haidi: good morning and welcome to daybreak australia. annabelle: we are counting down

to the market open. shery: good evening. u.s. stocks drop again after a volatile session, data treasuries erasing an earlier rebound. haidi: central bank officials continue comments. >> this is a serious problem that we need to be sure we respond appropriately. more increases are indicated. shery: suspected sabotage after nord stream 1 is compromised. we are seeing u.s. futures rebounding early in the asian session after stocks struggled for direction during the new

york session. the s&p 500 giving up more than 1.5% of gains at one point, we continue to see volatility from the fed, they are adding to the hawkish rhetoric we have already seen this week. we have the yen at 30. wti under pressure, but it rallied in the new york session given we got a report russia might be pushing for opec-plus production cuts, i mentioned tensions. mixed picture when it came to treasuries. the yield is moving, the 10 year continues to gain ground at around the 2010 level. the global bonds selloff continues. u.k. 30 year yield about 5% for the first time in decades, all of this having an impact on the property sector. for the first time, we saw

property prices coming down. it's interesting when it comes to pent-up demand, we continue to see sales. new home sales rebounded, little bit of buyers trying to get into the market before borrowing costs rally higher. annabelle: the rise in rates globally has hit house prices. that will be closely watched by policymakers. in terms of direction, futures are pointing to the downside with the exception of china. new zealand looking higher this morning. the dollar index is trading at 22 highs. more detail on the intervention last week.

changing with macros, we're lifting off the lows, there could be more volatility coming through. the imf criticizing the package of tax cuts, untargeted, spiking above 5%, a sign we're going to see more aggressive hikes from the boe. in terms of other sectors, european gas futures spiked as much as 20%. tensions over the nord stream pipeline.

a lot of volatility coming through. instability in asia today. haidi: we saw the overnight session rustling between gains and losses and not having a great deal of confidence, we did hear from jim bullard. they kept reiterating they need to keep raising interest rates. credibility is on the line. broadly being echoed by the chicago fed chief in minneapolis saying the central bank should deliver on the increase, this is what we're seeing, their potentially being seen that overly aggressive rate hikes could trigger a recession. a soft landing is looking less likely. shery: those comments calling

inflation a serious problem did not bode well for the treasury how they are getting back into the market. we have seen a massive selloff in the space. that lifted positive sentiment overnight, but the rebound did not last. we're seeing the worst treasury rout in decades, the 10 year yield climbing in 2022 which is more than in any full year since 1962. haidi: let's get more on the market reactions. let's bring in emily. we saw a reiteration of what we already knew was a commitment from jay powell. what are the markets confused about?

emily: we started the day, i had a lot of analysts talking about how the s&p 500 had reached oversold levels. when we started the day, we were thinking we could get a short-term rally, that is certainly what a lot of strategists were thinking. we were up above 1%, then the fed speak from bullard about how they are going to continue fighting inflation, same story we have heard but it does not help. in turn we saw the six day of losses for the s&p 500. shery: does not help when you have analysts having to track the destructive hurricane heading towards florida. what sectors are we watching for? emily: strategist are saying look at the utilities sector.

this is another risk wall street has to watch. the pylon earnings, looking at the utilities sector, one of the worst performing groups down about 1.7% today. some analysts are saying look at florida-based utilities and insurers with this hurricane. shery: we are watching russia's energy conflict with europe, as escalating dramatically with three gas pipelines in sabotage. there is risk. su keenan joins us. we are hearing from western allies that they suspect sabotage was at play. su: the eu expressing concerns. this has been a cat and mouse

game between russia and european allies with the nord stream pipeline being put on maintenance and cutting off the supply, now there is concern that there is more than maintenance issues. the pipeline is extremely important. the eu is working very strongly to try and replace the supply and get some independence. what is important is the eu put out a tweet indicating concerns, no immediate comment from the kremlin. russia has been squeezing energy supplies for months. it has caused natural gas prices to surge and that is what is causing europe to look for ways to resolve this. there was some leaks in the

baltic sea, that's how many countries started to take a closer look and raise concerns. meanwhile, you can see the level of storage in european nations is not where it should be so there is concern this could really be catastrophic unless the supply situation is resolved. we're talking that russia has upped the ante in terms of the rhetoric about annexing ukraine provinces and saying president putin will cut off supplied to the european allies. that has caused natural gas prices to shoot up in the past 24 hours. if you look at the bigger picture, you see how dramatic the problem is. natural gas prices have risen tenfold.

on the broader energy picture, a lot of the world is watching the price of oil, dramatic selloff, that of a halt to the selloff in the u.s. and london, west texas intermediate was up, dipping below $78, pretty much unchanged . a couple of things going on, oversold for west texas intermediate. traders are watching hurricane ian and platforms have shut down in advance. analysts are saying this is secondary to what is going on with the dollar. this is a currency play. goldman recently slashing its forecast for brent crude, forecasters believe brent will hit $100 by the end of the year. back to you. haidi: let's get to vonnie

quinn. >> presidency has reemerged. on his first foreign trip and more than two years, state media says there is an exhibition on beijing on tuesday about china achievements. strict covid protocols mandate seven days of hotel quarantine. saudi arabia's king has appointed his son to replace him as prime minister. the appointment formalizes prince mohammed as leader. he already overseas major portfolios including oil, defense, economic policy and security. his father remains head of state. more than 400,000 people have evacuated their homes in central vietnam ahead of the arrival of a typhoon. the storms do to make landfall

wednesday morning bringing heavy rain and flash floods and landslides. officials say it threatens to delay harvests in the world's second-biggest coffee producer. kamala harris is planning a trip to the demilitarized zone in north and south korea. she will become the first senior white house official to visit during resident bidens and year. she is scheduled to hold a bilateral meeting where regional security is expected to top the agenda. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, the worst bonds selloff in decades shows few signs of ending as central banks battle to stamp out inflationary pressures. more of that later. financials are starting to deploy cash.

more on the market strategy next. this is bloomberg. ♪

>> we are moving aggressively. we are committed to restoring price stability and recognize there is a risk of overdoing it.

>> we have a serious inflation problem and we are missing our target and the credibility is at risk. haidi: that was earlier fed officials. in certainty has seen cash emerge as the asset of choice. $4.6 trillion has been trusted mutual funds but our next guest is deploying excess cash into areas heavily hit. let's bring in the ceo. good to have you with us. where are you going bargain-hunting? guest: if you look at capitalization structure and small stock caps, they offer an opportunity. they have been hit the hardest. if we look at forward pe, they are between valuations that are similar to 2008.

when we look at that, as long as earnings hold and multiple status same, that can be an excellent opportunity. we are slowly but surely deploying capital in that area. shery: you also like domestic infrastructure names. this chart showing we saw home prices falling for the first time in 10 years or so, our infrastructure names still safe? guest: we see infrastructure as an area of opportunity and yes, certainly home prices are vulnerable, we saw sales are up but pricing is honorable on the downside. we like industrials. not as much as in the airline space but there could be opportunities there as well.

haidi: talk to us about the impact of king dollar on earnings. what sort of impact are you gauging for to the downside? guest: when we think about earnings calls, but we have heard is a lot of talk about inflation, supply chains. that narrative is shifting to now we will hear a lot more about recession risks and a strong dollar. expect to hear a lot about how that is translating into a headwind for multinational corporations, especially in the area of information technology. that is one of the areas being hit hard in the markets right now. i would expect we're going to hear that in our earnings calls and those areas might have more downside.

haidi: what entry point would be appealing in terms of global equities? guest: that's an area we pulled back from early in the year, and we are looking for an entry point, we hear the headlines about how europe is going to have a tough time in the winter, that is certainly an issue and we are seeing today's news, but apart from that we heard today from italy that they are set as far as gas for the winter. as we see this playing out in the fall, there may be entry points because when we look at companies, not just the economy but companies there may be some value to find international equities, specifically in europe.

haidi: get a roundup of the stories in today's edition of daybreak. you can customize so you just get the news you care about. this is bloomberg. ♪

shery: wall street banks have failed to properly monitor communications have now topped $2 billion. let's bring in bloomberg finance reporter. this was an extensive probe. reporter: months of discussions with 1000 banks and what they have said is you have improperly

kept track of how employees are communicating. the fines topped $2 billion. you see regulators cracking down and saying we are not done, we're going to keep an eye on this. this is a big issue. haidi: we going to see more of this? reporter: it's interesting that they announced banks need to hire a compliance consultant. this is not the end of it. this is the beginning. there is a new cop on wall street. if you look at the announcement, that wasn't banks agree to an amount, it was detailed examples in the announcement about how pervasive this is. investment banking teams having thousands of messages between

colleagues. it was shocking to see how pervasive the apps are, in another way it's not. we're living at home, it is so much easier to communicate and then you see how extensive this was. shery: you said it. the work from home culture did not help with this. what did we see about how banks are mitigating and hedging? reporter: it will be interesting. making sure they can use whatsapp but keep track of the messages or no, no more use of the outside apps, so it will be interesting to see how it falls from here. they have a year to get the plan up and running. thanks will be going back to the drawing board and figure out what they are allowing employees to do.

haidi: let's get you a quick check of the business flash headlines. ridesharing expects revenue growth to slow. the company used -- analyst projected a 49% growth for 2023 on average. >> there is a lot of excitement. we're also very cautious. macro economic circumstances have a lot of uncertainty. we are being cautious, but overall, the budget is excitement and people continuing to take advantage of economies reopening. haidi: twitter is accusing elon musk and his lawyers of not handing over text messages.

twitter has subpoenaed. morgan stanley was the chief financial advisor. a hong kong masses -- asset manager is looking to double accounts and singapore. the firm tried to hire staff where it has fewer than 10 staff. they said they are following the money. shery: take a look at currency markets. we continue to see downside pressure when it comes to everything against the u.s. dollar. the dollar is surging to fresh record highs. risk assets are weighing on the and pound. more bets that the pound could fall below one dollar, a level that was once virtually unthinkable. we're seeing the pressure.

while we are seeing the japanese yen trading in a narrow range close to the 145 level and expected monetary authorities to intervene. coming up, the global bond index has posted its longest string of declines but there are few signs the selloff is easing. we will discuss that next. this is bloomberg. ♪ millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save by talking to our helpful switch squad

at your local xfinity store today. haidi: getting a read on retail

sales for august. well below july.

us trillion authorities are investigating cyberattacks. they're calling to issue new passports. it will recover replacement costs for drivers license. the government tax cut with natural prices set to jump. shery: a former fed president saying the u.s. central bank is not realistic about the pain it will cause to the economy if it raises rates. they told bloomberg the fed should not give up its fight against inflation. >> the fed is moving pretty quickly. the fed is catching up.

>> the mathematics discarded the real world. i want to talk about the nurse will force in this overshoot. it is a requirement? >> i do just enough to achieve directives. monetary policy has long legs and it's hard to judge those effects. they said the risk of doing too little is much greater than doing too much because you end up in the 1970's with more entrenched inflation and have to

do more later. if you are late, you have to catch up. if you overshoot, i don't think they have been realistic about the pain that it's going to cause. there is never been an example of rates rising from 3.5% to 4.9%. if it rises more than half a percentage point, every time that happens, you end up in a full-blown recession. the fed is understanding the pain involved. what worries me is when the pain arrives, people will pressure the fed not to follow through. this is >> the point of the

column. if the market had a mind the fed would stay the course. what do you think they have to do to come out and stay the course, or do you think they are not going to? that they will pull back if it rises? >> chair powell is committed to staying the course. he knows the consequences. whether it can go along with them later. right now, it's easy to be tough. everyone wants inflation down. labor markets are strong. pain has not materialized yet. people will start to argue, doing inflation back to 2%? haidi: the dollar value has

pause after hitting a fresh record with the worst bonds selloff in decades. it's pretty clear. the blue line shows they are expected to stay at that level for the rest of the year. >> the markets are coming around to the reality. if you look, underestimating how much the fed had to do, how much

yields had to rise in order there may be a bit more of an example of how the market. haidi: take a look at whatsapp and with the pound. the boe is behind the curve. the benefits not brexit itself, it's not optimal.

the incoming trust government has fiscal policy conflicting with the objective trying to get inflation down. the bank of england will have to look at jumbo rate rises. the bank of england is behind the curve. the currency is a symptom of >> going on.

it has been complicated. fiscal policy is trying to pull the economy and an opposite direction. they had to the deficit, and to the borrowing. shery: bloomberg are calling it a crisis of confidence. we're seeing liquidity thinning in the u.s. government space. guest: liquidity issues can exasperate would otherwise be perhaps the moves would not be no doubt here, policy

mismanagement. liquidity is the icing on the cake. brexit is being mismanaged. the boe is having trouble containing inflation when it's had problems articulating and liquidity has not helped. let's get away, this is been a mismanaged policy to the mismanaged response. it doesn't seem that convincing.

market uncertainty and fundamental policy mismanagement. shery: does that mean a stronger dollar is inevitable? guest: it remains intact. political dysfunction in the u.k. seems difficult to see resolving soon. europe has its own problems. the ecb's challenge. we had an election and italy over the weekend. it's more or less focused on common denominator outcomes.

does not increase too much particularly in indebted countries like italy. political dysfunction in britain , this probably an element in the u.s.. to quote johnny cash, it is the cleanest dirty shirt. the u.s. dollar continues to rally against the and pound, i have not mentioned the japanese yen, there are issues in japan which makes the yen problematic. haidi: great to have you with us. let's take a look at the outlook with corporate bonds. looking pretty modest compared

to recent market stresses. what is this tells? annabelle: it's pretty much bad news. hoping the turmoil we have seen in stocks and bonds are coming to an end, risk premiums for investment grade still looking pretty modest, goldman warning of repricing. higher chance of a mild u.s. recession and marge oppressions coming through from a stronger u.s. dollar. if you look at the terminal chart, if you look at where we are sitting right now for the u.s. spreads, they are sitting around the 1.5 levels. well up from june lows.

as goldman sachs said, this unjustifiably high probability of a softer landing, a lot of room for downward revisions and off that, we're seeing high-grade spreads have a long way to widen. shery: analysts are saying we are near the bottom? annabelle: bloomberg intelligence has a new note looking at a couple of factors in terms of technicals. it indicates we have seen enough of the washout to justify a new low or bottom, looking at momentum indicators on the rsi basis, looking at oversold

conditions dropping below 30. we see signals of market capitulation. if you bring up the terminal chart, the put call ratio has surged, we are close to the key .75 level indicated as a market bottom. shery: coming up next, xi jinping has made his first public appearance since traveling overseas and more than two years earlier this month. details are ahead. this is bloomberg. ♪

>> three pipelines have been damaged by suspected sabotage. they were found to be leaking after explosions were reported. gazprom has warned the last remaining roots are at risk. sources tell us the european union is planning on banning citizens from russian jobs.

sources tell us lenders have decided to pull out. hurricane ian is poised to become a costly storm. damages and economic losses could exceed $45 billion. the storm has battered cuba. it is forecast to strengthen through wednesday. 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. shery: xi jinping has made his first public appearance in the 11 days since he returned from china. for more, let's bring in our chief north asian correspondent in hong kong.

reporter: there has been speculation. if you look at covid zero protocols, it requires all people to have quarantine for seven days followed by three days of isolation. this falls smack in-line with policy and protocol. there is always speculation ahead of such a highly politically charged time like the party congress. when i was the china correspondent 10 years ago when he was first appointed, he disappeared from public view for a few weeks and there was lots of speculation about his political standing. that has resumed this time since

he made that trip so close to the party congress. it's rare for the secretary-general to go outside which should be a leadership transition at the party congress. all seems to be well. he was seen to be attending an exhibit hailing successes of china. haidi: morgan stanley is the latest big bang to predict china will likely ease covid zero restrictions by next year. it's interesting because there are not a lot of analysts willing to cristobal gaze into what they might do after the congress. reporter: it's always a difficult thing to predict. if the national people's congress in march where they act

on the legislative basis on directives that come from the party congress. predicting when covid zero might be relaxed is very difficult. morgan stanley is the latest to earmark the spring of next year as a likely time that covid restrictions would be relaxed. goldman sachs said china will not begin reopening until the second quarter of next year. we have to get these -- through these events and then maybe because of necessity and slowing exports, slowing property markets could necessitate in easing and morgan stanley says the covid zero policy pressure will build because it comes on

with common prosperity. haidi: stephen engle. we have plenty more on daybreak coming out. this is bloomberg. ♪

haidi: a ridesharing giant will

expand to new areas. the ceo told ed ludlow. >> indonesia is one of our key markets. it has a big population and we have a fantastic team that is operating. a lot of it is tied to the app and ecosystem. we treat other countries though different. we have a competitive mode and that is how we have been able to drive the flywheel of mobility in terms of services and deliveries, getting into grocery deliveries and other on-demand delivery capabilities for our consumer base, we also have financial services. in indonesia, our partner will be entering the digital bank

space. i am sure that can enhance that. reporter: give me the big picture on the economy in southeast asia. what are you seeing with the consumer? >> there is a lot of excitement in southeast asia. in the last two years we have been in such a severe lockdown, tourism is starting to flourish. people are starting to travel again. people are starting to go to the airport and the commute is starting to pick up. people are dining out and enjoying things where they could not be or. we are very cautious. we know in the developed marcus

there is uncertainty. we are being cautious. overall, excitement and taking advantage. shery: we continue to watch the boom or bust cycles. for the first time in a decade, home prices have gone down. the fed study says working from home with more than half of prices were because of remote work. we're not seeing people returning, the reasons why

people are staying at home. reporter: it's an interesting breakdown. only 9% of new york city workers , 36% say they are equally productive 24% say they do not feel safe on transit. daybreak asia is next. this is bloomberg. ♪

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shery: you're watching daybreak asia. haidi: