and avoid disruptions in our economy. vonnie: 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. ♪ haidi: still ahead, discussing china's rocky road to recovery with betty wang. first, vladimir putin and xi jinping hold their first meeting since the russian invasion of ukraine. this is bloomberg. ♪

♪ shery: traders will be on high alert when the pboc releases its sue trinh athey when the pboc releases its fix for the yuan. we are joined by our guest. we are talking about the u.s. dollar against the yen, the korean yuan and the yuan is

still pretty strong. tania: not much has changed from yesterday to today. the yuan is flat your today. it is clearly a dollar driven move. what you will see coming up when the pbs decides to fix the yuan is, you might look for outside deviation. it is basically in line what they desk with what they have been doing in the past 16 sessions. we will see what happens at 9:15. haidi: when you look at a 13-high against the yuan and a 28 year high against the yuan, doesn't mean on a trade related bases that china may have more appetite for weakness? tania: definitely. barclays just lowered their forecast this week, going to 7.25. that is higher than the record that the yuan ever reached.

7.2, beyond that, we are not sure what the next mental barrier is for the yuan. haidi: our china fx and rice reporter tania chen, as we see moves that are big across fx on the aussie dollar looking at a year-to-date low, and the korean yuan knowing the 1400 level. on china, she's in big -- ga jinping and vladimir putin meeting for the first time since the russian invasion of ukraine at bombing to support each other against what they see provocations by the u.s. and its allies. let's bring in chief north asia correspondent stephen engle. stephen: i have never had a friendship that had no lim its. it is kind of creepy, right? [laughter] not to make light of it, but

there are limits. i don't think necessarily that the were in ukraine serves china's agenda. it has put energy markets in turmoil. it has raised global food prices at a time when china is struggling to develop and nurture its growth. i think there were telling signs and signals from the comments before the cameras in uzbekistan yesterday, before there were treated behind closed doors. xi jinping did not mention the work, but vladimir putin did and spent a lot of his minutes before the cameras explaining that he has, you know, he understands why china would have some concerns and questions about the war in ukraine. and i am sure xi jinping because of a lot of questions about it but xi jinping, being the internal diplomat before the cameras come essentially said dina and russia could inject

stability and positive energy to a world in crisis. he said china is willing to work with russia and displayed the responsibility of the major powers. this could be a jab at the u.s., but also a veiled jab at the war in ukraine by putin. because look, is russia acting like a responsible world power with the war in ukraine? i am asking rhetorically, and also open-ended -- it is not a no-limits partnership or friendship. there are issues. and that is a very clear reason why xi jinping made this meeting with putin a priority so close to the party congress in just one month, on domestic issues. it is extremely rare for a head of state of china to leave china so close to a party congress. shery: india is another country willing to engage with moscow, buying russian oil left of the

invasion of ukraine. what are we expecting for prime minister modi's meeting with putin today? stephen: the modi dynamic is one of the more interesting at the shanghai cooperation organization summit. it is a group set up in 1996 the counter the u.s.-dominated global world order. india's part of that. india has threaded the needle between superpowers, playing both sides. it is a delicate balancing act for narendra modi. he needs russian oil and military hardware but at the same time, he is part of the quad security arrangement, india is part of the quad security arrangement with the united states, india and japan and australia and hasn't criticized india for being close to russia

because they want india on the allies' side when it comes to china. india and china had a border dispute as recently as 2020. there is tension between beijing and india. it is a fascinating dynamic ident will be interesting to see what comes of that meeting between vladimir putin and narendra modi at the fto later today. shery: stephen engle, chief north asia correspondent. to get roundup of all the stories you need to know they's eight edition of "daybreak," you can customize your settings on the bloomberg gap so that you only get the news you care about. this is bloomberg. ♪

>> i am very supportive of the

idea of an oil price cap in general for russian oil. we started this debate and it is very good know that the finance minister made a lot of progress. yes, we are working on amending sections package that is required for this new proposal. we know we have to reset on that one. haidi: european bank commissioner ursula von der leyen on sanctions. msci europe futures are down by .6 of a percent. dax futures extending losses, 1.7%, euro stock futures down .5%. we have seen relentless strength even on a measured basis this week on the greenback,

dominating trading we have seen across a lot of currency pairs. this is as we continue to see global equities react to the possibility of what we got from the fomc next week. is it going to be 75? is it going to be 100 basis points? how is the market going to price that? shery: we have seen strength for the u.s. dollar given that speculation and donda -- and on the other side, weakness for the south korean yuan, at the lowest level since 2009 against the dollar and heading to the worst years since the global financial crisis. south korea and thailand have really used a lot of their foreign-exchange reverbs -- reserves as a percentage of gdp. but thailand has seen the biggest drop in reserves according to standard chartered data. we are seeing thailand at the weakest level since october 2006. the aussie, also weakness there,

but close to levels that we haven't seen since under this year. if it reaches the 56/$.82 level, we would be talking about year-to-date lows. as comic changes push weather disasters to new extreme, a new phenomenon could send the world hurtling to $1 trillion of whether disaster damages. we have seen extreme weather all over the world, whether drought or flooding or torrential rain. tell us about the impact of this on the global economy. >> it is difficult to quantify this year scale of it all. one way of thinking about it is, it could hit $1 trillion in damages. we have had two la ninas and

this is the third one we are heading into now. we have got a punishing drought in the u.s., especially california, parting crops there. growers are about to pull out almond trees, for example and corn crops with her across the country as well. in argentina and brazil, a similar story with soy, corn, coffee, sugar and oranges. not looking good from the agricultural perspective due to the drought over there and meanwhile in australia, we have been hit by floods and torrential rain which as submerged crops. and it is not just a food story, queens land is the biggest producer of metallurgical coal used to produce steel. some of the coal mines are at risk of being flooded. across asia, we have to look at pakistan in the last few weeks,

the devastating floods that have tallied up $10 billion in damages and losses. it is going to ricochet everywhere on the impact will be felt everywhere. haidi: sybilla, is it a result of climate change? sybilla: the jury is still out on the sites as to whether climate changes cause more frequent and intense la ninas, because it is a naturally occurring phenomenon when we have a slight drop in temperatures over the equator in the pacific ocean. however, when we live in this climate, we know climate change does increase the temperature of the atmosphere, which does lead to more intense climate events like floods and ruts.

and when you overlay -- floods and droughts. and when you overlay la nina on top of those, it exacerbates them. haidi: our agriculture reporter sybilla gross on that concerning peace in our beat take. up next, a view of the eco-recovery amid headwinds to growth. we will be asking betty wang about her views on the yuan as well as we get the seven handle. this is bloomberg. ♪

♪ haidi: let's get the latest when it comes to the export situation

in singapore for you. singapore no text numbers for august falling report 9% month on month. a bigger decline of 3% than we were expecting. the number year on year is a decline of 11.4%. this is a huge miss on expectations of a gain. i should say it is better than expected when it comes to the gain of 8.3% that was expected. electronics following 4.5% year on year. this is a volatile series when you think about pharmaceuticals and cyclicals in terms of production and investment. but we are seeing that rise on a year on year basis of 11.4%, a handy beat on expectations. shery: take a look at currencies trading at the moment. we have been talking about weakness of the chinese yuan. the officer number strengthening a little, but still past the

seven level against the u.s. dollar. it is not just the weakness of the yuan we are following, it is also the strength of the yuan against other currency pairs. we continue to see a little strength against the japanese yen which has seen the yuan at a 29-year high against the japanese currency, a 13-year i against the korean alexander wolf, -- against the -- 13-year high against the korean yuan. we continue to watch for any monetary support coming from the company. we are watching china a monthly data released and the economic tick -- economic recovery was likely disrupted by covid flareups and more restrictions. we welcome betty wang of australia and new zealand banking group. what do we expect from today's

activity numbers? betty: another month that the chinese economic recovery got disrupted by covid lockdowns and restrictions in the country. this is all on top of the energy shortage as well as weaker external demand as well as taiwan orders. we expect very little improvement in terms of retail sales and growth. shery: given what we are expecting with the chinese economy starting to slow, how tempted will policymakers be to let the yuan we can even further? we are seeing weakness against the dollar, but not necessarily against rival export competitors? betty: this seven hold last night is not actually a surprise for us for the yuan, especially considering dollar strength the past few weeks.

we expect the dollar to continue to climb, at least until the first quarter of next year. this means that there is still room for the dollar to move up thi -- up. it is possible, but it is against the background of trading currencies. the 101 or 102 level is not far from the level we saw earlier this year. on that front, weakness in the yuan is only against the u.s. dollar, not against the basket of trading currencies. but that doesn't mean the pboc will step away from the market. rather, they will keep a close eye on currency movement. we could see that last week. the foreign reserve triple got is a signal policymakers are standing by. i think there will be policy reaction and if the currency pairs move too fast or abruptly,

so this morning will be a key event for us. haidi: how much more can policymakers do in terms of the types of stimulus that will be productive, given that we see credit demand at the moment is weak? betty: in terms of policy, china still has policies to utilize. we do expect the central bank to cut rates, including the policy rate and the rrr rate, by the end of next year. but the timing at the pace will be data-dependent and also local liquidity conditions as well as currency dynamics. but the core issue for the economy right now is expectations and sentiment and how to revive that in a

sustainable way is something policymakers really need to think about. but with the party congress do in the middle of october, any policy clarity could only become evident after the event. haidi: i am glad you bring up the big event. the real question is, will there be a change to covid zero after the congress? betty: this is a key question. in general, there could be relaxation after the event. we don't expect, we expect it to be very significant, but on a gradual basis. shery: betty wang, senior china economist at anz. let's get the vonnie quinn with headlines. vonnie: russian president vladimir putin says he understands china' us questions and concerns about his invasion of ukraine speaking in

uzbekistan for his first in person talks with xi jinping since the war began, putin slammed what he called provocations by the u.s. and its allies. the chinese president called him an old friend and highlighted ties between beijing and moscow. the u.s. is now made a new push on the kremlin's ability to wage war. the state department sanctioned 31 defense and electronics entities. the defense department also imposed restrictions on 22 officials, part of a more wide-ranging sanction action the u.s. has taken against russia. argentina's central bank has raised its benchmark interest rates to 550 basis points, taking it to 75% in a bid to up up and curb inflation. prices have jumped 79% year on year. economists expect argentinian inflation to accelerate to 95% by the end of the year.

s.e.c. joe gary gensler says inspectors are about to fly to hong kong to audit chinese businesses listed in new york. it is a new step to avoid 200 firms being delisted from u.s. markets. the possible removal stems from beijing's long-standing refusal to let u.s. watchdog tech documents of companies based in china and hong kong. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ haidi: coming up next, china's credit market showing signs of discovery -- signs of recovery after months of distress. more next. this is bloomberg. ♪

♪ shery: look at how equities are trading across asia. the nikkei at a one-week low-end continuing decline as we see a little strength of the japanese yen the kospi continues to lose ground alongside the korean yuan which is close to the 14 hundred level despite the jobless rate out of south korea really coming in at the lowest level on record at 2.5%. the asx 200 led lower now by energy and materials and industrial companies.

and at least stocks are losing .1%. haidi: chinese credit markets showing signs of recovery following distress after authorities stepped in with comfort measures to aid the real estate sector. let's bring in our bloomberg reporter, alice, what does the credit tracker tell us about the market? alice: the credit tracker tells us credit stress is definitely easing in china's credit market and more prominently, the onshore market. our data shows stress onshore is followed one notch compared to july. that is largely driven by a drop in volume, defaulted their lowest level since february. in the offshore market, even though our tracker stress level remains the same, it is largely because, in early august, the officer credit market dropped to

their lowest level on record in a bloomberg index. so, even though they had the strongest rally in a decade, that is rebounding from a record low. shery: how much does this have to do with authorities perhaps shifting gears to support the economy and the property sector in particular? alice: that is definitely the biggest driver. a steady stream of policy steps by authorities are helping sentiment onshore and offshore. particularly with property-related policies. a small group of developers have been helped with the mystic bond issuance from state guarantees we have also seen large of an expected key rate cuts, as well as a one trillion yuan stimulus that we have seen property easing measures across china since august. shery: we are awaiting a number

of key restructuring proposals as well as the important party congress. what our expectations? alice -- what are expectations? alice: investors have raised their bets on the property sector since august. this week, we have seen property bonds as well as shares rising again, that is largely on the back of the property easing measures to boost housing demand. there is also a restructuring proposal everybody is waiting for, including the property giant china evergrande group. there are a few other factors. there are the policy steps we are all waiting for, whether there will be more rollout of opera to easing, as well as those policies will translate into housing demand and consumer confidence. shery: bloomberg's alice huang

with the latest on the chinese credit market. we watch the indian bond space because overseas investors are pouring in on the expectation that any day, j.p. morgan could be adding indian bonds into their gauge. this, coming after russia was excluded from j.p. morgan gauges after ended made ukraine -- after it invaded ukraine. haidi: if you look at technicals, we could see an upside on the rally for the 10-year. on the other side, we have seen the bond traders pouring money into this trade. they run the risk of being burned if india fails to make that index and global funds have sold the most in years in august. the 10-year yield could rise back to 7.5% in case of disappointment. we are seeing inflows adding fuel to the rally driven by that optimism, that j.p. morgan will

announce inclusion of the indian debt into its index. it could happen anytime. there is also risk of dampened sentiment if we see disappointment. the index inclusion theme is reportedly the only thing driving the indian bond market at the moment. up next, the offshore yuan has breached the seven dollar level, speaking of high-stakes. but the currency as a stronger against appears japan and south korea, a 29-year high as well as a 13-year high against the yuan. we will get more. this is bloomberg. ♪

shery: as we emerge from the pandemic, big changes in the luxury space. rolex could be a bargain as watched prices might move ahead. annabelle droulers explains why. >> in the closely tracked secondary market, valuations of many models slumped after peaks this year. now, a recovery is starting to take shape. >> prices have started to stable out and bottom out, which is good. >> the bubbly and secondhand

timepieces grew quickly. >> growing 5% on average for top models. there was a sense of euphoria in the watch market. >> but warning signs in the first quarter. >> the russian invasion of ukraine, the china market, we started to see selloffs in the luxury goods market overall. >> the link between watches and cryptocurrencies is a mentor for debate. both markets crashed in tandem this year, but the bitcoin correction is perhaps not to blame for the drop in prices for high-end timepieces. >> a lot of watch dealers, traditional and secondary, that own their stock, they weren't selling in order to buy more of the same watch, when watch prices go down, dealers experienced the watch market to equivalent of a margin call. >> a big unknown is how much

china will drive demand, with watch exports from switzerland rebounding engineering those of north america. >> i am watching china a particular, and hong kong. that is one of the top six markets as well. the whole area, and the free movement of product and trade. >> there is also expectation about the next it pieces. >> these to have lost no value since the april peak, but over 18 months, the absolute value of rolex is up. >> we are also very bullish on independent watchmaking as well. they are doing amazing things. >> conventional wisdom is to buy a watch because you like it, not because you think it will in these in value, but perhaps it is possible to do both.

annabelle droulers, bloomberg news, hong kong. haidi: a quick check of business flash headlines -- boeing shopping planes in china to other buyers as it seeks to unlock cash tied up in the back -- jets. trade tensions have stalled overseas deliveries of the 737 max and with covid lockdowns, the boeing ceo dave calhoun says the move will take a small number of aircraft. adobe has agreed to by design start of sigma for $20 billion. the acquisition will help adobo expand to lose for creative professionals. adobe shares tumbled 18% in new york after the news. singaporean has agreed to a deal to acquire capital for $14

billion. as part of the agreement, shareholders will receive cash per share. the real estate investment trust accounts berkshire hathaway an investor in the deal -- and its portfolio totaled $11.4 billion. shery: and the equity space, the nikkei losing ground at the weakest level in a week following the strength of the japanese yen at the 142 level against the u.s. dollar. the kospi continues to lose round together with the korean yuan, which is very close to the 1400 level versus the u.s. dollar. we are talking 2009 levels. the asx is led lower by materials and investors -- materials. the strength of the yuan, we are seeing it after significant weakness of the land that we were talking about 24-year lows

against the u.s. dollar at one point earlier in the week. there is a lot of talk of intervention. that has led to changes in the japanese currency. the korean yuan is very close to the 1400 level. the aussie as well. a little strength, this after being posted this year's low of 66.82 u.s. dollar and it is also losing ground at its weakest level since october 2006. we continue to watch the chinese yuan because it is at multiyear highs against the yen and the yuan despite weakness against the greenback. we are joined by chief china correspondent sofia horta e costa. what are we expecting for the reference rate today? >> at 9:15, all eyes are on the pboc. it has been setting a fixed date for almost two weeks and this

week, it will be interesting to see if the central bank does set the reference rate weaker than seven and allow the key number to break. we have state media this morning saying people shouldn't be so obsessed about around numbers and specific levels in the currency, that this is just a market moving. so, we could get a fix that is weaker than seven to just calm everyone down and say it is ok come of the chinese currency is only weakening against the dollar because it is still strong against major trading partners, the euro, the yen, and the yuan. haidi: is that suggest the pvc -- suggest the pboc has an appetite for weakness? sofia: it is a tricky balance

because i head the particle risk, stability is the theme. it is at such a political exchange rate since the trade war, so we could expect the pboc to push back against the pace of weakness, but not pushback weakness in itself. it is a very difficult thing to do whenever currency in the world's weakening against the dollar and we saw a huge in the dollar again up of the inflation print in the u.s. that is nothing the pboc won't want to fight because it is futile. but expectations of a managed weakness are increasing and the seven per dollar handle has not been broken onshore but yes, it is likely to break. haidi: chief china markets correspondent sofia horta e costa. some of the stocks we are watching ahead of the market openings in hong kong and china, alibaba, jd.com in focus as we

heard sec chair gary gensler say you was what stocks will be reviewing audit documents of chinese businesses that trade in new york beginning next week. we are also watching tv makers, china says it is putting blind investments in areas of new energy vehicles and will introduce more measures to push for high-quality developers in the eeev industry. also, building chip stocks while demand for electronics is weakening. shery: look at futures trading, s&p 500 index futures down .6% after stocks the client in choppy trading during the new york session. two-month lows for the s&p 500 index come around the 3900 level. tech stocks underperforming. futures on the taiex looking down as we see a broader selloff across asian markets. this will take us to a fourth

down day for this week on this asia friday. coming up in the next hour, achy risk to the markets i had of the china data dump with alex wolf and laurel lying. that is it for "daybreak: asia," as we look ahead to the start of trade. standby for "bloomberg markets: china open." this is bloomberg. ♪

david: good friday morning from hong kong.