kathleen: you are watching daybreak asia coming to you live from new york, sydney and hong kong. annabelle: we are counting down to the market opens in tokyo and seoul. haidi: the top stories this hour -- investors are bracing for another volatile week with asian stocks please to open lower. we are on watch were possible yen intervention as the currency tumbles towards the key psychological level. xi jinping warns of dangerous storms ahead with a defiant message on taiwan, covid zero comment tech. financial markets set to deliver their verdict on liz truss as she fights to save her premiership. annabelle: we have the start of market trading in australia -- taking lower for the start of trading. a loss of around 1.5% if futures are an indication. a lot of themes to be getting through this morning, starting up with what we are seeing in inflation because that is the

broader market theme. he will probably get through the details of the survey but we did see inflation excitations ticking higher. that is playing out in the bond yields this morning. if you change on that, it plays into the direction of yen trading. we are trading close to the key 150 level, goldman sachs thing we could reach it within three months. keeping an eye on what is happening with the pound this morning, it is moving higher, so it does seem investors are liking the renewed focus on fiscal stability in the u.k. and the prospects that more of the package of unfunded tax cuts could be reversed. the other thing is what we could see in china because we will have investors with their first

chance to react to xi jinping's address yesterday. i will let steve get through the details but broadly, this is not seen as too positive for the direction of markets. kathleen: you are leading us down the right path when it comes to the markets. the market took quite a beating, down about two point 5%, completely erasing the weeks gains. it was the lowest level since july of 2020. you can see some green on the s&p and nasdaq futures. potentially waiting to see what happens next. bonds on the 10-year note, topping 4% again. we are seeing some positivity there as well. nymex down to about $86 a barrel and west texas intermediate, no

surprise, there is so much concern about a goebel recession. if you paid attention to the meetings last week, you have to get ready for a session because central banks are going to be so aggressive. haidi: investors watching what comes out of china. we heard from a defiant xi jinping, taking to the podium sunday to open the communist party congress with policies that are at the center of frictions with the united states. let's bring our chief asian correspondent, stephen engle hong kong. certainly a strident xi that we heard from. it's a building on the same frictions already in play? stephen: there were not a lot of surprises to me other than the length of the speech. it was much shorter than five years ago. it was under two hours this time as opposed to more than three hours in 2017, but he did hit on all the hot button issues. if you want to see what is the

hardest news that came out of it, he did not give a roadmap or any clues as to whether the country is going to come out of its restricted covid zero policies. he touted the parties successes at saving lives because that is important and something that will potentially stay in place in china. the fact he didn't give any specifics on what would require or to loosen restrictions gives the party an opportunity to gradually reduce. if there's any good news, there is what you could say is positive news. the other bit of news i found was his defiance against the united states. more recently, these chip curbs, advanced technology being sold to china being banned, he said

chinese modernization offers humanity a new choice for achieving modernization. china can develop its technological advantages like high-end chips without the united states. xi found it resolutely to win the battle and key core technologies, but this doesn't happen overnight. it is a short-term headwind but the fact he is putting this as a priority should be taken notice. kathleen: taiwan, he talked tough on that. stephen: absolutely. he's said similar things that he has in the past. peaceful reunification is the priority but he did not rule out the potential as a last resort the use of force. >> resolving the taiwan question is a matter for the chinese, a matter that must be resolved by

the chinese. we will continue to strive for reunification with the greatest of sincerity and utmost effort, but we will never promise to renounce the use of force and we reserve the option for taking all measures necessary. stephen: like in past leaders dating back to 2002, he reaffirmed economic development is the party's top priority. this time around, he spent much of his nearly two hour speech talking about security. if you read between the lines, he is raised -- has raised security issues almost on par with economic development with the top priorities of the party. kathleen: stephen engle. let's get more from our chief correspondent for asia, garfield reynolds. how do you think markets will

react to the speech? garfield: it's not clear there's going to be a strong reaction one way or the other. he comes across as being resolute and it's also a two hour speech and i've seen a bunch of commentary and it seems like every commentator was able to take away from the speech what they wanted to, but he did come across as resolute, not imminently confrontational. given all the concerns they have about the u.s. china relationship and covid zero where he was resolute but not closing the door on easing restrictions, that might breeds some optimism, especially in an environment where for the moment, we are looking at a little bit of a risk on day spurred by the news over the weekend out of the u.k..

that situation is looking a little less dire. there is the potential if chinese markets react warmly to what xi had to say, that could spread some common prosperity across the region. [laughter] haidi: well played. could we see further upside when it comes to the pound? there seems to be optimism that we see u-turns when it comes to this package of unfunded tax cuts. garfield: we could see the pound go significantly higher. in a lot of ways, the market is getting what it wanted. the new chancellor is speaking far more the sort of language most market participants would want to hear. you have tax hikes instead of cuts, spending cuts instead of spending boosts, a far more prudent approach, which means,

and we heard the bank of england governor over the weekend essentially confirming this -- the boh and u.k. government are now not necessarily going head to head against each other. that's the sort of thing that is going to lead to the pound gaining, at least in the short term. we have a situation where the politics is very dicey over there. a lot of focus on how the u.k. prime minister recovers from this extremely volatile beginning to her leadership and whether you can get some calm in number 10 and number 11 downing street in the next few weeks and whether that translates to a healing process for u.k. assets. everybody is wondering has the

forced selling from those pension funds, is that gone? are there any other wounds that are going to lead to fresh chaos coming from other parts of the u.k. market? all of that remains in play but the overall tone is a lot more hopeful. haidi: garfield reynolds there. a delayed statement from g20 finance ministers, they are laying bare a variety of issues, including russia's war in ukraine and ways to deal with climate change. let's start off with the geopolitical side. where do we see the divisions and how was that present in the communique? eric: where we saw divisions breaking down our between to a large extent between 19 other g20 members and russia. trying to read between the lines of the communique but also using what we've heard from officials in the past several days.

the minister of spain which chairs and imf advisory board, basically all the numbers were on one side you have country on the other many of these issues. one of the key sentences i would like to read from this statement issued by indonesia on sunday in washington says a members strongly condemned russia's war against ukraine and expressed that he wretch is illegal, unjustified and unprovoked war of aggression against ukraine it is impairing the mobile economic recovery. there was no pat one which everyone has their guess at who said it's the sanctions opposed by the west is made pressure for the global economy. trying to read between the lines and parse the messaging, but

certainly the divisions caused by russia's invasion of ukraine preventing the g20 problem coming to a consensus for a communique. kathleen: on fossil fuel about their what they members suggesting even though climate change in the steps needed to, there's another side to that, which is the need for fossil fuels right now while this transition is being made. that's a very contentious issue among people who make policy on this. presumably russia being a picture but will produce. it's in the camp site don't go too fast, but for obvious reasons? eric: absolutely. one of the frictions and fracturing say part of behind closed doors was on the issue of oil. there were some clashes between the u.s. and the g7 and saudi authorities who were there. if an issue when you mention

climate change in the renewable energy aspect. this is an issue for large emerging markets. a country like india of one billion people looking at this if you and say we are being asked to be producing green fuels orbit renewable fuels, not able to eat the fossil fuel were asked not to use the fossil fuel of the last has used in order to become advanced economies and enrich themselves. a lot of the g7 vicariously here and yet a country of a billion people looking to make those kinds of advances is being told you can't use the same fuels that were used in the past. this is something we see surface take. it's odd in the indo pacific talks in l.a., india and other countries say we need to be able to use that fueled in order to reach a greater level

development. haidi: let's keep not to vonnie quinn with the first word headlines. u.k. chancellor of te exchequer has declined to rule out delaying the prime ministers plan to cut the basic rate of and contact. it would up to anon keep plank is trust'budget. he made clear that comic markets is priority and to show the government cannick for every penny up its tax and spending. the european union give are missed betting curb price volatility on the mark -- on the biggest gas marketplace. the temporary mechanism would impose a dynamic price limit for transactions on the dutch title transfer. the shirt and government will pledge 6 billion u.s. dollars for infrastructure projects and it budget. the prime minister told a news

at&t it would create jobs unlock productivity. the inflation -- fight highlights responsible budgeting. >> we cannot have budget spending which is accessible poorly targeted if we have money sprayed around and call directions. that would make the job park independent central bank that but. our intention it should provide cost-of-living relief that has an economic dividend. but which i mean it won't make the orders. vonnie: a secret white house official says u.s. could change its approach to saudi arabia. jake sullivan told cnn biden could make a decision on relations after consulting with lawmakers following november midterm elections. braden told cnn that would be consequences for saudi arabia after vote for opec to cut oil production. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm vonnie quinn. this is bloomberg. kathleen: still ahead, we will discuss japan's tourism the country's biggest tourism company. up next, more on the trading beacon agent with a debit script that might be emerging at the fed. this is bloomberg. ♪

kathleen: taking a look at the week ahead -- the pboc is set to raise its lending facility rate one day. economists expecting the rate to hold at 2.75 percent. on tuesday, china's third-quarter gdp data will likely show a feeble recovery after growth stalled the prior quarter. we are expecting numbers on china's industrial numbers and retail sales. the loan rates are expected to stay put.

continuing market turmoil in u.k. -- we are expecting to say -- to see inflation figures to rise a double-digit pace. in japan, economists expecting uptick in consumer prices. john lee will deliver his first policy address on wednesday top sources that he may ease property taxes and visa restrictions trying to curb a pandemic brain drain. that is your week ahead. haidi: we continue to focus on the party congress in china with xi jinping signaling no change in direction for the two main risk factors driving china's economy. let's get some reaction from shane oliver, the head of investment strategy and chief economist at amp. great to have you with this in person. this chart looks at political risks following these big meetings and typically they fall because we know more about the direction the next five years.

we know even with the leadership transition among the top positions, we are not going to see much change when it comes to things like covid zero or the property market. this suggests we are seeing imports slow, exports slowing, consumer demand depressed and contracting growth ahead. what can investors take away from this? shane: i guess the good news is there's no great negative surprised in there. it seems like more of the same. the downside is there's not a lot of upside either. there was hardly any focus on economic reform compared to previous addresses. not much action on covid. hopefully we are heading in a direction of easing of restrictions, as mrna vaccines are used in china and you get antivirals being used.

but that's not going to happen quickly. in the great scheme come i don't see a big change. you may get some relief. investors say there's nothing to negative and that gives you a bit of a relief rally. haidi: contracted growth has implications for a lot of australian companies. is that the angle a lot of your clients are taking in terms of how do these policies have a flow on up fact -- flow on effect to tech or mining in the sort of demand we see elsewhere? shane: australia remains incredibly sensitive to what happens in china. the outlook on that front has become bleaker. yes, resources and energy stocks hold us up to some degree. we have been a relative outperformer but there's a question as to how long that can continue. longer-term, it depends how quickly the adjustment in china occurs. if china's growth comes to a dead stop, that would be bad for

us trillion. if it is gradual, austral he will move on much like it has the last three years when we have had bands on various commodities from china from lobsters to coal. australia has managed to survive because of its exports. you can switch them to another economy and keep going. if that's the case, australia manages to pull out of this ok. but there's still the question particulate if china runs into more difficult problems as the property downturn continues. haidi: what kind of risk appetite the need to have to have exposure to china? shane: it's one of the bigger issues affecting markets right now. in china, there's just more questions. you could say it's moving in a liberalization direction and growth is strong. a lot of those things are fading

or are questionable and i think that means investors in china, it's questionable whether you can paint a great short-term picture or whether the long-term picture is as good as it was. kathleen: in terms of the trade numbers, we get singapore, but broadly china is such a big driver of trade in many ways in this region. if they stay slow and if the global economy slows, there's a big risk of recession. what does that mean for trade members and other countries in asia, many of which are export dependent? shane: it does leave asia quite vulnerable. a lot depends on what happens with the inflation problems globally. that china backdrop is still a negative one.

we will see some easing of covid restrictions and extra stimulus, so i don't tickets going to collapse. it just remains subdued and that puts a damper on things. the risks are on the downside for asian economies. if you look through next year, i suspect it starts to swing a little more positive as inflation comes under control. kathleen: the latest numbers, not good. very little reduction in inflation. what does that mean for asian traders, asian investors? shane: it's a short-term negative because it keeps the fed hawkish for longer which means upward pressure on the u.s. dollar. obviously a risk of financial accidents and that's bad news for asia. longer-term, i think at some

point we will get a downside surprise on u.s. inflation numbers. obviously we haven't seen that yet and we are waiting for that to occur. there was a glimmer of light in those numbers in the goods price inflation numbers and goods price inflation tends to lead services inflation. the lag can be several months before that starts to play through. haidi: great to have you with us. more to come. this is bloomberg. ♪

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>> you have to look at the u.k. and it has been a greek tragedy

and what we've seen in the last week with some of the policy announcements in the >> back and forth. >>we are at risk of talking ourselves into a worse position than we are. this is not yet looking to me like a steep and deep recession. >> in some of the other markets warehousing is a major component of their economy, whether hong kong or australia, you start to wonder if they aren't the next ones to look. >> the chinese economy has been a recession for a considerable time. >> bankruptcies, we see bankruptcies increase. now it is reaching italy. >> the next risk is the realization the economy will have to slow a substantial amount to meet those inflation goals. >> it doesn't mean the whole world is going up in smoke simultaneously but when you have a situation where we've had very low interest rates for so long and the world is adapted to it, now that central banks are raising interest rates, it changes things.

haidi: bloomberg tv guests there on our survey question -- where's the next recession? that's get into those results because we had nearly 500 people casting their views and some pretty bleak findings coming out starting with who will go into recession first. a fairly even split between the u.k. and the eurozone with the u.k. taking out the crown. perhaps a sign of lingering concerns around the financial stability of that country even though investors, if you take the trading in the pound but do seem to be liking the changes we saw from liz truss, including replacing the finance chief as well as the potential for that you turn on the policy of unfunded tax cuts. just 7% of people saying the u.s. will be going into recession, so a sign this diversions we see between the u.s. and the other side of the atlantic, that the u.s. is in a better position to whether these storms like the war in ukraine

and the energy crisis. the next question we had respondents going into -- which economy will emerge as a winner -- the vast majority of respondents saying the u.s. will recover from this first and are in a better position versus what we see in other parts of the world. so where to put your money? the survey indicates the u.s., the premium for u.s. stocks will remain in place and as peak hawkish and us does become apparent, investors are prepared to return to the u.s. treasury market in droves. the greater finding that came out of this is if you look at where to invest over the longer term, at some point, the survey found the u.s. would be the best place to put your money. haidi: the imf's first updating manager says the imf could pose a risk if banks have not properly hedged their borrowing.

many nations are in for a rocky ride as they adjust to dollar strength. >> when you have sizable movements in the dollar, it has sizable implications for the global economy because it is so dominant in trade and finance. the important thing to keep in mind is that there are fundamentals driving these. they seem very steep. tightening is one factor. i think this is going to be rocky for countries but they will have to adjust. they have to use their own monetary policy tools to keep inflation -- >> let me stay with the major countries and look at the yen experiment. john farrell is transfixed by

yen 147. what does the counsel of you and your chief economist for the japanese to extricate themselves from their unique yield curve control experiment? >> there are fundamental reasons for that particular diversions we see in the currency. japan has decided to stay the course in terms of keeping interest rates low while the fed has decided to stay the course in terms of raising interest rates decisively to bring down inflation. that is one of the primary drivers of the fact the yen has lost value relative to the dollar. over time, monetary policy will have to figure out what the best course is depending on inflation development in japan. but as of now, given the diverging trends, currency movements look like they do now. mike: if japan capitulates to a

normal monetary policy and the yen go strong, 148, 150 -- just to pick a number out of air, 129, what would that do to the pacific rim financial system? >> we would have to look and see if it happens in a disruptive manner or in an orderly manner. we have disruptions in exchange rates all the time. the problems that come up is when you have firms or banks that have borrowed in multiple currencies and have insufficiently hedged themselves. those get affected. but if you had yourself, these are movements -- kathleen: we've got another keenan coming up -- wall street lenders, walt -- su keenan joins us and the message from j.p. morgan and city seems to be the

kids are ok? su: barron's had a headline that some that up to say bank earnings were not that bad and investors may be happy with that for now. bank earnings kicked off on friday. four of the biggest banks out there and everybody knew it's been a brutal year so far, especially for investment banking with deals off and ipo's down. we knew there would be a sharp drop in profit and yet the earnings that came out were relatively fine with few surprises. that is why you saw green on the screen. wells fargo and j.p. morgan beat estimates if you look at the year today returns or performance of the stocks. you see the real read and the indication there has been paying for these banks. city reported a 20% profit declined citing challenging markets. investment banking was down 60%. wells fargo with a proven

earnings beat but there were costs tied to that scandal. let's focus on jp morgan because the prophets shrank but customers are healthy and other good news for investors -- they may receive that -- may resume their share buyback next year. they gave a guidance increase on their net income which came in at a record 9.17 -- 9.7 billion, a 17% drop. its quarterly revenue was nearly 33 billion dollars. investment banking fell by 47%, less than expected. a slightly different story for morgan stanley. it beat on fixed income. its investment banking was down 55% and the ceo is suggesting headcount is under review. suggesting there may be some cuts in the ranks. job cuts are big issue on wall

street but from what we are hearing from different ceos, it seems like all the major banks are checking out how they can be more efficient, how they can cut costs and cutting jobs or at least cutting headcount appears to be one of the ways. and we are getting slow on loan growth. it's going to be key for bank of america. su2: bank of america -- su: it reports before the bell on monday it has delivered some of the best earnings so far this year, delivering positive growth and revenue long before the others did. that's another reason that gets a lot of scrutiny. investors will be focusing on interest rate growth. how their interest-rate trading formed, and i i to the sky it's how mike mayo has been calling it. that's revenue from customer loan payments which are used to

pay depositors. they expect to see a big increase their. we will metal later in the monday open. haidi: you can turn to your bloomberg for more on this and more on bank of america's earnings. other key earnings to watch out for include netflix. they could see the turnaround in the stock performance. netflix is moving into an advertising model. also watching tesla reporting third quarter earnings. it has been battered by just a disappointing quarterly delivery number but elon musk's surprise decision to revive his offer to buy twitter among all the uncertainty related to that deal. let's get you to vonnie quinn and the first word headlines. vonnie: hong kong media reports say china may further relax border restrictions by year end. the south china morning for -- bring post sites the standing committee thing the current seven day quarantine could be

cut to four. the mainland may allow more visitors to cross the border from hong kong each day. pakistan's former prime minister has won the majority of seats in elections, building his election for an early national poll. he was protesting seven of eight seats and playing with 90% of the vote counted at 15 of them. he had to resign from all but one seat but the victory suggests many voters support his political narrative. south korean boy band bts has performed together for what could be the last time in years. saturday's concert was to promote south korea's second-biggest city at the candidate to host the world expo. in june, the band said it would go on at different ages as members focus on solo projects. the oldest singer also faces a deadline to begin compulsory military service. global news 24 hours a day on air and on bloomberg quicktake,

powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. kathleen: australia's treasurer says his country's economy faces tricky territory in the near term as the world grapples with inflation and the pandemics aftermath. i spoke to jim chanos as he prepares to deliver his first budget later this month. jim: i think now is the time for lunch talk and the truth is the global economy is treading a narrower and more perilous path. i think that's nice across the board around the g20 and other participants in these discussions. australia enters this difficult time from a position of relative strength but we won't be spared. we are putting a budget together i will hand down in less than two weeks and it is crucial we can't factor in the appeal time thinking of economic

decision-makers around the world and that is why the last couple of days have been so valuable. kathleen: wes the worst worrisome jim: message you per year? jim:everyone is worried about inflation. that's why we've got this london brutal tightening of monetary policy are on the world. it risks a hard landing. that's the most confronting reality we face. it comes to us part of the of the war in ukraine but other issues around supply chain complete aftermath of the worst part of the pandemic, all of these challenges have come together at once and i'm relatively optimistic about julia's mediums been prospects but in the near term we are going to have to navigate some tricky territory. kathleen: the australian dollar down about $.12 recently. it, it's got to be this aggressive fed rate hike. it's made the dollar very

strong. looking over your older, you see a global economy slowing down. jim: certainly what is happening with the u.s. that is putting pressure on our dollar at home. we have a dollar, australian dollar down into low to mid $.60 which is quite low by recent standards. that's something we are monitoring the cuts in pixar import expensive, so that is a challenge. i think more broadly, the issues the u.s. that is confronting, and i had a good conversation with chairman powell yesterday about that, the issue americans are facing are common around the world. we've got some combination of high or rising placed and complete got rising interest rates in one way or another, so the challenge for us is to build our defenses, build our buffers against the global uncertainty in the best defense is responsible budgeting and responsible economic management at home. so that is our focus.

haidi: jim chalmers speaking to kathleen in washington. coming up, we will speak to japan's biggest travel agency about the countries tourism reviver -- tourism revival. that's next. this is bloomberg. ♪

kathleen: keeping an eye on the yen on friday, the yen nearly reached its lowest level since august of 1990. today, you can see dollar-yen a little weaker, split a little strength for that again but against the other major currencies, it is a fixed bag as we look at euro-yen, aussie-yen, and yuan-yen. with so much pressure, it is a big go. let's move to another side of the story -- and has lifted on three. subtype order controls that kept forests out of the country. as one of the last developing weights to open for tourism, their anticipation of an economic lift that could equip step pre-pandemic travel boom. the president and ceo at gtp group, japan's biggest travel agency going back to the early

1900s. welcome to the show. i told you in the break i'm darting to get back to tokyo. i assume there are other people looking to do the same thing. what your sense of demand for foreign travelers to come back and how welcoming and open japanese people, still worried about covid as many people are qamar to be? >> this is the exactly the time foreign tourists coming back to japan and a lot of inquiries coming from travel agents abroad, and in the economic forum survey released in may this year, it's showing japan ranked number one in the tourism sector and this demonstrates the popularity of japan and

customers having high intention to come back to japan. kathleen: how about the japanese people themselves? many people, any country could benefit from tourists, restaurants and hotels, but what about the japanese citizen? do you get a sense people are hesitant or do they feel covid is behind them and it's time to move ahead, including bringing people back to japan? eijiro: they are getting ready to accept foreign tourists and the step-by-step preparedness of the destination is now complete. for example, the hotels who used to receive the large-size group is now adopted to accepting the individual tourists because people want to avoid they

crowded place. so making 80 smaller size bus and small dining rooms, that is the big change at the destination site and they are ready. haidi: have you seen the weaker yen playing into the outlook? eijiro: this impacts a lot. japan is very affordable at this moment in this depreciation of the japanese yen effect tremendous and many tourists coming back to japan. also, it is important to note japan is ready. acceptance is very important. haidi: what does it mean for the mastic travel? domestic travelers will perhaps

think twice about going overseas with the weakness in the currency making it not as affordable but if you have an influx of foreign visitors, is that going to create a backlog of demand domestically? eijiro: they are going to spend a longer time compared to japanese travelers and that effect is positive to the destination. the capacity of the hotels and we, for example, we are ready to prepare the platform to support this nation, together with the trip group. we have the platform access to

foreign tourists. so japanese travelers can enjoy the japan trip. kathleen: japan has silly wonderful destinations to visit. i wonder if people interest or were they want to go have changed and is that reflected in the kind of tours that are popular now? eijiro: attraction of the destination remains the same as before. but the new development, for the first time kumutha: route, kyoto and mount fuji. but the people's attention and awareness is on the state ability so that they can enjoy local food and awareness is

increasing in the environment as well. destination should be diverse as before. that is the attraction. we also have the new route on the deceived pan side, in accordance with the extension of the bullet train running next year onto the seat of japan side. the new route it also developed, so your destination is ready. haidi: the president and ceo of jgb group joining us. more coming up on daybreak. this is bloomberg. ♪

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kathleen: a quick check of the latest business flash headlines. us trillion regular say government appointed manager will basically control the casino license. it has named nicholas weeks as manager of operations to continue. self regulation, he says, was a fail. shares were halted head of the statement. -- thanks to higher energy prices. income jumped as much as 108% from a year ago. they did not make out its third quarter results.

haidi: let's take a look at some of the stocks we are watching when trade opens in korea and japan in just under five minutes time. we are watching energy related stocks that could be act of after oil posted a weekly loss as inflation fighting measures are souring the market outlook. watching the likes of sk innovation, japan petroleum. we have the market opens in seoul and tokyo next. the focus is on fx, watching the pound as we see more signs of turnaround on the unfunded tax cut package from liz truss and more yen intervention as we get close to that psychological key 150 handle. this is bloomberg. ♪

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kathleen: this is "bloomberg daybreak: asia." it is safe to say, big focus across the region on the yen after it hit 149 on friday. bold action promised by japan's government but this is on our radar screen. haidi: also watching trading on the pound. further upside potential for the recovery. we get a further you turn from liz truss. we already had the change at the top when it comes to the

exchequer. annabelle: you mentioned the moves in the pound. what is also playing out in the treasury space, we have the open of japan and korea. we had seen moves in the futures market edging higher in early trade. a story of what is happening in the u.k. because that has been lending a bit of stabilization in the gilt market. the pound is rising in the early trading session. in asia we are focused on the direction of the yen as it nears the key 150 level pure goldman sachs thing we could get there in three months because of the ongoing divergence between the u.s. and japan. in terms of the direction of stocks, the nikkei sliding. we had a trading jump on friday rising more than 3%. a lot of foreigners deciding to come back into the market.

that's go to the open for korea. we are also hearing from local media this morning reporting that the governor says there is one be ok board member saying the terminal rate should be higher than three point 5%. you can see it is weakening substantially, down nearly 1%. we are watching what happens in the tech index route the session with the inflation and recession concerns still in focus given at university of michigan survey over the last weekend or on friday saying inflation expectations are taking higher on a one-year basis. a negative for the tech index. in australia, the focus is on the energy sector. we are seeing brent crude rising at the start of trade but it was a weekly drop. that is feeding into what we are seeing on the energy index. it is outpacing the losses we have for the broader asx 200. haidi: let's get some more when

it comes to the opportunities we are seeing across the region. our next best season in chinese equities but only for those with high risk appetite and a long-term horizon. those are some pretty strong caveats. in terms of what we are expecting from the party congress, has any of that changed your strategy for china? >> in all honesty, we were not looking much at the party congress. two factors have weighed on the economy. going forward, that could change. it will not be a dramatic change. changing in the next 6-9 months. china will change its covid policy but not right now.

sometime early next year perhaps. when the vaccination rates among the seniors in china increase further, they will be more ready. they are moving in a gradual fashion as far as easing covid policies are concerned. having said that, a lot of the bad news has been priced into the market. the chinese equity market is something investors should not --. there will still be quite a bit of volatility as we watch this party congress. haidi: one of the other themes, is a tug of war between governments and central banks. the u.k. is a prominent casualty of that battle. at least in china do you have the advantage of being on the same page when it comes to policymaking?

and hopefully being able to return to the countercyclical factor of resuming to some level of growth? >> absolutely, i think that is china's advantage. inflation is not running away in china like in the u.s. the pboc has the ability to do more if it wants to. as does the government. having said that, i would caution -- i don't think they are looking for a return to rapid growth. the chinese government has a target for the economy this year and it will probably come in at 3% in terms of growth this year. i don't think they are looking to achieve that target. i think they are looking for reasonable growth. they will not do anything that is too aggressive. i think it will be more gradual. they will do what they can to support the economy on the housing market but do not expect fireworks from fiscal policy or monetary policy in china. it will be gradual steps.

kathleen: looking down the road, this is not an immediate investment avenue but in the tech battle after the u.s. curb, that has to be important to build up the chip industry. will there be opportunities for investors? will try not follow through on this to a degree? >> the government is determined to push aggressively in the high technology space. it is in the e-commerce space because of the tightening of regulations in the last 12-18 months in china. when it comes to high-technology, they recognize [indiscernible] i don't think opportunities will be immediate. it is something to keep in mind. it is clear the chinese

government will focus on this area. they recognize there is a lot of pushback from u.s. they have to to do it to stay competitive -- they have to do it to stay competitive and keep china as a power. kathleen: what about the yen? >> it is not about the yen but about the u.s. dollar. the question to ask is will the u.s. dollar continue? yes, it looks like it will get higher. we are now projecting that there will be 275 basis point hikes in -- will be two 75 basis point hikes. the central bank in japan.

i was listening to the show and you talked about the u.s. dollar and i would not be surprised. the dollar is strong. there is no reason for the dollar to take a step back because interest rates in the u.s. are on the high-end. you could see more supersized rate hikes in the coming months. kathleen: the executive director of strategy at ocbc bank. vonnie: u.k. chancellor of exchequer jeremy hunt has declined to rollout delaying by a dear the prime minister's plan of cutting the income tax. that would be another u-turn. hunt has made clear that quieting the market is his priority and he intends to show the government can account for every penny of its tax and spending plans. the european union's executive arm is planning a mechanism to curb price volatility. it wants to prevent extreme

price spikes and derivatives trading. the temporary mechanism what impose a price limit for transactions. the benchmark for all gas traded on the continent. hong kong media reports say china may further relax its border restrictions with the city by year-end. the south china morning post said the current seven-day hotel quarantine period could be cut to four days. it also reports that the mainland may allow more visitors to cross the border from hong kong each day. the australian government will reportedly pledge 6 billion u.s. dollars for infrastructure projects in its october budget. the prime minister told aap the spending would create jobs and unlock growth and productivity. the group -- the global inflation fight --. >> way cannot have been budgets

spending that is excessive or poorly targeted. if we have money spraying around in all directions, that will make the job of our independent central banks even harder. our intention is to provide some relief that has an economic dividend. vonnie: global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: let's take a look at some of the early movers in the energy space. annabelle: we are seeing some moves. kakao --one of south korea's biggest tech giants. naver, and a bit of a drop. a fire in an area where there are a lot of tech companies that disrupted services for these companies. they did say they are working on

restoring operations as soon as possible and an inquiry has been ordered. turning to what else we see for stocks moving in the session. take a look at the start of trade for the energy stocks. we are seeing moves to the downside for most of them given the moves in brent crude just fractionally higher. but another weekly slump your taking a look at the bank stocks. in asia we are seeing particular losses from mcquarrie group. kathleen: still ahead, xi claims victory. frank glavine gives us his take later. we assess the chinese president comments on taiwan and his refusal to roll out using military force to reunite the

country. that discussion in a moment. this is bloomberg. ♪

>> we put the people and their lives above all else. it is about the historic rise in china's economic strength. our central government exercises overall jurisdiction over the special administrative regions as prescribed by china's constitution and basic law of the hong kong special administrative region. resolving the taiwan question is a matter for the chinese, a matter that must be resolved by

the chinese. we will continue to strive for a peaceful unification with the greatest sincerity but we will never promise to renounce the use of force. we must meet obstacles and difficulties head on and ensure the development and security and dig deep to surmount difficulties and challenges of the road ahead. haidi: china's president xi jinping opening the party congress. for more, let's bring in stephen engle and shuli ren. not a great deal of surprises but the same strident approach. >> in reflection again, 24 hours after the speech, i felt it was a bit of a sober speech.

three hours plus five years ago and this time it was under two hours and he got right to the point on a number of issues. he did not necessarily talk about the downside to the economy from covid zero and the lockdowns but he didn't hail the party and these policies helping to save lives. and we should read into it as it is not going away anytime soon. he did not give a roadmap that could leave that open to interpretation that they could start gradually easing. that is the optimist in me saying that. not a lot of definitive outlook for covid zero. taiwan was another issue. he reaffirmed that peaceful reunification is a top goal. that is their preferred way through this good but they said that reunification must happen and can happen. and if they have to they will

use force. and then again probably the one topic with the most geopolitical overtones as well as international appeal is his assertion that they can become more self-reliant in high-tech technology in the face of the more recent biden restrictions on chip sales to chinese chip factories. kathleen: in terms of why the party congress is so important, what is the key take away? what intensity did you sense in his comments? shuli: very intense. the congress is important because it is the communist party's pitch to the nation why it should be the party to roll. -- to rule. we also note that president xi jinping is very secretive.

it is helpful to listen to the speech and compare it to five years ago in 2017. you can tell his heart and mind are looking outward. he is looking at geopolitics and the technological competition with the u.s. i think it is 10% or 50% of his speech when he was talking about external influences influencing china's affairs and his voice cracked with emotion. taiwan is on the top of his mind. haidi: i am quite curious as to what you were going to ask. stephen: i wanted to ask about the tone. you are a mandarin speaker and you can get the tone a lot easier then i can as a second language. you thought his voice was cracking.

was he a bit angry? >> yes. stephen: and what does that mean? >> he is visibly angry. the speech had 15 sections and a lot of them were ideological. you could tell he was going through the procedure. but when he talked about geopolitics and china's right to have its own path to modernization, he was very passionate. he also talked about china needing to retain talent in science and engineering. and then you could tell that is where his passion is as well. haidi: i was going to ask, is it a mistake for foreign investors to assume that because there will be changes in the top leadership that the key policies like public health and the regulatory crackdown, that any of that will change? shuli: if you look at the speech, it was very formulaic.

the first part is touting china's achievement in the last i've years. he talked about covid zero and how he kept trying safe by implementing covid zero. in the lookahead section especially people's livelihood, he did not talk about covid zero. that gives us some hope and optimism. i am with stephen. perhaps china is not going to have covid zero until 2027. and he still talked about economic development which i think was a palliative outlook compared to market expectations. kathleen: stephen engle and shuli ren with an interesting roundtable on xi jinping's speech. liz truss facing backlash. what will that mean? we find out next. this is bloomberg.

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>> i want to be honest. this is difficult. we will get through this storm and we will deliver the strong and sustained growth that can transform the prosperity of our country or generations to come. haidi: liz truss. this will be a key week when it comes to testing the volatility we have seen across gilts and the pound. we saw pound rising in early trading. some bolstered expecting to see more of the prime ministers package to be reversed. take a look at futures. german docs futures looking a

little -- german dax futures looking wan. trimming some of the early rally. investors watching what is going on in the u.k. u.k. financial markets getting fresh opportunities soon to pass judgment on liz truss's economic program without the bank of england to offset any turmoil. david joins us now. as we see this tug of war play out between the government and the bank of england, what are the levels you're watching for when it comes to trading in the pound as well as gilts? >> the pound -- 140.95.

that was the recent high. we are still quite away from that. that is a good sign for gilts. you expect them to rally as well. the big worry for gilts is even with this initial rally, you have u.k. cpi on wednesday. that is supposed to go up to 10%. that could put pressure on gilts. in the rally today, you have to dodge the cpi bullet. if a comes in higher than expected, more pressure on gilts. any rally -- it is it where they are at the end of the week that could impact developments. haidi: when it comes to assessing where policy goes from here, is there a sense that some physical responsibility --

fiscal responsibility might be coming to the fore? >> the idea of a bit more fiscal responsibility is positive for the pound. one problem is the budget deficit. that is why additional spending is worrying the markets. how will it be paid for? even if you get just some of the policies being returned, there are still some not being returned. that is still not a positive for the market. and therefore any pound rally is a bit limited because that needs to be sorted out. the market is looking at the projections for next week when the new chancellor of the exchequer revises the budget.

any rally of sterling could be short-lived particularly if the dollar it maintains its strength. kathleen: at the g 30 meeting when andrew bailey was on stage with kuroda and others, he made it clear that he and jeremy hunt were in solid agreement. now that the former -- the situation has changed so dramatically. when the market gets this that they are arm in arm in what they need to do, how will that affect gilts and pound etc.? >> it is a positive in the near term that they are on the same page. how much they are on the same page still needs to be seen? what is this mini budget? how many things are they you

turn -- u-turn-ing on? the markets -- there are still unfunded items on this mini budget. we are looking for another 90 basis points in december. the boe does not come through and do is part of the equation. it will take both of them to fulfill their end of the

haidi: we do have nonoil domestic exports from singapore just crossing the bloomberg at the moment. the number is coming in at a contraction of 4%. that is a seasonally adjusted month on month number. the previous month we had been expecting for the month of september a gain of 4/10 of a 1% so that is a miss. we are also seeing the electronics importance -- imports being stripped out at 11% and that is worsening. paring gains after we saw

an 11% gain in august. if you take a look at the contraction in demand for china come exports contracting 34%. let -- electronics was a big component of that fall. this comes after another move from the mas. last week's gdp print was pretty good and showed the extent that the opening of singapore's border and the resumption of co--- post-covid activity contributed to that rebound. the exports number is not looking good and that plays into the picture of the slowing import demand holes we see from china. -- demand pulse we see from

china. annabelle: japan and korea are dependent on the health of the mainland economy for their export picture. we are looking risk off at the start of trade. already minutes end of the start of trade. you can see broad-based declines. real estate is one of the few sectors pointing higher. and financials. we saw improving net interest income margins for the likes of j.p. morgan and bank earnings well underway and the u.s. changing the picture -- currencies very much in focus this morning. we are eyeing the yen. this would be a key intervention level. goldman sachs says we could hit 150 within three months because of the growing policy diversions gap between of the u.s. and japan. we are also watching the pound. traders seems to like the

chance of a for the reversal of the package of unfunded tax cuts from the u.k. in the leadership changes that liz truss made over the weekend is putting more stability into the treasuries. in terms of the outlook for u.k. stocks, looking fractionally weaker and focused on how china opens in one hour from now. there are signs to the downside. this is down to the lack of policy pivot announcements that came through over the weekend. vonnie: chinese president saying china is staying the course as it faces what he calls dangerous storms and growing challenges from the united states. in an almost two hours speech to open the congress, he said china will pursue developments while ensuring national security. he also said taiwan reunification was a matter for the chinese and he hailed the

restoration of order in hong kong. a senior white house official says the u.s. could change its approach to providing security assistance to saudi arabia. national security advisor told cnn that the president could make a decision on relations with riyadh after consulting with lawmakers. he told cnn last week that there would be consequences for saudi arabia after it voted for opec to cut oil production. pakistan's former prime minister has won the majority of seeds in by elections a building momentum in his campaign for an early national poll. he was contesting seven of the eight seats in play and he had won five of them. he will have to resign from all but one but many supporters support his political narrative. thou korean boy band bts has performed together for what could be the last time in years. saturday's concert was to promote the second largest city's bid to host the world

expo. the oldest singer it faces a deadline this year to begin compulsory military service. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: what a weekend it was for bts fans. i did not watch the concert but i know many that did. they were desperate to get the last glimpse of a performance from bts especially after the announcement that the band would be going on a break to pursue solo projects. the fact of the matter is what can possibly replace not just the soft or cultural power of the group but also the year economic power it has brought to south korea? arguably such a big factor when it comes to the country's international appeal across a number of different generations. annabelle: when you look at the

shared performance of big hit entertainment. down. down below the ipo trading price given that shock announcement that came through. and the overall economic value. when you look at the trade balance of power in the first half of this year, intellectual property was posting a huge surplus indicating the ongoing need for korean ip and the power of kapok. -- kpop. a lot of questions should these members be completing their military service. kathleen: it is a touchy exemption to be granting. especially when there are deep disparities when it comes to wealth and social equality in this market. and in this economy. it remains to be seen whether we could see on another k-pop band replace the power that bts has.

i have been listening to a bit of black pink. annabelle: black pink is one to be watching. that is one of the bands that could be a front-runner to replace bts if the military service needs to come through. kathleen, i don't know your views on the k-pop scene. kathleen: it is not my main form of music. but i do love it because of the dancing is so great. it is not just the music. it is the movement and i am a sucker for that. watching videos like that makes me want to watch it more. let's go on to third-quarter net income. bloomberg intelligence sees the company on track.

let's bring in the industry analyst. what is your outlook for the rest of the year? ada: it reported a 16% year over year growth for both revenue and net income line for the third quarter. this is largely driven by its direct to consumer sales which more than doubled from last year. the company has a 15% year on year growth sales target for the full year of 2022. and we believe the company is on track to deliver that the rest of the year. haidi: the stock has been under pressure on the back of this alcohol ban. the problem is it is so susceptible to the whims of policymaking and leadership mandates. ada: correct. the share price has been under

quite a bit of pressure in boy -- in recent weeks because of market speculations of potential stricter alcohol bands for the chinese civil servants. what we have seen so far is that there has not been an official statement of a strict error alcohol ban -- stricter alcohol ban. they have been rolling out since 2012. most of the really strict ones are already in place. haidi: our bloomberg intelligence analyst. xi jinping pledges to wind the tech battle against the u.s. the former u.s. undersecretary of commerce for intelligence -- for international trade, frank laba joins a half -- frank lavin joins us next. eck out angi.com today. angi... and done.

kathleen: with just weeks to go until the g 20 summit, we are putting a spotlight on the key issues they will be facing. it statement from finance ministers and central bankers was delayed by several days over differences over issues like ukraine and global warning. haslinda amin joins us now. this often happens ahead of

meetings like this. there are so many different views and interests. what are the key bones of contention? haslinda: there is not just one issue. there are a lot including the likes of russia's war on ukraine as well as climate change and fossil fuels. this is not the first time that g20 has been split having issues with delivering the statement. the same thing happened at the g20 finance ministers meeting in bali a few months ago and a lot of contentious issues. we have g20 member countries divided on their views on russia's war in ukraine. we have the likes of the u.k., germany and europe condemning that war saying sanctions on russia is a key reason why the world is in such a state right now. the likes of china and india are pulling back on condemning --

they are pretty neutral in their statement. and then brazil negotiating for cheaper oil from russia. we see a split. it comes down to national interests at the end of the day. we talk about climate change as well and here lies the key issue. as we go into the cup 20 meeting, a lot of questions on whether nations will pull back on the commitment given geopolitics in the u.s. and china, the two biggest contributors to climate change. will that mean other g20 nations will also fall back on fulfilling their commitments to climate change? a lot of contentious issues at the g20 meeting. split on where they stand on those issues and hence we saw how that statement came three days after when usually a comes within hours. haidi: bloomberg's haslinda amin. and the decoupling of the

biggest global economies -- china's president has pledged his nation will prevail in its fight to develop strategically important tech underscoring beijing's concern over a u.s. campaign to separate it from cutting edge chip capabilities. >> we will accelerate the implementation of innovative driven strategy. we will meet china's strategic needs and we will concentrate resources. kathleen: let's bring in frank lavin. he previously served as a u.s. undersecretary for commerce for international trade. great to have you back on the show. on the heels of this very

important speech. if it were not for president biden's u.s. curb on china when it comes to chips, so important to developing key things they need to develop, maybe this would not be resonating so much. but against that backdrop, what is xi jinping trying to tell the world and the u.s.? frank lavin: you are right. thanks for having me back on. this speech is taking place in the context of a teary ration in u.s.-china trade relations and president biden has imposed export bans on chip technology to china. this is a reassuring message or an attempt to be reassuring to his constituents saying we will plow ahead on our own and we will devote the resources and effort on our own to close the gap and makeup for whatever shortfall there is from this

band from the united states. kathleen: another key issue is taiwan reunification. shuli ren who is a mandarin speaker said at this part of the speech he really picked up and his voice even shook and he is angry. what did you pick up? frank lavin: taiwan is the most important domestic political issue in china. it is obligatory for anyone that aspires to senior leadership in the chinese communist party to be forceful and strident on taiwan. part of what he is doing is passing a test. i would not allocate all of the interpretation of this to domestic chinese politics. i think they are serious about this. do not want to see a change and the status of taiwan. they want to caution the united states of fomenting or incentivizing an independent streak in taiwan.

haidi: at the same time, we see domestic governance and covid zero. and consumer demand is being depressed. this is constraining growth. we just had the singapore export numbers when it comes to demand from china shrinking over 30% for september. what does that mean for businesses in your area? and how china is re-shaved in terms of whether or not it can continue -- is reshaped in terms of whether or not it can be the economic powerhouse? frank lavin: the lockdown policies in china have caused considerable disruption to the chinese economy. beijing will save the benefit is worth it. in my mind they could've accomplished a lot of the benefits of that without these massive and pervasive and

dislocating lockdowns and i think the ripple effect will go on for some time. they really went for a rigid approach to covid and they are paying a huge economic price and they will not be able to easily turn the light switch on next year. it is a longer-term problem for the chinese economy. haidi: what are you seeing from a business perspective for your business? frank lavin: specifically in e-commerce, you have a collapse in demand in certain segments like apparel and beauty. they are typically the largest segments in consumer goods in china e-commerce. when you have lockdown, you do not need a new skin cream or shirt. it also disrupts work habits and office activity and experimentation. it has a depressive effect on the whole economy. kathleen: in terms of the next

steps for china come up what is at the top of the list? many are saying that covid zero may not be going away for a long time. some ought after the congress is when xi would be able to say, we are doing better and we can start winding it down. what do you think is the next big step? frank lavin: i am in the second group. the point of the congress -- and this is consistent with chinese political culture. he is not there to be defensive. his message is we took the right steps to safeguard china's health. it is almost a defiant or resolute posture he is taking and it is accepted and amplified by the party structure. that is for today. my guess is when we start looking at january, we will see some experimentation and reduction in quarantine for international visits and a lighter touch when it comes to

lockdowns and a slight move away from zero-tolerance. the chinese government tends to move incrementally and i don't think they will move until next year. haidi: really great to have you with us. frank lavin, former u.s. undersecretary of commerce. as we count down to the gathering g20 heads of state in bali, you can get more in depth and discussions and analysis. more ahead. this is bloomberg. ♪

kathleen: let's get a check of the headlines. j.p. morgan chase has reported the highest interest on record. the lender also raised guidance for the year as it continues to reap rewards from the interest rate hikes. jamie dimon says u.s. consumers and businesses remain healthy but he also said there were headwinds. citi --revenue declined 7% in the third quarter. the fed's battle against inflation also took a toll on wall street operations with fees from investment banking falling 64% and revenue from stock trading dropping 25%. haidi: xi jinping address to the party congress has left traders

pouring over the nuance of each phrase. let's get more from lianting. the consolidation of other narratives that we have seen from the leadership so far. are there any silver linings for investors? >> there are a few sectors that investors got a little bit of confidence towards after the speech. that would include tech hardware. xi jinping featured tech hardware prominently in the speech talking about how advanced and you fracturing would be the foundation of a modern nation. that is one to watch out for. another one that is property. that is interesting. xi did not mention in his speech that housing is for living and not speculation. another one to watch out for is

the green energy sector. he kept talking about it but there is a caveat. we won't see an immediate transition into green energy. he said china will not rush into it. china still is facing high energy costs and for that reason , china will not stop burning fossil fuels until it is confident that clean energy can reliably replace them. kathleen: important issues. china will release key economic data on tuesday. what are you expecting? >> expectations for a modern increase or improvement for overall gdp and other economic data. economists are expecting gdp to expand by about 3.4 percent in the third quarter and that compares with almost 0% growth in the second quarter because the cities were locked down. if you look at individual or other key data, i think retail

sales will show a slow down to 3.5% in september. it is because covid zero is a very prevailing policy still in china. industrial production will probably have stabilized. that is because there is more infrastructure spending in the last few months. kathleen: our asia stocks managing editor. some stocks we are watching ahead of markets opening in hong kong and china. we are watching the taiwan semiconductor. it is up 4.3%. all of these in the green. interesting after xi made his point about tech and everything. and don't forget cnooc.

keep it right here. china open up next. ♪