haidi: good morning. annabelle: we are counting down

to asia's major market open. shery: the top stories this hour. u.s. stocks surged with the s&p 500 reaching a key technical level with the strongest rally this year. haidi: the reversal of fast fiscal stimulus boosting sentiment, jeremy hunt scrapping tax cuts as prime minister liz truss faces growing pressure to step down. shery: china relays a -- releases a report to concern investor uncertainty. we actually had a very strong rally with almost 90 9% of s&p 500 companies one point and gaining ground, we are seeing the 10-year yield moving to the 4% level as treasuries also rallied, it was a risk sentiment today, being boosted by what was

selling in terms of earnings not to mention we were rebounding off of technical levels. not a lot of changes in wti prices. we are seeing concerns about global demand. along the asian session we are seeing a little bit of upside above $85 a barrel. let us look at the bloomberg, the numbers out of the bank of america when it comes to the consumer side of things, adding to the rose expectations about consumption, spending on cars soaring. when we look at investment banking, the bank of america did beat expectations. we continue to watch this space because dealmaking has really slowed down, the cfo and bank of america saying that they will not be cutting jobs in that unit although goldman sachs may see some big reshuffles in the leadership coming up. annabelle: the health of the u.s. consumer is something we

are watching because bank earnings are giving u.s. stocks a big boost and consumers are looking fairly strong as well, that is setting us up for the asian trading session, new zealand is online in the green. the aussie dollar is in focus because we i've been seeing at reversing its recent losses although strategists say we are unlikely to get to the 63 sent level because we do have the rba meeting minutes in a couple of hours. the yen has been flat, the ninth straight day of losses, very close to the key intervention a level. changing on for a set up across the rest of the region, we are watching what is happening with the pound, extending its gains here, investors are liking this fiscal policy shift in the u.k.. we will have more details in a few minutes. we are keeping an eye on what is happening in china because it is a fractionally stronger year, it is a risk on feeling we have in

the markets, chinese markets listed in new york. that is also as it comes when we have been having traders being told to wait for some pretty key data sets. haidi: it is an interesting development want to come to the delight of the gdp numbers as well as the monthly activity numbers were expected and some economists are saying do not read too much into it because they could be that everyone from the leadership down in china's government is focusing on the party congress. having to put time aside to analyze the pork report, really focus on getting announcements -- analyze the report and really focus on getting announcements. they are delaying the release of the data points. it comes at a time where the market sentiment side of things could really use a bit of a boost. shery: it is so we, back in 2017

we had the party congress, they released the gdp numbers. we are watching closely as market seem to have reacted a little bit without much fanfare. we are talking about the csi 300 and the csi china trying to digest xi jinping's recent speech. chinese regulators in the meantime are hard at work ramping up efforts to support the stock market. we have seen a market supported measures in the pipeline including -- seen market supported measures in the pipeline including help in the markets today. specifically credit suisse, they are considering a sale of the u.s. management business with the investment bank chief says for more on that, bloomberg's scoop, let us bring in sonali basak, and emily griffey out at

our global economics and policy editor kathleen hays. this is a huge scoop and we are expecting eight turnaround plan next week. what are we hearing? >> several stores have been on credit suisse because so many details of this plan are starting to leak out. we have investment banking and police expected to step down, he will step down at the big investor restructuring plan release that is at the end of october. you have news from bloomberg reporting that investment funds, sovereign wealth funds tied to abu dhabi and saudi arabia may be investors, should they plan a separation of the investment banking unit. that and a potential plan to sell the u.s. asset management arm could start to help credit suisse raise money to stave off a large capital raise. this will raise money for restructuring.

if they can pull this off and a sale of the securitized private group which has been drawing interest from different firms including apollo. that could start to help them raise money that they can use to do something more. haidi: it has been full speed on the banking bit. another leadership shakeup at goldman, potentially some signs of optimism when it comes to the numbers in the bank of america? >> you see a continuation of what you saw a jp morgan which is a big boost from the interest in income. goldman sachs sees the same boost does not apply to consumer business. tomorrow goldman sachs is reporting they are watching the trading figures because they have been coming in above expectations and they have been strong in other places. they are expected to bring in $3 billion. they are expected to announce a

third large restructuring of their business lines under their ceo who is entering his fifth year on the job. there are a number of executives who are rising amid this reorganization, the question is what does it mean in terms of potential future targets? a combined trading unit, an asset management unit, alongside a separated transaction banking unit that has the consumer businesses in a different unit. while these businesses have different expectations moving into next year which many executives see as a tough economic environment. haidi: we have seen the correlation between how banks do and the s&p 500 does and perhaps the chart on the bloomberg showing that very well. we are have started earning seasons -- we have started earnings season. annabelle: we had a huge rally in the u.s. stock market.

a lot of strategists were talking about the chemicals, we bounce off of the 200 week moving average for the s&p 500. there is chatter about what the upcoming earnings season will mean for stocks not just the bank earnings but the entire season. i thought bloomberg intelligence's gina martin adams's analysis was interesting . the bar right now for s&p 500 earnings is so low. back in june analysts were expecting the eps growth for the s&p 500 for the third quarter to be 10%. they brought the number down to 2% now. the expectations for the season are very low. the bar for a beat is very low. we perhaps get a bounce in the equity market that is more sustained than just today if these earnings do beat. eight earnings season strategists forget about that

decades high inflation and the rise in rates and they look to their short-term earnings beat as a reason to buy more stocks. haidi: we continue to get the use flow from the u.k. liz truss' economic plan is in tatters. what is the recession risk? >> the recession risk was always there. you have soaring energy costs, rising inflation, that makes people want to spend less and that is what liz truss, has a new prime minister, was trying to address with her aggressive tax cuts on the wealthy. she wanted to underpin the cost of paying for energy bills for u.k. citizens and businesses this winter but it backfired as you all know. the yields plunged, the pound hit -- the yield soared and the pound hit a record low.

she and andrew bailey agreed on the he thinks he has done what is gator run of anything left of this program. she is trying to save u.k. credibility and reassure investors that it will be a place to invest. here is what he said today when he was announcing his new fiscal plan. >> i remain confident about the u.k.'s long-term economic prospect as we go for growth. growth requires confidence and stability. the united kingdom will always pay its way. this government will take whatever tough decisions are necessary to do so. >> he had to say that they will pay their way because that is the fear investors have that their plans have gone off of the tracks. what he has done, the income tax is gone indefinitely. universal energy support is owing to be shorted to april of

next year. they will be -- there will be more targeted energy relief. there will be tourists taxes that are reversed, that will raise about 32 billion pounds for the u.k. government. not enough to get them on track. they will pay people, a price for all of this in higher yields. labor economics estimates it will be $10 billion a year because these yields will stay higher for some time. the associate risk has gotten higher. that is look at a chart looking at what the investors are thinking, what will happen to the bank of england's key rate. they think the terminal rate is at 5.15%. they thought it would be 5.3 or 5.5%. it is not a big thing for the bank of england. they have to hike rates aggressively was inflation expected to get up to 11% year-over-year. they can do, this is a jumbo,

not a superjumbo height of 75 basis points. this is a little bit less aggressive and a long way to go to get everything back on track. jeremy hunt is trying. haidi: we are saying that reflected in the pound. -- we are seeing that reflected in the pound. we did see the reaction, the positive reaction when it comes to the rest fight for the pound after we saw the new chancellor outlining the plans to scrap the proposed tax cuts. also be helped by a fall in the bloomberg dollar index, down 1% to the lowest since october 7 as we saw whales sliding as well. watching the aussie and the kiwi, they had a recovery after the speech over the weekend, new zealand inflation came in, barely slowing in the third quarter, the domestic price

gauge exhilarating to a record 6.6% is what does look like the rbn says those rates remain intact. watching a move in the yen. that weekly fear great indicator, the highest since 1989 it indicates that the bulls are in control. let us get you over to vonnie quinn. >> russia has had critical infrastructure in central give with suspected iranian drones -- kyiv with suspected iranian drones. the aircraft damaged several houses and sparked a fire. the ukrainian president claimed people who shot down 13 incoming drones. eu nations have discussed the use of drones in

ukraine, they say the block is gathering evidence to determine whether moscow is using weapons for attacks in kyiv and other ukrainian cities. u.s. regulators are investigating the three arrows capital. they are looking into whether the money manager violated rules by misleading investors about its balance sheet and not registering with the agencies. three arrows filed for bankruptcy after the collapse of the blockchain lead to a selloff in digital assets. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: more u.s. bank earnings, why odeon capital group believe you should sell shares in goldman sachs and morgan stanley. then we will speak with shana orczyk sissel, we speak about the high probability of staying

defensive next year. this is bloomberg. ♪

>> anybody sitting on debts is going to be in trouble because of the higher interest rates. as interest rates are going to 9%. they will have to keep on

raising rates. simply because if inflation is 8%, you have to raise rates higher than inflation which means 9%. that will go out the window if the cpi goes down. i do not see that happening anytime soon. haidi: mobius capital mark mobius there. i recession is a high probability in 2023, she continues to position defensively. shana is the ceo of spotlight capital management. shana: large-cap quality names are i want to be. as you pointed out, i am predicting that probably of an recession in 2023 is high.

since 1929 if you look at the presidential cycles there has never been a recession that started it year three of a presidential cycle. history is not supportive of what i am saying, take this with a grain of salt. i do not see how we avoid a recession with the fed being so aggressive. position yourself into a larger cap, solid, defensive names. health care. areas of the market who have had the most burning surprises on both earnings and revenue. these are areas i would look at defense companies, i talk about this before, and then i am going to be really careful about my entry points and the evaluations of the names i consider for a portfolio. i had to be offensive in how i position.

i need to make sure i am well protected and in case there is more downside to this market. haidi: you mentioned staples right now, i wanted to bring up this chart, we saw the third-best return when it comes to consumer staples in the most recent chart. the top sector for the day as well. what does that tell you about the strength of the u.s. consumer and households as we had some pretty optimistic signs from the bank and lending numbers out of the big banks as well? shana: i do not think the consumer is as strong as people think. look under the consumer data and you are seeing an increase in the amount of debt through credit card usage that consumers are starting to accumulate. that is concerning because the rate on that debt is much higher than it has been in the past. i worry about the ability for consumers to handle that debt.

the banks are doing well because they are getting better margins and that would be expected. they have been very careful with the credit that they have been giving out. much more careful in the credit risk that they have. those are two things to consider. consumers are spending more money on things that are less frivolous. you see them spending more on food, health care, i am not actually as bullish on the u.s. consumer as others may be. underneath the numbers they are not as strong as people think. the holidays will be interesting . i do not think it will be a particularly strong holiday season. if that is the case, it supports the idea that the consumer, the u.s. consumer is not as strong as people think. shery: how much would you take away from this earnings season given it is backward looking? the bar has already been lowered

so much in the past few months. shana: i think you hit it on the head. one of the biggest problems i see is i think the market wants to see earnings completely drop out. that would be more positive and resilience because we see the stress in the economy and the inflation and the pressure on the consumer but we are not seeing it in earnings and as long as that is the case, as long as employment numbers remain strong and earnings remained relatively strong, that emboldens the fed to remain in this aggressive stance. they have already said they are comfortable pushing us into a recession by being more aggressive now than spreading it out. that is because they were late to the game. as long as things look the way they are, it emboldens the fed and i think having earnings brought out would be much better for market sentiment than having it where we are today which is that they are actually pretty

resilient. haidi: good to have you with us, thank you, the founder and president at baryon capital management. shery: an exclusive interview with blackrock vice-chairman philipp hildebrand, how they biggest money manager is doing the cash the biggest money -- the biggest money manager is looking at markets. this is bloomberg. ♪

haidi: take a look at the day ahead, the bank of australia set to release the meeting minutes. the rba deputy governor is to speak and new zealand inflation

slowing slower than expected, they will need to keep hiking rates and no inflation eased to 7.2 percent, down from 7.3%. shery: here is a quick check of the latest business flash headlines. a company may stop making cars in china as they lose market share to domestic players. the ceo says they may implement a strategy in china. they use the same phrasing about closing still lantus --stellantus' jeep plant. softbank cells thd after a sale price -- thg after a sale price collapse. the deal was announced last

year. this year fell to $40 million. coming up, china deferring the release of his third quarter gdp data and the economic indicators. more on what could be behind the unexpected delay. we do not have an announcement date. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. >> you are watching debris

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australia. liz truss says she will stay in her job for the national interest. she wants to accept responsibility and say sorry

adding that she plans to leave the conservatives in the next election. she is trying to hang onto power after being forced to reverse course on her economic reforms. jeremy hunt has ramped up what was left of her economic program. he is scrapping tax cuts and signaling support for energy bills to restore order to public finances. his decisions reversed the tax cuts and giveaways trust announced -- truss announced. >> we deliver our mission to go for growth. growth requires confidence and stability. the united kingdom will always pay its way. this government will take whatever tough decisions are necessary to do so. >> ftx is being investigated,

texas regulators are trying to see if this violates state law. regulators say the inquiry is complete ftx should pause the purchase of voyager. pakistan's former prime minister is asking for early elections within days or he will lead a protest march to islamabad. his warning to the government came in after his party won six of the eight seats contested in a minor election. khan was ousted through a no-confidence vote. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. haidi: china's decision to delay key economic data has been blamed on the party congress in beijing rather than fear that the numbers may underperform. let us bring in our north asia

correspondent stephen engle in hong kong. there is criticism when it comes to china data, what is going on here? >> the data has not been good as of late. on the back of lockdowns in china and in shanghai, there was expected to be a rebound in the third quarter to 3.3%. that is on the back avail of stimulus. the big headwinds are still there and that is the threat of lockdowns because of covid zero, ongoing covid zero policies as you can paying -- as xi jinping do not alleviate fears. has a property market headwinds and the turmoil there. -- the property market headwinds and the turmoil there. it was delayed and then we get a message late last night, short notice, that the third-quarter gdp as well as monthly indicators like industrial

production, fixed as an urban investment, retail sales, property sales, property investment, energy consumption, it would all be delayed. they do not give a reason nor did they give a date on which it would be provided. it is not a good look for china. not surprising given the importance of the congress. keep in mind when xi jinping is in two hour speech he is delivering his work report. -- delivering his two hours speech he is delivering his work report. from the provinces to the municipalities, they have to study it word for word. they do not want to get distracted. that is a more plausible explanation. they did not want to distract from this man's words. shery: that is stephen engle with the latest on those chinese gdp numbers.

look at how currencies are trading across asia, we are seeing narrow trading for the japanese yen after we saw the 32 year low being reached on friday. we are very close to those levels. . this is as we are seeing the dollar also falling. u.s. shares are falling sharply out of treasury yields are falling towards a 4% for the 10-year yield. giving a little bit of a boost on the other side of the break below the aussie dollar. we saw it rise in the previous session as well. the kiwi dollar against the u.s. dollar holding steady -- falling. guilds rose, we are seeing in the boe rate hike premium being paired back. jeremy hunt almost completely dismantling the tax cuts of the predecessor. britain's reversal on the controversial tax cuts are a step in the right direction.

this is according to one of the country's biggest lenders. they spoke exclusively to david westin. >> we are a big lender in the u.k., one of the top mortgage lenders and with a low risk portfolio. what is happening in the u.k. is affected consumers and businesses. the world is living through a period of unprecedented economic stress added by the geopolitics and the national politics. what is difficult at times like this for governments but also for businesses is to get the balance right between what is urgent and important which is fighting inflation. making sure that we are laying the foundations for growth. fiscal policy has to be aligned with monetary policy and that is the balance that was not right in the u.k.. it is about -- i am pleased by

the steps that have been taken and it is important to get stability and confidence as much as we can. i just do markets but to consumers and businesses. we are a big investor in the u.k. and we have high confidence in the institutions of the country. it is a very attractive place to do business, it attracts talent from all over the world. i think the steps taken are in the right direction. >> you came from washington, he attended the imf for meetings. -- you attended the imf world meetings. we have a lot of inflation around the world and a lot of central banks raising their interest rates. we also have a war in europe. how does that come together? imf is worried about recession. >> we are at levels of inflation we have not seen in decades and arresting governments that are being at high levels. what is important and this has profound implications for our

customers, consumers, businesses, society. getting the inflation down is important and i like to say that this is a disease that requires antibiotics. it would not be cured by vitamin c. have the conflicting fiscal policies and that is happening in many countries. making sure that they are not going against the other is important. from washington and as a leader of a bank, this crisis is different from what we had in 2008. have a strong global financial sector. -- we have a strong global financial sector. we have more capital, look at the last five years, we have taken outdoor capital from 8% to 12% and increased profitability of 9% to 14%. -- our profitability from 9% to 14%. it will be tough times. >> are you taking reserves?

>> now that you mention that, latin america and emerging markets, countries like brazil and mexico are in a much better situation than they were in the previous crisises. these countries have less debt and have followed monetary policies and actually the only currencies that have strengthened against the dollar are the rial and the peso. what we have done to get ready is what i explained in terms of the numbers. have the scale globally but in markets to be competitive, we have -- we have the scale globally but in markets to be competitive, we have to be competitive for our customers. >> is inflation hitting your bottom line? >> we have had negative rates, that is not normal, we are going

back to eight normalization of rates and this is how the system should work. -- a normalization of rights and this is how the system should work. we should do better. haidi: that was david westin. recession fears are growing but such warnings are hard to find when it's. we get a look at bank earnings next. this is bloomberg. ♪

haidi: you are watching daybreak australia. shery: we are seeing signs of high inflation and the economy is away on company balance sheets. balance calls are becoming a concern for money managers? annabelle: this has been one of the key things we have been watching coming through in the earnings season. the amount of cash that companies have on their balance sheets is starting to drop. you see the chart in the second quarter, we saw a decline of the 14% on the year. that is exclude financial companies. a company cutting its cash balance can be happening for good reasons but the concern is when you have a lot of companies doing this together. when the outlook for the economy is deteriorating.

how many managers are reading this, schroders is saying this could be a signal when we have higher expenses, slowing revenues, or both. even though market investors have been fairly optimistic about the overall outlook for company balance sheets. look at other measures, the debt service coverage ratio is how much cash companies have relative to their interest payments. it is looking pretty strong. haidi: when it comes to the consumer outlook, the data we are getting is actually looking ok? annabelle: that is right. this is something that was closely tracked in a bank earnings given that we do have the fed rising rates. we have inflation that is still strong or increasing in the u.s. as well. that has come through from bank of america and also from the citigroup earnings, jp morgan last week as well.

the consumer is holding up, he had an increase in credit card spending in the latest results for bank of america, 13% on the year. that was down to people spending more on traveling, entertainment and when you look at less wealthy consumers, they had five times more savings in their bank balances than they did at the start of the pandemic. the number of cars that the bank of america is repossessing is also halved. this is how the ceo spoke to us about the u.s. consumer. >> the credit quality in our consumer books is strong across the board. the payment and delinquencies are much lower. much lower than any average five best year-type period. they moved off of the floor but they are still much lower than they have been buried consumers are spending and they have money to employee and you see has on employment numbers and they have good credit. shery: the bank of america ceo

there. investors have been waiting to see how consumers were holding up especially given we have surging prices. aggressive rate hikes as well. to discuss the results we bring in richard bove, with odeon capital group llc. when it comes to earnings, it is looking at things through the rearview mirror. have already passed. what about the expectations for the rest of the year? what are you hearing? richard: i believe that for example that what mr. moynahan said was incorrect. people have more money in their bank accounts, inflation may be up 15% from where we were before the pandemic. if inflation is up three times faster than the amount of money in consumer bank accounts,

consumers are not in a stronger position. in addition to which, consumers are not buying a lot of houses, they are buying fewer cars and the retail sales numbers recently were not particularly good. i think your comment showed it was exactly correct. we cannot keep looking at the rear view mirror and saying that is what is going to happen going forward. the consumers see themselves under stress and they will find it more difficult to find employment and i think that basically the time to lean into banks stocks, take benefits from the rally they are having. people should resign. shery: we should be selling bank stocks at this point because you are expecting the consumer to weaken and perhaps see more loan losses going forward? richard: that is one reason. there is a much bigger reason and it is difficult for investors to understand this point.

it is the most important point. when interest rates go up, the value of bank assets go down. that means that the banks have 91% of their assets in financial instruments. if you increase interest rates, the value of the securities of the mortgages, of the car loans, the value of everything that they have is going down. take a look at the bank of america's balance sheet. any of the banks, any of the banks who have reported earnings in the last two or three days, you will see clearly that their net worth is going down. you can concentrate on the fact that many doing well but the increase in the income is not good enough to offset the pretext of earnings decline. the increase in loan loss. let me give you an example.

jp morgan, indicated a year ago that they had a recovery of 1.5 billion dollars in their loan-loss portfolio. this year, they are indicating that they have a potential loss. but they $3 billion swing -- they have a $3 billion swing. it is not going to offset the decrease in the asset value of the banks. the only our tax earnings down, their net worth is down year-over-year. i do not think the regulators will stand by and let that happen without demanding the banks of further increase their loan-loss and increase the amount of net worth that they have. haidi: when you talk about the revelatory overhang that is at risk, are there specific banks that are being targeted or will

be targeted? you talk about regional banks in particular. >> michael navarro at the federal reserve, i do not know if he said this last week or last friday, he indicated being concerned about the accounting techniques being used by the big regional banks because he believes that many of them were similar to the big universal banks. if you take a look at a bank like pnc financial, or even regions financial and compare it to citigroup or bank of america or wells fargo, or would you see is -- you would see that their business models are not that different. their accounting techniques are different. the federal reserve will tighten regulations meaningfully on these banks. that will impact their earnings. the piggy bank of a bank is its net worth. if there are fewer dollars in

the piggy bank, it cannot grow earnings as much. look at the possibility of increased loan losses, old money having to go into loan-loss reserves and number three, more money having to be put in the piggy bank. stress our earnings which i think means that there is a big increase and you are seeing bank stock prices and it is overdone. haidi: we continued to be riveted. by the developments at credit suisse. have begun the asset process management sale. do you think they can achieve this strategic turnaround? >> i have no doubt about their ability to turn around. i do not think it is difficult to turn around a troubled bank. it happens over and over again. we stop the bank from lending and you increase gathering and

you shifted the bad loans into what is called a bad bank. you selloff some assets and number five, you get a big helping hand from the central bank in switzerland, the swiss national bank, and therefore it may take two years but you turn the bank around. credit suisse is not going to fail. credit suisse is going to succeed and turn around and i do not have any doubt in my mind about that. haidi: you make a sound so easy like it is a bank restructuring for dummies. great to have you with us. you can also turn to your bloomberg for the latest including the latest when it comes to goldman's earnings. tliv is where it is at. this is bloomberg. ♪

haidi: southeast australia is pressing for more rain and damaging floods. the ongoing devastation will have an impact on the budget. what we see -- what do we see the impact will be? >> consider the area of victoria that went underwater over the

weekend, this is part of the country where a lot of australia's food comes from. you will see the impact in the supermarket aisles, the town of ross kester, 85% of that went underwater. there are two dead, two missing. another agricultural area was impacted. victoria was on target for eight record harvest and it has gone out the window. at the grain producing area, fuel will suffer there as well. we saw the impact on the market, a fruit supplier saw shares hit to the tune of 13%. there will be a risk to that next week, last summer's flood caused damage last year. it will be in the billions. shery: it has been a year of record rainfall in australia, one more could becoming? >> if we cast our minds back to 2019 and 2020 when a large

portion of the country were on fire, i came to an end thanks to a biblical delusion. -- deluge. rain has been the norm. everything has been letter in eastern australia and the rain is coming back to victoria in new south wales, brisbane and the state of queensland on the southern island state of tasmania as well. we are expecting to see 34 thousand homes in victoria evacuated. sydney broke a a rainfall record. 2.2 meters, 87 inches and bear in mind there is more than two months of the year left. shery: given all of the rain that paul just talked about, these are the stocks we are watching in australia, insurers are in focus, given the rain

event across eastern australia. wheat stocks, also rio tinto expected to release third-quarter production on numbers in the announcement. but as a four-day break australia -- that is it for daybreak australia. daybreak: asia is next. ♪

haidi: you are watching daybreak asia. we are