shery: you are watching daybreak

asia coming to you live from new york, sydney, and hong kong. >> we counted down to the market open. -- we are counting down to the market open. paul: a positive tailwind for asian stocks after wall street plunges back-to-back gains on solid corporate earnings, the yen touching a 32 year low against the dollar. 2.4 million's new subscribers for netflix in the last quarter. indicate old allies for the age of electric vehicles. >> we have the open of the asx 200. given the positive momentum and the back-to-back rally after the more positive earnings that came through as well, we have futures

pointing to a weaker start. will watch that as it goes underweight. we see the bhp group, a little bit lower at the start of the trade. the first three months of the fiscal year, we did see higher iron ore output as well as copper and nickel production and the overall energy space was lower. in terms of the direction of what that means for the dollar, that could weigh on the aussie dollar, given it is more commodity sensitive. i will hand it back to you for breaking news. shery: we are getting the latest in the petroleum reserve in the u.s. they are going to buy crude oil, the u.s. is prepared for significant releases this winter if needed. we see all of this from u.s. officials holding a briefing on those efforts to lower gasoline prices. president biden will announce the continued release on

wednesday. we are getting some indications about what that may look like. official saying that the fixed-price rules allows purchase for future delivery as well. the president will fulfill previously announced 180 million release in the u.s. and the u.s. over the side whether that releases -- the u.s. will decide if the releases need to go into 2023. we were not expecting u.s. to tap into the u.s. reserves. we are into the biggest spr release. president biden has announced a drawdown of up to 180 million barrels. we are getting confirmation from u.s. officials that biden will fulfill the announced 180 million released barrels and they will keep buying crude oil at or below 67--- $67 to $72 a

barrel. we are seeing some upside after the down side the new york session. this is falling on the prospect of these additional supplies hitting the market. look at the broader market as well because we are seeing u.s. futures gaining ground at the moment. really rallying and continuing rebound from the new york session where we saw u.s. stocks rallying for a second session. treasuries had little change but we are following the 10 above 4%. after hours trading is important given the netflix job. this is with earnings season. paul: in for more on the big earnings in the u.s. let us bring in our bloomberg reporter su keenan and geetha.

talk us through the highlights. >> the trading desk came to the rescue of goldman through what was a sharp downturn in investment banking. dropping into the bloomberg, even with what is considered a brutal year and brutal quarter for banks, the trading operation was strong and posted 6.2 billion. better than forecasted. wall street pulled the bank back significantly. goldman's revenue was down 50 7%. -- was down 57%. at least half of the other six banks, goldman's fixed income led trading gains. that sent the stocks higher. all of the bank stocks went higher, a lot of green on the screen in the latest session. the ceo also pitched investors on the new vision for the company.

they have been reporting about a major reorganization. turning away from their consumer business and they are leaning into what they do best, trading and investment banking. combining the two units. there were questions about that. on the conference call, a noted bank analyst said he was surprised there has not been able up yet. he asked goldman what they are doing to prevent third-party risk. goldman said that they are released on risk management and talking about the economy. they seem to have a lot of different ways to address the fact that they are bracing for the worst without actually saying that. they say that they are really being cautious going forward. paul: the other trade we are following is netflix. shery: continuing to grow, we are going back to growth. how positive or those numbers today? -- were those numbers

today? >> double the expectations. it was well above consensus. there are some catalysts for this were on the horizon. a new advertising based year that is going to be launched in the next couple of weeks -- tier that will be announced in the next couple of weeks. that has optimism in the netflix numbers. paul: are we seeing a bit of glory for other streaming platforms more broadly? >> the big concern has been about whether the streaming slow down we saw in netflix, what that means across the board. i think this is going to prompt a little bit of relief. there is much more room for growth. they do have to be aware that they can see growth all through. it is going to be a point where

the platforms are going to mature. there going to be more creative ways to monetize their subscriber base. it provides a nice roadmap for all of these other streaming services down the road. shery: that was are earnings today. the biden administration is planning to release 15 million barrels from u.s. emergency reserves. they may consider significantly more this winter. bloomberg has more on this. we continue to see more measures to try to fight rising gasoline prices. >> this is a top issue for the midterm elections that will happen here in the u.s. in three weeks. the administration was angry when opec-plus announced plans to lower production targets by 2 million barrels. there are sensitive to any action that will result in higher gasoline prices. the action was taken today to

try and limit any price effect from that opec-plus decision by putting the last 15 million barrels from that original trench on the market come december. paul: how about the plan to add to the petroleum reserve when prices get to between $67 and $72? does that put a floor on the crude prices? >> it remains to be seen if that will happen. the administration official who was talking to our reporters said that they are intending to get the bang for the buck and send a signal to the market on what the government's intentions are when it comes to buying oil to replenish the reserve. shery: the latest on the biden

administration effort to really curb the price of gasoline. let us get more from bloomberg's executive editor. paul, we have seen these expectations about more releases putting a damper on oil prices in the new york session. in the asian session, the wti is rising? >> this is something that may help the u.s. markets more than the global markets. we have the tension between opec and the u.s.. remember that they were pretty disdainful of the decision by opec. to start reducing the output from crude oil, try to keep prices elevated. there is a push and pull between the two sources at the moment. there is an equilibrium in any case. although it is a significant kind of psychological impact for the u.s. to be releasing this

into the market, the physical supply term it is not a humongous difference. with the u.s. market, there may be a margin, the impact of the global supply and demand picture is more than it is. paul: let us talk more broadly about the market action we saw today. back-to-back gains for the u.s. equities market. what does this mean? does the bottom end are we back talking about another selloff -- or are we back talking about another selloff? >> there is so much nervousness about the rally and every time we flip back around again. we have seen swings of 2%. 1.5%, something like that. as a market is volatile at the moment and enjoying the birth of reassurance -- the reassurance. we are intrigued by a comment i was reading overnight talking about how it is great to have

this and a fresh, real-time update. rather than the backward looking data we tend to react to on the day-to-day basis. things cannot say that it is the forward look. people are battling down, people are prepping for the inevitable slowdown. shery: is volatility inevitable in u.k. assets? we are still expecting inflation numbers, we are expecting the boe to go ahead with the delayed bond sales as well. >> it was quite telling overnight that they are giving them, that it will continue with its plan to begin quantitative tightening with a bit of a tweak. not selling bonds. having really major disruption and distortion, the focus is on short or medium term yields.

it is the bank of england, it wants to get on with the hiking cycle like the fed wants to get inflation going. the market has to get used to that. it is not going to be brilliant for the economy but the bank of england has already told us that it is pretty grim and that is why it is trading at such depressed levels already. their honesty and the integrity we have seen from the bank of england over the past couple of weeks will be something that can provide reassurance. paul: let us get to vonnie quinn for the first word headlines. >> has a european union has announced a new emergency package to tackle the energy crunch. it will use the joint purchasing power in negotiations with global gas suppliers.

it is refraining from immediate price caps over secures -- concerns over security of supply >>. we will keep prices predictable and gas going to europe. we cannot exclude a supply crisis or a shortage of gas. i demand reduction is key -- a demand reduction is key. >> russia carried out 190 strikes with rockets and pros killing more than 70 people. the ukrainian president says one third of the country's power stations were destroyed. the main grid operator has managed to keep electricity supply too much of the country shifting power levels on other transmission systems. south korea has said north korea has fired missiles into c boundaries. they fired 250 rounds. south korea began 12 days of

annual military exercises which included an specified number of u.s. troops. north korea has increased weapon tests. slogans attacking xi jinping seen on a break to have spread to other chinese cities. an analyst online says that the phrases have appeared in eight chinese cities including shanghai. they criticize the strict lockdowns and call for the president's removal in favor of elections. 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. shery: china's property decline is likely to continue. andrew joined us later carried a look at fx markets after the pound extends again following

the u.k. tax-cut reversal. sean callow joins us next. this is bloomberg. ♪

shery: take a look at how currencies are trading at the moment, the yen very narrow trading versus the u.s. dollar. we are still talking about the two year lows against the greenback, traders are concerned about the possibility of intervention by japanese authorities, perhaps one reason we see a bit of stability for the offshore yuan as well.

multiyear lows against the u.s. dollar. the onshore yuan volumes and trading, slumping to levels last seen during the shanghai lockdown. investors concerned this is not a good time to bet against a currency given the ongoing party congress and the need by politicians to keep markets steady. we are watching the british pound, we see upside given that we have seen the massive u-turn from tax cuts to potentially austerity measures. the boe starting is quantitative tightening -- it quantitative tightening. with us now is sean callow, from westpac. we see the lows in september for the pound? sean: i think we had an aberration that spiked to

103.50. the rallies are below 110 in the multiweek. that is what we have had during the last few days, reversal of what many people thought the market so is quite foolish. proposals for our country that is running substantial deficits. it has large issues too. the u.k. is reliant on borrowing money for the rest of the world. the trade and current account deficits. he needs to be attractive to be issuing more debt. we have had is the reversal. it remains probably the same. it could be 10% coming out later today, the economy that as bank of england said was entering a recession.

it is very difficult to have the scenario against the u.s. dollar which is essentially strong for all of right reasons. shery: when it comes to account deficits, the trade deficit seems to be weighing on the japanese yen as well. investors are looking at the 1.50 level. why is that level so important? what is single a reversal or could we get weaker against the u.s. dollar given the fundamentals at play here? >> i think it is natural to be aware of any round figure like that. it is having a psychological impact in terms of the capitulation. future positioning, it does not look all that short. it is incredible. there is potential for people to get on board in terms of this. there will be concerns from japanese officials.

it will be wary. it is hard to make a fundamental case and watch that be a magic number. if we compare it to 1998, that surge to 147 and a sharp reversal. this time, i think it is a very unusual, huge interest rate divergence that is in the u.s. and japan. the short-term, it is not going to turn around. paul: we have seen administrative finance intervene once. is there any point of intervention or is this about managing the situation? sean: they finally took action, i am not a bit surprised philosophically, this administration has been very forceful for markets to be market based. i think that they have got a

huge amount of support in terms of the g7 energy 24 the -- g7 and the others for action. i think this is speculative positioning, hoping it does not get too mucg of a one way -- much of a one way bet. they would prefer to keep out. paul: i wonder what you make of the decision by chinese officials to delay the release of gdp data. it could mean nothing. it could mean everything. is this a reason to walk away from commodity currencies? sean: good question. it is hard to see why it would be positive. justin, the head of the release, the consensus for a much better quarter is in terms of a rebound

from the q2 two covid pressures. i think that it is a bad sign in terms of the monthly september activity data. that is something the markets have been uneasy about. it has been pretty strong. it is not a good look by any standard. look at commodity currencies, it is not a huge amount of this. we have weakness. usually see the aussie dollar, probably being a big factor. it is used as a proxy for china and growth. paul: thank you so much for joining us. get a round up of the stories you need to know in today's addition of daybreak.

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paul: quick check on the headlines, global shares turn negative after the news outlets said apple was cutting production of his--its phone. it is cutting by 6 million units in the second half of 2022. credit suisse's are working with the bank of -- credit suisse is working with the bank of canada with a capital increase to shore up the balance sheet and raise

funds for restructuring read it could come after the bank's prescription announcement. -- restructuring announcement. i deal to reduce the stake in nissan, -- a deal to reduce its stake in nissan, renault is set to sign a nonbinding agreement. it would reduce its ownership of nissan to 15%. coming up next, hong kong chief executive is set to release his first address. this is bloomberg. ♪ 202 pounds on golo.'ve lost so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds,

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paul: breaking news out of australia, this is the west bank

leading -- westpac leading index, 0.4 of a percent, similar to what we saw in the previous month. on the affects more broadly, gains of more than 1%. in terms of construction, the cement manufacturer of 3.2% after a wretched week. things are appearing to turn around. the westpac leading index improving, just point 0.4% contraction. let's get a check of what is happening in the markets. let's get over to annabelle. annabelle: picking up what you're saying about the leading index. falling commodity prices are also -- also high rates have been weighing on over the past few readings, that is something that is determining the outlook of australia's central bank, you can see this chart. when you take a look at our economic surveys coming from economists, the rba is expected

deposits tightening cycle earlier than his peers. other issues that could happen, we have less wage pressures in australia and the economy. the other factor is the fiscal policy seems to be tightening as well. in terms of the set up for the direction of stocks today, it seems like investors are putting central bank moves aside. there are other positive factors that are seeing risk sentiment improving throughout the session. futures, we have seen's -- seen stocks moving up, 30 minutes into the trading session where in the green. new zealand online. also the nikkei futures contract and singapore looking for a small mover to the upside of the open as well. we had better earnings coming out, solid start to the earning session in the u.s.. valuations are looking cheap. the policy reversal in the u.k., also -- all of these are positive for risk sentiment. we heard from president biden at the top of the hour, announcing further release of crude reserves and more on the way as

well to ease this gasoline crunch that we have in the u.s., that is contributing to the inflation problem. that is something else that plays into the session. if we change and take a look at another asset we are watching closely, the yen, we are close to a key technical level. 14953. that is the technical support level, compared to the moves back in 2011, of the 2015. 2150 is the want to watch. our live team is saying we could see some kind of intervention around 151. the currency, where watching closely. shery: it's another good rounded number everyone will be watching. we are watching hong kong chief executive john lee making a former pitch -- formal pitch to the global finance community. the city is back in business when he delivers his first address on wednesday. let's bring in our chief northern asia correspondent, stephen engle.

what are we expecting? stephen: there should be a sense of urgency from john lee in his address later this morning and hong kong. if there is not, there better be one. we can call this policy address one that is tied to the singapore affects. they had a head start in opening up, relaxing completely its pandemic curbs. its population through june -- june gained. hong kong has shrunk 1.6%. hong kong is, dare i say? i have been out here 32 years, there is always been nails run for hong kong. i'm not counting them out but it is on its knees because we have been going on for years nearly of very tourists coming in, pandemic controls, there was the political unrest in 2019, 2020 there's a national security law. there's all kinds of headwinds that will likely put hong kong's economy into contraction for the

third come out of four years. there should be a sense of urgency. what will john lee do? he will make his pitch to the world saying hong kong is open up -- opening up, we will offer incentives for you to come here. don't go to singapore. he will not say that but that is the back message there. there will be some measures to make some visas to attract people here. also for companies to not go through the arduous task of proving that they have made significant efforts to hire locals over foreigners or those from the mainland. that will be welcome. there could be new visas to entice recent graduates from prestigious universities to come here on special visas with no conditions. there will be, perhaps, stamp duty relaxation or rebate. we are not sure on this. this is a controversial one, essentially to allow foreigners, including those from the mainland, to come and have the

stamp duty, upwards of 50% on property purchases, how that rebated within three years, perhaps within seven if they get permanent residency. there's going to be a number of moves to attract people to hong kong and get them to stay and earn money here and spend money here. there were also be a number of domestic issues including infrastructure spending. paul: realistically, how many incentives can they unveil, considering the states of the government's budget? stephen: it's like literacy is fiscal deficit triple this year government estimates. costs are shrinking. reserves are shrinking down to a 20 year low. the covid pandemic curbs and the airport processes they have had for three years or so are expensive. hong kong is in a fiscal problem right now, because land sales and property is down.

there are no tourists. no tourists have come for the last three years. that's a big question. if you're going to dole out cash incentives or pay for big projects, how are you going to do it? there will probably be bond issuance for infrastructure projects. but they're going have to lure these people with relaxation of curbs, and relaxation of visa requirements, and essentially sell that hong kong is open again. we will have to see. one thing i do know, at least reading the tea leaves, there's no indication or little that john lee is going to relax the last remaining hurdles for pandemic controls. zero plus three right now, that is still likely to stay in place for arrivals. that will limit the amount of tourists who come to hong kong. haidi: stephen, we are getting news. hong kong is not going to allow

public gatherings of 12 people from october the 20th, a bit more relaxation. that is chief north asia correspondent, stephen engle. let's get to vonnie quinn. vonnie: the biden administration plans to release 50 million barrels from the u.s. emergency crude reserves may consider more this northern winter. it's an effort to ease ask -- gasoline prices that have become a liability for democrats ahead of the elections. the white house plans to replenish the reserve by buying westech's crude when it falls to two dollars a barrel or less. minneapolis fed president says the u.s. central bank cannot positive campaign in monetary policy tightening, but underlying inflation is accelerating. he told the panel discussion that core services inflation keeps surprising policymakers to the upside. he says he will not advocate pausing the key rate at 4.5% unless there is progress on core inflation. the bank of england will start

is delayed bond sales next month. but will initially exclude the debt. the announcement of quantitative tightening is a statement from the central bank. the boe had been on the defensive for weeks after fallout from massive unfunded tax cuts, forced to buy gilts again, to avoid a fire sale by pension funds. the u.k. has summoned a top official at the chinese consulate in manchester over an attack on hong kong man protesting the chinese president. the police say the man was dragged inside the gates and assaulted after the protest on sunday. a source tells us u.k. officials are working on the assumption that the general from china was directly involved in the incident. ukraine says russia carried out 190 strikes with rocket jets and kamikaze drones over the last 10 days, killing more than 70 people. farmers lenski says one third of -- zelenskyy says one third of the country was destroyed in russian strikes. the main operator is keeping electricity supplied, by

shifting power load on its transmission system in the country. global news 24 hours a day on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries around the world. i am vonnie quinn. this is bloomberg. shery: coming up, a worsening crisis in china's property market, dragging junk dollar bonds deeper into distress. more on that with orient capital research, next. this is bloomberg. ♪

>> you're watching daybreak asia. taking a closer look. what we have heard from the party congress, or what we haven't, there's been no change in direction for two main risk factors dragging down china's economy. the first district covid rules, and then we have housing market policies. few issues matter more than the health of the property sector in china. it accounts for a quarter of domestic output and 40% of household assets. home prices, outside of the main cities have been falling for more than a year. that is after beijing doubled down on the campaign to reign in developer debt and a promise to make real estate more affordable in this quest for common

prosperity. the property boom, if you change on the power of china's growth, it's risking becoming a drag. based on the calculations we have from bloomberg economics, they say we will need to see a 25% drop in construction to realign housing supply and demand. best case scenario, a managed fall will be dragging on national gdp through the end of the decade. then in the worst case scenario, we're looking at another financial crisis. a lot of concerns around the health of the sector. if you pull up the terminal chart, we can see the confidence has yet to be restored. investors are turning away in drones. taking a look at the real estate stocks index, that has slumped around 40% this year. haidi: investors club and expecting a turnaround in chinese housing market from the commonest party of congress have been -- coming as part of congress have been disappointed. president xi giving signals of

any major changes in the property sector. joining us andrew collier, founder at orient capital research. president xi talking for two hours over the weekend and saying nothing at all to give any relief about what is happening around the opry sector -- property sector. there was a grim picture. realistically can this get fixed without heavy government involvement? >> it can't get fixed even with heavy government involvement. the government cannot afford to do that much. this is a self-inflicted wound. beijing imposed sharp cuts on the property market several years ago, really out of concerns for the debt that was being created. ever since then, the central government has backed away from any large stimulus measures. we have seen some accommodating monetary policy with some cuts in interest rates, but that has not rejuvenated the property market, because people are really nervous about investing their money in a shaky asset

class. so, what we have seen is the rise, once again, of shadow banking, a lot of local governments that have more or less doubled their responsibility for expenditure in the past 20 years, are now turning to various shadow banks to get extra money. many of these banks have borrowed from the banks, the state owned banks. it's indirect government stimulus. it is this nontransparent things that could end badly for china. i'm not optimistic for turnaround in the property market. paul: the stress is everywhere. we had see if you holdings default on a bond payment. we have junk bonds at record lows. the government financing vehicles are getting into trouble as well. is the question a matter of what breaks next, if so what will break next? >> exactly. that's the issue.

you could have a financial crisis if you had a collapse of some of the shadow banks, like the local government financing vehicles that have 23 trillion yuan of debt. the government will try to cover that up. as they fail, the government is going to have to step in with an indirect stimulus of support from the local banks or you could find something were one estate firm buys another state firm. that asset buries the debt. beijing controls the messaging. so, it's l -- it has less ability for for financial crises to go viral, because of the media, in china. you don't have the clap -- capital flight issue because of the close borders, you had in the financial crisis in 1987 in asia. they have advantages. but at the end of the day there will be deep pay not just for the international u.s. bond investors but for local governments and property owners. shery: when it comes to local governments, we have seen them

really active in the property sector. when it comes to those financing vehicles. how big and a part of economic growth are these lgfv's, when it comes to china's gdp? how sustainable is this form of financing? >> it's not very sustainable. the state firms in the lgfe's have replaced developers and buying land to prop up local governments because they need 30% of the revenue coming from land sales. these lgfe's are running on fumes and don't have a lot of debt capacity. in some cases i heard they're treating them like short-term loans on the expectation that the property market roars back in 2023 and get their money back. which is bullish. i don't think this is sustainable. the interesting thing is beijing more or less told the provinces

and county governments, it's up to you to keep this in check. they don't care so much about the collapse of the property market, though that is a worry. they're concerned about a giant protest erecting across china and the stability of the party being questioned. local governments are responsible for it. i don't know what they are doing at this point. it's tough. shery: we seen some state guarantees emergent august with the scheme to support the issues of local bonds by some developers. how effective will this be? >> by who? if you are doing it by a local government that is running in a percent deficit and -- 8% deficit and borrowing from shadow banks that doesn't mean anything unless beijing exit up. local government could go bankrupt. beijing will try to keep them afloat. these guarantees are only worth

as much as beijing is willing to step in and do it. beijing is not willing to do that at this point. paul: imagine that you are hired as a consultant to the government. what would you advise? what is the way out of this mess? >> first of all, they need to reform the entire state system. they're squandering billions and trillions of dollars of money on state firms that have very small returns on capital. that's the first issue which is not going to happen. the second issue is that they have to redirect, open other capital market, so people have a way to invest in the property market. people have been investing in that because they figure it is a healthy future investment. they stop doing that now, that's a problem. what we are seeing realistically is a flight of safety, which is state firms. a lot of the state firms are getting capital from the banks or vineland are doing some of these transactions -- buying these lands or are doing some of these transactions.

a modest amount of reform may happen on the local side because they will be forced into a corner. shery: andrew collier, good to have you with us, managing director over at orient capital research. we sure to tune into bloomberg radio, getting analysis from the daybreak team, live from our studio in hong kong. stay with us. ♪

shery: here's a quick check of the latest business flash headlines. netflix shares surged in unexpected third quarter earnings. the streaming service adding 2.4 one million subscribers, meeting internal expectations. a slate of fresh programs including new episodes of stranger things and extraordinary wu, attracted millions of viewers. it weighed on the revenue and profits. it has pleaded guilty to u.s. charges of supporting terrorist organizations, the french cement maker will pay fines after admitting a series of subsidiary pays to the islamic state to keep a cement factory running. the case marks the first time a company had pleaded guilty in

the u.s. to aiding terrorism. kia will absorb another two bullion dollar hit in their third quarter earnings, years after 2017 vehicle recalls after -- due to engine issues, problems relating to their engine continue with cost provisions accounting for at least 44% of estimated operating profits for the quarter. the earnings report is due october 24. paul: bloomberg has learned that it's in the final stages with but deal with nissan, let's bring in reed stevenson. how significant is this deal in terms of the operations of both renault and nissan? >> if you think back to carlos back in november of 2018, that was the beginning of this entire saga, which is finally coming to

culmination right now. his arrest destabilize the alliance a -- destabilized the alliance and made nissan seek capital alliance with renault. and now with renault needing cash to transform itself into do companies, one with combustion engines and the other with electric vehicles, nissan has our cash in exchange -- that cash, in exchange nissan will get some independence it has soft. shery: what does this mean for the finances of both carmakers? >> that's an interesting question. nissan does have cash. it has $10 billion equivalent as of the end of june. but it is reportedly, according to our reports, looking to repatriate some of the cash from china in order to pay roughly

$500 million to $750 million to invest in renault ev business. four renault it is a bonanza. they will get much-needed cash in order to make this transformation and keep operations going, after the hit they took, after pulling out of russia earlier this year. paul: what should we expect next? there is an event coming next month? >> the big announcement is supposed to happen on november 15. what we need to be on the lookout for is any potential delays due to concerns or intervention by the french government. the japanese government is a bit concerned about the transfer of ip or technology as part of renault possibly reportedly going into ownership for its legacy engine combustion and

powertrain business. those are x factors to look out for. at the moment it looks like both sides are going to seal the deal, before mid-november, and we will see the announcement then. shery: senior editor, reed stevenson with the latest on the japanese carmakers. we will be watching those on the open of trades in korea and japan. also those shares relating to asian tech companies and korean drama, production studios given netflix positive results. we will be watching for a press conference at 11:00 a.m. local time over service disruption. two ceos will apologize. this is bloomberg. ♪

shery: this is daybreak asia. we're counting down to asia's major market opens as we see the rebound in wall street, given the positive start to earnings season. we will see what reaction we get in the trading session. paul: it looks like we are setting up for a day of gains across the asia-pacific. it raises the question, does the bottom and are we back tomorrow talking about more selling? volatility seems to be the name of the game. what are you watching? annabelle: a lot of questions around how long these gains can last but it seems for the said it -- set up investors are focused on what is coming through in corporate earnings rather than the risk coming from fed tightening. we're looking at the opening for japan, south korea, we have the start of trading for cash treasuries and the 10 year yield coming on young -- online, above the 4% level. you said we are seeing positive

session, that is how the nikkei is looking at the start of trade. we have seen futures indicating a weaker start or more mixed open around asia today. looking at what we see in terms of the yen, we are seeing close to the key 150 level. really, japanese authority picking up their jawbone off the currency. the finance minister saying he is watching the frequency of monitoring the fx market. turning to what we see in korea. the tech sector in focus is where we saw gains for the nasdaq, given a lot of these positive tech earnings. we are seeing the kosdaq index trading fractionally higher, compared to the benchmark. we will see that sustained through the session. we saw similar move yesterday. the kosdaq lower. the korean won sitting flat as we get trading underway. it improved yesterday in the session, given this improving sentiment around risk appetite. now, turning to australia. we have the asx 200 one our into

the trading session, we are seeing gains broad-based. we are also checking what we see in the energy sector, one of the drags on the asx -- asx 200. britt prude up 1% higher. we had president biden announcing a new release of crude reserves. he is opening more to tackle gasoline prices and inflation. paul: thanks. let's get a bit more context on these daily market moves that we are seeing with asian equity strategy at j.p. morgan, mixo das. looks like we're setting up a day for modest gains, two back to back days of gains. but, how fragile does this look? how are you trading around volatility? >> to be honest it's difficult being an asian talking about markets. all asian markets are doing these days, falling what is

happening in the u.s.. if you look at the correlations referring -- between previous u.s. performance at today's asian performance, it has been one. what asian markets have been doing is what the u.s. has been doing. for the u.s. markets, if you think about valuation and earnings, valuations look very close to where they can bottom out. on the earning side of there is still more downside. yesterday, j.p. morgan's u.s. a strategist cut their forecast for 2023 to 225, below consensus at this point. paul: there are plenty of headwinds for asian markets of the moment. we have dollar strength, central-bank tightening, recession risk weighing on the minds of many people as well. is there anything you can point to that is fundamentally positive? >> fundamentally positive? if you look at msg china it is trading, fundamentally positive.

chinese earnings are not being downgraded anymore. if you look at the china internet space, we are seeing upgrades on forward earnings. if you look at asia overall, we are at a situation where the business cycle is bottoming out. if you look at our business cycle monitor it is at levels where it historically tends to bottom out. on valuations, where at bottoms. earnings were at lowe's -- we are at lows. the asian set up as positive. the only issue is where following u.s. markets. it will really depend on how the u.s. market performs for these asian gains to deliver. shery: does that apply to china? we are seeing china doing his own thing, given that they have their own policy issues, their own economic issues. when valuations are looking attractive, other than that, what about the policy uncertainty given the party of congress didn't provide much in terms of economic support or

more stimulus on the way. >> i think, if you look at china, the market on valuation, it's extremely low. like i said, earnings or bottoming out. if you look out -- at performance the last two years, in asia and china, has been following the s&p through and through over this -- these two years. china has gone on a different trajectory. part of this has been fundamentally driven, but part of it has been driven by policy risk being priced into the risk premium. the argument that we made in late august was china's local risk premium, across a variety of frontiers, was speaking at that point. we were arguing that is the bottom in terms of china risk pricing and improvement from that has been gradual. but it is still improving if you look across u.s./china

relations, across the property sector issues, across regulation issues, as well as zero covid. all of these things are improving, just gradually. shery: we are expecting the policy speech coming from the chief executive from hong kong trying to make city more attractive. what do you expect from the markets? one it comes to individuals in finance, do you expect, what you need to see to make the city more attractive -- what do you need to see to make the city more attractive? >> the biggest issue is the covid policies. that has been restricting flow of people into hong kong. as you know hong kong, being an open financial center needs that people coming in and out. so, if we could have easier mobility into hong kong that will help, lesson restrictions, that will help. if we get moves in that direction, as we have been getting, there's no fundamental problem with hong kong being a

strong financial center. paul: we have china delay the release of its gdp data, a bunch of other data as well. i am wondering, what is your gut telling you? does this happen for bureaucratic reasons or are these numbers to hideous to release during the people's congress? >> i would not want to speculate on this. it could be the numbers have not been put together yet. we will have to wait and watch. shery: thanks so much for joining us. asian equity strategist at j.p. morgan. let's turn to vonnie quinn. vonnie: thank you. minneapolis fed president says the u.s. central bank cannot positive campaign of monetary policy tightening, underlying inflation is still accelerating. he told the panel discussion that core services inflation keep surprising policymakers to the upside. >> if we don't see progress in underlying inflation and core

inflation, i don't see why i would advocate stopping at 4.5 or something like that. vonnie: the biden administration plans to release 15 million barrels from u.s. emergency crude reserves and more this winter. it's an effort to ease high gasoline prices that have become a liability for democrats ahead of the elections. the white house wants to replenish the emergency reserve by buying westech crude when it foster $72 a barrel or less. the bank of england will start its bond sales early next month will exclude the long data debt. the announcement of quantitative tightening is a statement of intent from the central bank. the boe had been on the defensive for weeks after follow-up from massive unfunded tax cuts forced to buy gilts again. slogans attacking president xi seen on a beijing bridge next week and reportedly spread to other chinese cities. an anonymous pro-democracy group

says the phrases have appeared in at least eight chinese cities including shanghai and shenzhen. the slogans criticize the strict lockdowns and china and called for the president's removal in favor of elections. 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 around the world. ♪ i am vonnie quinn. this is bloomberg. paul: thanks very much. let's get over to annabelle for what is looking -- what is moving on markets. in the u.s. we saw big move for netflix after hours. annabelle: a big jump we had around 13% wednesday for netflix and some of its peers after the bell. we had netflix reporting better-than-expected subscription numbers for the quarter, very positive for the stock. in terms of reactions we are seeing and asia, big asia tech names and japan, also some of the smaller korean stocks.

these are linked to programs that are seen on the streaming platform. these are some of the names at the start of trade. another sector we are focusing on today is the transportation one. this is earnings related. we had united airlines fourth quarter forecast coming in better than what wall street predicted. it follows a similar move from what we heard from delta. we saw united airlines rising 7% lay after hours. also, u.s. airlines stocks gaining on that. a lot of rebound on corporate travel, leisure trips as well. but this is the reaction we are seeing. most of the stocks are gaining. the airline sector. we are still in transport sector again. we're looking at korean auto stocks instead, specifically hyundai and kia. they have booked a $2 billion in cost to cover engine issues they had. they had more people than they expected being recalled, the

engines had problems over the past couple of years and that is why they needed to put aside more money or expenses to fund that. shery: annabelle there with the stocks to watch. hong kong chief executive john lee is said to deliver his first policy address at hong kong. we outline what businesses want to hear. first, netflix is growing again, feeding on subscribers and earnings and analysis. those numbers, just ahead. this is bloomberg. ♪

>> we think this lower price will bring in a lot more members than -- we are confident the long-term this will lead to a significant incremental revenue, that we don't see a lot of members switching plans. often times when they come in and select a plan for a given feature, let's say does the 4k resolution, we see that to be a pretty sticky choice. shery: netflix, chief product officer greg peters on the company's business strategy. for more on the netflix beat and

more big earnings as well, bloomberg reporters su keenan joins us. start with lucas. netflix really reporting growth again, how big of a relief was is for investors? lucas: a huge one. you saw the stock up 10% after hours. it had shrank, the first two quarters of the year. it's still not growing like it was before the pandemic or at the peak, 2.4 million in a quarters fine for netflix, not great. 4.5 in the upcoming current quarter is below than what it has done. but people are relieved that the company's back on a growth trajectory. you heard from the cofounder, we are glad were not shrinking anymore and are back to growing. paul: we got a lot of information on this new ad supported platform from netflix. what were the key takeaways? lucas: it is rolling out in november.

it will cost seven dollars a month. you will see approximately five minutes of advertising per hour. it's important to note nobody who currently pays for the more expensive plan will not have to see ads. it's an alternative. netflix said they didn't expect to see many material gains from it in the last couple of months in the year. it will be in 2023, next year, that we will see the benefits. it has potential to be meaningful for the company, both because it gives current customers who are thinking about canceling,. cheaper alternative. they can downgrade. and it may appeal to some people, when netflix is too expensive. the company is been adamant, they believe they will make as much, if not more from ad supported customers. shery: it's been a positive start to the earnings season. another gainer in the regular trading sessions was goldman sachs. how positive for its results? su: it's a simple story, the

traders once again came to the rescue of goldman. by all accounts it was a brutal quarter, if we drop into the bloomberg, you can see the trading came in strong. the operation posted $6.2 billion, an 11% increase. without the traders the quarter would have been ugly for goldman. its investment banking slipped 7%. volatility in the market meant a lot of trading. many of its peers, goldman's fixed income led the trading gains. was sick a look at the price action -- let's take a look at the price action. thank stocks are higher across the board. for a second day in a row. yesterday it was bank of america, with strong news about the health of the u.s. consumer. the ceo from goldman also pitched in and investors about his division for the company, given the stock has been struggling for the past year. there's been a lot of pressure on him to reorganize.

they're turning away from the consumer business and leaning it's what they do best, trading at investment banking and combining the two units. on the conference call, an interesting question about the economic environment. one analyst says he is surprised there has been a blowup, what is the bank doing to prevent third-party risks? solomon said there -- the bank is always had a strong risk management plan. 20 time economic conditions so quickly, he says they are tightening very quickly, you're going to have disruptions in economic activity. in so many ways, the goldman ceo indicates the bank is breaking for the worst and how that my shape -- might shape the markets. paul: no potential warning of a slowdown. all of these banks are going on a hiring spree. su: we reported some of the banks talked about looking at headcount. the biggest banks have cap adding during the past -- kept

adding during the past. three months, goldman, morgan stanley's talk about scaling back means there putting headcount under review. if you look at the numbers, goldman, morgan stanley, bank of america reported third-quarter headcounts up from the prior quarter and a year ago. of the six u.s. big banks, only wells fargo cut the size of its staff with a 6% reduction. goldman saw the largest growth in staff with a 14% increase from a year ago. 4.5% in the quarter. goldman explained typically a thing of the year they look to some of the lower performers and cut the ranks that way. it was a process that they have always had, they put on hold during the pandemic, and re-instituted. it was not to indicate they are cutting other workforce. in these tame -- times of cost-cutting, they are looking at ways to be more efficient. they are hiring talent were needed. -- where needed. paul: bloomberg's lucas shaw su

keenan. you can get around up of the stories in today's edition of daybreak. go to dayb , on your terminals, it is available on mobile and on the bloomberg app. you can customize your settings so you are only getting news on the industries and assets you care about. this is bloomberg. ♪ at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.

shery: take a look at how european futures are trading, more upside after four session of gains for european stocks. we saw those gains being trending in regular session, given that we are seeing these fears of our session and hawkish central banks around the world. we continue to have soaring prices and energy crisis, as well.

this was exacerbated by the bank of england the ninth report that the central bank will delay planned bond sales. for more let's ring in affects strategist, david, for check of the broader markets. given the boe's quantitative tightening starting next month as planned, not to mention the massive you turn when it comes to the tax cuts, could we see more upside for the u.k. assets? david: there's more potential upside in the near-term. the market is moving on risk sentiment, with u.s. earnings coming better-than-expected, the dollar is getting weaker, you are seeing sterling rallies. there's upside. obviously, the key thing is u.k. inflation, which is supposed to go up 10%. that comes in higher than expected, that may put a dampener on u.k. assets.

how aggressive does the bank of england into be? at the moment the bank of england, market supplies over the next two meetings, november december, 171 basis points of rate hikes. i'm looking for the boe to be aggressive not only in its next meeting but the meeting after. they're looking for the boe to signal that as well. it could move markets. a lot of it is factored in. at the moment, as long as the sentiment remains positive in the u.s., that will feed through the u.k. assets. and there's room to edge higher. paul: in terms of central-bank aggression, we have heard from another fed speaking in the past few hours. let's hear about what he had to say about inflation. >> if we don't see progress in underlying inflation i don't see why i would advocate stopping at 4.5% or something like that. paul: somewhat hawkish a speech tehere -- there.

it's hard to see in and for strength of the moment. david: broadly it is tough. it's being supported by this inflation data. next week we have the consumption expenditure data out in the u.s., which is supposed to be singing uptick on a a by month basis. that will keep this argument of the fed will settle inflation and that it is an coming down. the markets are expecting it to decrease in the next year. the fed says, until i see that in the data i'm going to keep hiking. at the moment the data supporting that. the market is looking for 4.9% as a terminal rate, but if the data remains elevated going into next year, the fed can say for .9% is not high enough, we may have to go above -- 4.9% is not high enough, we may have to go to 5%. we made see the inflation data plateauing in the early of next year, if it doesn't, they could

say i have to keep hiking. shery: no wonder we are seeing pressure on asian currencies and the potential fears, not only on the japanese currency but also on the chinese yuan, given the ongoing part of congress. david: you have seen the pboc intervene, the bank of korea has intervened. a lot of central banks in asia are intervening to stem the tide of the dollar strength. the catch is, it doesn't work, it only provides a temporary blip. unless the u.s. treasury involved as well. it's very tough to start the dollar strength against its fundamentals. treasury sector -- secretary, janet yellen, is in no hurry to join any intervention. even if they do continue intervention, it's a one-sided story and it is delaying the inevitable, which is further

dollar strength at the moment. paul: fx rates a strategist david. let's get a look at the business flash headlines. renault in the final stages of concluding a deal with nissan. it would allow the french carmaker to proceed with a plan carveout of its electric nickel business -- vehicle business. both sides are set to sign a nonbinding agreement. renault leashes its ownership to nissan at 50%. apple shares turned negative after tech news outlet, the information reported it was cutting production of its iphone 14 plus. apple was backing off plants to boost production of the iphone 14 product family, by as many as 6 million units and the second half of 2022. credit suisse is working with the royal bank of canada and morgan stanley on a potential capital increase in case the baking to shore up its balance sheet and raise funds for restructuring.

the capital increase could come after the bank's formal restructuring announcement's october 27. johnson & johnson posted higher sales and earnings for the third quarter, even as the strong u.s. dollar dented the outlook. the shares a slip and adjusted earnings guidance. johnson & johnson is one to slough office consumer business while trying to sustain its medical devices and drugs business. we will get a sense of a business sentiment in hong kong with john lee who was set to deliver his first also address -- policy address. this is bloomberg. ♪

> from the world of politics, to the road of the balance of power with david westin. news, analysis, insight. weekdays. this is berg. ♪ annabelle: this is "daybreak

asia". 30 minutes into the trading session for japan, it has been a good start. futures were having a mixed of, but instead modestly higher across the region at the start of trade, with the korea and japan rising 0.4%. in terms of what is driving that, you have the positive reading from the earnings season in the u.s., and other factors as well, including what we're seeing in the options market. our mliv team wending that rates traders could be calling their unjust how aggressive central banks around the world will be going forward. something we heard from from j.p. morgan at the top of the hour is the correlation between what we have on wall street and with asia. certainly seeing that today, because a major driver for us is what we see in the new york session. .

but actually, on a longer-term basis, on the 60-day moving average here, we are seeing the correlation with u.s. stocks trending lower. what is driving that is what we get in china, given that makes up one-third of the benchmark here in this region. something else were watching today as well is whether we are seeing the true bottom for markets, since we did have the bank of america survey saying that everything is screaming capitulation. will receive the bottom as they predict, of stocks in the first half of next year? paul: screaming capitulation. they sure know how to write a headline, don't they? [laughter] hong kong chief executive john lee will make a global pitch that the city is back in business, when he delivers his first policy address later on wednesday. for more, let's bring in our chief north asia correspondent stephen engle, in hong kong. what are we expecting to hear from the speech. stephen: if there isn't a sense of urgency in his policy

address, there should be, because let's face it, i have been here 30 years and has only been a comparison between singapore and hong kong. hong kong has usually just shrugged and said, they don't have what we have, and that is access to mainland china. well, things are different this time around. . singapore has a head start on opening up. they had a boost in population, up 3.5% through june compared to hong kong had its population down 1.6%. and obviously hong kong has been licking its wounds from its very punishing covid procedures and isolation. there had been no tourists coming. the financial services industry has seen a brain drain. . john lee needs to address all of this in his first policy address here in the legislative council behind me wednesday in hong kong. what will he say? there is a lot of speculation on what he might be offering up to incentivize people to come back

to hong kong, including making it easier for companies to break down the red tape and prove that they don't necessarily -- that they don't have to prove that they are offering jobs to locals rather than foreigners and even mainlanders. there also could beat newbies is to attract high net worth individuals -- new visas, to attract high net worth individuals. and there is also a stamp duty cut that has been widely speculated on property purchases. right now foreigners including mainland chinese have to pay a 15% premium on top of the asking price and on top of other taxes when you buy a property here. there is speculation that john lee could incentivize people to come, primarily mainlanders, to boost the property market here by basically refunding that stamp duty over a potential 3-7 year period, if the foreigners stay and perhaps become permanent residence.

there will also be a bunch of domestic issues, including infrastructure spending. . and anything that he says on covid restrictions will be newsworthy. but don't hold your breath, we already got a statement from the hong kong government yesterday, saying they will increase the gathering size for outdoor gatherings from 4 to 12, but it is an incremental step. people want the complete reduction of that three-day self-monitoring when you come back to hong kong, which includes 12 covid tests, and you can't go to bars and restaurants . shery: how many incentives can he realistically unveiled, given the government's coffers are shrinking? stephen: most economists expect the fiscal deficit this year to triple the estimates. these covid controls, building of the containment sites and

what they do at the air and the testing, it costs a lot of money, in their coffers are being drained. in fact, reserves are down to a 20 year low. they have enough to cover government spending but i year and a half or so, but you cannot throwing out much more cash incentives and funding a lot of these projects without taking a severe toll on the bank account of the hong kong government, especially at a time when we are potentially heading for. . the borders are still not open with mainland china. the tourists have not come back yet. it has been a trickle, mostly residents returning to hong kong since john lee relaxed the covid carbs that the airport. there needs to be a lot of incentive, but there isn't a lot of wiggle room to put out cash

incentive, with the government's coffers the way they are. shery: chief north asia correspondent stephen engle there joining us with what to expect from the hong kong chief executive policy speech later today. let's bring in the amcham hong kong chairman, up for what we should be expecting on this address. joseph, good to have this. there was a huge laundry list of potential incentives that the government could ring forth for businesses. are any of those that the government cannot miss in this each that would be a big no-no for businesses in hong kong at this point? guest: thanks for having me this morning. obviously, his reach this morning is something that we will be watching very closely, and with other chambers as well, we have submitted a recommendations. i think what we want to hear in the speech is, one, on the

travel restrictions with covid. we know the government has made treatments ahead of time, we know they may not address that specifically, but related to that i think is the talent attraction and retention. the brain drain that was mentioned of people leaving hong kong, that floodgate is open and it will take a lot to reinvent hong kong or bring the attractiveness back to hong kong to ensure we can bring the target back and attract either graduates and also higher net worth, senior managers to come back. this will be extremely something that we are watching. shery: how much of those changes that you mentioned in media, like no longer needing to go through a lengthy process of showing that you are trying to recruit locals for firms for example, or relaxing rules on the 50% stamp duty, another example, how beneficial would

those be in order for you to retain talent in the city? joseph: i think the relaxation, the arcing about the visa extension, it is hard to say what impact that will have. i think the intent in terms of providing more time people to settle as they come in could be a benefit. but that alone will not attract top-tier graduates from schools to come to hong kong. they need more. because once you are here in the city, it is about the life in the city and how you live, so the other restrictions going on will play an impact and that has to change as well. that sentiment has to change in order to combine that together to really make this an attractive place to come. paul: we were hearing from stephen engle a moment ago talking about some of the budgetary limitations the hong kong government is currently facing.

you have to manage your expectations in terms of this policy address with that in mind? joseph: that is what we are watching. the sentiment within our members and the businesses we represent is of concern. it is about how can they sustain the current actions of incentives that they are providing with that balance that they are running out. there needs to -- it is coming to a push where we have to make a decision where the government has to make a decision on when we can fully open up and be on par with other major cities in the region. the zero plus three was a big step forward and it helped in terms of business travel. but the tourism piece is an important part of the economy of hong kong and a lot of our businesses, and that has to be considered going forward, if we went to really open up and rebound. paul: how optimistic are you

that hong kong can be reinvented, or is it just becoming another metis joseph: chinese city? joseph: we think -- is it just becoming another mid-tier chinese city? joseph: with the geographical location and the access to mainland china and what they are doing to continue to try to open up and expanded their economy, hong kong still retains a lot of that uniqueness, that businesses internationally can really capitalize on. so our members are optimistic about that aspect of it. how do we move forward from the position we have an in? it has been a struggle in the last few years, seeing people leave and see the negative perspective that hong kong has had globally. that has really impacted the way that our companies do business here. although the aspects are still

there and we still believe in that, we need to see reaction to prevent it from deteriorating even further. paul: joseph armas, chairman at amcham hong kong. data on, we will talk to the european chamber of commerce in hong kong, about chief executive john lee's policy address. we will also be joined by ing bank china economist on that. you can tune into bloomberg for more as well, go to tliv to get commentary and analysis from bloomberg. shery: we have an alert on the bloomberg, the local media in korea is saying that kakao's ceo maybe offering to resign. we are expecting a press conference on the service disruptions we saw in the weekend.

the two ceos are supposed to apologize for the disruption, and announce new plans for the emergency committee. but local media are saying that the ceo might be offering to resign. senior lawmakers may also be discussing government oversight of the company after slover's outages over the weekend. let's get to vonnie quinn with the first word headlines. vonnie: the european union has announced a new energy package. it will use the e.u.'s purchasing power as leverage in negotiations with global gas suppliers, enabling joint purchasing in case of shortages. but the bloc is refraining from price caps. >> as we maintain efforts to keep gas flowing to europe, we cannot exclude a real supply crisis, the shortage of gas. for this solidarity and demand reduction are a key.

vonnie: south korea's military says north korea has fired artillery shells into further zones near its boundaries. officials in seoul say the north fired nearly 250 rounds. north korea has increased weapons tests in recent weeks, in response to what it calls "the dangerous military drills." ukraine says russia carried out 119 strikes with rockets and so-called kamikaze drones in the last 10 days, killing 70 people. the president says nearly one-third of the countries our stations were destroyed. but the main electricity supplier have been able to maintain power supply in the country. 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. paul: thanks.

still to come, president xi jing spring gives no hint of easing his strict covid zero policy -- president xi jinping. we will look at the effect of his three year isolation from the world. this is bloomberg. ♪

shery: major markets trading

across asia now gaining ground, as we see the tailwind coming from wall street. health care, utilities, consumer staples leading gains. energy under pressure, but wti is now recovering in the asian session, trading above $84 a barrel, all. paul: china's party congress has given no indication the so far, of any easing of the covid zero c that has kept a country isolated from the world for almost three years. one bloomberg opinion columnist says the rising isolation will only make the country weaker. he joins us with more. you say xi jinping is drawing the long lesson from history. what is he getting wrong? guest: what was interesting from the speech years ago was that he said self seclusion it one behind. if you look at the tone of his speech five years later, it is different. the concept of openness was

invoked 33 times in 2017, just a few times this time around. if you look at the pattern of chinese history, it is often between periods of isolationism and periods of openness. the times of isolationism is when it has been weakest. beijing was the capital of the mongol empire, guangzhou has been a trading post since the first millennium. shenzen, all global and trading posts. if china does not relearn that lesson of history that it is at its strongest when it is most open, it will be hard for it to achieve the growth that the party once. shery: is the lesson that china faded as they closed borders, or did they closed borders book was the economy was not doing well and they didn't win competition from abroad? david: interesting point. one reason i think isolationism has over his been a temptation

for china through history is that it is a very large domestic economy, similar to the u.s.. of course, the u.s. has had periods of isolationism because it has a very large domestic economy. but if you think back country of humiliation, the period of the opioid wars to the establishment of the people's republic, when china was taken advantage of, you think of those nations that took advantage of china that they weren't nations with large domestic economies, they were poor in land, marginal, on the fringes of the world -- portugal, the netherlands, england and later, japan. not having a large domestic economy to fall back on force to those nations into an engagement with the world. china's retreat from the road i think poses risks to it. paul: chinese policy typically gets adjusted on extremely long. time horizons. do you see anything being done to change course? david: sadly, not.

if you look at the provenance of covid zero it, was the first major policy mentioned in the speech. obviously a lot of people are questioning how long that will go on. there are no signs of a retreat from that. mentions of security topics were prioritized over mentions of economic topics this time around. and of course, many of this is out of the chinese government's hands, the chip crackdown we saw from the u.s. last week, that will increase china's isolation, yet it is not chinese policy. and the attacks on peoples of chinese ethnicity in america, in terms of academia and business, those are outside of china's hands. however, the broad thrust of she boomers policy and this goes back to 2025 -- the broad thrust of xi's policy, and this goes back to 2012, that was the crackdown on internet use.

that needs to change. china is still a developing country that needs more capital. we have seen trade as a share of gdp fall sharply over the last few years. unless that reverses, there is a problem. paul: bloomberg opinion columnist david ficklin, thank you for joining us. tune into bloomberg radio to hear more from the day newsmakers you can, also get in-depth analysis from the databricks team at casting live from our studio in hong kong, live on radio or bloomberg.com. plenty more ahead. stay with us. ♪

paul: let's get a quick check of the latest business flash headlines. this company has pleaded guilty to u.s. charges of supporting terrorist organizations. they look -- they would pay close to $800 million in fines. the case marks the first time a company has pleaded guilty in the u.s. to aiding terrorism. hyundai motor and affiliate kia will absorb another 2 billion hit in their third-quarter earnings, years after a 2017 vehicle recall due to engine issues. problems relating to their engines continue, with cost

provisions accounting for 44% of operating profits for the quarter. and a earnings report are due october 24. macau's co-ceo mid-to-upper to resign -- kakao's co-ceo may reportedly offer to resign. officials are also holding a news conference to address the matter. service disruptions prompted widespread criticism, and a plan by lawmakers to increase government oversight of the company. netflix shares surged after hours on better-than-expected third-quarter earnings. the streaming service also added 2.4 one million subscribers, that beat internal and wall street expectations. a slate of fresh programs including new episodes of "stranger things," and other shows attracted millions of viewers. shares of this company are also surging, along with other south korean drama production-related stocks.

shery: that boost coming from the positive earnings from netflix and those korean drama makers, really seeing the upside. we are also watching tech and media stocks, as markets open in hong kong and china, including tencent, netease, baidu and others. also watching airline stocks, they could follow their u.s. years prior, after united airlines earnings forecasts exceeded wall street estimates. keep an eye on cathay pacific, air china and china eastern. also tesla, american airlines reporting earnings this week. they will give us an indication of where american consumption is at. so far, we are seeing a bright or positive start to earnings season in the u.s.. that has boosted trading in wall street. take a look at u.s. futures, continuing to gain ground in the

asian session after stocks rebounded for a second session here in new york. we had the after hours jump in and netflix as well talk about, subscriber growth topping estimates. also watching the offshore yuan bang, 11.2 two level. it's all about the dollar strength and on, the other side of that trade, the weakness in asian currencies. paul: let's look at how we are trading as markets open in the asia-pacific. . it's immodestly risk-on day. here in australia, better by 0.3%. the rally continuing for a second good still to come, investment strategy with m&g global cio fabiana fedeli. she sees markets remaining volatile. ♪

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yvonne: