haidi: good morning, welcome to

daybreak australia. anabel: we are counting down to asia's major market open. shery: the top stories this hour. u.s. stocks rebounded after the war september in two decades, the treasury yields falling, easing fears that the fed will over tighten monetary policy. haidi: one jumbo hike before slowing the pace of tightening, as they balance inflation again is a quick hit to growth. shery: the u.k. chancellor may change plan after the back down on the tax cut for top earners. u.s. futures looking higher, earnings in the asian session after the s&p 500 saw the best since july. the fed may not over tighten, on manufacturing numbers. we have some low fund

positioning, extreme pessimism coming off of a rebound, around a 30 level, back to those levels after the impact levels last week. our treasuries are rally across the curve. he also had a weaker time, helping with wti prices. we see a little bit of pressure in the asian session. this is after 5%, the opec-plus meeting, the expectation is a cut and supply concerns coming to the front. we are watching the market very closely, look at the bloomberg dollar index, it was under pressure, easing. on the other of the coin we actually have the british pound around the previous session. right now it is unchanged by this is after the u.k. government had to bet against the british pound. it could be seeing more movement

in the coming days. we are watching the brazilian rial with a surge against the u.s. dollar with the runoff election coming up at the end of the month. given we are heading towards a runoff, both sides of the equation, that will move towards the economic center. that is leading to optimism about brazilian assets. we continue on the bitcoin, we do know that october is a good month for bitcoin. usually rising around 25% or so. we will continue to watch this crypto frenzy. annabelle: let us also take a look at the impact of the strong dollar in a shout. he saw the yen above the key -- we saw the yen above the key $35

level. it did help japanese stocks. we are watching futures pointing stronger today. high-tech stocks have been automated among the biggest beneficiaries. among all of the issues you mentioned, i read it was the third best start to u.s. stocks in an october since 1931. they are looking to play catch up in sydney. kiwi stocks already online, there is a lot of room for us to move around this terminal chart, looking at rsi in this part of the world, we can see here this is the oversold level below 30. we are off of the lows. china does make up a lot of this, it is a third. it is close this week. we will see what kind of moves we get in a new session. haidi: we have stocks rising given the price of the food

market turmoil. we saw a lot coming on friday, that has backfired and we saw quite a bit falling to the record lows in trading before getting back some of those losses before they close. we have to talk about how share prices are down 70%. look at this chart on the bloomberg, it is tracking the stock price, it is showing some normal drama around the company continue. haidi: all of the drama is coming up across the backdrop of the presidential bank drive. they continue on their hiking project rate. rba today could be harmed by 20 five basis points but there could be a number of market participants who expect 50 basis points. it would be the last if not one of the last jumbo sized moves we see from the rba. we have to remember that even though they challenges for the rba are pretty similar to the

ones we see globally, there are domestic factors as well. there are growing risks to demand as you have the higher rates as well. let us get some analysis on this. give us some more on the rba. 125 basis points, is it time to take a breather? >> i moving in terms of the size of the rate hike that we get to date. we have lower expectations from 50 basis points to 25. at some points, up to 50. bloomberg economics expects a 25 points increase in australia in food, energy, construction costs, i hear they hate to use the word

transitory. they also weekend some of the hundred 25 basis points we have seen since may. it does hurt the economy and when you look at powell last month, suggesting that he so 25 basis points on the table at this meeting. going forward, this could be the last supersized rate hike if we get one today. the consensus is on the 25 basis points. shery: given what we saw in the numbers, the markets are looking for a pivot again. this chart showing how they are pricing in the fed cutting rates and rates being lower at the end of 2023. is this going to a last and boost optimism for the market? there is a big rebound today. >> that is the million-dollar question and wall street is kicking off of october with a bank.

we are entering this for the u.s. equity market. this is historically a very bullish time because usually midterm elections, the first, second, and third quarter are among the weakest. this is into the pre-election year next year. it is time for stocks but again the big question is what about the fed, whether or not stocks can continue to gain on that momentum without the fed having a pivot. october is known as a bear market killer with bear markets ending in the month. we will see whether or not the gains will continue. the momentum we see, looking at a sign of exhaustion we have saw on friday. they're looking at 97% of the s&p 500 in the green today. we will see of the momentum can continue over the next couple of weeks. haidi: jp morgan is writing, when you hear from one of

the more vocal polls, for the index is now in danger, what do we make of this? >> 4800 price target on the s&p 500, they did cautioned that he worried that the s&p 500 may not close at that level by year end. with the war in ukraine and the issues going on with russia and gas prices, as well as what is happening in the federal reserve and the latest shakeout that was happening in the u.k. last week. he did not lower his target, he has a $4800 price target. one of wall street's most vocal bears. there is a much lower price target below 4000 on the s&p 500. there are indications they are looking at their indicator while it is -- where it is pointing to being a bible as a cell -- buy v

s a sell. shery: the expectation for another 50 basis point hike, what is happening there? >> the bank of new zealand seems a bit more settled. seeing 50 basis points in november as well. unlike australia, the path of tightening seems to be a bit more certain. we see the cash rate of 4.5%. it does not stop the qe dollar sinking against the greenback. it is making imports more expensive. fueling inflation, a familiar scenario in the tight labor market as well. we have the fed tightening, the unlikely assist as well. it does seem to be in the tightening cycle in new zealand. the tightening is now mature and

well advanced and falling energy prices are taking some of the pressure off as well. perhaps in 2023 the picture may start to change in new zealand as well. shery: the latest on our top stories. u.k. chancellor also bringing forward the release of the medium-term fiscal plan. looking to be financial markets about his economic strategy earlier. he and the prime minister dropped their tax cuts for the highest earners to fend off amounting rebellion within their own conservative party -- a rebellion in their conservative party. >> it was a distraction and it was the wrong thing to do. we need to listen, people in government have to listen to people in the country. it is a tough thing to do. it is a tough thing to put your hand up and say you can do that. >> bring in john oliver --

author. this u-turn, what does it mean for the path forward? >> for the u.k.? the damage has been done. for the world in general? there was a brief risk of an almighty systemic event in the u.k. which has been quenched. the only problem is that this was a nasty reminder for everybody. that is why we have questions about credit suisse or sensitivity to the yen. a nasty reminder that there are possibilities of accidents out there and nobody is quite sure where they are. people are taken by surprise by what has happened by the u.k. pension funds last week. in terms of the politics of the situation, in the u.k., i think this is dead in the water and possibly this trust is as well.

this is very serious, a predicament they have landed themselves in. haidi: what happens in parts of this economic package? we are hearing from within her own party she is losing support fast. symbolic as of my lead, and to call for an immediate election? >>: for an immediate election is not going to -- calling for an immediate election is not going to happen because the conservatives would lose it. they have a majority in the house at the moment and they are not going to vote to risk losing their seats. that is an extremely unlikely event. certainly, if they do find a way to jettison yet another prime minister, that is going to begin to be very damaging for the

president and that would increase the pressure for them to do the decent thing and call an election sooner rather than later. i think we can basically assume that we still have two years until the next election. there are ways the conservative party could conceivably fire liz truss. it takes intrigue of even greater intrigue that went into dispatching with margaret thatcher over 30 years ago. a good habit out of the fight people are gossiping about it suggests it is a possibility -- a good sign of it is that people are gossiping about it and it suggests a possibility. the best thing they can do is come up with a fiscal plan with actual cuts. that will convince the market that they know what they are doing and that things can be done responsibly. most of the cuts will be in

things that will annoy the voters. beyond -- shery: they are talking about welfare payments being cut? >> they were going to be making a difference when inflation is actually quite high. one of the easiest ways to save some money would be not to index them. that would be political poison i would think. it would assuage the market quite nicely. shery: that is drawn with an breakdown with everything that is happening in the u.k.. >> european union companies are working on a deal on the new sanctions package for russia. they are seeking to punish russia for escalating the war in ukraine and in the annexing for occupied territories. the hitch has been agreeing details on a price cap for russian oil to countries. members don't need to formally approve the deal.

-- members need to formally approve the deal. negotiating with russia to end the war and see crimea for good. citizens are being asked if they want to live. in ukraine or russia ukraine's president put up his own quarter poll asking if people think elon musk supports ukraine. kahn faces a criminal conviction. he has been campaigning for early elections be outed in the election for a no-confidence vote. >> a colder than expected round of residential voting. the benchmarks urged the most

since april 2020. investors betting that the former president may need to advertise more market policies before the second round vote at the end of the month. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. haidi: still ahead, paul bloxham tells us what he expects another outsized hike from the rba. coming up next, nicole webb tells us why the market sees the slump as a chance for long-term gains. ♪

shery: u.s. futures extending gains after they saw the best day since july, rebounding. we have the extreme sentiment in the barn positioning and fueling a rebound. our next guest is not see the market rebound -- does not see the. market rebound. we have seen a little bit of a rebound, given the short term reasons i mentioned, why do you

think this is now going to be sustained? nicole: we think there is room. it is not visually exclusive to their being a great opportunity to purchase. we are saying when we hit support for the s&p around 3600 every day, we see volumes that have a buyback of that level. in terms of where we see the market contract from here, from where it recession or activity and some of what we suspect will happen, this earnings season or the one to follow, it will be that the market may come down to that 13 times 215 times multiplier. -- there is probably still room below that to go.

shery: we have heard from people given the strength of the dollar, corporate earnings will actually be a squeeze going forward. you have not decided to stay fairly new. why is that? nicole: some of the u.s. modeling was done in anticipation of the purchasing power we would keep on sure here -- onshore here. i think it is important to remember the returns from this point forward will depend not so much on what happens, but on what happens relative to what is already priced in. we think there is a lot of long-term opportunity outside of the u.s., we do not see the shift or the wave of outperformance coming until the u.s. dollar either slows itself down or you see the fed plateau and pool.

until you see the price adjustment in currency, we do not see the opportunity right now for that pivot. haidi: does that arbitrage opportunity that come from expectations set us up for a period of structurally lower growth? who benefits from that? nicole: we all benefit from that to some degree. the normalization of the temple at which or the velocity at which we experience a change in the markets is something that is a bit necessary. it is more of a return to normalcy. investor expectations, some of -- week can name period -- we can name periods of kind of feel likely to emulate. some of that is more slowed, less engineering.

one of the things i anticipate to come through is a little bit of this responsiveness to covid engineering. we do not want to get the market wrong. when the fed breaks something with their decision-making, they will then ease us out of it. i think investors are getting this wrong. what i see are the springboks, i think we underestimated the pain of the stall out. at some point the fed does stop raising. how long they hold or suspend it, that is in question. that is when you start to see the earnings numbers are trickle through. also some of the early data, building on inventories and tighter margins. that will come through to the surface. haidi: that is the senior vice president at wealth enhancement

group. nicole is with us. plenty more to come, this is daybreak australia, this is bloomberg. ♪

haidi: here is a quick check out the latest business in mind. -- business headlines. a late friday memo focuses attention on dramatic moves in the stock price and credit spread. the company assumed it would see shares fall to a first record low. shery: google has a shut down his translate app for china and be one of the few offices operating in the world's biggest market. -- one of the few apps operating

in the world's biggest market. chinese carmaker byd has not stopped its sales record for hybrid vehicles. it is sold 800,000 units, beating tesla for delivering in the third quarter. that was a 187% increase year on year. up next is rba decision to and the guest tells us why there is a risk of a final outsized hike before a ship to slower moves -- a shift to slower moves. this is bloomberg. this i- [announcer] imagine having fuller, thicker,

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call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) >> i am totally stumped, mystified, surprised that fed officials do not acknowledge

that they are focusing on the fed funds rate as part of a monetary cycle. the monitor developments, they have one more rate hike coming. that will be at because the financial stability issue will pop-up as a primary concern. shery: the fed rate hike past. stay with us for morning calls. what else did we hear in that conversation? >> they are also talking to us about the financial stress in markets. we see the big rate increases and a stronger dollar. the qe program kicking into high gear. that will be the primary focus for officials here rather than raising the fed funds rate. they say it will not get up to 4.5%. we should see one more hike and

that should be in for the current rate hiking cycle. hated forecast back in july we have already seen the bottom for u.s. stocks. you can see that did not happen. we had the huge selloff in september. a great start as you can see here. the stock is driven by the fear that fed would be inducing a recession. he is looking at his current cars. he does think it is too optimistic but he does the u.s. stocks being a safe harbor from all of the other issues we are seeing in global economies. haidi: it is harder to call a bottom for this market. >> a lot of strategists are wondering if we have seen the bottom for u.s. stocks. it is a little bit higher again. in terms of what as a bank saying, we have not seen the full capitulation and what they are looking at is this cell site indicator.

this tracks investor sentiment towards equity on a monthly basis. this is based on asset allocation recommendations provided to the bank. in september that was at 83.6%. the near 10% selloff we did have for the u.s. stocks. the bank of america is saying no signs of a full capitulation yet. it has been a reliable contrarian indicator over time. the bank of america has been a bullish signal when investors or bearish. shery: we are looking at geopolitical tensions in the korean peninsula. japan is one of residents to take shelter from a north korean missile. this is as we have heard from japan is saying that north korea may have fired a missile according to the japan coast guard, even a south korea is saying that north korea has fired ballistic missile to the east side. this follows a seven missile

launches last week and north korea is saber rattling around political events. we saw this launch around kamala harris visiting japan last week. a ronald reagan aircraft group had arrived four drills. north korea may have fired a ballistic missile. a report and japan is going to warn the citizens to seek shelter from that missile. haidi: something else investors need to contend with, national security. geopolitics or at the four and the backdrop of what global central banks are doing. here in australia there is the rba cash rate dealing with our next guest, high inflation has not embedded itself in broad-based expectations. 25 basis point move is essential

to avoid a total outsized hike today. this is how the messaging has changed market expectations when it comes to potentially eat the white line, the float really flattening. very early on in september we had a case for the slower pace and hiked growing as the cash rate is rising. what is idiosyncratic about the economic conditions in australia versus the broader inflation talent we see globally? paul: there are a few differences. one difference is that inflation did not arrive until a little bit later in australia and as a result of that it has not embedded itself in the expectations yet. we have seen wages growth start to pick up, it is taking a lot

of time to get through. the broader wages story, unlike the u.s., wages growth has not gotten going. the second element is the rba has a powerful inflation tool. they have a powerful cash rate. most of the mortgages in australia are direct. they have a quick effect on the economy. a very powerful tool. maybe they do not need to do quite as much? the final element, the global element as well. we are watching what is going on globally. if we were at a tipping point in the global story, it is some indicators this will be overnight and so on. this inflationary force that this may deliver may be good for australia. i think the rba governor has taught me about the idea that he wants to deliver a soft landing. he does not want to push the

economy too hard. that is different from what we are hearing from other central banks who are focused on inflation irrespective of what it means to growth. there are differences that explain some of that. haidi: global forces, ust forces happen helpful for driving the aussie dollar down -- usd forces have been helpful for driving the u.s aussie dollar down. paul: the aussie dollar is down against the u.s. dollar. it is not nearly as much down against a trade-weighted basket. if you look year to date, it is down slightly across the area. fewer stocks of strength. a lot of companies are coming down, the euro is down, the

pound is down. it is not just an aussie story. it is a strong u.s. dollar story. for the inflation outlook for australia, the is important. it is important to watch what is going on in the weighted index rather than the aussie dollar, u.s. dollar. it will not be nearly as inflationary because the index has not come down nearly as sharply. to your point about commodities, it has not been tracked in commodities. the aussie dollar has some disconnect. i think the primary explanation is in the early 2000 when we had a big connection between these two things we had a massive issue with capital going into iron, coal, and natural gas. this time around it is very different. haidi: and you delve into the wages side of things -- can you dive into the wages side of things? more of a pickup than the other

indices we follow? paul: they are the leading edge, the new job turnover, people who switched jobs are driving a lift in wages growth and we are seeing that pick up at a faster rate. you have to keep in mind for australia, 40% of the wages in enterprise bargaining, agreements between firms and workers and unions. these tend to be two or three years long on average. a lot of them have not moved over yet.

the wage rates. the wage rates. could the rba rate tool, how powerful it is compared to other countries, say in the u.s. we have mostly 30 year fixed rate? paul: that is right. 60% of australian mortgages or on variable rates. it gets through to those rights advocates through the households. that is unusually low. through the pandemic there were a whole bunch of people with mortgages in australia. they are not 30 year mortgages are like people have in the u.s.. they reset in a large way running through next year into

2023. by that point, there will have a larger share of variable rates. household debt levels are high, most of the rates are variable and most of the mortgage rates are variable. when the rba moves it adds a pretty rapid impact on households. a powerful tool may not need to be loaded quite as strongly in order to get the same slow down what we -- the slow down to get inflation under control. haidi: ucd 4% terminal right, what is the risk of upside inflation surprises forcing the banks to go further than that? paul: in new zealand, they are talking about the idea of slowing the plate. i do not think they are ready to do that yet. i think the new zealand cash

rate will be at 4%. we do not think they will go any further. they new zealand economy is already slowing down quite sharply. they will have a harder landing than australia. having been the first central bank in the g10, a fixed interest rate in the cycle. we think that they may be the first in the tail end of 2023. the the new zealand story is interesting to watch. the central bank is falling early. we think there is more guidance about what is coming down the track. haidi:. to have you with us and your insights. that is the economist from

australia, new zealand, and global commodities. this is bloomberg. ♪

>> u.k. chancellor is promising

no more distractions after he and the prime minister were forced into a u-turn to cut taxes for top earners. this was to prevent a mounting rebellion within their conservative party. they will announce a medium physical plant sooner than november. -- a medium fiscal plan no sooner than november. >> i think people in government have to listen to people in the country. it is a tough thing to do. >> a lawyer for the sadiq khan prince has asked the u.s. judge to dismiss a case accusing him of ordering the killing of demo khashoggi. -- jamaal khashoggi. the suit was filed by khashoggi's fiance.

58 people were killed by eric dane ian as the damage amounts. according to -- people were killed by hurricane ian as the damage amounts. mounts. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. shery: we are continuing to track the missile launch by north korea. japan giving more details of this trajectory saying that the north korean missile passed overhead through the pacific ocean. authorities are sending a missile alert for hokaido, and parts of tokyo as well. they have warned citizens to seek shelter from the missile.

your hearing from authorities that they north korea missile flew over the pacific ocean -- that the north korea missile flew over the pacific ocean. there were missile tests last week due to the visit of kamala harris to the region. we will be watching what is happening in japan as authorities are alerting the public. let us turn to the latest on energy prices. we see a strong rally in new york as investors and traders focus on the expected cuts in monthly output from opec-plus. the final decision will not come until wednesday. >> that is the first in-person meeting of opec since the pandemic. oil was up as much as 5%, we are seeing gains in asia trading.

notice the european natural gas there is moving down in europe, it has to do with a lot of the eu demand, trying to get demand to go down. they got a man to drop by 10%. they have been able to agree on a package on how to do with russia's block on some of the natural gas flowing their way. let us talk about opec and proppant to the bloomberg. they are expecting to drop production by one million barrels a day. it is a surprise when everybody views the tight supply right now in the fundamentals for oil, but we have to realize that prices have slumped after going all the way up to $120. there is focus on the challenge that oil producers are focusing on.

there is a focus on investors and wide-ranging analysts say as we count on the final month to the year, volatility is expected to continue. we are watching only for the opec-plus decision by the european winter, the conflict with potent, how much success the eu can make in avoiding economic damage. the u.s. is focus on the damage from hurricane ian. while that affect the u.s. economy -- will that affect the u.s. economy? a lot of questions about to take place in the coming weeks. the right decisions, the strength of the dollar, all of that promise more volatility. oil is done by a quarter in the last couple of months as the slowing global economy has sapped demand. look at the recent rise in west texas intermediate crude. the big picture shows that while all of the gains we saw

post-russian invasion of ukraine have really disappeared. it is a big concern about demand, about recession. that makes the focus on the wednesday meeting of opec-plus although the greater. -- opec-plus all the greater. shery: the energy crunch? >> despite environmental concerns, demand for the dirtiest of fossil fuels has been on the rise. most u.s. power plants one of the key fuels that is used and the stock prices for coal from central appalachia was up more than 200 for a ton. newcastle coal from australia is up, it is down on the day. you see the wesco prices there as well. check out the action for a lot of the coal-based stocks.

they took a big dump on the back of the spot price increase. the surge in coal prices has to do with post-pandemic demand for electricity and the fact that coal miners cannot boost supply fast enough. haidi: in the meantime, australia is posting a fit of the lithium refining capacity. -- fifth of the lithium refining capacity. a reporter joins us now. james, they are looking at the value of australia's energy as well as mineral and mining exports. he goes to the back of what sue was saying, despite the momentum behind the energy transmission, we see oil and coal place at a huge, voluble part -- play such

a huge, valuable part. >> record highs, that was driven by coal and gas. coal is the number one export earner of $120 billion. that is not a result of the increased production. that is a feature of incredibly high prices. gas as well. one of the top exporters in the world, it has dropped down a bit. it is the economy riding high on this. i think the future, looking to the future, -- shery: talking about the future, there is a global push to push away from fossil fuels, how vulnerable is it?

>> that this is a good question and difficult one to answer. look at the figures in australia, they are desperately dependent on fossil fuels for export. the future, the government in his forecast is quite bullish about the near term demand for coal and gas. for the future for coal, this is going to become a problem. half of the coal is used in steelmaking. there is no really other commercially viable way to make steel. on that side, it is ok. iron ore, it is the biggest in terms of volume, that has a future. australia is looking a couple of

decades into the future. it is going to have to start thinking about where the new exports are going to come from. that is where lithium comes in. you mentioned lithium in your opening. this is still a tiny export. lithium is used in electric vehicles in the battery. it is tiny compared to other commodities we talked about. talking $1 billion this year. that is where the future is. shery: that is our metals and mining reporter there. another quick check on our headlines. antigen test allied -- a judge delayed the testimony of key witnesses for the government's former pharanos lab

reporter. kim kardashian will pay almost 1.3 million dollars to settle allegations she illegally touted a corporate security. she used social media to promote a crypto asset security offered by ethereum. she did not disclosed she was paid to do so. a spokesperson for crash and says she cooperated with the investigation. -- for kardashian says she cooperated with the investigation. a firm's funds has become the most expensive in the industry. the increase will be the second since 2019 and will pay to retain talent. haidi: look at trading when it

comes to fx. particularly on this missile alert from japan over the north korean missile that flew over the ocean. areas in hokaido and parts of tokyo. we did see the yen weakened beyond 1.75 for the dollar. we see traders testing the government resolve to help the currency. we see a bit of a shift in sterling. it looking like a pain trade given we are sitting at the multiyear lows. quite a bit of risk off. this is bloomberg. ♪