>> a very good morning. welcome to daybreak: australia. >> we are counting down to asia's major market open. >> good evening from bloomberg's world headquarters in new york. oil, extending its rally after opec and allies agreed to their largest output cut since 2020. the u.s., saying the decision is outside of. >> san francisco said the bar is high slowing the pace of tightening. >> raising to a level we believe is restrictive enough to bring inflation down and then holding it there. >> the views from the fed, not helping sentiments, after a dramatic rally in the last few days. here's a look at wall street. that was an easy day for stocks. a 2% drop in the open.

suddenly at noon, a big options trade goes through and stocks start rallying. they were powered more by the opec cuts, the biggest since 2020, as we just said. energy stocks had a big day. as you look at the board here, the s&p futures closed down about .2%. in the futures market, flat, a little bit negative. we are seeing the negative sentiment still there. not a big impetus after the day we saw today. in the bond market, it was certainly the hawkish comments from the san francisco fed and the atlanta fed, along with stronger-than-expected services sector data that helped push yields higher. the 10 year yield, with a nice drop. may over at least for now. the futures market, we are seeing a bit of a drop. a little bit further rising yield.

we will see how that continues. the 10 year. crude, back to about $88 a barrel. this is quite a move. goldman sachs, we saw the opec-plus news, saying they think this is very good for prices. looks to me like a pretty simple call. >> that is certainly what they said, goldman sachs, a bullish signal. we could see any sort of changes to peak rates in the narrative. the markets, getting a little bit ahead of themselves. you can see on this chart, we are going to need to see a lot more market stress if history is a guide before we see any pivot here. these are the periods of easing in the early 2000's financial crisis, covid, coinciding with the blue line, spiking above the line and read. -- in red. the vix is below the 30 level currently. let's change on now to the asian

trading day. taking cues from wall street. sydney futures looking fairly slight. we did see the rally in energy stocks. we will be watching those in the session today. as we said, goldman sachs saying it is a bullish call. any rally we get in energy prices helps to fuel those inflation fears on the market, plus the opec-plus decision. >> it was an interesting decision. going into it, there is a tight rope opec-plus members were walking. the demand disruption, and wanting to maintain price stability and price advantage. we got this firm review from the u.s. president pretty much immediately. defended by the ministers making that decision. saying it is necessary to protect the industry and their own economies from the risk of a global slow down.

it is fair to point out, because they are using these outdated data predictions, the only oil supply will have -- the supply will fall by half the amount. just adding another risk to shocking the global economy. >> i wonder if the opec-plus members wonder if it is headed for a slow down. this is a bit of a preemptive move. the federal reserve are looking at the rising risk of recession on one side and inflation rates staying stubbornly high in the u.s. it is the recession risk that has made investors think, maybe they are going to have to pause. the president of the san francisco fed made it clear today on bloomberg television that she is not. let's listen. >> i don't see that happening at all. i see us as raising to a level that we believe is restrictive enough to bring inflation down. then holding it there until we

see inflation truly got close to 2%. and demonstrate that price stability is restored. >> mary daly talking about the need to be resolute. we had john williams saying on monday -- saying it on monday. rafael bostic chimed in at the close of trade, saying he sees the funds rate going to 4.5% next year. he did not see a move to hike rates, then start immediately cutting them. they seem to be talking in one voice now. a very important thing to keep the markets on track i guess. >> we do have some breaking news, when it comes to the twitter deal, the financing of the deal, given that we have seen this about-face for elon musk, saying now the deal is back on track. he's going to go ahead and honor it after this piece offering and legal battles. apollo and six straight are not

financing. this continues to really add a bit more caution and injury to where this -- intrigue as to where this goes from here. banks are reconsidering and potentially having regrets. obviously during bad economic times. we continue to watch the story. two parties, not in talks to finance or renew the twitter deal. let's get more on the broader market reaction. shaky as it was to new eco data. it was eco-data and the fact that the fed speakers said it could not be more firm in terms of how committed they are to getting inflation down meaningfully, before we see any kind of talk about a pivot. >> he also mentioned earlier what fed mary daly was talking

about this morning on bloomberg tv, honing in on the point that basically investors are confusing a policy pause with a potential fed pivot. she suggested there could be a particular point where the fed gets to a particular terminal rate. at that restrictive rate for some time, until they see inflation come substantially down. it is interesting, because it seems as though the fed has been trying to communicate that to the markets, but they are hearing something a bit different, especially when looking at how futures are pricing and potential rate cuts for potentially next year. she signaled that could not happen until after 2023. >> what a crazy day. the midday options trade got this big rally going. it felt like it is turning around. then all of a sudden, an hour before the close, you see things starting to pull back. was it the weight of -- there are more negative factors out there than positive right now? >> there are a lot of different

factors moving things today. like you mentioned earlier, looking at the economic data, still firm on the services side and jobs data. ahead of friday's payroll report. going into the session further on, you so energy stocks rally. getting closer to the close, a lot of strategists, wells fargo, reporting big trades happening in the options market that was really fueling a lot of the losses. when we saw the s&p 500 at one point erasing its decline, but eventually closing slightly lower. again, a lot of these swings and volatility, traders are expected to happen until there's certainty as far as what the fed's path looks like. especially when it comes to the big question mark with inflation. we will get the big cpi report on thursday. >> we sure will. bloomberg equities reporter just menton, thank you so much for the interesting wrap up -- jess menton, thank you so much for the interesting wrap up. this is drawing an immediate

rebuke from the u.s. president. what are your takeaways from the meeting in indiana? we got the headline, but what else is there? >> the headline number is 2 million barrels a day but the actual code can be about one million barrels a day. that is because opec plus members have been massively under producing. according to bloomberg calculations, the difference between the output target and real production is about 3.5 million barrels a day. russia alone produces 9.8 million barrels a day versus its target 11 million barrels a day. that is why the reaction has been so muted. >> you talk about the reaction being muted. do we see any repricing going into the year's end? given the immediate response was sort of a shrug? >> right, there are a lot of factors. first of all, on the one hand,

demand can be weaker. especially of the global recession proves to be real. at the same time, the market remains very tight. it also depends on china. i recently heard china provided more quotas for refineries, which means they will buy more oil. there will be additional pressure on demand and prices can go higher. also keep in mind, this price cap on russian crude is coming up, which means russia won't be able to sell its crude above a certain price level. bloomberg spoke exclusively with russia's economic prime minister, and he said russia will not be selling crude to countries that support price cuts. listen to what he had to say. >> it creates a very bad precedent.

there are a number of examples of market interference. [indiscernible] if implemented, we are not going to supply countries which support. >> there's a big dislocation between speculative and physical markets. how is not going to affect how this plays out for the next several months? >> i think we will see opec-plus producers will be able to fix business. on the one hand the market is really tight. . on the other hand we see a massive amount of short positions. because producers and -- because producers and speculators and traders expect prices to go lower. which is actually happening. people expect the recession will

be real. less demand for crude. . at the same time the price of crude has more than doubled. traders are facing a dilemma. you don't want to short crude, because opec makes the market tighter. at the same time you don't want to go long, because recession can be real. >> natalia k., on the balancing act with oil producers at the moment. let's go to new york with your first word headlines. >> thank you and good morning. the u.k. premier has rallied respondent members at the party conference in birmingham. the annual gathering. , overshadowed by humiliating government plan to cut prices on britain's highest earners.

-- by a accumulating government plan to cut prices on britain's highest earners. a bruising few days in which members of her own, openly questioned her plans. >> it is a vital time for the united kingdom. these are stormy days. in these tough times, we need to step up. i am determined to get britain moving. to get us through the tempest. and put us on a stronger footing as a nation. >> the wto says global merchandise trade will slow next year. it says manufacturers, households are grappling with a mix of issues including the ukraine war, high energy costs, and central-bank rate hikes. the wto expects trade growth to fall sharply in 2023 to 1%, compared to the previous forecast of 3.4%. >> we have just released our forecast. it is looking quite grim. a little more grim than we had

thought. a real slow down and it is happening for several reasons. of course, the i energy prices in europe arising from the war in ukraine are a big factor in this. and household spending. in various developing countries happening in emerging markets. >> taiwan has pledged to work closely with the u.s. and other allies to stop china's military from acquiring state-of-the-art technology, putting it in line with washington's efforts to restrict high-tech exports to china. industry heavyweight tsmc is building a new plant in the u.s. as china ran some military threats -- ramps up military threats. spacex has launched a nasa mission to the international space station. the mission had been delayed several weeks. the crew is due to arrive

thursday after a 29 hour journey and a schedule to spend six months in orbit. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ >> still ahead, a look at where the u.k. government goes from here, as prime minister liz truss tries to rally the conservative party following her you turn on top level tax cuts. and coming up first, despite a major drop in u.s. job openings, our next guest says the fed will not inhibit until inflation is back in its target range. rebecca felton joins us just ahead. don't miss our exclusive interview with new zealand's finance minister, grant robertson, as they signal more big hikes ahead. he joins us at 10:30 a.m. hong kong time, 3:30 p.m. in wellington. ♪

>> as head officials make it crystal clear they will not have but until inflation comes down, the next guest says she is staying underweight equities and overweight cash. we have the senior market strategist at senior investment group, rebecca felton. do you feel a little bit like saying, haha, i told you so? the markets rally because --

rally because they thought the fed would pave and now they've got a ways to go. >> thank you for having me. no, there is no joy in this pyramid is very painful for all of us. we don't expect the fed to pivot . of course as we've heard fed president bostic speak today, the tone there was still very firm. we believe it's going to be a while before we hear more positive news coming out of the fed. >> when is the point to start buying stocks again? do you have to wait until the fed has made it clear that they are at least going to stop hiking rates? do you make your own forecast on how inflation is going to play out? and be that your guide as to when you are hopping back into the market, or do you stay in cash in definitely? >> we definitely don't want to stay in cash. the reason we are holding is we are looking for opportunities down the road because we do

believe the u.s. economy is still on track to grow. but what we are looking at in the near future, i.e., the next two weeks, when reporting season starts in earnest, there a lot of uncertainty for many people, because while we have had the bar set low with revisions we've had so far year to date, you still have expectations for what 12% or so profit margins, revenues to be strong. and i think what we will be listening for our buzzwords -- are buzzwords like pricing power and demand because we want to see those who have held up, such that earnings revisions don't have to be trending lower. once we get to earnings season and get a pretty resilient tone from management teams, than perhaps it will be time to deploy some of that cash. >> where do you see the impact of the strong u.s. dollar this season? >> obviously, it is really tough, with all the revenues we are getting.

the s&p 500 i believe is north of 30% of revenues that come from overseas. that's obviously a headwinds for earnings. it is bad for the emerging markets economies. so definitely, it is a negative for the global economic situation. as high as it is right now. >> so, it sounds like and you would not be the first person if you agreed with this that earnings still need to come down lower before we see a fair reflection of the amount of risk that is out there? >> well, i think some would say the bar has already been set pretty low. the consensus was q3 was up around 9%. now we are below 3%. perhaps they have been revised low enough. i think it's going to be more about what they say rather than what they report. because we still have a lot of unanswered questions, as it relates to consumers. we have a lot of and answered questions as it relates to plans

for expansion on the part of these major corporation. we've already seen a number of companies lower, talking about hiring freezes and layoffs. we really need to get a pulse on that type of activity. >> rebecca felton, senior market strategist at riverfront investment group. you can get around above the stories you need to know to get your day going. terminal subscribers can get that dayb . this is bloomberg. ♪

. -- >> russia's deputy prime minister, alexander novak, has slammed the price cap on russian oil. speaking exclusively to bloomberg in vienna, novak told us his country will not sell oil to any countries that adopt such a cap. >> indeed, there have been tw

o important decisions taken today, the decision by your country's president, and the second decision which is just as important as the first one, is actually the extension of the cooperation, it was scheduled to expire at the end of 22 enough to. now it has been agreed -- end of 2022. now it has been agreed that it will be expanded until the end of 2023. the decision was taken to balance the market out. especially, this is very important ahead of the winter season, when we will also see the seasonal decline demand by 2.5 to 3 million barrels. this decision which has been made today helps the market to balance it out i think. it is a very weighted decision and a timely one. >> let's look towards february of 2023. you will have more sanctions, we

assume. you will potentially have a price cap. can you tell me with a surety what your production in february of 2023 will be? you said 92%, 93% for 2023. but is that the worst case scenario, by february, with more sanctions on a price cap? >> as we are seeing, the price cap creates a very bad precedent. we will primarily hit the ones who are actually implementing it. we know in history that there are examples of market interference, especially with the mechanism of price control. it only leads to deficits of certain goods. it is an example -- it is on acceptable to russia. if it is implemented, we are not going to supply countries that join this mechanism. >> russia's deputy prime minister, alexander's

novak -- alexander novak, speaking to manus cranny in vienna. >> the october 17th trial remains on track for now. a quarter has not yet received an agreement from both parties to put the case on hold. twitter shares remain below musk's $54 and $.20 offer price as analyst point out many unknowns remain around the transaction. credit suisse stock resumed wednesday following 4% after news of banking operations. credit suisse has no immediate concerns around liquidity and funding. according to reuters natio

>> welcome to daybreak: australia. opec-plus members have a great

to cut their output of oil by 2 million barrels a day starting in february. actual supply will fall by about half of that amount. it is the biggest cut since 2020, adding another rest of the global economy. the white house slammed the decision. >> we are disappointed that opec made this decision. the president mentioned is unnecessary if you look at the global environment where supplies continues to be the predominant challenge. we have been working for some time to take action and encourage action globally to make sure that supply actually matches demand. >> the european union has a new package of sections against russia, including mechanisms to excel sanctions being judged. other measures target russian individuals including those involved in recent widely condemned referendums in ukraine. some nations say the latest

draft weakens earlier proposals. the european commission president is proposing the block intervene in the gas market to cap rising prices. including a temporary price limit. the commission commends the price no longer reflects the reality and the shrinking share of russian gas. after alec walden settled allegations of the accidental shooting death of a cinematographer on the set of the movie "rust." he agreed to give them titles on the production. the trial is set to resume in january. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ kathleen? >> san francisco fed president says market anticipation of

interest rate cuts next year is misplaced. she told us the central bank will be setting a high bar for slowing the pace of monetary policy tightening. >> we are resolute at raising the interest rate into restrictive territory so that we can bring inflation down, which is causing millions of americans to suffer real pain. that everyone is experiencing it. it is also very damaging to the economy to have this level of inflation. so we are committed to bringing it down and staying the course until we all -- until we are done. >> before the interview, you said the futures market shape, the idea that you go up and come back down next year is wrong. >> i don't see that happening at all. i see us as raising to a level that we believe is restrictive enough to bring inflation down. and then holding it there until we see inflation truly got close to 2%. and demonstrate that price

stability is restored. >> what is that level that is restrictive enough? >> right now we've got the rate up to a point where it is a little bit restrictive potentially. just at neutral. i would see more policy adjustments as required to restrain the economy sufficiently. remember this is about bringing demand, which is very strong, back online with supply. bringing inflation down. i do see more rate increases, as necessary. of course we are consistently data-dependent and we will continue to do that. >> i know you, because you are data dependent, you have not made a decision of what you want to do november 2. >> that's correct. >> what's more important right now, the speech at which you get to the level or the length of time you leave it there? >> to my mind, the length of time we leave it there is increasingly important, because that is really going to be the thing that brings inflation not just coming down, but achieving the 2% average inflation target that we have set. >> how do you know whether you have gone too far?

the feeling is the fed raises rates until something breaks. are very close to anything breaking? >> we definitely don't raise rates until something breaks. we actually are forward-looking. very forward-looking. you have to be. you can look at the data that's published, a lot of the time i spend in my job is actually out talking to business leaders, community members, small businesses, workers, asking, where are we in the economy? you put that together, and you are constantly calibrating two risks, not doing enough and having inflation expectations drift because inflation just won't die off, or doing too much and over steering and causing unnecessary downturns. that is not relevant for the economy and conditions we are trying to achieve. so we are constantly monitoring both of those risks. the main thing i want your listeners to know is it is not abou -- it is not a backward looking enterprise. it is a forward-looking

enterprise. we want to get there as neatly as possible. >> what is the danger that you run into something -- the bank of england had to deal with last week, of some sort of financial derivative that you had not been watching, or people were not aware of, suddenly blowing up? >> certainly, you have to look for those things. a time period with not just u.s. tightening policy, but central banks across the globe tightening policy. it is a synchronized, but not coordinated tightening. we are all just being faced with the same inflation for many of the same reasons we are facing in here in the u.s. firms and sectors are repositioning. we have to be on the lookout for that. the fed always has several rules it is managing at once. principle one you are hearing about right now is monetary policy, combating high inflation. but we always have the lender of last resort response abilities.

we would be prepared to use it. what i'm saying right now is in economy that is actually working well. but we have high inflation. and we've got to get that down. so we can have sustained growth going forward. >> mary daly, the san francisco fed president, speaking with bloomberg's michael mckee. we continue to see the dollar strength becoming the key narrative again, as we get more assurance from the fed speakers like mary daly that they are staying on course with their tightening regime until we see meaningful inflation coming down. we are seeing the pullback when it comes to sterling. the pound sinking more than 2%. traders piling back into the dollar trade. expecting the fed will be sticking to the commitment to hiking rates. no pivot just yet. we saw a bit of a reaction from the u.k.'s lives trust at the annual party conference overnight. watching the aussie dollar as well, falling under 65 u.s.

cents there. seeing a little bit of strength this morning when it comes to trading in the aussie. the kiwi dollar, tempering somewhat, getting as much is 1.3% earlier after the big move from the rpm fed. we continue to really watch the situation when it comes to the dollar yen as well. we are seeing a little bit of weakness in the yen with the bloomberg dollar index strengthening. potentially really gaping credibility to this view that the pullback was really some profit taking. an enormous amount of strength in the dollar rally. let's bring in our asia contributor. we continue to see the dominance of the dollar story. that accounts for the impact across world currency reserves. . a lot of these economies have spent a lot of money during down there reserves and interventions.

-- have spent a lot of money drawing down there reserves and interventions. >> that is true. of course the other half of that is japan, when it intervenes, we will expect it might have to intervene again, given what has been going on. india has been spending, indonesia has been spending. there are other economies, with expectations they have been spending. there is also the valuation effect. both the u.s. dollar has sawed against most currencies. especially the currencies that are also part of the central bank reserves. the euro is down about 13% or so this year. the yen is down about 20% or more. that reduces the value of those holdings. and if you need to convert them into dollars, as you are looking

to defend your currency, then there is also the valuation effect of those currency reserves are all held as treasuries or similar, government bonds. government bonds have lost a lot of value this year. it is all of those effects. the bigger concern is not just what is -- not just what has come down. but as the pool shrinks, you've got less ammunition to use going forward. if you are a central bank and you need to use those reserves, are there just because of what's going on in the regular course of business or if you want to defend your currency. >> of course, the emerging-market, central bankers and officials say over and over again it is not like the asian financial crisis, they've got lots of reserves. i want to ask you about the kiwi. in the policy statement from the rpm fed, we got that mention of a weaker currency could be a risk to the cpi, a risk to inflation. so clearly it's one of the

factors they have on their radar screen when figuring out what they are doing with policy. >> yeah, very much so. it's always been -- new zealand has always been externally sensitive for this. which is understandable. it is a pretty small economy. yet it is something like the 10th or 11 most traded currency worldwide. so it is one of the most traded currencies relative to the nation's gdp. it is very sensitive to that. i think it is an interesting contrast with australia. which is being more relaxed about the currency. that's partly because the huge windfall australia has reaped from the impact of russia's war on hard commodity prices, which is helping the australian economy and helping to support the australian dollar. the australian dollar is noticeably weaker this year than the kiwi, it is up against the kiwi this year even though the fed has been more aggressive on rate hikes. i think that is part of why they

felt they could pave it to slower hikes. it is also part of why there are strong expectations the rbnz we'll stick to the sort of hiking path the fed has been carrying out. >> thank you so much, these are currencies that are definitely in focus. that is bloomberg's chief correspondent for asia and live contributor garfield reynolds. let's stay with foreign exchange as we bring in annabelle who has been looking at what analysts have been saying about the yen. talk us through the details. this is still a hot currency story. >> that's right. this is a new call from credit. the yen could offer the best opportunity for profits against the dollar over the medium-term. the reason they are saying this is because they are looking at recessionary fears that are building on the economy. during those periods of contraction, that is supportive, all safe havens like the yen, they are also looking at real fx exchange rate terms, when you look at those, they say the yen also appears to be. ultracheap. . we do also need to note that

agricole is basing this on the assumption that the fed will pay but and rates. obviously that's been quashed by the likes of mary daly. also the other assumption is we will see some sort of pivot from the boj, when the term ends next year. bloomberg intelligence likewise it saying the dollar yen looking fairly overvalued. they are finding it hard to drop their core on yet weakness -- on yen weakness. being driven by these bigger factors like policy divergence with the u.s., saying we could see the yen weakening for the. . they are looking at 145 to 150, haidi. >> the yen has seen a big boost when it comes to japanese stocks. the outlook for emerging-market equities, are things starting to look up? >> yes. that is actually what morgan stanley is saying, finally a bit of good news for em stocks. they have had multiple quarters and years of underperformance versus developed markets.

basically morgan stanley is saying we could be seeing some positive moves ahead for emerging-markets, and also asia, japan. we have seen extreme selling across these markets. they are comparing it to a situation where a lot of wood has been chopped and now it is time to plant some new saplings. you can take a look at this chart, we are heading into another period of underperformance of emerging markets to their developed peers. a lot of that can be put down to what we are seeing and china, because it does make up a large portion of the em index. down to policies like obit zero, tensions with the west -- covid zero, tensions with the west, being a drag on the index, still likely we are going to see the sector improve. >> the equity sector is going to be improving. annabelle, thank you so much. importantly, don't miss our exclusive interview later with

new zealand's finance minister, grant robertson. as they signal more rate hikes ahead. he joins us at 10:30 a.m. in hong kong. coming up, we review this trust -- liz

>> we gather at a vital time for

the united kingdom. these are stormy days. in these tough times, we need to step up. i am determined to get britain moving, to get us through the tempest, and to put us on a stronger footing as a nation. i had three priorities for our economy. growth, growth, and growth. [applause] cutting taxes is the right thing to do morally and economically. high taxes mean you feel that is less worthwhile working that extra hour, going for a better job, or setting up your own business. that, my friends, is why we are cutting taxes. ♪ >> the u.k. prime minister liz truss. speaking at the tory party conference in birmingham. our next guest says truss

faces a hard task to prove competence. we've got ben wellings joining us on. it is dovish control at this point but i suppose overwhelmingly when you talk about political survival for liz truss, are there any other options short of losing another try minister within the next two years? >> yeah, that's a good question. the conservative party are a little bit boxed in, i think. they've got two years to go to the next election assuming it is not called early. that would be a high risk strategy for a party lagging so badly in the polls, as the conservatives are. i believe they have to stay with liz truss. she doesn't have a majority of backers from the election campaign over the northern summer. so her position in parliament as

a little bit shaky amongst our colleagues. as you said, i think the speech was an exercise in damage limitation. it was fairly unremarkable. given the events of the last two weeks, i think that will be a sort of mission accomplished as far as the leadership team is concerned. >> at the same time, she is being derailed by internal attacks as well, factions against her leadership. is there a way for liz truss to balance some very deeply unpopular physical moves that will be called for in order to reinstate this idea that they are fiscally responsible? where do they go from here? particularly when it comes to trying to restore financial markets' credibility? >> right, i think to your first question of course, cutting taxes particularly is not popular amongst the u.k. electorate. why this is caused -- has caused

internal dissension, boris johnson and even theresa may's, the popularity was built on -- their popularity was built on providing support in terms of payments throughout the pandemic and also the idea of so-called leveling up using infrastructure projects, to mitigate inequalities throughout the u.k. truss has signaled very clearly she is opposed to all of those things. has been forced a turnaround on that. so this is really her constituency saying, this is not going to be popular. how that then translates in terms of the international markets -- because they of course reacted very badly to the mini budget announced by the chancellor, supported by truss, very close ideologically and politically. so if she can row back from

that, this really reminds me of 1992, when the british were ejected from the exchange rate mechanism that was going to set up the euro and lost their reputation for economic competence, and could not come back from that. when you combine that with the tax cuts, the way they are landing amongst the u.k. electorate, there's this idea that conservatives the circle of nasty parties -- as theresa may once put it. the combination of those things is going to make it difficult for truss to overturn that between now and whenever the next election is. >> what is the essence of the tories right now? you can go back to brexit, how that was handled. theresa may was a political football. once she was kicked around enough, boris johnson got himself elected and we saw what happened to him. what do the tories themselves think they stand for?

does this represent them trying to define what they stand for? where they want to take the country? who they are? >> i think that is really great question. i don't think they necessarily have the answer to that themselves. what we are seeing is different visions of what the conservative party ought to be, contending for each other. if you like, there is a more -- i'm thinking of the right term here. there is a more liberal wing of the conservative party, a softer wing, represented by some of truss detractors, seeking to make connections with the so-called left behinds, the jams, the just about managing's. truss represents a return to an ideology which has lost some of its luster since margaret

thatcher was in power. there an interesting phenomenon that seems to be happening. what i seem to be observing is what parties typically do when they have lost an election -- the retreat back to the surety of things that worked in the past. and sometimes they don't fit with present concerns very well. but nevertheless it is a reassuring reflects. as far as the ideologically committed people within the party are concerned. for me they are behaving like a party that is already in opposition. except of course this is all playing out in the glare of decisions they are having to make, whilst still running the u.k. so it is unusual to see this. but i do go back to that analogy with the exchange rate mechanism. and i think they have lost their reputation for economic management. >> ben, right to have you with us this morning, ben wellings. let's take a look ahead

for australia and new zealand. australia's trade numbers for august were due today. we are seeing the trade balance rising to 10 billion aussie dollars. also watching the trading session today, ceo kevin gallagher says governments should rework policy frameworks, encourage new investment in energy projects, especially gas and hydrogen. quantas ceo alan joyce says the airline is returning to normality. some operational problems do still need to be fixed. this is bloomberg. ♪

>> a quick check of the latest business flash headlines -- virgin atlantic is pulling out of hong kong for good. the u.k. airline is canceling flights and closing offices in the asian financial hub, ending a 30 year history in the city. one key factor it closed is it closed russian airspace which extends place between heathrow and -- flights between heathrow and hong kong by at least an hour. malaysia has declared the company triggered the legal clause because of a late last month at the gas pipeline. that pipeline feeds the lng complex which exports gas to customers across asia. that is it for daybreak: australia.

the with us -- stay with us. this is bloomberg. ♪