haidi: we are coming to you live from new york, hong kong, and here at the investment conference in sydney. shery: australian has just come online. asian stocks set to follow wall street into the red. the s&p 500 hitting a fresh low for the year as investors brace for data. minutes of the last fed meeting show they are committed to restrictive policy and recalibrate the pace of rate hikes. global chipmakers pull back from china as u.s. export curves begin to bite on beijing's domestic tech ambitions.

u.s. futures pointing slightly higher after the s&p 500 fell for a sixth consecutive session in new york. there was a lot of villa to lodi he around the fed minutes. of course there was the expectation of perhaps more fed tightening given the u.s. ppi numbers we got this morning showing that they rose more than expected, the first increase in three months. we have the treasury market advancing, the 10 year yield falling below the 390 level again and even wti prices continuing its dissent for a third consecutive session. really firmly lower after the ppi numbers given that of course they are also an indication of what the consumer inflation numbers will be on thursday. that very important number for the fed. annabelle: important for the fed but important for every single trader and investor analyst out there.

when we saw some of the worst selloffs globally in the september print or following the september reading, you will unlikely be taking any big positions ahead of it today. we will be seeing muted trading volumes throughout the session but certainly some sectors we are watching in particular president biden perhaps weighing an outright ban on russian supplies. also the pricing of that very key commodity for the ev sector. we have japan futures falling to a more muted or fractionally higher.

trading around a multi-decade low. given the diversions swissie between the boj and the fed. shery: minutes of the federal reserve's last meeting showing the central bank is firmly committed to bringing down inflation as some anticipate the need to start calibrating the pace of rate hikes. our global economics and policy editor kathleen hays is here with the details. which camp is she in? kathleen: let's hear what she said and then you can decide. for me it is obvious. it shows unanimously they are committed to bringing it down 2%. there is talk about potential

calibration. several participants. you never can tell, many might be more than several. it is still a sizable, significant number. they are looking at highly uncertain global economic developments. they are looking to calibrate the pace of further tightening. it has to do with the size of rate hikes. we know that there are economists and central bankers and policymakers around the world were raising questions, not just in the u.s. but about what the fed is doing. they also say the fed is going to maintain interest-rate of stance, but they say the risk is going to be coming more two sided. so we are getting closer and closer to some point where we are getting closer to enough even if we are not there yet. the fed being cautious, more

data dependent moves. so people are thinking we are hearing her voice and the voice of others when we see these vote. neel kashkari, the ultimate of who has now become a very ardent hawk, he was talking today about a very high bar set for pivoting to a less aggressive said policy path. let's listen to part of what he said. >> for me, the bar for such a change is very high because we have not yet seen much evidence that the underlying inflation, services inflation, wage inflation, the labor market, that that is it softening. i think we are quite a ways away from anything like that. kathleen: many fed officials including loretta mester who spoke with us just yesterday was making that same kind of point. we have to see inflation coming down. michelle bowman speaking in new york, she said sizable hikes should be on the table unless inflation falls. sustainably, that kind of a

fall, not just a pullback. who knows what we are going to see thursday. but this is the key. i think they are looking to doing this eventually at some point, but for now the data has to show that is the right thing to do. haidi: that commitment to the cause continues. kathleen hays joining us from washington. it seems like everyone is a macro trader in this inflation driven era. our chief correspondent from asia, more looking at the cpi print, although we have talked about how impactful this one thing -- >> there was a lot of potential for misleading of what comes out

when it comes to the cpi report. it is a very interesting difference, with the fed is doing. the rba industry earlier -- in australia it said it looks like something needs to be done. there was nothing that clear from the fed. the ultimate aim is to avoid a hard landing. certainly the worst that they could avoid is restraining inflation. you have a strong focus and you do not want to risk inflation

too long. if they do pivot it will be once rates are restrictive. they do not think rates at the moment are particularly restrictive. the risk here is investors get ahead of themselves in looking for inflation at a peak. shery: i need to get this question and because there was so much confusion in u.k. assets, is the boe extending bond buying? all of that volatility was quite surprising. >> it was very surprising. i think the key outcome here, governor bill lee's comments -- bailey's comments where we can afford to hold on because surely

the boe would not stop its bond buying and destroy the markets. they said, look, we have to get out of here, you need to do this now. they did that. perhaps it is mission accomplished. that explains why the treasuries were calmer in the face of the fed minutes coming up. shery: garfield reynolds with the latest on all of our top market stories. let's get the vonnie quinn. vonnie: american spires are starting to pull back is from top chinese chipmakers. it forces a firms are doing so in the wake of new u.s. regulations. the suppliers often send workers to help with manufacturing. they have been placed in u.s. unverified list.

restricting its abilities to buy american technology. the white house is considering a total ban on russian aluminum the response to the war in ukraine. the biden administration displaying a number of options including an outright ban or increase in terrace. russia is the world's second largest producer of aluminum after china. a boj governor has pledged to maintain monetary easing. he spoke at an annual meeting of the institute of international finance at washington where he defendant policy saying japanese inflation is different from that in the u.s. and europe. he says the central bank needs to continue easing to ensure its inflation targets. he reiterates the return to intervention was appropriate. >> we continue to prevent the inflation target in a sustainable way. the economy is strong.

we have to continue to support the economy to recover. vonnie: global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. haidi: let's get you back to hong kong, taking a look at aluminum stocks moving in the early part of the session. >> that is right, vonnie went through the details about biden weighing an outright ban on russian supplies. the morgan stanley report we were discussing, the outlook for lithium not looking so great, also reflected in what we are seeing in minerals at the start of trade and qantas is jumping at the start of trade, australia's national carrier as return to profit, up to 1.3 aussie one billion.

it does take a lot of pressure off the ceo, he has been the target of a lot of public anger in australia. shery: coming up, how mobile recession risks risk our company the shift to renewables with the cfo of fortescue future industries. this is bloomberg. ♪

haidi: a clean energy transition is keyed to be explored at the australian investment undercurrents. the invasion of ukraine as disrupted energy supplies. it will complicate the global transition away from fossil fuels. speak to the cfo of fortescue future industries. the question at the forefront of the debate is going for do we see sustained inflationary effects given the huge transition we are expecting to go into the low orbit economy, or is there a risk of undershooting inflation? >> the clean energy transition is a medium term story or medium longer-term story. the short term dynamics that we are seeing in terms of rising prices of fossil fuels are

actually really accelerating the clean energy transition, because it makes clean energy even more cost-effective faster and more competitive faster. the clean energy transition is about the medium to long-term, it is about the future of the planet at its heart, and short term dynamics have some influence on that and it is a story about the medium to long-term. i prices for fossil fuels not make it more attractive to accelerate that shift. haidi: have you found that shorter-term market volatility and uncertainty as made it more difficult when it comes to selling these projects? >> i do not think so at all. the cost of capital is higher because the cost of capital shifted across the board. the fortunes of capital that went to be deployed into the green energy transition are absolutely there. they are resilient to what we see going on at the moment. that is where people went to

allocate capital, they can see longer-term benefits, so i do not see any disruption. haidi: when you joined the company it felt like the momentum westward urbanization. we have had a longer than expected a conflict with a longer than expected energy crisis with the backlash against esg. rather than stalling these fossil fuel projects they are reopening them to take advantage of price actions. it did you see that as a deterrent or a challenge in your view? >> i do not think so. clean energy now is more cost-effective, you have a very large price rise in fossil fuels, which means alternative green energy sources become cost-effective today. we also expect green energy is on the downward part of the cross curve.

the costs are elevated, the price is very elevated. green energy as god a long way to go down. it is competitive today at current fossil fuel prices. shery: when can we expect the next big multibillion-dollar renewable energy deal? we have seen mou's when it comes to hydrogen, but when can we expect something concrete? >> we are very much looking at getting -- we have a couple of projects getting very close to first investment decision. so we are looking to do that over the next nine months or so, and have those announcements out there, and they are large projects we are looking at. we are looking at large projects around the world, we are very much looking at accelerating those projects, get them happening, get the learning from those projects and get the green energy out there.

shery: to what extent is the macro environment, rising rates, borrowing costs, affecting the way you were doing business right now? we note sometimes innate heavy energy industry -- capex heavy energy industry it can be a hindrance. >> the cost of capital is higher, that is unambiguous. about the supply of capital wanting to invest in green, i do not see any slowdown in that at all. why we may have seen some disruption of her to invest in tech over the last two months as the market has been more volatile, i have not seen any sign of that in the green space. there is still a very large supply of funds and well more than the current demand. haidi: future potential when it comes to renewables, but what about the policy up charge? is there a risk of falling

behind if we do not have the inflation reduction act? >> i think that is a good question. australia as a great comparative advantage. we have the best renewables on the planet, the best suna nd wind, so a huge advantage. we need to fully realize these benefits to the play on scale. what we have seen in the u.s. with the introduction of the inflation reduction act and europe much incentivized for what is going on in ukraine, which is forced movement rapidly. those calls for capital, if we do not have a constructive environment here we will see those calls for capital deployed in the u.s., and in europe, even though australia is one of the most cost competitive places to reduce this, there is a risk of debt. we will lose out on opportunities in the meantime.

haidi: cost advantages what investors care about in the long term. is there any indication that we are seeing that for longer-term modeling? >> for longer-term modeling including by bloomberg in particular, the answer is yes. bloomberg research has shown costs are coming down. to accelerate the move down the cost curve, we need to get out there and start producing hydrogen on scale so we can realize those learnings. haidi: i have to ask, since you left the rba a lot has changed when it comes to monetary policy. >> it is a different space, i am excited about the space i am in now. the space i am in now is about the future of the planet, which is fairly important to be involved in. i am happy to abate the transition to something which i think is critically important to

the future. haidi: great to have you with us , running this year in new zealand at the investment conference on day two. coming up, opec cutting first quarter projections after oil demand is slowing. a possible resurgence of covid as well. we get the latest outlook. this is bloomberg. ♪

shery: opec+ is lowered its work were fourth-quarter oil demand, and there is fresh saber rattling from russia further cutting its oil flows to europe. su keenan as the details. with losses in the new york session and further pleasure in asia trading as well. >> we are starting a fourth

session down in asia trading, but analysts are saying is this news actually tightens the market. opec's last -- slashed its demand for gas big news this week was opec+'s decision to reduce upward by 2 million barrels a day, one million effectively when you consider opec is having problems reaching targets. many analysts are saying action today 2/the demand forecast and/ estimates for global demand goes by more than twice that all retroactive, justifying what they already did. traders in the new york session directed to ppi, ge u.s. inflation metric payment much greater than expected. that helped push prices down, wti down more than 3%. brent futures also down 3%

intraday, settled just above the $92 mark, but the u.s., which needs to fill the gap created by the opus plus reduction can back it supply and demand estimates. you see a slight differential, that is the cut. the big issue according to john kilda is pointing out an aspect still bullish for all supplies is meaningful loss of russian supplies. that is what is getting everyone spooked. pimco was warning russian oil output could be harder it by escalating sanctions. president putin condemning the gas pipeline leaks as an act of terror, saying energy infrastructure in the world is at risk, the big focus will russia retaliate against european nations when they impose sanctions by cutting further the amount of oil. back to you. haidi: su keenan with the latest. let's get you the latest

business flash headlines this hour as we continue to follow top stories. looking at eisai, extremely competent getting full of approval in an experimental autonomous drug. the ceo told bloomberg more data is due next month. he expects a decision in january and is confident the drug can medicare coverage and to give us. asml as ordered customers to stop servicing stocks in china after the biden restrictions. the chipmaker told of rule changes in the mail. it tries to strike a balance between the two nations. coming up next, the outlook for japan as boj vows to keep easing. the imf mission chief for the country. ranil

>> it is really amazing, obviously not to discriminate, there are lots of risks in the world. we have never seen this kind of volatility. ups and downs intraday. >> there is a hunger, risk appetite. >> we are pitching ourselves where yields are globally. >> equity and credit and a bottoms up away is something you can moving on. >> we are all looking around saying right now we can get what was 6.5% on the ccc is another index. haidi: some of our guests at -- >> some of our guest speaking about market volatility and

investment opportunity. it is a hard date defined conviction in this market given we are this close to the u.s. inflation print later thursday. the reading we had in september is part one of the biggest a loss -- biggest selloffs across equities. it is the core reading that could wreak havoc, levels coming in at six point 5% versus 6.3%. that is the market picture we have ahead of that reading, we could expect you to trading volumes today. the other big focus point for investors is what we are getting out of china and what we are hearing and local media, more commitments to this covid zero policy ahead of the party congress on sunday. the expectation from investors is perhaps not that we would get immediate policy shift, but they are not taking a liking to it. perhaps we would see a way out of stringent policies. in terms of micro-pictures,

elements of positivity, look at how qantas is trading today. we are seeing a big pop for that stock given that it roared back to profitability in the last quarter. overall in this chart, the focus is on growth. japan in particular, and that is why boj is taking with his policies. the yen continues to slide around that multi-decade low. 147.66, we had that slide in begin really being reinforced by ppi numbers that came through, but then came the comments from governor karoda. shery: let's listen to what he had to say, because those comments about maintaining monetary easing really move the markets. >> we continue to monitor easing in order to achieve 2% inflation

target. for stable and sustainable benefit. the economy is still recovering from the pandemic, so we have to continue to support the economic recovery. shery: in washington covering the meetings is kathleen hays and destroyed by our next guest. >> i am very happy to welcome the imf division chief for japan. it is great to be with you. i wanted to ask about again but i have to start with what governor kuroda said. she so steadfastly adhered to his position. it does not matter how much the fed hikes rates, monetary stimulus is still using. as an economist what do you make of what he is saying and you agree? >> thank you, it is good to be

here again. our view is as well monetary stimulus is needed. inflation is at 2% and a durable manner. headline inflation is above 2%, but core inflation remains below, and i think he is correct and the bank of japan is correct that we need to see wage growth being significantly higher, closer to 3% before the boj can say we have hit our target directly. kathleen: this position of maintaining stimulus, especially as other central banks are raising rates aggressively is one of the reasons the yen is getting clobbered. it is staying at the 140 level, a key intervention level. is it justified? you once said the weakness in the gun is not due to economic fundamentals. as you change your mind? >> there are mixed reasons were

weakness in the again. part of it is what is going on with the european central bank in terms of tightening monetary policy to address inflation concerns. that leads to growing difference in interest rates, policy rates and also longer-term rates. that is part of the reason why we have seen the gun avenue depreciation pressure. kathleen: the boj should jordan it's maturity target for long-term yields. why do you make that argument, and how would it enter into this conundrum they are in where they want to support again. at the same time, their position on stimulus, etc. is keeping it on the least side. >> the reason we decided was not to address monetary tightening. we thought it was important to shorten the target to sustain

the policy for a longer time. the reason behind that is in japan, what matters in terms of the real sector, corporate loans in particular is the yield curve up to five years. and what matters beyond the five-year point is management issues for banks, pension funds, to develop constraints we have advised the bank of japan to shorten the yield curve target. the current target we are well aware that could suggest monetary tightening. at the moment we do not think it is a good idea to take a step in that direction. shery: given how active boj has been in the markets, we have seen a huge dysfunction in the bond markets in japan, the 10 year not trading for a fourth session. what are the implications of this for the broader economy? >> so the boj's monetary policy

we believe will help support the broader economy. in terms of monetary stimulus, we think that is important for support. the economy as begun to recover from covid. as economists we think it is a low potential there is a negative output gap, so we believe support is needed for this time. so that is in terms of monetary policy. in terms of the yen, there are mixed impacts on the japanese economy for the again. it does, for example, support exporters in japan, but it does do harm for individuals who important, firms who import or buy imported goods. haidi: we know that sustainable wage growth is the only thing at this point it's going to get them to any kind of policy pivot. do you think these levels of

wage growth that they are wanting to see our possible, sustainable? when do you think they could get there? >> that is the big challenge in japan and has been a big challenge for some time. we have had very low inflation in japan for 30 plus years, so there are not expectations for large increases in inflation, and thus not a lot of pressure for workers were large increases in wages. we have seen some pickup in the past couple of months, and overall wage growth above 1.5%, but as the boj and governor kuroda said, we would like to see which is above two point 5%, perhaps as high as 3% before we think the inflation target has been achieved and adorable matter. kathleen: how they can enter then to this, you have not

changed on shortening the maturity target, etc. when do you think i time will be or would you be or the boj to start moving to less tighter policy? it is going to be entirely dependent upon the fundamentals. governor kuroda will be stepping down in the spring. libby up to the next governor about when it should change and when you think it will change? >> the what we look at it is independent of the governor. you have to look at the critical data. one is what is happening in wages to see whether we aren't seeing wages that would roughly correspond to the inflation target, and also we are aware that inflation is rising, headline inflation is above 2%. core inflation is heading 2%, meaning excluding food and fuel. those are two important data

points to look at. kathleen: when there is a new governor, does that in some ways opened the door for boj to look at it and say, yes, it is time to start moving in the direction, which governor kuroda has never said? >> is quizzical development -- coincidental development we have seen in the spring. wage negotiations are important for regular workers, the employees would lifetime employment, so that coincidentally happens to occur next spring. we do think at that stage the boj should reassess the data. haidi: that is the imf chief for japan joining us with kathleen hays. let's get you to vonnie quinn

first word headlines. vonnie: officials are committed to raising rates to restrictive levels in the near term with the some concern about the economic impact. some policymakers know it is important to become a rate the pace of further tightening to mitigate risk from global economic uncertainty. many felt the cost of doing too little was worth doing too much. president vladimir putin says explosions of the nord stream pipeline set the most dangerous precedent. he blames the act of terror the u.s., ukraine and poland, calling them beneficiaries of the blessed. putin added that he shows any critically important object of utility transport is under threat. china may start importing corn from brazil in order to reduce dependence on the u.s. and replace supplies from ukraine. 45 verse 20 soundbite companies

-- 45 festivities owned by -- global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. ♪ haidi: american suppliers are beginning to withdraw step from one of china up leading chip companies in the wake of new regulations. we have the details next. this is bloomberg. ♪

>> in addition to having the supply chain we went to american companies are competing on a level playing field with companies in china and around the world. that is why we have taken actions like restraining the ability to ship key components as well as making investments in semi in the united states. shery: the secretary of the treasury on the biden administration trying to build more resilience in the supply chain for chip makers. equipment maker's taking action to comply with new regulations to limit sales to chinese customers. they are set to withdraw staff on china of las vegas most

advanced maker of memory chips. let's bring in our chief agent or correspondent -- chief asia correspondent stephen engle. >> it has been a big week for chips. accompany out with earnings today. this is more evidence this engine is ramping up after the biden administration move last week that we just outlined prior to my report here. essentially, we are learning from sources that a number of these u.s. chip equipment maker's like kal and lam research will start withdrawing its staff from customers in china, including yangtze memory technologies, the largest maker of advanced memory chips in china. these big companies from the

united states will send their staff to customers around the world, including china, to fine-tune that equipment. if they are withdrawing that that will deal a severe blow to the ambitions xi jinping among others have outlined among making advanced semiconductors a key development and national security priority in china. asml, the dutch equipment maker, is telling u.s. employees not to continue to service its customers in china. this is all coming on the back of the new regulation from the biden administration last week. separately but related, we have another putting out a statement saying they have been given a one-year reprieve of putting its equipment into its factories in china. they are also reporting an electronics company is gotten

one-year reprieve. this is a space we will watch as asian chipmakers both serve china and the united states have to make these delicate balancing acts and choices. china or the united states, it has to come down to that. haidi: and does not play into what xi jinping might stay in his speech opening the party congress this weekend? >> that is an interesting question, because all of the chinese top leaders going back to 2002 at the party congress speech have listed development, economic development as the top priority. even xi jinping in the last party congress used economic development as the top priority for the party, but increasingly over the last few years you have been hearing xi jinping talking about development and security, meaning national security.

so what you could see on sunday when he gives a big speech at the beginning of the national congress, he could essentially elevate national security on the same level as economic development, and that according to analysts means or perhaps the party, and we have seen it with the tech regulation crackdown and the like, perhaps xi jinping is willing to sacrifice on economic growth for the sake of national security. at the same time, xi jinping as earmarked tens of millions -- tens of billions of dollars to build its own advanced chips. it is a national security issue, but also an extreme economic security issue for china. shery: stephen engle there. be sure to tune into bloomberg radio to hear more from the day's biggest newsmakers getting analysis from the debris team

while casting live from our studios in hong kong. visit bloombergradio.com. stay with us. ♪ inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews. just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done.

shery: we are getting producing a result of japan, year on year growth numbers, 9.7% for the month of september coming up

much faster than economist at expected. the expectation was for easing from the previous month. instead of that we have acceleration to 9.7% year on year, month on month number is with the .7% for the month of september. we have seen oil prices falling sharply from august levels. the expectation was for easing and producer price numbers. the weaker yen is inflating costs of goods and materials. producer prices exhilarating much faster than expected at 9.7%. we have heard from the boj governor kuroda vowing to keep monetary policy news despite the fact we are seeing inflationary pressures whether it is in the consumer side of things or factory prices. haidi: when you look at asia's poor performance versus the rest of the world, it is the

deepening chip route. in terms of year to date is not been a great year, a great run, but how much worth what we get with the chip selloff and the darkening outlook for the broader industry? >> this year has been a very tough year for pretty much any markets across the world. recently we have seen shares in south korea and taiwan fall sharply because of worries about the semiconductor sector. we have not seen this kind of slow down in chip demand in a few months.

recently the biden administration has been tightening its stance on chip exports to china. that has been hitting chip reactors hard. in the near term, investors have very little reason to buy chip shares even though their valuations have come down quite a bit. of course, the chip sector has been the indicator of the economic cycle as a whole. some people, including morgan stanley, think a bottom might be coming very soon. within a few months. 3 to 6 months. shery: what are we expecting in

the near term, because anytime we have that kind of cell across asian markets, we have seen sometimes regulators try to calm markets, stabilize stock prices. what can we expect? >> until some time ago, investors had input that the upcoming chinese communist party might become a trigger for reducing market sentiment. people are suggesting beijing will maintain its zero covid policy. they will ease policy on --

dashing any hopes that were ease policy on covid. many people expect they would change sentiment. there is no idea when that is going to happen. today japan's data shows inflation pressure is building up even in japan. shery: our bloomberg senior hstech reporter, he has told us some of the stocks we should be working -- watching, semiconductors years being some of them. keep an eye on defense stocks given the north korean leader kim jong-un as guided test of long-term -- long-range strategic cruise missiles. aluminum in focus. the market opens in seoul and

tokyo are next. this is bloomberg. ♪

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>> this is daybreak: asia. we are counting down to asia's market open. this comes of course as we continue to count down to the all important cpi print from the u.s. that statement from the fed, really failing to move markets. we know one inflation print is not going to make much of a difference in the tightening path. >> with the cpi coming out of the u.s. on thursday, you already have the ppi numbers today coming in higher than expected. we had japan's ppi coming in much stronger-than-expected. all of this of course is going to be felt across the markets. >> that's right. a very much wait-and-see mode and asia.

we've got the opens now for japan and korea upon us. also the start of trading for cash treasuries. we did see the drop in yields by the most in a week, following their september fed meeting minutes as well, the other big focus for investors in the session is a 10 year yield coming online like this. essentially the main takeaway as you say, it is going to take them a lot to get off their rate hiking path. even though there was some sort of opening of the door to find tuning, if needed. -- fine tuning, if needed. we are also keeping an eye on the japanese yen this morning. a little bit, basically around the two decade low against the greenback. given that we did have the governor speaking as well yesterday, really reaffirming the commitment to loose policies going forward. perhaps we are seeing, in terms of the stock reaction, we are seeing it basically front. right now -- basically flat right now. the core reading will be one of

the major focuses. let's take a look at what we are seeing in korea at the start of trading here. chipmakers very much, pulling back slightly. we did see it regrouping its losses in the previous session. it is confirmed that's not going to be subject to the u.s. restrictions on chip companies, doing business in china for one year. we also had local media reporting the same for samsung. still looking a little bit weaker at the start of trading here. we are seeing the korean won also with a bit of weakness here. it led asian currencies higher in the previous session, but today a bit more caution ahead of the cpi reading and more clarification from other central banks like the boe, they are going to be extending those emergency measures beyond the end of this week. in australia, we've got the sx 200 being led by financials. you can see at the bottom of your screen -- it's at the bottom of your screen. we are seeing oil again let, traders very much focus on the

fed. -- flat, traders very much focused on the fed. >> let's discuss more with bloomberg editor kathleen hays. the lead correspondent for asian. and garfield reynolds. let's start with you, kathleen. we've discussed a potential fed minute, talking about the rate hikes, committing the rate hikes. tell us a little bit about what we can expect especially given that we have those cpi numbers coming out. >> the cpi numbers are supposed to show a little bit of relief from the 8.3% year-over-year we saw the last report. certainly not enough to begin to meet the requirements the fed needs to start actual -- to start to actually not even cutting rates, just pausing, maybe even making them smaller. financial stability is becoming more of an issue. number one in the fed minutes, clearly they all committed to inflation fighting. there's no question there. at the same time we caught something that sounded like some fed doves in the background,

talking about a highly uncertain global economic environment. the bank of england is certainly one part of this. it is important to calibrate the pace -- how quickly we are getting there. how much we will keep frontloading. with the aim of me to getting risk. that is an important consideration. at the same time, several are saying they are going to maintain a restrictive stance. they are noting that those brits are going to become more two-sided. a very important moment for lael brainard, the vice chair, she gave a speech two days ago, talking more about the fed needing to be cautious, watching the data, certainly we are going to get to restrictive policy, but there's a little note of -- we are getting closer to the point after doing 300 basis points of rate hikes since march, that is a big move, that there's going to be a point where they are already -- where they are ready to pause. they made it clear, they are not

quite ready to look at that because he says there's a very high bar to pivoting. he says because underlying inflation, services inflation, wage inflation, the labor market, that is not yet softening. the latest job report was certainly proof of that. it is very interesting michelle bowman, speaking in new york today, said that sizable hikes should be on the table, unless inflation is falling. that still seems to be sort of the core, the consensus. there is and probably some participants. some members are talking more and more. we are going to have to be cautious. the cpi report, coming up. we will certainly -- it will certainly have something to do with that. it will take a few cpi reports to make them think they have done enough so they can sit back and not do these aggressive hikes. we shall see. >> you.

that really kind of goes -- >> yeah. that kind of goes to the question of the day, the need for sustained volume. what happens of inflation just plateaus, rather than a sharper drop-off? >> yeah, i mean, that is part of the reason why we ask the question -- it is a question that many people seem to be answering already, but pondering on the surface anyway. we've got this very elevated inflation. and this sort of waiting game. it has not peaked yet. what if it stays sticky? there are plenty of reasons, including the war in ukraine, what is going on with globalization. some of the tensions between the u.s. and china. i would not argue for a rapid restoration for supply chains that could help bring inflation down. on the surface, there's a strong

expectation prices will come back down quite rapidly and the fed will be able to put a mission accomplished -- put up a mission accomplished and stop hiking rates and even consider easing them, in the not-too-distant future. the alternative is, you also have bonds suddenly look attractive when there are juicy yields, but it is not juicy if inflation stays above 6%. then equities, to would face hard -- equities,, too, would face hard times. those are sectors that do have some pricing power. they do have the capacity to hold costs down within the industry. or pass on to their consumers. commodities for example have had a rough time recently with a strong dollar. some of them might come back, as

a real asset that could be expected to hold its value in a higher than expected inflation environment. even if inflation has picked. >> garfield reynolds and bloomberg's kathleen hays, as well, with how markets are awaiting the cpi print. let's get you to bonnie prince -- vonnie quinn with the first word headlines. >> under pressure to extend emergency purchases after promising to end them, the markets support it was do to end this friday. a financial times report of the central bank privately told bankers the deadline could be extended. the confusion roiled markets -- world markets, sending gilt yields higher. opec has slashed productions for the amount of glued it will need to pump this quarter by 440,000 barrels a day. cutting estimates for global

demand growth by more than twice as much. the oil consumption downgrade gives further insight into the motivations for the 2 million barrels a day supply cut agreed to last week saudi arabia and its allies. china may start importing corn from brazil as soon as december as part of the drive to reduce dependence on the u.s. and replace applies from ukraine. some 45 facilities owned by companies including cartel have been preapproved by brazil export to china. corn futures and the dollar strength are forcing china to look for alternative supplies. the white house is considering a total ban on russian aluminum in response to the escalation in ukraine. they are weighing a number of options including an outright ban or a large increase in tariffs. russia is the world's second-largest largest producer of aluminum after china. 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. ♪ sherry?

>> still ahead -- we are live at the australian conference in sydney, we speak to mohammed apabhai about his market outlook. first, a boe ford member joins us to discuss -- board member joins us to discuss the pledge to continue using. more on that, next. this is bloomberg. ♪

>> we continue our easing, in order to achieve the 2% inflation target. the price target for stability. the economy is still recovering from the pandemic. so we have to continue to support the economy to recover. >> the boj governor, speaking at the iif and washington, d.c. our next guest says there is no question the yen's depreciation continue. -- depreciation contributes to inflation significantly. let's get more with the former boj monetary policy board member joining us. great to have you with us. is this the reason why the governor is in no hurry to follow the u.s. or the ecb? when can we get the sort of

inflation the governor wants to see? >> hm, yes, at this moment, as you said, there are questions, inflation, food, security, and we look at long-term inflation, the boj does not need to rush to raise interest rates at this stage. at this moment, japan's output cap is negative. so the amount is still weak. from a macro economic perspective, the doj's decision to stay in the status quo is understandable. >> sayuri, a lot of people are saying given the weakness of the yen, you perhaps need to tweak policy at least when it comes to targeting the 10 year yield. if you do tweak that, perhaps raise the bar a little bit, will and have a meaningful impact on the yen's strength? >> so, i think at this moment,

changing monetary policy frameworks i think the boj does not want to take the risk, because the policies are a bit more solid, copious as a central bank. if the boj wants to change their policy, they need to spend some time to discuss with market participants. to make them understand. maintaining the status quo is a quite reasonable choice. but at the same time, the yen is depreciating. the defense should be the intervention by the ministry of finance. repeated warnings, that should be the first line of defense. but if the yen depreciates significantly, there is no way to stop the depreciation, i still think there's a possibility that the boj might change monetary policy

framework. but at this moment, we should focus on foreign exchange market interventions. >> the interventions, do they really have much of an impact on the psychology of how traders are trading the yen? we saw the lust intervention only lasted for about a week -- last intervention lasted only for about a week. >> yes, it is true, intervention is not great impact, but at the same time, when you look at the yen/dollar development, it is moving along 146. it means the market is still paying attention to the government intervention. so in that sense, it is working. i think this combination of warning and occasional effective intervention, actual intervention is important. and then it is hawkish monetary policy stance.

by the first quarter of next year, we will know what will be the terminal rate, leading us to the federal funds rate. once we know that, i think the pressure on the end depreciation will gradually weaken. the first line of defense at that time should be intervention. >> going forward, we know the thing the boj wants to see his sustained wage growth. how long does it take to get there? can we get there, given that we have started to see signs of labor market strengthening? >> i think the japanese economy is not really bad. wages are stagnant. but wages are dropping. at the same time, it is clear, the japanese economy is still in a recovery process. i think japan's economy is likely to achieve 1.6%, 1.7%

economic growth next year. the japanese economy is not as bad as what is expected in europe next year. so from this perspective, also probably maintaining low interest rates, it is reasonable to support domestic demand. >> good to see you again. thank you for joining us. former boj monetary policy board member and professor of economics. we have plenty more to come. this is bloomberg. ♪

>> we denounce -- we have announced where we are at by the end of this week. >> the bank of england can talk tough but fundamentally, they are going to have to extend this. they are trying to hold things together as best as they can. >> the confusion i think comes between the financial side of the bank of england and the

monetary side of the bank of england, which are not trying to do different things. >> monetary and fiscal policy being a crossroads with each other, that is a very dangerous cocktail for both markets. >> has been trying to maintain price stability and at the same time address financial stability issues with this other instrument. >> this is not yet looking like a very steep and deep recession. >> i worry that this is not enough. i think they are going to have to come up with their version of what it takes. >> by this time next year, they will be cutting interest rates. >> economists and bankers, giving their take on the boe, what comes next for the u.k. economy. let's take a look at european futures opening up in this session, we are seeing a pretty flat picture when it comes to dax futures, just really trading order -- trading flatter at the moment. we did see a fifth straight day

of losses when it comes to european stocks in the previous session, reacting to the ppi warmish kind of report stoking even more fears that we are going to see a tighter than expected trajectory from the fed. also of course a huge amount of volatility when it comes to guilt as well as the pound, sterling as well, with a drop. the 30 year yield, reversing course. >> let's turn to japan. the drugmaker eisai says it is confident it struggled gain approval in the u.s. for alzheimer's. data from recent tests show the drug works, they say, making at the first medicine to successfully blunt the program should -- the progression of dementia and a large-scale trial. >> the drug discovery and development is the most sophisticated business in the modern days.

and i would say, it is like a positive gain. and so, it should be coordinated prophetically well at that time. then you can see the landscape. in this case, it is a successful drug. we call this puzzle game the four r's -- right hypothesis, right dosing, right appropriation come and write and points, coming together at one time, like a puzzle game. so we see very good -- so we see a very good landscape. mainly the drug success. >> the data you showed us showed us the statistical significance. but experts question the clinical benefit. and the issues of the side effects. what is the answer? >> at 18 months, the end of 18 months, we compare the placebo

and the active difference -- the difference was 27%. how good this 27% then, experts said in alzheimer's disease trials, if the effectiveness is between 20% and 30%, it would be clinically meaningful. so 27% is relatively high, with this 20% to 30% clinical meaningfulness. i believe we have high clinical meaningfulness. >> previously the product was criticized for his high pricing and was forced to cut the pricing by half -- tell us about your pricing strategy for this. how are you going to price the product? >> patients can be in any

locations. living in any income levels ,in any -- in any income levels, in any circumstances and conditions. the major point of the pricing in this case is affordability. >> how do you think you can gain insurance coverage? >> we are confident that this is codified as what the authorities said, as high-quality evidence. of course, we are starting the constructive dialogue with agencies. and we hope that agencies will understand this. >> what do you think is your competitive advantage over other drugs? >> i'm not in the position of talking about any competitive products at all, but this i can say, the advantage of the drug, and has no title --

titulation, so from the first -- no titration needed. it is effective from the first infusion. it is a needle toxin targeting to that. the fed affects -- the side effects are relatively low. i believe the drug has a stronger competitive advantage. >> what is the latest with the schedule of development? >> we have reported that we have submitted auxiliary approval for the fda and without a date of approval as of january 6, 2023. also, we are scheduling to submit additional approval -- full approval to the fda by the end of march. march of 2023. and the same schedule for pmda

japanese authority. and also to ema, european authorities. and we are expecting to acquire full approval from those three agencies by the end of 2023. december of 2023. >> eisai's ceo, speaking exclusively with bloomberg. here's a quick check of the latest business flash headlines. materials have slashed forecast for the fourth quarter citing your restrictions to china, the biggest microchip many fracture or -- manufacturing equipment estimates the new u.s. rules will reduce sales by about $400 million. it says the curbs will affect sales of fabrication equipment and related parts and services. bytedance is offering to buy back shares from its employees for $155 apiece. it is the firm's second buyback program this year, as it

ramps up plans to boost morale after its ipo stalled. the move comes after the company announced a $3 billion buyback program for investors last month. giving the start up a $300 billion valuation. apple is withholding new employee benefits from staff, who work at its only unionized retail store. in a move that could inflame labor tensions. this week, the company increased health care and educational benefits for all workers. however, it told employees working at a store in the baltimore suburb of tao sense, that the union would need to negotiate further perks -- negotiate for the perks. coming up, reporting earnings and revenue guidance for the coming quarter in the coming hours and how u.s. chip curbs could impact future earnings. this is bloomberg. ♪

>> this is "daybreak: asia." i'm vonnie quinn with the first word headlines. officials committed to raising rates to a restrictive level in the near term but they did show concern about the economic impact in the most recent minutes. in the latest fomc minutes, policymakers noted it would be important to calibrate the face of -- the pace of further tightening to mitigate risks of global uncertainty but many felt the cost of doing too little to fight inflation was fight that -- was worse than taking too much action. in russia, president putin said the explosions in the nord stream gas pipeline set they most dangerous president. speaking at a moscow energy forum, he blamed the act of terror on the u.s., ukraine, and poland, calling them beneficiaries of the blesseds -- the blasts. he showed any critically important equipment of infrastructure is under threat. bloomberg has learned americans and players are starting to pull

back staff from tough chinese chipmakers, firms including applied materials, and kla, are doing so in the way company was regulations -- in the wake of u.s. regulations. restricting as well as ability to buy american technology. the first paying tourists to space will go back to orbit with spacex for a trip around the moon. dennis teedo and his wife paid to fly on the starship once the vehicle is complete. they will travel with 10 undisclosed passengers on a weeklong journey. the trip does not include a landing on the lunar surface. it is unclear if other passengers have yet been chosen. 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. ♪ shery? >> we are half an hour into the trading session in japan and south korea. let's turn to bill for what to watch -- belle for what to watch. >> this is the picture here,

half an hour into the session for japan and korea. mostly low this morning. this is really all about the u.s. inflation print. the data is due out later thursday and the u.s.. the headline number is expected to keep falling. but in the core reading, that actually could trend back to the levels that we saw in march, coming in at 6.5%, versus 6.3% in the reading prior. a 75 basis point hike from the fed in november. that pretty much seems to be baked in by this point. that is also playing into the yen. that currency come around the 24 year low against the dollar. given that we also had the boj governor really affirming the commitment to easier policy settings. out of china, we are getting this commitment we have seen throughout the week, really, in state back to media, that the government must stick with covid zero policies, even at the risk of economic growth.

so that really is not something -- is it something traders are not liking the sound of either, not that they had been expecting any sort of immediate policy shift at the party congress starting sunday, but still some hope at least that there could be a path out. in terms of individual stocks, keep an eye on quantas this morning, if you take a look at how it is trading, a big pop, given the carrier is returning to profitability. we have seen losses there. it is very much wait and see mode. take a look at this terminal function looking at trading volumes we have across asia. you can see this as a projection for the trading throughout the session today. we are well off the 20 day moving average. you can understand why -- given what happened after the september inflation reading. that is one of the biggest selloffs and global equities this year. -- in global equities this year. >> taiwan's economic affairs minister is downplaying the impact of the new chip restrictions on the island's

economies while urging investors to stay calm and believe in the resilience of tsmc. chipmakers reporting earnings later on thursday. let's bring in charles c. how do you view the curbs, the impact on these advanced boundaries, like tsmc? -- foundries, like tsmc? >> the immediate impact is they will not be able to take any orders from the chip designers. -- the chinese chip designers. that will probably impact 10% of overall revenue, of tsmc, in the coming several quarters. that is what the preliminary assessment is so far. . >> tsmc has really lost a lot of market share, just this year. what can we be focusing on

that will matter to investors? >> that is a good question. this afternoon, the tsmc managers had a briefing on the results. most importantly, what they agreed on on futures, we are not sure that -- with the u.s. action on huawei, apple, mediatech, the top chipmakers, this time, we are seeing that the sector is very weak. there is a lot of uncertainty. so we do not know what will replace the cat. -- replace the cap. they are quite confident so far that in the last earnings that we saw, they are still moving

50%, 55% of capital intensity. that is a record high. but we are not sure, if we will keep the same percentage in the coming quarter. >> which companies might be better placed, when you take a look at tsmc, smic, through the curbs? >> so far, i think what we have seen is the most significant damage we saw on the chinese primary chip capability. that is an area where samsung, micron, they might actually feel happy, so you may have less worry eventually. because they are a competitor of

tsmc and global foundries. >> bloomberg intelligence technology analyst charles s. policymakers are complying with regulations with chelsea chinese customers. for more let's bring in our chief north asia correspondent, stephen engle hong kong, what do we know? >> we do know obviously this has been a turbulent week, as we have just been discussing, for the global chip industry, with billions of market cap knocked off the big players. who have the tsmc earnings out later today to get a better outlook of going forward into the fourth quarter and the next year. essentially, after this biden new regulation came out last

week, that essentially bans high-tech equipment, from the u.s. companies, like lumbar pride -- like from applied materials. also -- maker asml, from essentially selling to chinese companies. asml, they are dutch, but they have instructed their u.s. employees to stop doing business essentially with its china's customer. so there is a larger dragnet if you will hear. the one reprieve -- if you will here. the one reprieve here is yanhep not confirmed by samsung that samsung also got a one-year reprieve. the first shoe to drop is this

technology, china's largest advanced maker of chips. this is going to be something that we are going to be seeing playing out, as companies way how they are going to adhere to these biden regulations -- weigh how they are going to adhere to these biden regulations. >> is this something we could hear from xi jinping ahead of the party congress? >> is an interesting point. we know that chinese leaders in the past dating back to 2002 essentially named economic development as the party's top priority. and every leader in every congress since then, even in 2017, xi jinping less that development as a top priority. but increasingly the last few years, we have been hearing him use a a new slogan, that is essentially development and national security on equal

footing. and that is what we will -- what will be interesting to see, whether he puts national security on the same level at the party congress speech, to open the party congress sunday. that would indicate as well that they are perhaps willing as we have seen recently to sacrifice some economic growth so they can bolster national security. semi conductors, to bring in that portion of the equation, foreign national security and economic issues, whether this spreads further development into semiconductors is a further drag on the economic growth is yet to be seen. xi jinping has pledged over the last few years tens of billions of dollars into advanced semiconductor money fact rings so china can be self-reliant in the face of these u.s. sanctions and the like. it will be very interesting in the short term to see how these moves by the biden administration limits china's ambitions. and what xi will say to

counter that. >> stephen engle there. we have more policy action coming from the biden administration on russian aluminum as well. let's turn to belle for some of the market action related to that story. >> from one hot spot to another, now we are looking at what is happening in russia. specifically the biden administration is considering expanding the sanctions -- the restrictions to aluminum. russia's aluminum products. that has so far been spared from the sections listed given their -- sanctions list given their importance. we are seeing aluminum producers moving higher in australia. in terms of the reaction, and another metals space, take a look at lithium. take a look at the biggest names in australia, they are slumping. we got our report out from morgan stanley, saying they are concerned about the outlook for prices. specifically what they are seeing in the customs data from

julie. in september, -- from chile. and september, prices went from $75 a ton to $55. >> coming up next, our next guest says it is unlikely central banks will be able to get their balance sheets back to pre-pandemic levels anytime soon. that's just ahead. this is bloomberg. ♪

>> it's a pretty amazing environment. obviously not to discount there was lots of risk in the world. we have never seen this kind of volatility, up and down. the ups and downs intraday. >> there is a hunger. there is a risk appetite. >> we are pinching ourselves a little bit. >> equities and credit in a more bottoms oh boy is a journey we have -- more bottom up and down way is a journey we have been on. >> we are all looking around saying, right now we can get what was 6.5% eligible -- on the triple see index a year ago. >> there's more opportunity caused by this volatility. >> that is the bloomberg invest conference in new york on the opportunities in the broader market. let's take a look at how asian markets are trading at the

moment. a little bit of a mixed picture with the nikkei down falling .3%. the japanese yen, holding around those levels, a 24 year low against the u.s. dollar. we have heard from the boj governor, talking about keeping monetary policy loose. we also saw the ppi numbers surprising to the upside growth of 9.7% year on year. asx 200, being supported by consumer and discretionary stocks, the kospi also gaining ground, haidi. >> let's get more analysis on asian markets with the citigroup global markets head of asia trading strategy. mohammed apabhai. great to have you in person. you talk about the risk of financial instability, as a result of global central banks hiking, as one of the key risks. is that a risk for banks in particular? >> i think it is a risk for

the whole financial system more than anything else. my view is my own. the treating be was much more short-term. what we have been looking at is the amount of liquidity being drained away from the global financial system already. the amount of money, the $2.2 trillion. when the dollar is strengthening the way that it is, it is representing a much greater tightening than some of the equity market. certainly it seems policymakers are actually factoring in. >> is that what we are seeing when it comes to the liquidity worries with the treasury market at the moment as well? does that play a part in those concerns? >> it is. if you look at the big concerns we have, in addition, we have seen certain places where risks have flared up, for example with the bank of england. yesterday we saw the cei,

with implied volatility rising. there as well. what we are looking as the european banking system is stressed. but at the moment, we are not seeing anything. we are also watching the asian foreign exchange reserves as well. whether they are having to sell done treasuries. one of our concerns is all the fed signals that you get based on the new york fed model of interest rates, there is actually dislocation happening in the markets, and that could actually be resulting in the wrong signals being sent out. >> japan of course has a pretty high fx reserve level of more than a trillion dollars. but still they had to start intervening in the markets. we are seeing this dislocation happening and this dysfunction continuing in the ggb space as well, tell us a little bit about what we can expect on that market, and how investors should approach it at a time when the boj's just a massive player

there. >> yes. i think the boj's really got itself into a bit of a corner here. the boj actually has done more qt than any other major central bank in the world. they have reduced their balance sheet by $450 billion over the past few months. the interesting thing has been though, that even with the reduction in the balance sheet, the dollar/yen continues to go higher. this is not a story that the boj i think is very much in control of. it really seems to be about the fed and ecb balance sheets. what the boj can do is they can try and slow the pace of yen depreciation. it is really dollar appreciation more than anything else. until the fundamental change, the fed either pivots on interest rates and/or on qt,

that seems the direction of dollar/yen, notwithstanding any short-term bounces, will still be for it to head a lot higher. somewhere between 160, some projections even up to 185, with the balance sheets driving what is going on in the currency market. >> is that sort of a similar story to what we are seeing with the south korean won? >> absolutely. in fact, if you look at the numbers we have put together, it is actually the same story on the euro, sterling, the korean won, yen, and on u.s. real rates. if current correlations persist in the way that they have done, then there is a possibility that the best case scenario for us is a move down to around $.90 in the euro-dollar, but if the

current correlations persist, $95 billion of qt results in a 3% depreciation of the dollar, then we could be seen even record lows on euro-dollar, and much stronger levels. but we think the fed will have to back down well before we get to those levels. or at least we are hoping that they will. >> how do you assess the depth of the selloff when it comes to chipmakers? what's going to be the catalyst for it to become more constructive? cutting? what are you watching for? >> we are watching for this general malaise you are seeing in equity markets. what you are seeing is the general direction is lower and on top of that you have all the secondary conditions -- on the secondary considerations that are being put on. equity markets with think are 2% or 3% where we are around here. may start getting relatively oversold. around 34, 35 -- perhaps there

could be another bounce, another 7% or 8% up again. all that does is it prolongs the pain. what we are going to be doing , i think there must few times i have been on bloomberg i have talked about how the s&p is going to go below 3220. >> 2900. >> 2900 as well. yesterday in the conference i was saying 80% to 90% probability the s&p goes below 3220 by the end of the year. probably a 40% to 50% probability that we could get down to 2900. if the fed does not pivot by the end of the year, 2022, it will probably happen by the end of the first quarter of 2023. have to think about what headlines they are going to use emphasize this. but maybe that will be something we can use. >> thank you for delivering some good news for us. great to see you, the citigroup global markets head of asia trading strategy. mohammed apabhai.

more to come here on "daybreak: asia." ♪ this is bloomberg. ♪

>> bargain hunters piled on. let's get a preview of today's training with asia stocks managing editor -- with the asia stocks managing editor. is this all a part of the party congress?

>> we did see a large buying force yesterday. that reversed the loss by 2%. whether this is genuine investor buying or national team buying, that remains unclear. a lot of traders were actually speculating that the national team came in to stabilize the market, leading into the party congress. but for dip buyers, there were good reasons to buy. if you look at the performance of the csi 300 and the last three months, leading into this event, the index lost 10%. and that is the worst showing heading into such an event. since the inception of this index in 2005. >> shutting down schools and bars, with another flareup of covid cases, how vulnerable is the market with this kind of development? >> yeah, it is kind of obvious the shanghai government really

wanted to avoid the perception of a citywide lockdown. that is why they are doing things quietly. for investors, i think as long as the factories are not impacted porky many fracturing bases of ev makers and chipmakers are not impacted, market watchers will not really heed or pay too much attention to such development. the key is whether the lockdown will be long-lasting and whether they will expand the lockdown to the manufacturing basis. a lot of people are watching out for the u.s. cpi data tonight. >> of course. [laughter] we cannot forget the cpi print. lianting tu there. coming up, paul henley joins us for iran's on on the escalating china tensions with taiwan. plus, we will discuss early strong sense of a china recovery. that is it for "daybreak: asia."

this is bloomberg. ♪

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