>> welcome to daybreak

australia. i am haidi stroud-watts in sydney. >> we are counting down to asia's major market open. >> let's get to the top stories is monday morning. investors bracing for an unpredictable week in march. some key markets shut. >> oil producers considering cutting apple by more than a billion barrels per day. >> the motor being counted in the presidential election in brazil. we will be getting analysis from eric. hope you're all well and had a restful weekend. we are turning the page. the new weekly quarter. things are changing. what a substantial drop. here is the set up as we get underway.

3500. that is where we are. substantial pop here. opec-plus is willing to look at more substantial cuts than expected. maybe more than a million barrels per day. >> you can see the u.s. futures there. that is new zealand. just a little bit in the green but in terms of what we are watching in the currency space, we just saw beyond the u.s. dollar looking little further. still, the aussies rated and of the rba decision, that is the big one on the calendar. not enough to catch this in bank of america. we could see trading around $.65 at the end of the evening while the yen is looking a little weaker this morning.

we will get a sense of how much the end weakness is impacting the biggest companies in japan. we will be looking at the economic calendar in asia. we will also be seeing a lot of markets shut. including, china, south korea. and then part of australia as well. >> we are in a tenuous position when it comes to the global economy. they are echoing what we saw with the anxiety back in 2007. we keep saying the word unprecedented but the layering of different global risks and shocks bringing us to this point, we are seeing an aggressive downshift.

it is a government affected by policymakers. we heard from the former u.s. treasury secretary, larry summers speaking on wall street week. saying we are living through elevated risks. there is this moment where we are seeing this in east anxiety. >> absolutely. the last 15 years or so, when you had a down year economically, you have a look at this forecast moving forward. since we are talking about 2007 or 2008, 2009, the story is quiet swift. you look at credit default swaps on the bank and you see them having to come out and basically calm the nerves of this market, the stocks basically collapsed. we are talking $10 billion as far as the market cap is concerned. we will get to the nitty-gritty

of this in just a moment but what will the restructuring look like? when they will be laying at those plans. it echoes what happened with deutsche bank. we will have a look at this very closely. we are still talking about the u.s. bond market. >> not over yet. it seems we are bracing for more ups and downs ahead of what could reframe that outlook. let's get some more from debbie reynolds.

>> there are extreme levels of strain we are seeing across the treasury market and the bond markets globally. we will see the biggest concern about potential wheat levels. that is among the alarm bells. the interesting thing along with that is that we are seeing a relentless live. they rose for the ninth straight week. that is the longest we have seen since the 1990's. the bond market has fully capitulated the idea of change or interest rates. it will stay high.

we might see some pullback here in this sort of losing streak. they tend to come just passed the midpoint in the tightening cycle. the fed is going to go on hiking rates. there is already a sort of level of resignation about the idea that it will not turn around anytime soon. that adds to the fears that they were talking about and you guys were talking about. in 2007, interest rates were already significantly higher.

when you had a major breakdown, the fed already had interest rates with the select markets there. if there is a major meltdown now, what does the fed do? >> i don't think we want to that point. >> the rp's have told us as much in terms of the fact that we will probably get a bigger one. they will have smaller and smaller rate hikes ahead. what does it mean for the housing market? it really shows a strain there. >>is came out this morning. it showed further declines. there is not a lot of hope that this is the bottom of the housing market.

the rba is likely to slow down. not tomorrow. when something really goes dead, the strong expectation that they will slow down to see if this will be a severe shock for the housing market. the housing market will come down noticeably. we will see if they will continue to show enough resilience that is not with the rba wants. that will continue to go lower and persuade them to spend less. >> we really see the scale of

the global recession and these opec-plus expectations. >> yes. that is one of the difficulties that keeps coming along. opec has been making noises for some time, how they are not satisfied with the way the futures markets have been moving lower at a time they don't seem to think that is appropriate and also hanging all the over this is what has been going on with russian oil. that is one of those things, you have to keep inflation elevated and demand lower. >> thank you, we will talk to

you later again. the other big story is brazil. not two hours back, pose closed. on one side, you have mr. bolsonaro and on the other, let's get a sense of where we are. , julia, pleasure to have you on the show. why don't we start there? >> we have about 30% of growth counted at this point. it was a bit of a slow start for the one here. bolsonaro is ahead. very early on, we started with the first number they came out a little bit ahead. it quickly flipped. bolsonaro has been holding this late since there have been five-10% of votes counted.

>> to have an expectation of when we have certainty over these results? >> brazilian results, pretty fast because we do all electronic voting. the counting is really fast. it was a bit of a slow start this time around. we are getting a lot of votes counted in the middle of the country, the southeast and south which are regions that tend to favor bolsonaro. we still have a lot of numbers from the northeast which tends to lean toward here. it may take a little bit of time. we have seen the numbers pickup from now after being stuck below 10% for a while. it should be clear in a couple of hours. this is -- we will see if we will go to a runoff between them. >> what are the implications for

investors? >> for investors, they have both present very different views. especially on the privatization side. there is a bit of a disconnect between foreign investors and local investors. foreign investors tend to favor, they think you will be just fine. brazil has been kind of shut off from this specific type of investment low because of his stances, especially on the amazon. and his fiery better grip -- fiery rhetoric about the topic. you can see some inflow here.

what we know from investors is they are not prepared for a first-round decision. if some polls like, this week are corrected and he went in the first round, markets are not present that in. there is concern there and we saw some jitters in the past week, there is concern that it would potentially embolden him to pursue a much more leftist agenda if he could get that resounding win. >> lasky over to vonnie quinn. -- let's get over to vonnie quinn. >> several thousand russian troops were in line over the weekend.

it is pushing the eu to pledge similar health. the ims has previously calculated that ukraine needs about $5 million every month to keep its economy going. the controversial decision to remove this tax rate was made. the source as the chancellor is trying to head off with rebellion going public with the opposition to the plan. this indonesian president ordered a full inquiry to the vent stampede that killed at least 131 people.

this caused people to panic and rush to an error as it. the global governing body for him from carrying or using this. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> just ahead, eric joined us to talk about the implications there. what eric has to say about what is going on. peter maguire says he is cautious on everything. we will see what they do with that information. this is bloomberg, good morning.

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>> let's look at your week ahead. this is the september jobs report. this has people picking up across all regions. these are some of the stronger business conditions. covid restrictions are eased. these restrictions are using as well.

>> a couple of weeks before, the party congress, there is demented tourism to provide that here -- >> after living through september, i suppose we give ourselves a pat on the back but where did we go from here? how are you position given the uncertainty? >> i think the first thing is to take a deep breath after what we have been through over the last nine months. the u.s. dollar seems to be the only suffering safety mechanism. the equities we are worried about, the markets just inhaling

the atmosphere. it is very difficult. they say you'll never go broke taking a profit. quick safe havens are where you are at at the moment. >> absolute. that is just an example. i think from a training perspective, unless the retail sector, the men and women on the street looking at opportunities, that u.s. dollar has just been a way to sell euros and sell again. and then trade the web so as crude market. that seems to be the number one strategy at the moment. >> what about fixed income? anything there that is safe?

>> i think you have central banks rationing rates. as far as cash in some ways, it is cane. that is always a safety valve. a lot of retailers equities, getting funds from equities, putting it in the bank and desist enjoying a little bit of uptake as far as interest rate. >> who knows when that comes but what would be the first thing that you would do? >> i think it will be gold. that has to be an uptick. we get that inflation story i think it has just been held under water for far too long. you could get us all up as far as the u.s. dollar. you might see them give up something.

maybe that gives up something and you see a little bit of a rebound in the currencies. maybe you have to see an uptick as far as equities. that big selloff in the first nine months. it will be a wild ride at christmas. >> it looks like that ride might get a little less wild. we are expecting one big move out of the rba. the bulk of the heavy lifting is probably done as well. do you see any opportunities, as far as central banks get to this portion of their tightening venture? >> i would agree that maybe we are at the last ratchet up. we reach every sales that lead up to christmas. whether we have the inflation story completely under control,

we can see what he has done in the past. if we are hearing december and we still haven't got the animal under control, maybe we have to see further rate rises or more significant in the year. there is a great degree of uncertainty. i think we will just see were all that teary lives. >> i like your tie, i like your ghetto. you can get a round up of all the stories you need to get your day up and running here. you can customize it to where you only get the news and information on the industries that you care about. check it out. we will be back in a couple of minutes. this is bloomberg. ♪

>> good monday morning.

there we go. the early mover today. in the commodity space. we are watching energy shares very closely. >> less than 100 days as we go through here. the bank is at a critical moment . they have a strong capital base here. it promises regular updates. tesla missed estimates in the third quarter. they were securing vehicle transportation capacity continued to ramp up production.

it still fell short of the 350,000 the markets are accepting. elon musk says tesla is aiming to smooth this out from the end of quarter rush. the general motors president says that demand for its cars remains resilient in the united states. speaking exquisitely with bloomberg, he says he sees a light at the end of the tunnel when it comes to the ship shortage. coming up next on daybreak, error joins us to talk about the brazilian election and the outcomes for investors. 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...

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>> you're watching daybreak australia. the cartel will consider cutting

out more than one million barrels per day will. a larger than respected -- expected reduction shows the economist on effect in the face of rapidly tightening monetary policy. a one million barrel cut would be the biggest since the pandemic. a final decision will be made until they meet in vienna on wednesday. iran says it is getting closer to recovering account using for sanctions. the biden administration denies any issues. iran has about $7 billion from oil sales blocks u.s. sanctions. turkey is reportedly reported a stock market law. warrants have been issued for 10 people. two of them remain at large.

biden says damage is likely to rank among the worst in u.s. history. marco rubio says many tourist towns were covertly ravaged by the storm. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> let's get you guys an update. we have the latest headline here. roughly 43 or 44% of the votes counted here. these polls closed about 2.5 hours back. we are in the midst of counting. let's get a sense of the implications moving forward. joining us now is eric farnsworth.

this one looks pretty close. >> it is great to join you again. the polls at this point appear inaccurate. this may make it so people don't have to go to the second round but almost 50% of the votes counted, bolsonaro is in the lead. the northeast of brazil has not come in yet. this is a lot closer than what you predicted. >> we have an idea of all this. what changed materially?

>> several things changed materially. domestically, you have a difference of opinion on the environment. they will seek to reverse at least some of that. we also have a difference of opinion in terms of the economy. people are much more focused on state ownership of the energy sector and infrastructure and things like that. bolsonaro has privatized more and more of this. in terms of international trade policy, you also have the differentiation there. i think in the context of outreach to global training partners for china, it looks like they could reopen a more robust relationship with china. there are some significant differences there.

>> would any of those initiatives help unlock those broad-based structural growths that you have written about where basically at the end of another lost decade, it depends, are there better economic prospects under each government? >> you really hope so, the brazilian people have suffered a long time. much of that is because of overinvolvement of the state in the economy and also, brazil is traditionally a very closed economy. that would change presumably. it is very interesting, they try

to increase their trade relations with the united states. it will be interesting to see if other trading partners will respond, if that would be appointed difference here. >> those candidates seem to be in the run up to this, competing on who can come through with more of the populist measures. if you talk about the government overstretched in that sense, is there a risk we will see more of the same? >> part of what this -- what made this campaign complicated is neither candidate but out there what they would like to do if elected. they spent a lot of time vilifying their opponents. and negative campaigning and making accusations and such things. you really have to look at the people around the candidates in terms of who they have as their productive -- presented finance minister in the economy.

and under bolsonaro, they have done really important work in terms of economic reforms and we will see if that process will continue forward. lessee who will be around him. but you do have a cadre of people that have been talking about recapturing previously privatized assets into the state . there was a lot to consider there. >> just one last point on the follow-up on that, can we make an informed decision based on past performance or leaning? which one would be more fiscally different? >> that is hard to say. in the run-up up to the elections today, bolsonaro has really broken the bank in terms of spending to get direct cash

payments to those who are underprivileged. brazil's economy was booming. largely because of the commodity prices at the time. in brazil itself. there was also significant state level spending at that point as well. it is hard to see how either one would be able to pull back at this point. you have efforts needing to be made, where you have all this. it is going to be a challenge. >> always great to have you.

we appreciate your time on a sunday night. you can also turn to bloomberg for more on the latest on those brazilian elections. you can get commentary and analysis from bloomberg's expert editors. staying with politics now, liz truss made a controversial decision to remove the top test grade. let's bring in roz matheson. what is the political survival of both the chancellor and the prime minister at this point? >> the backlash has not been in the market but also here.

how can we afford this? what can we do here? you can see those complaints rising. there is probably a willingness to let her all the desk a little bit longer and see if she can rescue her rib -- a reputation with the markets. can she sell this package to the broader electorate and give her a little bit of room? sadly she does not have a lot of time to turn this around. >> right. it is interesting to see how markets move this week.

what is next here? >> she is refusing to give out the budget estimates, how this will affect her fiscally. emergency aid is going to run off at some point in the next week. plus, the boe has to meet on rates itself. she is trying to delay these kinds of figures that may affect the market when they will see in the numbers how that will affect the bottom line in the u.k. and have the u.k. can afford this tax because she is suggesting that she wants to push ahead with. those numbers in a couple of weeks on november 23, i think they are due out and likely to risk another bout of high markets. >> the s&p over the weekend revised it to the negative on the debt. do we get to a point where we need to consider the possibility that the rates are actually at

risk? >> i am in brazil for the election today. the joke is that the state is ok but on a serious note, we are seeing and wondering if the ims has to step in further. there is no cost be to show how it will be affordable. what does it mean for the broader market you are seeing? expressions of concern from the u.s., expressions of concern from the imf. and that fundamental damage not just to the economy but the investment environment in the u.k., that has to be playing on the mind of investors more broadly. >> there was ever senior executive on all things you get

on what you watch moving forward. coming up, the new boss asking investors for less than 100 days to turn -- the new tournament strategy. we will get the details of what that might entail. that is up next, this is bloomberg. ♪

>> welcome back to the show. some investors are pinning their hopes on the optimism that they hope for you. could equities actually get a boost? >> that is the hope of some investors out there. they are looking for any of this in these markets. earnings season is coming up. we have the big u.s. banks kicking us off in about a fortnight from now. maybe they could be a little bit more optimistic about their outlook in the u.s. economy and then signally things like higher rates to actually help them on their balance sheet. that could be something that could help markets along for a little while. then you have the question of how much of the bad news is already being priced and. you're seeing one is on the

other, analysts/and their forecast. perhaps there could be a bit of the rally. you also have history in this chart that we could see in the fourth quarter. we are only seeing global stocks declining in this here. we could see a rally at the end of the year. there are the technical indicators. a lot of markets are in oversold conditions as well. >> we had another note,. he is getting pretty concerned about central still hawkish year. what has happened is the previous outlook was based on the chances that central banks would not make policy levers and

also that the war in ukraine would de-escalate. we have not seen that. they have an escalation tensions in europe. you have to look at what is happening in the overall bond space. you can see that basically we are in a situation where the fed is making it very attractive for investors to park their money into treasuries. they are offering around 4%. most of the curves here have a situation where investors can see interest rate as being a good alternative. as we know, that is not a good situation for the equity market. >> liquidity risks need more attention. although this as they talk about market instability. the bloomberg opinion columnist told us more about their concerns when it comes to central bank interventions.

>> that is an important addition. i think for certain countries, especially those who are importing the u.s. monetary policy but do not have anywhere near the robustness of the u.s.. it is a real issue. we have to somehow figure out how to go through this. you and i know that we tend to focus on interest rates and with the fed will do on credit risks. we tend to ignore -- liquidity risks. that is something we need to pay a lot more attention to. >> we have been paying attention to that in the major way this week. we saw the boj in the last week having to come in and stuff it into the fx market to support the japanese yen. they had to set up an instrument

on italian euros to raise rates even further. china has been wanting investors that they need to step in. who is next? who is willing to blink and can we get to that equilibrium? >> that is the major question. these interventions are unclear to be temporary. these are just band-aids. it tells you the global economy is unclear. there will be a lot of collateral damage. when you distort an economy for so long, getting out of the distortion is by definition problematic. that is what we are learning. we had no choice to get out of distortion because if we don't, the inflation is going to be even more problematic.

all of you who are looking for a pivot, be careful what you wish for. this pivot only happens if you have an economic or financial accident. that was the bloomberg opinion economist talking about what japan came out with in terms of their intervention. that is the update their. broad dollar weakness. a doll in double digits, we are back to these levels. let's talk about the new laws. basically trying to build investor confidence as they prepare to announce these turnaround plans. let's get the details on this. this is a bag that has been struggling to recover from a string of scandals and losses. what does the strategy look like? >> the interim strategy will put

out there tournament strategy at the end of the month, october 27. the ceo has been working very hard to use investor and gas confidence in the interim. putting out the second end of week memo in two weeks as the stock shows the -- default swaps rose. reassuring staff of a strong capital base. he also told the staff he plans to send them regular updates until they come out with this strategic plan on october 27. they had to deal with market speculation, and these capital balances as he tries to turn things around. clearly, the turbulent markets of late have not answered the questions about rising default swaps. last week, the cost of credit suisse and the cost of insuring credit and bonds against default

client about 15%. that is a level not seen since 2009. the market cap of the bankrupt school around 10 billion swiss franc. that is just over 10 billion u.s. dollars. any shares that would be highly diluted. >> what are we hearing from the analyst community at this point? >> there is a lot of talk about this investor confidence. minus the brazil unit and it is

also considering involving the first boston brand name that some considered to be very strong. the bank has confirmed they are considering these options as of last week but kbw again saying the bank still needs to raise the rates about an additional 4 billion in capital after selling off some of these assets and that is to fund the restructuring. a lot of full anticipation as to what that restructuring plan would be. october 27 is the date being given. that is a very quick timeframe given that the new ceo took over in july. >> you can tune into bloomberg radio as well. you can get in-depth analysis from the debris team. we are now broadcasting live from our studio in hong kong. morehead, this is bloomberg.

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>> let's take a look at the day ahead. marcus is setting up. it is a quiet day going into the start of trading here in sydney. we are seeing about a quarter of 1% of. we could see a bit of an early

decline potentially. a also session for u.s. stocks. kiwi stocks also looking a little muted. we have two big decisions up from the rbn. this is on the cusp of when we might see this central-bank slowdown. >> yes. you're looking at the opec meeting about midweek. more than a million barrels may be. there is plenty more ahead here in the show. daybreak: asia is coming up next. this is bloomberg. ♪

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