>> good morning and welcome to "daybreak australia." i am paul allen in sydney. >> i am annabelle droulers.

shery: good evening. i am shery ahn. the top stories this hour. u.s. stocks halt their two day rally with treasury yields surging to multiyear highs on rate hike concerns. paul: fed officials keeping up the hawkish rhetoric on the fight against inflation but james bullard sees an end to aggressive hikes next year. >> we are predicting that inflation will come down and it will be a disinflationary year in 2023. shery: the dollars growing strength ways on tesla's results but elon musk says a meaningful share buyback is likely. u.s. futures extending its deadlines. we have every sector of the s&p 500 in the red today except for energy. oil gaining and that is what

markets were watching. above the $85 per barrel level, close to $86. we continue to watch nasdaq futures. tech under pressure. we have the 10 year yield continuing its rally with the treasury selling renewing with a two-year yield at the highest since 2007 and it's all about the hawkish fed really playing into the markets. and after hours trading, we are watching tesla. stock coming off session lows. this of course after earnings disappointed and we have seen the stock fall about 40% or more this year already. put into the big picture of things and it is the king of carmakers. just of note, i mean, not close to 1987.

36th anniversary of black monday today. annabelle: just speaking of tesla because dollar strength is weighing on those results but take a look at how that currency is playing out this morning. the yen, we are on watch very close to that key one for -- 150 level, for any signs of intervention. perhaps not to reverse the weakness in the currency but simply just about introducing a little bit of two-way risk into the market sell a lot of debate about where and when we could see that. it is worth pointing out implied volatility at least on a one-week basis is still fairly subdued so perhaps there's not that urgency to act in the markets but when and if we do see it, japan oregon futures could be the area to watch given that in the past, we have seen elevated volumes on that contract when there has been talk of the boj stepping into the market on behalf of the government that. it is going to be one we will be

watching throughout the session and we do know of course that the finance ministry does not feel the need to tell the markets when it steps in either but let's take a look at how other currencies are faring in the session given the dollar strength we are seeing in the aussie dollar very much in focus this morning given also the weakness we see in the chinese economy. cba says that could push it below the $.60 level for a period of time. as you can see on the asx 200 futures contract, new zealand stocks are already trading. morgan stanley says the recent rally we had basically just investors getting too impatient to find the bottom but still, stocks need to fully price in the effects of a slowing economy pool and the fed is still committed to hiking. >> on the subject of the fed, anyone who diligently made their way through all 12 pages of last week's minutes might have found three hidden words in their which were actually from fed back. those words were revised down

significantly and they related to u.s. potential output. fed staffersductivity growth, slow gains in labor force participation but the upshot of those three words, revised down significantly, means there's either going to be more fed rate hikes or there's going to be a longer period of below trend growth. the staff do not set policy but they certainly do informant. >> i love that this story came out today when we had to go through the minutes. really very interesting to point out that u.s. potential output being revised down significantly. we continue to hear more hawkish rhetoric coming from the fed including from jim bullard. kathleen hays spoke to him and he was reiterating that it's a good thing the markets are finally priced in. the november rate hike about a potential december hike as well so for more on the u.s. market and tesla's earnings, and we

continue to see the moves in the after-hours session, let's bring in emily graffeo and ed ludlow. let me start with you because the hawkish fed rhetoric never helps the markets and just of note, 35th anniversary of the market crash as well after a two day rally in u.s. stocks. emily: it was interesting to watch the move today. we saw the yields moving up higher. the two-year again, i feel like i say this every week, reaching the highest level since 2007. the tenure topping 4.1% -- 10 year topping 4.1 percent. analysts are saying we pretty much cannot see stocks rally if yields stay at this level. brett donnelly of spectrum markets said the market is at a huge crossroad right now. it doesn't matter how many subscribers netflix picked up in asia. if yields keep ripping higher, risky assets are going to struggle so that is in focus for him right now. in the same vein, if we look at where we are in the s&p 500, we

are still positive on the week. i have another course of analysts who are saying may stocks have already priced in -- maybe they have already come to terms with that higher rate story but we will have to see how we finished the rest of the week for the equity market. ed: certainly a very challenging environment for stock pickers. emily: there was an article from some of my colleagues at bloomberg news about the correlation. the s&p 500's three-month realize correlation is at its highest level since july 2020. it basically means the biggest stocks in the s&p 500 are moving in tandem and they are dictating how the broader index moves. what a worse time for something like this to happen considering we have such a crucial earnings season. we have tesla today and we have alphabet, microsoft, apple, all next week. these big tech stocks make up a really large portion of the s&p

500 so to have correlations this high has a lot of traders on edge. shery: let's delve into tesla and what stood out to you. ed: it was a really difficult quarter. this is the first time that tesla has missed on the top line since the third quarter of 2021. currency headwinds are a big part of that story and beyond that, higher input costs, commodities here and we knew coming out of third-quarter deliveries that they have struggled and came in below estimates because in the final few weeks of the quarter, there was still vehicles in transit. they could not register those as delivered. the fulfillment costs of moving those was higher. in the call, elon musk was talking about how there were no boats, trains, carriers to move these vehicles from a to b when it really mattered but he's super bullish on demand, talking about how he sees a path forward . tesla has a market cap greater than apple. tesla has a market cap currently

of less than 700 billion. this is classic elon musk. keep investors looking to the horizon. certainly a challenging quarter. annabelle: it also -- paul: it is also significant that elon musk himself is on this call. he said he would only do them if he had something big to say. i know there is possibly a lower cost car in the pipeline. what else is there in terms of big announcements? ed: elon musk said he would not join earnings calls but then he has proceeded to join every single earnings call. he has not a great record. it's always worth bearing in mind. if there is another follow-up question from retail investors post about future products, what is crucial here is the semi-truck is finally real in early production. he says he will be there in person to hand the first units over to pepsico. the cyber truck move from a development product. they are starting to build the machinery that will make the

cyber truck. these are positive sides he was bullish on demand. this idea that they do believe they will sell every vehicle they build. for me, the keywording was tesla is recession proof and the logic behind that is in a steep downturn and recessionary environment, much of the consumer base globally has or has not decided to buy electric vehicles and they decided they are best positioned to tap what demand is there. annabelle: at the -- paul: ed ludlow and emily graffeo there. let's take a quick look at what is happening at fx markets at the moment. the kiwi and the aussie fairly stable but take a look at the yen, hovering below that 150 mark against the greenback. traders again on the other for the possibility of intervention. not a lot of change either to the british pound against the greenback right now. we are watching very closely what is going on in the u.k. as

a number of tory mp's are in open revolt against the prime minister. shery: the u.k. prime has fired a home secretary for what has been described as a national security breach. wendi morton and her deputy have resigned. for more, let's bring in john authers. the prime --can the prime ministers arrive this? >> i would be surprised if she can last the week at this point. to give you an idea of how much confusion there is over this, both statements made just now are currently being denied. the whips say they did hand in their verbal resignation but they are going to carry on. she is saying she was not fired. the fact that there is this kind of confusion over a person who is running -- running the parliamentary party of britain's

governing party. and the person in charge with maintaining law and order in the u.k. is quite terrifying. shery: how does this play out in british politics? i know the general election is not until 2025. john: late 2024. what you can hold on earlier if you want to. written doesn't have a written constitution. there is always at much more gave in britain than there is elsewhere. the reason you don't likely have an election much before then is because at this point, the conservatives would lose horribly. i think it is impossible for them to win. they just have to hope the labour party loses the next election which is just about possible. what is intriguing if you take a look at the u.k. gilt markets,

it has stabilized quite nicely today. gilt yields fell fairly significantly while everybody else's yields went up. 30 year gilt yields are now below 30 year treasury yields. so from the market point of view, the crisis -- i would not want to say it's over -- but the acute phase of the crisis is over and that's basically because politicians are in such a mess that the bank of england and the treasury can be, you know, will be left to get on with it. paul: this government has almost become an object of ridicule now in the united kingdom. john: i would not agree with you. paul: i will just refer to the sun newspaper which is running a live feed alongside a picture of this trust -- liz truss, asking which will last longer. there has to be a rule change to remove liz truss or will she

resign? john: if i were her, because she is still not that old and has a few more decades of life to enjoy, i would salvage some dignity and resign. i am not her. she obviously has a different way of operating from many of us. i would imagine it's going to be the easiest way for her to go. the thing that is tricky is the thing that the conservatives have to choose a successor and the current rules mean if you have more than two candidates, you whittle them down to two, and you have to put those two to the party and the country. in many cases, considerably more conservative of the country as a whole and many of them are bitter about the fall of boris johnson. so they have the recent -- if he

does survive another few days, it will be because the conservatives are trying to work out how they can sort themselves out, how they can change the rules. paul: i was incorrect. it is the star monopolist on, but in a cosmological sense, those two things are the same. john authers. thanks so much. let's get to vonnie quinn for the first word headlines. vonnie: thank you. russian president vladimir putin has extended martial law in four occupied zones of ukraine and stepped up security in nearby regions. the new rules impose limits on civilian movement and give military officials more power. the actions, as forces continue to press the advance. president biden says pollutants decisions show the russian leader is in an incredibly difficult position. president biden says u.s. oil producers should not be returning record profits to shareholders to be a higher stock buybacks and dividends. the u.s. administration is stepping up criticism of the

energy industry and its role in high gasoline prices as war rages on in ukraine. the president called for oil companies to use windfall profits to boost production and help ring down fuel prices for consumers. pres. biden: we need to increase oil production without delaying or deferring our transition to clean energy. my message to american energy companies is this -- you should not be using your profits to buy back stock or for dividends. not now. not while war is raging. you should be using these record-breaking profits to increase production and refining. vonnie: traders are shifting bets towards a larger bank of canada rate hike next week after september inflation came in stronger-than-expected despite lower gasoline prices. cpi was up 6.9% from a year ago, beating economist predictions for a 6.7% gain. arcus are pricing in a six to percent chance of a 75 basis point rate hike which would take the benchmark to its highest

since 2008. 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 vonnie quinn. this is bloomberg. paul. paul: still to come, we get to speak to the policy institute about global trade challenges and we are going to hear why vice president wendi kotler does not see any inlet -- imminent fall in u.s.-china relations. if they see equities remaining volatile, we will delve into their investment strategy, next. this is bloomberg. ♪

>> we are data-dependent and we are watching the data with i think -- we are predicting or at least the dot plot is predicting that inflation will come down and it will be a disinflationary year in 2023. meeting that call for further moves in 2023 so if you take that as the sentiment, you know, there could be a decision to move that into 2022 december meets. shery: jim bullard there. our next guest says globally synchronized monetary tightening will result in an unwind of business models. they were created over the past few years of easy money. that's bring in the chief market strategist. good to have you with us, ellen.

are you talking about businesses that rely heavily on low-cost debt? and where do you see the problems emerging? ellen: that's exactly right. we have had global interest rate suppression for the last decade and a half ever since the great financial crisis and now, we are seeing globally synchronized central-bank rate increases and the financial repression that led to unusually low interest rates, even negative real rates for part of this year in some countries, men a lot of business models were built that rely on very cheap debt. you see it in all sorts of unexpected places. the first place we have seen it has been in a lot of the private equity leveraged buyouts. and you see the banks made commitments to the private equity companies that they would offer a certain amount of debt at a certain price and then the fixed income

market moved out from under them and a lot of them are stuck with this data that they are unable to sell at the price that they want to. that is the first order effect. i also think you see it in some unusual areas. what we saw in the u.k. aside from some of the other problems that have been surfacing in the u.k. is because of the global rate suppression, you are seeing pension funds reach for yield by leveraging up and using derivatives to try to get enough yield to meet their obligations. we are hopefully not the only ones that are doing that. you saw what happened there. -- as well as you said earlier. shery: is that why you tell us, not the time to be a hero and continue to eat those veggies? where would you do that? ellen: we are looking for high-quality, high cash flow companies. we are very focused on the

u.s. right now. the strong dollar has been very obvious for a long time. we think it is quite likely to continue. even a lot of the economic pressure. we are looking in the u.s. and within that, we are looking for high-quality free cash flow companies, health care companies, defense companies, we are looking at companies that have dividend yields. a lot of them are actually fairly inexpensive. there are a lot of places but you have to do your homework and be willing to buy things that are not sexy stories like the growth -- growth stocks of yesteryear. paul: i cannot help but notice that you did not have consumer discretionary on that list. how long do you expect the consumer to remain resilient in the u.s. considering all the headwinds? ellen: the consumer still has excess savings. that is shrinking. we heard some statistics about that recently but there's still excess savings and the consumer is still the beneficiary of the very strong labor market.

you have seen the unemployment, high job creation numbers. that part is positive but the question is shrinking. credit card balances are growing. you see a little bit of pressure in the second order effect there. by virtue of looking at the credit card balances. at some point, the excess savings are going to run out. i think it's really interesting is you marry that up with what the stocks are doing, consumer discretionary, right now, the consensus for consumer discretionary earnings growth next year is 31% for the s&p 500 consumer discretionary set. this is even as economists are forecasting gdp to decelerate from close to 2% this year, 1.7, down half a point next year and that's a big deceleration and yet consumer discretionary estimates are still counting on this big increase. it seems like there is a disconnect in the stocks where they are still expecting quite a

lot of margin expansion, quite a lot of revenue growth in a decelerating economy. at some point, the clock is going to run out on the excess savings. paul: do you have a larger than ordinary cash allocation at the moment? a number of our guests do. ellen: we have taken several points off actually. paul: chief market strategist, thank you so much for joining us, ellen hazen. plenty more to come on "daybreak australia." this is bloomberg. ♪

shery: we are watching the earnings call by tesla. elon musk speaking right now. we have seen of course stock falling after hours with disappointing earnings. he is now talking about twitter, saying he is excited about the twitter situation. this is of course the buyout of twitter for that $44 billion

deal that was revived earlier this month on the original price of $54.20 per share. he says he is obviously overpaying for the twitter acquisition. we saw a little bit of a jump higher for twitter as elon musk made these remarks. really giving a little bit more certainty when it comes to the fact that he will be in fact buying twitter. coming up, st. louis fed president jim bullard sees an end to aggressive rate hikes early next year. 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.

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shery: a little bit of a mixed picture in u.s. futures right now. this of course after we saw the s&p 500 falling in the new york session, reversing those two sessions of gains that we had this week. energy was the only sector that

gained ground in new york and this is even after the biden administration confirmed those 50 million barrels of oil being released from the spr. he did not mention an export ban which is what markets were watching. we are watching twitter, a little bit of a jump higher given the elon musk in the tesla earnings call -- tesla results disappointing but he said he was excited about the twitter acquisition that he was obviously overpaying for it. paul: st. louis fed president james alert says he expects the central bank to end its frontloading of aggressive interest rate hikes by early next year. he spoke exclusively with our economics and policy editor, kathleen hays. >> i do think that they will have an impact and in some ways have had an impact on the housing market in particular where it appears, you know, increase in rates has really changed the dynamics there. that is someplace that i would say they are not long and

variable labs. that anticipated fed moves before they were even in train this spring so that is a place we have seen impact right away. it's a big shift and takes a while to steer the ship, so -- kathleen: it is certainly not the main -- one of the main things driving inflation now where the prices have fallen. james: rents are important. kathleen: they certainly are. that is why people are worried about inflation staying high next year because those rents, the way they are calculated, they are going to spread out over several months. james: what we are aware of the calculation so we will take that on board and take a look at that. you are right. the core measure of pc inflation is still in high fours and the

dallas fed, 4.75 or so. pretty high inflation in the u.s. even if you try to trim out some of the more volatile components so we are going to have to get that turned around, moving the right direction towards 2%. kathleen: how are you going to do that? what is the restrictive terminal rate of the medium target interest rate, 4.4% this year? 4.6% next year? what are your projections now? james: if you look at the september summary of economic projections, the so-called dot plot, it did seen the committee was coalescing around further rate increases and upcoming meetings even by the end of the year. that seems to be the base case right now. most of that has been priced into markets. i would anticipate that that is having an impact right now. if you are trying to get inflation down, that is good news paid we will have to follow through on the in the subsequent meetings this year and get the

policy rate up to a level where we can put meaningful downward pressure on inflation. that is the main goal immediately ahead of us. kathleen: off-the-cuff right now. what would you say that level looks like it's going to be? is it going to be higher than you thought it might? is that the risk here, not that you are going to be lower but they are actually going to need to have more rates to get to a more restrictive level? james: i have done this calculation of a minimal level that you would have to get to to put downward pressure on inflation. i did it at a conference at stanford in may. you can look it up on my webpage. that number came out to 3.5% but since then, the inflation is unfortunately -- it has continued to surprise to the upside. if you do that again now, you

are going to get something closer to what is in the dot plot. 4.5 or so, something like that. we are watching the data. we are predicting, the dot plot is predicting inflation will come down and it will be a disinflationary year in 2023. shery: jim bullard speaking exclusively with bloomberg's kathleen hays. let's stay with the fed for morning calls and bring in annabelle droulers. what are you hearing from strategists when it comes to the potential policy pivot? is the pivot back alive? annabelle: depends on who you talk to but if you listen to what a strategist, dennis gartman, is saying, he is inspecting a fed pivot not until the end of 2023 or even into early 2024. the reason he told us in an interview that that is what he is expecting is because when he says the fed starts to change its policies, it always goes on

a further -- goes on further and lasts longer than anybody in the market expects. he does see more pain ahead for equities and other asset classes and his view also should really contrast to what we do see in the broader markets. traders are expecting that pivot to happen earlier in 2023 so his advice to investors is to be buying to your treasuries, where you can pick up a little income. he does not expect that to happen. what else he is looking at, because his newsletter that he does and out is well known for its use on commodities, he's also very bullish on the outlook for wheat, pork. that is trading around eight dollars a bushel. he says that could go to $13 or even higher. given where the conditions are dry in the u.s. and the crop itself does appear to be a little bit behind schedule. paul: let's talk a little bit

about bitcoin which has been trading in an uncharacteristically narrow range recently. what is the outlook there? annabelle: quite mixed-use coming in on this because we do hear from some strategists saying, given that it is in this narrow range, we are poised for a lot of volatility in the asset class, but others including the galaxy digital founder's of them a bit more sanguine on the outlook for the currency. he basically says that bitcoin has been in a rough run. it will be range bound in the months ahead he has separated the performance of bitcoin from other tokens like ether that has taken in a lot of inflows from the biggest names on wall street because it is a bit on the long term outlook for different companies, how they can manage supply chains. he says bitcoin is being driven more by macro factors in the market and he specifically is looking at liquidity that has

been withdrawn from the fed. take a listen. >> it's a very difficult environment. in almost every asset class. i started wall street 30 years ago and when markets were suffering this much pain, you almost always saw a big night on a white horse. they show up with, you know, some juice that would get the markets excited again. this time, we don't have central banks that are coming to the markets. annabelle: the fed not coming to the rescue. there are other factors that means he should be bullish. a tensions between the u.s. and china, china's persistence with covid zero policies, all of these create an unfavorable environment for bitcoin. still, he is bullish on the long-term potential of this currency. he is encouraging investors to bet small for now.

when he says the market does turn, bitcoin and other cryptocurrencies will be the favorite child. paul: still to come, wendi cutler joins us as we discussed the rapid spike in international trade restrictions. this is bloomberg. ♪

vonnie: you are watching "daybreak australia." the latest fed beige book sounds a note of caution on the u.s. economy which is says expended modestly through early october. slowing economic activity raises recession returns. the report says outlooks grew more pessimistic amid growing concerns about weakening demand. sources say a group of u.s. justice department prosecutors seek probable cause to charge former president donald trump with obstruction of justice but we are told a path to an actual indictment remains unclear. the team that is part of the classified records probe has not yet made formal recommendations to merrick garland who would ultimately approve or reject such a move. iran's supreme leader lauded the reputation of military drones produced in his country and acknowledged concerns about the export. his comments come after a source told berg that the e.u. proposed

sanctioning three iranian generals. the u.s. says it observed growing cyber security threats at home and throughout asia. the secretary of homeland security is warning against malicious activity coming from russia, china, north korea, and iran. his are marks, mid heightened tensions between the u.s. and china over issues from trade to human rights and the status of taiwan. >> malicious activity from the p.r.c. is a real and present threat not just for the united states but for other countries as well and that is why i travel to such a distance here to singapore. vonnie: global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. paul. paul: international trade restrictions jumped by 30% last year as nations scrambled to

protect industries and technologies. a new study from the bank of korea pair with us now is the vice president at the asia society policy institute and she previously served as acting deputy u.s. trade representative. thank you so much for joining us in sydney. i want to start with this brewing trade dispute between the u.s. and china taking on a new dimension with restrictions on shift technology. what are the risks for both sides? >> the risks are enormous and the tensions will continue. the semiconductor announcement was a big deal and a major shift in u.s. export control policy and we are basically saying that our semiconductors are not going to be going to china. not just semiconductors but our equipment and talent. i think we are going to see an increasing separation in these industries between two major trading powers and this is going to have a huge impact on the rest of the world.

paul: this is something xi jinping addressed in his address to the people's congress. let's have a listen to what he had to say. >> we will accelerate the implementation of the innovation driven development strategy. we will speed up efforts to achieve greater self-reliance and strength in science and technology to meet china's strategic needs to concentrate resources on technological research. paul: can you foresee or imagine any set of circumstances where these barriers might be walked back? are we in this new era of strategic competition? wendy: i find it very difficult to see a scenario where there is a walked back. china is left with no choice except to accelerate its self-reliance campaign but the question is, can it actually, you know, achieve the technology

breakthroughs it needs to in the semiconductor industry? so far, they have not been able to do that. from the u.s. perspective, that is ok. shery: we continue to see these countries becoming sideload. trying to become self-reliant. the bank of korea survey or report talking about how global technical barriers increased 30% last year, whether it is rules standards or procedures. have you seen that on the ground when you talk to trade policy makers? what sort of restrictions and divisions that you are seeing on trade globally right now? wendy: this is distressing news, particularly if you are a small or medium-size country. you are going to be in the crosshairs of this new competition between the united states and china and frankly at a time when the wto is not equipped to deal with these types of barriers.

they are not traditional tariff barriers or border barriers. they are talking about standards and technical issues. these are the issues that are going to keep products out of markets now and for the future. shery: where are we in the end of pacific economic framework at this point and could that upset some of the barriers that have been raised? wendy: the into pacific economic framework which is the biden administration's blueprint for economic engagement in the into pacific, it is moving forward. the negotiations with actual -- will begin soon. it will make a contribution towards opening markets but i don't think we should fool ourselves and think that this is going to be the answer to u.s.-china competition. paul: you are a former diplomat. i wonder if there's any sort of back channeling that you can imagine might be going on between the u.s. and china right now, some sort of negotiation that could be happening outside of the public eye.

wendy: i would like to tell you. let me say i hope there is but i don't know if -- i don't have any reason to believe those channels of communication are going on in a meaningful way to try and find some kind of accommodation, particularly in this high-tech space. paul: there was an interesting article in one of the financial newspapers suggesting the u.s. policy has become aggressive against china and almost looks like a push for regime change. is that a few you would agree with? connected to that, do you see that xi's leadership could be in some way at risk? i'm reminded of the winston churchill quote. dictators -- they fear to dismount. wendy: xi jinping has a lot on his plate. i don't think he's going to be in for another five years. everything indicates that the role of the state is going to increase he's going to accelerate self-reliance in developing china's technological

progress. the united states, some people call it aggressive but it is responding to what china is doing as well so i do not think it is fair to say it is the u.s. 's fault here. they are looking at a situation where it's technology is being stolen and fair trade is not occurring. paul: when did cutler -- wendy cutler, vice president. thank you so much for joining us. australia's september employment data is coming out in about two hours time. bloomberg economics thinks the economy added 20,000 jobs in a month and the jobless rate stayed at 3.5%. the business confidence index is also due out at the same time. santos has reduced its full-year production forecast. they reported third-quarter sales of 5.9 billion u.s. dollars. we have plenty more ahead on daybreak. this is bloomberg. ♪

paul: u.s. secretary of homeland security says cyber security threats are growing both at home and throughout asia in an exclusive interview with haslinda amin to he warned against activity coming from russia, china, north korea, and iran. >> malicious activity from the

p.r.c. is a real and present threat not just for the united states but other countries as well and that is why i travel such a distance here to singapore to speak of the nature of the threat, the need for countries to work together in addressing that threat not only from the p.r.c. but from north korea, russia, and iran as well. paul: have -- haslinda: have you seen china become more aggressive in stealing u.s. data in recent years? alejandro: they have been aggressive for quite a number of years so this is not something new, some new development on the horizon. in watching other countries and seeing their response to the threat or perhaps sometimes not a sufficiently vigilant response to the threat, we are seeing china become very, very aggressive in selling its wares,

seeking to invest its infrastructure in other countries. we feel compelled to share the perils of allowing that to occur with our close partners and allies. haslinda: have you seen the same activity in other parts of the world like asia as well? alejandro: we are and we share information with our partners and our allies fear the sharing of information is so vitally important because we have to really reinforce the core principle that cybersecurity is not bound by geography, is not bound by borders given the increasing interconnectedness of the world. so a cyber crime against one is a cyber crime against all or potentially can have ramifications for all. haslinda: we have seen the biden administration impose restrictions on chips and now, there is a harsher tone when it

comes to the cyber tactics of china. is there a sense that the biden administration is now adopting the china policy that was adopted by the trump administration? is there a sense of that happening? alejandro: it is very important. it is a core principle that we promote democratic principles around the world. we do so in a way that is consistent with our values and that is what we are doing. and so, we seek to promote a fair, open, transparent, and accountable marketplace, a marketplace not just of commerce but of ideas, of freedom of expression. haslinda: i want to talk on china's digital footprint. it has been expanding, especially with its silk road. we have seen the likes of gulf states embracing china's influence. are you concerned about that? alejandro: we most certainly

are. we do not make the decisions for other countries. we want those decisions to be fully informed with respect to the risks and rewards. and to create a fair marketplace. haslinda: i want to touch on the midterm elections coming up in november. are you concerned that you could see some major attacks? alejandro: we have seen and the fbi has published an alert with respect to the exploration by chinese actors, exploration to assess whether there are vulnerabilities. we have not seen and exploitation. shery: that was out hard for my okra -- alejandro there. the earnings call just finished with elon musk talking about twitter and how he is excited about the pending takeover, saying he's obviously overpaying for that 44 billion dollar

twitter acquisition. ibm gaining ground in the after hours after sales topped estimates as it also saw some currency headwinds given the strength of the u.s. dollar. we are watching philip morris gaining ground after hours. it has reached an agreement with philip morris for the system and they will be getting 2.7 billion dollars from philip morris that they want to use the funds in pursuit of moving. montreal saying they could be using the funds for debt repayment and share buybacks. we have live pictures of the chicago fed president, charles evans, speaking at an event in virginia, saying that we need to ensure inflationary pressures do not broaden out. we need the fed policy at a sufficiently restrictive stance. we have seen already fed speak today. with jim bullard also talking about really carrying out those rate hikes that have already been priced into the markets,

officials need to follow through and implement those increases. we will continue to watch this conversation with chicago fed president. you can go to live to follow that conversation. "daybreak australia that is it for"daybreak australia. open" -- this is bloomberg. ♪

shery: you are watching "daybreak asia," coming to you live from new york, sydney, and hong kong. annabelle: