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

market opens in tokyo and seoul. paul: australia has just come online. asian stocks poised to follow wall street lower. a spike in sovereign bond yields ending a two day rally. shares something to a nine-year low. fed officials keep up the hawkish rhetoric on the fight against inflation but st. louis president james bullard sees an end to aggressive hikes year. >> the dot plot is predicting that inflation will come down and it will be a disinflationary year in 2023. paul: the dollar's growing strength ways on tesla's results but twitter gets a boost as elon musk says he is excited about his takeover deal despite paying too much. shery: as you said, we have the open of aussie markets and at the start of trade, we are seeing the asx 200 snapping a two day rally, given that we are basically hearing investors saying it was a bit of a head fake, the rally we saw over the

past couple of days. there are concerns around the broader macro outlook, also around fed rate rises and this was a big topic for us this morning because we are still hearing from evans who is giving his speech, charles evans, on the fed's economic outlook and committing to keeping rates into restrictive territory and perhaps even starting hiking six-month earlier would have made sense. in terms of the movers we could see for the upside today, energy will be in focus. we are seeing that gaining ever so slightly at the open here. staggered start but it was one of the few gainers in the u.s. session. shary can get through the details on that. to what we heard or what we did not hear from fighting. we are still keeping an eye on the aussie dollar this morning because strength we have in the greenback, you couple that with the concerns around china's economic outlook, cpa says that could push it below $.60 to the greenback. we are also keeping a very close watch on what is happening in the yen this morning as we await for it to hit 150.

it is just within a whisk of that for now but taking a look at what we see between the implied and realized volatility here, you can see the spread in the bottom panel is at its widest gap since 2011 p or what that indicates to us as we could see further fireworks in the currency ahead. it is a signal to us of further volatility. shery: especially given we continue to see the strength of the dollar. we heard from charles evans and jim bullard today talking about really following through with the rate hikes. it was a good thing that the markets are now pricing in those rate hikes. we continue to see the pressure in the asian session. u.s. futures down after the s&p 500 fell for the first time this week. of course, we also where following the treasury market. renewed selling with a two-year yield at the highest since 2007 on that hawkish rhetoric. the only sector that was in the green in the new york session was oil.

they'll just mentioned the spr. president biden confirmed the reliefs of 50 million barrels from the strategic reserve but he did not talk about a potential export ban which is what markets were watching. we are seeing wti in the asian session very close to the $86 a barrel level. paul. paul: fed officials have been hammering home their aggressive stance on inflation for weeks now. but now, the st. louis and minneapolis chiefs say a pause might come at some point next year. >> we are watching the data. we are predicting, at least the dot plot is predicting inflation will come down and it will be a disinflationary year in 2023. it does call for further moves in 2020 three so if you take that as the committee sentiment, there could be a decision to move that into 2022 at the december meetings. >> i want to see us have confidence that the core

inflation has peaked and then it will head down in the right direction. financial markets are suggesting inflation should fall rapidly next year in the year after. i certainly hope that they are right but i have not yet seen evidence that that mechanism is in play. paul: she fascia economics correspondent enda curran joining us now. neel kashkari also very conscious of the balance of risks between the fed doing too little and doing too much, isn't he? >> neel kashkari made the point that he expect inflation to come off over the coming months and of course that might give the fed breathing space, saying next year, it will ease up on the rate hiking cycle. now, there was some nuance in his messaging like you are saying, making the point that right here and right now, he is not comfortable with where core inflation is at. we know the core inflation is at 6.6%, 40 year high in the u.s., especially because of an

increase in food and energy prices paid mr. kashkari said two things pick he wants to see core come down before he feels any kind of degree of comfort and as you mentioned, he said he is willing to do more and then do less when it comes to jacking up interest rates to get inflation under control. there was a headline take away that he does see life on the horizon paid maybe next year when the fed can ease up, that is a next year story. for now, they have a lot of work to do. it does mean more aggressive hikes this year and that is why the market is priced in for at least 75 when they meet on november 1 and november 2. shery: we are also going to the beige book not to mention last week's fed minutes in discovering the u.s. output, potential output being revised down significantly. how important are these words? enda: the beige book is really interesting because it is a liaison with the central bank officials and the real economy.

countries, manufacturers. they picked up a couple things. they are warning that they are slowing the hiring tensions. u.s. jobs market has been a standout pillar globally in terms of the global slowdown. some warning for factories there. they are talking about how it is difficult to pass on the price increases they are suffering to customers. customers are pushing back so that means they will have to absorb some of that pain in the margin and there was an uptick in reset -- in reference to recession with factory owners and company owners among fed officials. so all told, is not pointing to an economy falling off a cliff or anything like that but it does point to concerns and it will add to the case that those people were warning it takes a while to hit the real economy. a lot of people think the real pain in the u.s. will come six months from now and perhaps that is what the beige book is hinting at.

paul: enda curran there. stocks failed to keep the rally going in the u.s. as yields crept in multiyear highs. for more, let's bring in our mliv contributor, garfield reynolds. getting quite difficult to be a stock picker in this environment, isn't it? garfield: yes. the crosscurrents from volatility just keep on keeping on. when you start to think that may be have got some confidence, there is potentially that plateau in your interest rates with central banks coming. yesterday, there were a lot of concerns globally about inflation and perhaps the realization that even if there is a peak in rates, it will only be a plateau. you will not get a rapid come down. that caused lots of difficulties

for equities. there's also some potential signs i think that investors are now starting to already look forward and consider what the risks might be around the midterm elections which are coming up on us all too soon early next month. you have got that. you have got whatever is going on in the united kingdom. you have continued constraints from the war in europe and plenty of uncertainty about china as well. volatile times. shery: let's talk a little bit about whatever is going on in the u.k. because it's focal to assess the u.k. political situation and how fast it is moving. traders don't seem to be going back to the gilt markets. garfield: there's not a lot of reasons. if you want juicy yields at least on a nominal basis, you can buy plenty of those in the treasury market, it turns out, and elsewhere.

you have the situation where the boe's maneuverings have managed for now perhaps to bring some greater level of calm to the gilt markets what the ultimate driver of the volatility, the difficult political situation, that remains. that was something that people were telling me last week, that they were reasonably confident that the boe would be able to get matters under control, delivering a consistent message. the major concern was a radical change in government or government policy at almost any time over the coming few months and it's difficult to see what the resolution might be. that is what investors are saying. difficulty in judging what might go on in not just the coming week but then the coming months when it comes to u.k. policy. all of this is happening at a

very difficult time economically for britain. none of that says it is time to go back into the united kingdom's assets. shery: garfield reynolds with top market stories today. let's talk about tesla grabbing the spotlight in extended trading with shares taking a tumble after sales missed estimates. the company cited the stronger dollar as well as production and delivery bottlenecks. su keenan joins us with the latest. we saw shares paring back some of the losses with elon musk in the earnings call. su: elon musk said there would be an epic end to the year. he qualified that by saying knock on wood. he promised a meaningful stock buyback for board approval, 5 billion to $10 billion worth, and claimed tesla will soon have a market cap double that of apple and saudi aramco. let's look at the after-hours price action.

shares were initially down significantly. they pair the losses a bit as did some of the smaller rivals on these comments but losses again were only. during his enthusiastic comments. he cannot for that -- emphasize there's excellent demand in the fourth quarter and increasing output of critical battery sales is gaining traction. constraints have been an ongoing hurdle. he committed to average angle delivery goal, 50%. easy for me to sap at he did not specifically say it will hit that target this year. production goals have been in focus and again, this was an issue with bottlenecks. he said he just could not get the trains, the planes, the barges to deliver the cars when he needed to. tesla blamed the stronger dollar on taking a bite out of profit and revenue and flagged a

foreign-exchange impact of 250 million that weighed on profitability and this is important at analysts say we can expect to hear this as a theme going forward. tesla has missed an ominous time for growth stocks more widely. it is considered a bellwether on riskier, expensive valued equities and that might be why we are seeing the tesla loss widen now that the car has ended. carmaker shares are among the guest contributors to moves in the s&p. it's drop into the bloomberg short-sellers. they have actually finally been getting a little traction against tesla's stock so it will be interesting to see how it holds in regular thursday trading. some analysts believe tesla's disappointment could spark another market wide selloff because it is so influential in tech and among gross -- growth stocks. a lot of investors and tesla are just not used to seeing that. they are used to seeing this company winning and winning

again. back to you. paul: su keenan. let's get to vonnie quinn for the first word headlines. vonnie: 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. actions, as ukrainian forces continue to press their advance. president biden says russia's decision shows the russian leader is in an incredibly difficult position. president biden also talking about u.s. oil producers he said they should not be returning record profits to shareholders via 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 the war wages on in ukraine. the president called on oil companies to boost production and bring down fuel prices for consumers. pres. biden: we need to responsibly increase american

oil production without delaying or deferring our transition to clean energy. my message to the american energy companies is this, you should not be using your profits to buy back stock or for dividends. not now. not while a war is raging. you should be using these record-breaking profits to increase production and refining. vonnie: shifting bass after september inflation came in stronger than expected. it was up from a year ago, more than economists predicted. they were looking for a 6.7% gain, pricing in a 60% chance of a 75 basis point hike which would take the base -- benchmark rate 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 am vonnie quinn. this is bloomberg. paul: still to come, a review of tesla's earnings with david

traynor, who is one of the very few to put a sell rating on tesla. our next guest says we are only in the first phase of a bear market. phase two is getting underway. we have clear bridge investments joining us, just ahead. this is bloomberg. ♪

shery: take a look at how asian stocks are trading at the moment. we are seeing the asx 200 losing groun about .10 .9%, which was sort of the case in u.s. trading as well with wti really shrugging off president biden's remarks about energy prices and we continue to see oil higher at the moment. nikkei futures also point them lower with kiwi stocks also down we are watching the japanese yen as well. narrow trading range after touching the fresh 32 year low. our next guest warns of head fakes on the way to a real market bottom. joining us now is jeffrey schulz, investor and investment strategist at clear bridge investments. good to have you with us.

we have the bank of america fund manager survey pointing to potentially a market bottom in the first quarter of 2020 three. where do you see it happening? jeffrey: it may take a little bit longer for a durable bottom to take place. looking back, the last 12 recessions, none of them saw market bottom before the recession actually started. given the strength that we are seeing earlier this week, the job numbers from a couple of weeks ago, the labor market broadly speaking, i think we are at least maybe two quarters out from the start of this recession overall. thinking about earnings expectations for the next 12 months, they are only down 2%. typically, earnings expectations have moved down closer to 26% and even if you strip out the global financial crisis, -19% so no matter how you slice it, you have a very optimistic earnings and even though you have some negative sentiment from an

investor standpoint, the path of least resistance for the market over the next couple of quarters is choppy but down. shery: will this be different from previous times for the global financial crisis? any time we have these huge drawdowns, we saw jeffrey: the v-shaped recovery in the markets. jeffrey:it may be -- we saw the v-shaped recovery in the markets. jeffrey: it may be a little bit different. you had a fed that cut rates in order to stimulate the next cycle higher in the durable market bottom. today, the fed is clearly focused on price stability and listening to recent fomc committee members, most of them want to get policy too restrictive which is 4% to keep it there for a prolonged period of time to fully stamp out inflation and achieve their 2% inflation goal on a sustainable basis. if the fed isn't likely going to pivot, it might not be a year or longer for them to cut rates. you may not see that v-shaped

recovery, what we have been accustomed to come over the last number of cycles. it could be a choppy environment for a longer period than people are anticipating. paul: one of the things we have come to rely on during this period of enhanced inflation and fed tightening is a strong u.s. dollar. is this precluding you from looking at any global markets outside of the u.s. right now? jeffrey: global valuations are very cheap especially compared to their twenty-year medians, whether you're looking at the u.k., the eurozone, japan, for example. obviously getting more insight on china. obviously, the zero covid tolerance policies are going to be with us for at least the next year. not necessarily expecting a huge burst of growth from the chinese economy with the chinese consumer reluctant probably to reengage with the economy on a more durable basis. given this overhang and the likelihood that the u.s. economy is going into a recession next year, i think it may be a little early to think about global

markets on a longer-term basis. i think you are probably going to have a better opportunity sometime in 2023. shery: we are not at the market bottom yet. what is the key risk for you going forward? jeffrey: the key risk is front and center, a fed that has to push even harder, become even more hawkish than what is being priced in right now. thinking about the u.s. consumer. household leverage is at levels last seen in the early 1970's. they might be less interest rate sensitive than they have been historically and with lower energy prices and potentially lower inflation, if wages remain relatively sticky, real purchasing power may continue to support consumption. also, if you don't see the labor market rollover in a more durable fashion, the fed may need to raise rates more than what is being anticipated. lastly, if corporations hold onto their labor because it has been the scarcest commodity of this cycle, margin deterioration has just started to happen and

this could result in a situation that although the fed has a terminal rate or the markets are pricing in a terminal rate of 5%, it may have to go higher than that and because a deeper recession. paul: jeffrey schulz, director and investment strategist. thank you so much for joining us. you can get around up of the stories you need to know to get your day going in today's edition of daybreak. terminal subscribes here to dayb . it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪

paul: quick check of the latest business flash headlines.

asml surged after predicting fairly limited impact to restrict china's access to cutting-edge chip technologies. the equipment supplier expects u.s. curves to affect about 5% of its back log. it would top analyst estimates. ibm surged in extended trading after sales beat expectations and affirmed the forecast. sales rose 6.5% over the third quarter on strong demand for software, mainframe computers, and cloud services paid ibm says currency fluctuations would cut full-year growth by about seven percentage points. it intends to sell its 60% stake in the parent company for as much as $2.2 billion. the chinese conglomerate confirmed that the group will buy the stake with a final price coming after due diligence. their liquidity has been under scrutiny since moody's morning in june. still to come, the yen's tumble

may pause as traders seek signs of stealth intervention from the japanese government. we have the yen trading at 149.84. we will talk about the latest moves in fx markets in a moment. this is bloomberg. ♪

shery: st. louis fed president james bullard says he expects the central bank to end its front loading of aggressive rate hikes by early next year. he told us exclusively that the option of moving increases into soup a for 2023 to this year's

hiking cycle. >> the meeting does call for further moves in 2023, so if you take that as the committee sentiment, there could be a decision to move that into 2022 at the december meeting, so you could do that, but why prejudge that meeting at how much difference would it make from a macro perspective would be a good question as well, whether you put the 25 basis points there or put it in the first quarter. >> what about expectations, what about markets, what about telling people you've noticed inflation is high and intend to do something about it? >> we do and we definitely have move through very quickly, so this would be more of a tactical issue on the larger strategy. kathleen: speaking of 2023 and hoping inflation will get to the point that you want it, would that be a point where you would say, yes, it's time to pause? >> i think there's a possibility

of a good dynamic in 2023, so let's cross our fingers that we get it, but i think if inflation does start to decline meaningfully, we can stay where we are at this higher level of the policy rate that meets the committee's criteria. and at that point, we could watch inflation fall and get back to 2%, that would be a very good dynamic, i think. kathleen: calibration, that's another fed work that showed up in the minutes of the september 21 meeting, and people assumed, because you've already gone pretty fast, the calibration would be slowing down. is that a correct interpretation of this calibration of rate hikes going ahead? james: you do have to think about with a reasonable level is. i think that 75 basis point moves have been because we started at such a low level, so we were way below any kind of

concepts of a long-run neutral. step one is to at least get up to the long-run neutral, then get above that, then get above a meaningfully restrictive level that would with appropriate for the level of the economy. that doesn't mean you go up forever. the committee is going to reach a judgment at some point about how much is the right amount and that's when i want to get this idea across of transitioning to what i would call ordinary monetary policy, and you might do, looks more like the 1990's or something like that. so, no, you are not had zero rates, you are at higher level of rates. but from that higher level you are adjusting to various things happening in the economy, including on the inflation front. doesn't mean you couldn't go higher? you could go higher depending on inflation development or stay there and watch inflation fall. those could both be possibilities.

it wouldn't, you would be out of this very rapid rise in rates. kathleen: is this important for people in the markets to realize that pausing or slowing down the pace of hikes does not mean that they end, it doesn't mean you declare victory on inflation, you just decide that you've tamed it enough that it doesn't need such aggressive moves? james: what i mean by putting meaningful downward pressure on inflation would mean you are at a level of the policy rate where you are confident that, ok, we have the right policy, we are doing the right thing, and even if inflation blips around a little bit in the wrong direction on one report, you still feel confident that i've got the right policy, even for that situation. kathleen: are you in the camp that things going slower would be better now because there is a risk of financial instability, we have seen these aggressive rate hikes reverberating not just in the u.s. economy, the

u.s. mortgage, but other economies around the world? james: i think step one is to get to the right level, then from there to become data-dependent. paul: st. louis fed president james bullard speaking exclusively to bloomberg's kathleen hays. we are underway here around the asia-pacific, let's take a look at what's going on, what are you watching? annabelle: traders are focused on what we are hearing from fed a -- fed officials like jim bullard. especially the chicago fed president and charles evans, who setting the case that we need to have rates and restrictive territory in order to bring inflation pressures under control. so we still do need to see further hikes ahead. that's weighing on the trading sentiment. we are half an hour into the session for the asx 200. you have japan futures coming online in singapore. you can see that contracts lighting here. 30 minutes just under from the open in tokyo, but still, of

course, the bottom looking a little bit allusive, but that hasn't stopped the likes of nomura. change over to japan saying we could see the low points of asian equities over the coming few weeks. they are looking at -- if you look at this terminal chart, they are looking at the past 12 u.s. recessions, and also the past five chip cycles as their reasoning for that. they are basically saying that the risk/reward ratio is looking attractive, but it does depend on your investment horizon. they are saying you need to look at the performance over the next year. if you look at the performance chart, we are on track to be underperforming the global gauge once again, seventh straight quarterly loss for msci asia-pacific index. so not a great sign. but when you take a look at what else is lighting off course, the yen very much in focus because we are on watch for it to hit 150 within a whisker of that now . a lot of talk over whether we could see more intervention from

authorities. on that, the finance ministry says it doesn't feel the need to inform the markets when it does get involved, but a lot of that being driven by the ongoing yelled gap or policy divergence between the fed and the boj. you also take a look at seasonality. that can be another factor that plays into this when you look at the 10 year average. it actually enters a time of yen weakness into the final few months of the year. something else that doesn't help yen traders. shery: let's get more on what's happening in japan from bloomberg's's effects in rates reporter. ruth, we continue to see the pressure on the japanese yen given governor kuroda stance and it comes to lose policy. but we are seeing yen swaps corporate bond coupons now pointing to perhaps a surge in the 10 year yield. what is this telling us about expectations of where the boj will go? >> it is a clear messaging from bond vigilantes. that they are willing to test

the boj's measure here. in terms of yen swaps climbing, absolutely, average coupons on ten-year year bonds pushing higher. process -- crossing and negative rates around the time and negative rates ending around the time kuroda steps out in april. all of this is telling us this will be ongoing yen pressure, ongoing pressure on jgb because people, investors are just not convinced that the boj can cling to its ultra dovish monetary policy stance where inflation is pushing high into japan. and as long as treasury yields continue to edge higher, as long as the dollar continues to push ever higher, you are guaranteed to see pressure day by day. paul: how about pressure on the offshore yuan. we did see it has reached into august 2010 yesterday. how much more downside and how are policymakers managing this decline in china? ruth: it's another key currency

that's under a lot of pressure. again, the divergent story. you've got the fed hiking interest rates aggressively for what's happening in china, the opposite is happening with market property downturn. they have ultra easy monetary policy. as long as that divergence continues, you are going to see pressure on the offshore yuan. this is just another line in the sand at 7.727 mark that was reached overnight in the new york session. traders will continue to try to shore the currency and test china's defendant on exxon if they wanted to. paul: bloomberg suning -- senior fx rates and effects reporter ruth carson. let's get the vonnie quinn for the first word headlines. vonnie: the latest fed book sounds a lot of caution on the u.s. economy which expanded modestly through october. said slowing economic activity raises recession concerns amend indication of inflationary

pressures. outlooks were more pessimistic amid concerns about weakening demands. bloomberg has learned that a group of u.s. justice department prosecutors believe there is sufficient evidence to charge donald trump with obstruction but, we are told paths to an actual indictment remains unclear over the former president's handling of classified records. investigators have not yet made a formal recommendation to attorney general merrick garland, who would approve or reject such a move. i ran supreme leader has posted about the capability of military drones produced in his country and comments reported by state media. ukraine and western nations accuse iran of providing russia which drones used in recent attacks on kyiv and other cities. a bloomberg source says the eu has proposed sanctioning three iranian generals and one entity for providing military support to russia. the u.s. says it has observed growing cyber security threats at home and throughout asia. the secretary of homeland

security says warning against malicious activities coming from russia, china -- china, north korea and iran. his marks, amidst heightened tensions between the u.s. and china over issues from trade, human rights and the status of taiwan. >> murrell -- malicious activity from the prc is a real and present threat, not just for the united states, but for other countries as well. and that's why i traveled such a distance here to singapore. vonnie: global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn, this is bloomberg. shery: coming up, elon musk says tesla is likely to do a meaningful share buyback after shares fell short of wall street estimates. new on that next with new constructs. this is bloomberg. ♪

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paul: let's take a look at how tesla is performing after hours. sales did fall short of wall street estimates of tesla dealing with a well-publicized delivery and publicized the bottlenecks. asking for softness after hours of tesla of 5.3%. that is spreading some of the other well-known names in the ev space. we have them off by nearly 2%

after hours and ne-yo annex pang is showing a little bit of weakness. let's get out to our next guest. he somewhat rare and has a sale rating on tesla. ceo at new constructs. a rather mixed state of results. we didn't know that tesla was experiencing difficulty around delivery and the supply chain, however, to a room i -- reliably profitable amount, and you still have the sell rating on the stock, why is that? david: because the valuation of the stock replies an unreasonable level of future profits. when you do the math and you give tesla a credit for margin that is 1.4 times toyotas best margin, they still have to sell 16 million cars at an asp of $40,000. so, with a $700 billion valuation, it has never made any sense, it still doesn't make sense. i question the prophets, free

cash flow still looks negative to us, even though they've cut back on op experience so, i think this is a paper tiger and i think the walls are sort of starting to cave in on mr. musk. paul: you've hit a sell rating, but would you go as far as to short the stock, because that's been a challenging trade in the past. david: markets aren't paying attention the fundamentals, we've known that for a long time. the meme stock phenomenon demonstrates that. shorting is a fools errand. the more you short, the more likely you might get blown up because people will buy a stock because people are shorting it. the real issue here is, we've been saying this for a couple of years, as a fiduciary, you have to take into account the risks, the mounting risks now with tesla because it's not just that the business needs to achieve outrageous expectations for future cash flows to justify the price, but you've got this twitter deal, this huge distraction.

even dan ives, the super bowl of tesla saying that musk's trading candy bars for caviar by going after twitter, and you've got the mounting regulatory risk, how many lawsuits are out there against tesla right now? in the nh teays finally paying attention to this fsd thing. the boy getting tired of it -- empty promises in the cases that they will buy back stock just never really made any sense for anybody doing the math. so i think fiduciaries have to take a long, hard look in the mirror and say, can i really justify owning this stock with the risk we see. shery: given the share buybacks that you are talking about, and the short term, will we continue to see the support when it comes to this stock question mark we are still seeing a market cap that's three times bigger than the second-biggest, which is toyota. david: the market cap is more like the combined market cap of the next 10 companies. and we've got this in the latest report.

we call tesla the night king of meme stocks. if tesla goes down a lot of market will follow it down because it's an original meme stock. you look at how much the incumbents are spending and going to be growing, there ev product offerings, tesla doesn't have a chance and we are seeing some of the most mature markets. tesla's market shares are plunging. i do think they have a demand problem. they have a quality problem, and we've known forever that they've got a scale problem. musk has been promising to scale up production for years. bloomberg created a projection to scale how far off his projections were for the m3 model. execution has been an issue, now he's even more distracted. this doesn't make sense to folks who focus on this. shery: it's interesting you are calling this a meme stock quality stock we have seen the retail traders don't seem to be buying the dip anymore. has the fed sort of change the calculation for a lot of these

business models? david: absolutely, that's why we have 19 stocks in our zombie stock list because all these companies that have come into being these last few years, based on an easy credit environment because they could lose as much money as they want and people are willing to fund it, they are in trouble. with a tighter market for funding, they can't roll over their debt or continue to lose money. investors are demanding profits. they won't keep throwing money down a hole. and that's bringing an end to a lot of the speculative investigation that we have seen that has driven stocks like tesla for so long. paul: you laid out a compelling case as to why you think tesla is overvalued. what would be fair value? where should the stock price be? david: checking out now, the gets 25 bucks is probably a fair number. i think even at 25 bucks that implies production success of around i think a couple million

cars a year. so, it's still well above where they are now. but, yeah, i think that gives him credit for 3.9 million cars a year. so, $25 you think is probably a fair price considering the competitive market that they ev market is, tesla's inability to probably scale. but honestly there's risk it could go lower than that. i think when the sentiment shifts on this in the same way it drove it up to ridiculous sites, they could bring it way, way down. shery: good to have your thoughts, ceo and new constructs with his views on tesla. be sure to tune into bloomberg radio to hear more from the days big newsmakers. getting that analysis from the daybreak team broadcasting live from our studio in hong kong, listen through the app radio plus or broom -- bloombergradio.com. plenty more ahead, stay with us. ♪

shery: breaking news out of japan, we are getting those export numbers, a gain of 28.9% year on year for the month of september, which is really coming above expectations and also an improvement from the previous month.

of course we have had a weak yen that's helped exports, it's also helped imports, its growth of 45 point 9%. this is also a much bigger gain than what was anticipated. although a little bit of a slowdown from the previous month in terms of imports. we have continued to see the trade deficit come in and japan, given of course the rising oil prices, although a little bit of a drop when it came to september. the adjusted trade deficit would come in at ¥2 trillion, which is slightly narrower than what was estimated, also narrowing from the previous month, the adjusted number also ¥2 trillion. the considerations for these numbers is, oil prices have come down a little bit in september, yen continues to be weak, and all of this is having an impact on the trade deficit. which is, again, in a cycle really pressuring the yen even further.

paul: let's get a quick check now if the latest business flash headlines. it fell in late trading after posting adjusted third-quarter loss of $60 million. the results come five weeks after it warned of a tougher quarter to the lower metal prices and higher cost for raw materials. alla minium costs are down on rising global inflation and surging energy costs, and the risk of a ban on russian exports. bloomberg has learned saudi aramco is pushing ahead with plans from ipo of its oil trading business and what would be one of the biggest listings this year. sources say the firm is working with advisors for listing in riyadh as early as this year. aramco is working on adding more banks of the ipo, which could value the unit at more than $30 billion. galaxy digital founder and ceo says every asset classes breaking point of a rising inflation that striving hawkish monetary policy. he told bloomberg that going small is the gameplay as the

markets never get through the month ahead. >> is a very difficult environment, where as market breaking levels in almost every asset class. i started in wall street 30 years ago, and were markets were suffering this much pain, you almost always saw a big night on a whitehurst -- white horse. he would call them greenspan or madame yellen show up with some juice that we get the markets excited again. and this time we don't have central banks that are coming to the markets. so lots of analogs that one might look at that normally have worked, have always worked in the context of a fed easing cycle, not with the fed still has to tighten, so we will be in for a rough few months of markets that are pricing in a tremendous amount of -- but it still bearish. inflation hasn't rolled over, growth and employment is still strong in the u.s.

we've got a war with china brewing, or at least a cold war with china. china going back to zero covid and not really helping the global economy and the growth kicker. russia, ukraine not really feeling like there's a breaking and the tension. and so, it's a lot of that information, it's priced and, therefore, you see while bear market rallies and the trends remain in place. >> are you ever than tempted, amid this volatility, to put new money, dry powder to work whether it be in crypto or across other assets? spoke to david rubenstein a couple of days ago saying these levels will eventually go higher if you got more of a long-term perspective. >> so much is your timing and the concept of how you trade. if you trade leverage, the all clear sign is not there. it takes a lot of courage and i would encourage people to bet small. if you are looking at this over a 15 year horizon, i still think

stocks haven't hit their low, but, what are we, 15% may be from where they finally go, 20%, so if you are looking at a 10 year horizon, sure. to your notes at 4.5 percent, probably a decent buy even though they could go a little higher. again, it all depends on the type of investor you are. shery: the japanese yen holding at that 149 level, very close to 150 at the moment against the u.s. dollar. this as we continue to see the boj holding onto ultra-loose monetary policy. this is bloomberg. ♪

shery: this is "daybreak asia". we are counting down to asia's major market opens. we could see pressure coming from the wall street trading session with the s&p 500

reversing the gains we saw a earlier in the week. of course, this as we head toward another monetary policy decision in indonesia. a rate hike expected as we continue to get more hawkish speak from the fed. paul: we will get some unemployment data out of australia this hour as well. that two-day rally was short-lived. none of those old risks we were talking about actually went anywhere. annabelle is here watching the market open. what are you keeping? annabelle: seems to have been a head fake and the two-day rally. we are looking to snap that at the open for japan and south korea. we will be watching the moves in treasury yields very closely, given those spikes we are seeing across the curve, really a reflection of this broader, bearish sentiment coming back into markets, that's one of the factors driving them to multiyear highs. we have the 10 year yield still holding at the 4.13 level. that is the highest since june 2008. that move in the treasury yield is also playing into yen

trading. we will be monitoring this throughout the morning. the yen here extremely close to that 150 level you're at a psychological level to watch, but also means we could possibly see some level of intervention from the boj on behalf of the japanese government there. we are still also keeping an eye on what that means for the japan bond yields as well because we've seen the yield there really rising above that upper range target, also reflecting the issues for the boj to stick with its easy policy settings. but do have japanese stocks coming long -- coming online and the nikkei down 1% at the start of trade. it's turn to the open for korea because the kospi is also getting underway and also snapping a two-day rally. we are seeing down 7/10 of a percent. the cause act, we are also referencing the moves we had in the nasdaq because that was down 1.7 percent in also keeping an eye on what we see in the korean won. it had been on a two-day rally with this very short-lived. in risk sentiment. but it's again we see the

weakness come back into the currency. still one hour to the trading session for australia, quick check on the asx 200. how we are faring today in the session, under pressure, also referencing the moves that we have in the bond yields, particularly in the shorter more rate sensitive three. than brent crude is factually weaker, the are seeing the energy index, one of the outperformer's in australia this morning. paul: that short-lived rally that we saw in the markets, let's take a look at how our next guest is trading around the volatility. we are joined now by this ceo and cio at your rising capital asia. that two-day rally we saw did turn out to be a head of a -- a bit of ahead fake as one of our earlier guests described it. how are you trading around the volatility? >> i think what we saw was a bit of a bear market cover. the market has repeated itself back to the realities of what's going on. we are in a time of heightened

inflation in a time of inflated curve. on top of that we have very important developments going on in beijing during on sunday we will hear who the new leadership is for the next five years. that's really critical for the market and that's where the markets we focused. paul: there's a lot of quality names that have been getting beaten up and some of the selling we are seeing recently. is this a good time to look at those with a view to getting long, and i'm thinking some of the asia tech names? sean: i think that tech has a challenge. the first challenges that we are in the midst of an unprecedented geopolitical dispute over who should have access to critical technology and semiconductors. so as the market tries to get through that, they are figuring out who are going to be winners and losers. i think one of the challenges is that they are going to be continued requirements for western companies to get permission from washington before they sell leading edge

and bleeding edge technology to the chinese parties. on the other hand, we still have muted demand in markets, particularly in servers, pcs, and consumer electronics. so, it is a very difficult time right now to get long in this area. anything that interests us we are looking for the ones that were first into the trouble to come out, i would say panels would be the first thing we are looking at, but it's just for the brave right now. shery: what about china tech? the self reliant theme that has been emphasized, even during the party, just conference will take new meaning. are you expecting to see those prickle technologies ceva new support from beijing? sean: what is happening is that there are two types of technology that are really at the edge right now. number one is things to do with new energy and number two is to do with semiconductors. the near term challenge with semiconductor related technology is that they require

semiconductor production equipment that comes from the west. this spe is currently under restriction and what we will have to see is a time of extended research and development and china to be able to move from the mainstream semiconductor to the bleeding edge and leading edge. on the other hand, with new energy, that's where china shines. in new energy they are leaders in wind and solar and those are areas we are focusing our attention on at this particular point. shery: let me turn to indonesia because you are focusing on the growing middle class. we do have a great decision. today this chart on the bloomberg showing how rate hikes aren't helping that much with the weakness of the rupiah. how will this really affect your investments, and when you say you'd like the growing middle class, how much of a long horizon is this? sean: what we've seen in indonesia is a push through of the commodity prices into the

consumer markets. if we look at what's happened this year and palm oil, up 4% this year, other food related items like wheat and corn, that has arisen. on energy commodities we have seen a very strong year to date growth, particularly in coal. that has had a secondary effect of pushing up the money flow, particularly in rural areas of indonesia, that has put more money in the family's home in their we've seen spending. so near term we have seen spending, but these are people that are less impacted by near-term moves in interest rates. that we would see in surabaya, jakarta, etc., where they are much more mainstream consumers. we are interested in the middle and lower income segments within indonesia who have really seen a nice boost. shery: you've talked about the commodities theme playing out in indonesia, how much focus are we going to see now that we are going into winter and into these energy related names? sean: i think as we go into the

energy names, the first catalyst we are watching across europe is the days in which they are allowed to turn on the heat. and as we see it kick off in germany a few days ago on the 15th of november will be an important date in china when thermostats start going up. that will put people's attention to that. there way we are expressing that situation is by looking at new energy. i think people are going to realize, particularly in europe, that if you don't have your own source of energy, you have a challenge in the medium to long-term. we like these new energy companies that will provide alternative sources of nonfossil fuels, that's not just good for the environment, but it's good for earnings. shery: good to have you with us, ceo and cio at your rising capital asia with his views on the markets. let's get to vonnie quinn with the first word headlines. vonnie: the leadership of liz truss is close to collapse after she fired one minister over

security breach and two others resigned before agreeing to stay at their post. the former secretary shared secret documents on a personal mobile phone. her departure, combined with interparty division over fracking can serve many conservative mps that liz truss should resign immediately. russia's president vladimir putin has extended martial law and for occupied zones of ukraine and stepped up security in nearby regions. the new rules impose limits on civilians and give military officials more power. the actions come as ukrainian forces continue to press their advance. president biden says pollutants decision shows the russian leader is in an incredibly difficult position. president biden also talking about u.s. oil producers, saying they should not be returning record profits to shareholders. the u.s. administration is stepping up criticism of the energy industry and its role in high gasoline prices as the war rages on. the president called for oil companies to use profits to

boost production and help bring down fuel prices for consumers. president biden: we need to responsibly increase american oil production without delaying or deferring our transition to clean energy. my message the 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 -- waging. you should be using record-breaking profits to increase production and refining. vonnie: traders are shifting bets towards a larger tank of canada rate hike after september inflation came in stronger-than-expected in spite of lower gasoline prices. the cpi reading was up 6.9% from one year ago. beating economists forecast for 6.7% gain. markets are now pricing in a 60% chance of a 75 basis point rate hike. that would take the benchmark to its highest since 2008. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries.

i'm vonnie quinn, this is bloomberg. paul: thank you very much, let's get a check with annabel for what's moving in the early moments of trade and japan and korea. what are you watching? annabelle: taking a look at the asian tesla suppliers. we did have results coming through for third-quarter earnings. they were amiss on wall street. few concerns that were particularly around production, bottlenecks, delivery issues and dollar strength weighing on that, it is taking a look at the names, particularly lg energy solution and panasonic, big battery makers for tesla. another sector we are watching if you change on is the japanese chip equipment makers because we did have more results coming through. these were from global peers asml and llama research. both of those beat wall street estimates. asml also culminating on what this restriction that the u.s.

is imposing on china's access to advanced chip technology, what that means, and they say the impact is fairly limited. he saw the moves in the after hours for stocks but today not following through on the session. but perhaps a sentiment indicator with broader risk offset. still keeping an eye on the energy space because energy is one of the few gainers today, so far just about 10 minutes into trade across most of the region, particularly japan and australia. that is really reflecting the moves we saw on the u.s. session when energy was basically the loan mover to the upside on the s&p 500. shery: we continue to see oil gaining ground $86 per barrel. central banks cannot unilaterally and materially stop the strength of the u.s. dollar. more on the fx markets, next. but first, james bullard expects the central bank to end as frontloading of aggressive interest rates heights by early next year. our exclusive with the st. louis

fed president next. this is bloomberg. ♪

shery: we are watching asian currencies closely especially as the japanese yen is close to the 150 level.

we are hearing from the finance minister in japan that they are watching the forex market with a sense of urgency that they cannot condone excessive moves on speculation, and that will continue to act appropriately on excessive moves. of course we have a speculation about potential intervention again coming from japanese authorities. we are also watching what's happening with the korean won because we are seeing a really significant weakness in that 1430 one level against the u.s. dollar. we are hearing from the korean authorities closely monitoring short-term money markets that they will swiftly resume purchases through the bond stabilization fund. we had speculation from local media this week that korea was considering temporarily banning shortselling of shares. we are now seeing some remarks coming from the financial services commission when it comes to closely monitoring the short-term money markets. paul: st. louis fed president james bullard says he expects the central bank to end its frontloading of aggressive

interest rate hikes by early next year. we spoke exclusively with our global economics and policy editor kathleen hays. who began by asking whether the jumbo hikes have had the desired effects. james: i do think they will have an impact and in some ways, have had an impact, i would say the housing market in particular where the increase in rates have really change the dynamics there. so that's someplace that i would say are not long and variable lags. that market anticipated fed moves before they were even entering the spring, so that's a place where we've seen impact right away. but, it's a big shift and takes a while to steer the ship. so the housing market is not the whole economy. kathleen: it certainly isn't in it certainly not one of the main

thing striving inflation. prices have fallen. that's one reason why people are so worried about inflation staying high next year is that those rents, the way they are calculated, they will spread out over several months. james: we are aware of the lags in the calculation, so we will take that on board and take a look at that. you are right, the core measure of pc inflations is still on high fours and that dallas fed trimming 4.75 or so. so, pretty high inflation and 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 in the right direction back towards 2%. kathleen: what does this mean for the restrictive terminal rate of the september steps medium target interest rate 4.4% this year, four point 6% next year? after the latest data, what are

your projections now? james: if you look at the september summary of economic projections, that dot plot, it did seem like the committee was coalescing around further rate increases at upcoming meetings, even at the end of the year. so that seems to be the base case, right now most of that has been priced in the markets, so i would anticipate that that's having an impact right now, so that's good news if you are china get inflation down, but we will have to follow through on that and the subsequent meetings this year and get the policy rate up to a level where we can put meaningful downward pressure on inflation. i think that's the main goal immediately ahead of us. kathleen: off-the-cuff, right now, what do you say that level looks like it's going to be? will it be higher than you thought it might be? is that the risk, not that you are going to be ok or move it lower, but that they will

actually have to have more rates to get to a more restrictive level? james: yes, i've done this calculation at a minimal level that you would have to get to two put downward pressure on inflation, i did at a conference at stanford in may, and he could up -- you can look it up in my webpage. at the same time that number came out to 3.5%. since then, the inflation news has continued to surprise to the upside. so if you do that again now, you are going to get something closer to what's in the dot plot , foreign to have, for 75, something like that. and i think it we are data-dependent and it we are watching the data and we are predicting, at least the dog plot is predicting inflation will come down. it will be in disinflationary year in 2023. shery: st. louis fed president jim bullard speaking exclusively to bloomberg's kathleen hays.

for more on the fed let's bring in chief asia economic correspondent enda curran. we also heard from chicago's charles evans talking about needing fed policy to be at a restrictive level in order for inflationary pressures to not broaden out. is there anything new that stands out in all of this fed speech now? enda: there are comments alluding to the idea that it will come off the boil. you heard mr. buller talk about it being the year of disinflation, markets are price for a big inflation slowdown. some of that is base effect. even though these officials are saying next year inflation will come off the boil, right now, right now their focus remains especially on core inflation. neel kashkari overnight talking about core inflation at 6.6%, 40 are high due to increases of food and energy cost, that's nowhere near he wanted to be. he was talking about, for example, even if there is a window to slow down, he wants to air on the side of doing more with interest rate hikes and

less in order to ensure that inflation has come back under control. yes, you can argue the economic point of when it will come off the boil next year, but the central messaging is, for now interest rates are going up. markets are locked on for another 75 basis point move in there could be another large jumbo sized one followed out in december. paul: one of the concerns tickets frequently raised by our guests, one of the key risks is over tightening, how conscious is the fed of this? enda: you heard mr. bullard there talk about the areas that are seeing impacts of interest rate hikes already. for example, a housing sector is coming off. he doesn't see a reason to worry about the delay there. but there are parts of the economy that are prone that it does take a while for rate hikes to show up and in particular that would be the remark where we had the book out overnight where the fed goes out and talks to people in real economy companies and manufacturing companies in a couple of points

they raise is that they are seeing softer hiring tensions on their own and now, that's clearly an area where you look for an effective rate hikes. they have less pricing pressure so the inflation they can no longer pass on to consumers. that will hit their own margins going forward. there is chatter about recession risks in the u.s. and if anything is allowed at risk it has to be the recession where people are talking about might come next year. bloomberg talked about a 100% chance next year. certainly there are parts of the economy showing a pain at the housing sector, but minor parts of the economy have yet to show that housing rates and that's what economists worry about, at what point in how deep and how long-lasting will that economic pain b. shery: bloomberg's enda curran be -- and there. we had european stocks falling in the previous session for the first time in five days. take a look at how futures are trading at the moment. we continue to see the downside

pressure. stoxx 600 closing and snapping its longish gaining street since mid august. we are following with happening with u.k. assets given the reshuffle we see with prime minister liz truss government. u.k. banks were under pressure in the previous session, given reports at the treasury was considering a potential 33% tax rate for lenders. this is bloomberg. ♪

paul: let's take a look at how tesla suppliers are performing around the asia-pacific at the moment. we did have tesla reporting sales that fell a bit short of wall street estimates, the company citing delivery and production bottlenecks, but here we have lg energy solution battery supplier moving a little

lower by a fifth of 1%. panasonic up by 1.25%. it is a down day for pretty much most of the major indexes -- well all of the major indexes around the asia-pacific. tesla grappling with a few issues, we did see the stock move lower after hours. automotive and technology reporter joins us now from san francisco to discuss a little bit more. rather lackluster third quarter, but we had to elon musk on the -- we heard elon musk on the earnings call saying we will have an epic end of year. we are rather custom to elon musk making grand promises, how likely is it that we will see that big finish to the year? >> the big issue in the third quarter was that they made more cars and they were able to deliver, and they spent a fair amount of carl -- a share amount talking about this and of quarter where there were just not enough ships, boats, freight

trucks to deliver the cars, and they delivered about one third of their total volume in the final weeks of a quarter. so they are hoping tired and that out, they already basically have inventory headed to customers, and yes, musk is always about the fabulous future, but they were trying to kind of signal that the worst is behind them, but you saw the stock decline after hours by about 5%. shery: we also saw him talk about share buybacks, what does that mean for the company? dana: there is nothing imminent. retail investors have been clamoring for share buyback and he basically just said they were open to it, that the board would discuss it, he could see something in the range of five to $10 million, but there wasn't like a real plan or a real timetable for that. shery: dana in san francisco with a look at tesla's third-quarter earnings. we saw a little bit of disappointment when it comes to the numbers. tesla stock falling after hours.

twittered did get a little bit of a boost after elon musk talked about how excited he was about the acquisition. he did say that he was overpaying for that deal. plenty more to come, especially talking about indonesia central bank. we are expecting a rate hike. this is bloomberg. ♪ millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save by talking to our helpful switch squad at your local xfinity store today.

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paul: breaking news out of australia. the unemployment rate for september holding steady at 3.5% that record low and not budging from their. . not a lot of change to

employment, we were expecting 25,000 jobs to be added. looks likely only 900 jobs got added in the month of september. . the participation rate holding steady at 66.6%. decline in part-time employment to 12,400 jobs lost. 13,000 full-time jobs were added . also staying state, the aussie dollar has not judged on the back of that news -- has not moved on the back of the news. let's go to annabelle on more. annabelle: that aussie jobs numbers are very volatile, you never know what to expect with that one. something that is helping is the return of labor in the country. immigration is picking up and that also relieves a bit of pressure on the rba because wage

pressures in australia are not as pronounced as they are in other countries, so the rba can perhaps end its tightening cycle earlier than its peers. we have already heard from fed officials like charles evans from the chicago fed, saying that there is a need to keep rates in restrictive territory to bring inflation pressures under control. that is certainly playing out in the equity space this morning. we read across the screen at the start of trade for japan and korea. one hour into the trading session for australia. other sectors we are keeping an eye on, we are focused on the bond yield space as well. we are seeing treasury yields and bond yields rising, led higher by what we are seeing in the shorter duration treasuries. you can see the jump in the q. kiwi, appo 20 basis points,

rising 10 basis points the day prior. the dollar strength, it is weighing on currencies around the region. our markets live team is pointing out that the outlook for asian currencies could be looking to improve as we head into the end of the year. what is weighing on that, the year-to-date losses we have had led by the japanese yen. we are watching for that to hit 150. falling commodity prices really helping to boost the terms of trade and external balances of many currencies. so perhaps we could see a change as we approach the end of 2022. shery: over next guest says that when it comes to central-bank hikes, they alone cannot stop dollar strength. with us is the emerging market strategist at nat west markets. galvin, good to have you with

us. we just have seen weakness in markets, as annabelle talked about. we are headed to another bank of indonesia rate hike today. the chart there showing how it has not helped when it comes to the weakness of the rupiah. how much more can central-bank across asia, including indonesia, do here? guest: that is a really difficult question. with regards to the central-bank reactions, we have seen so many of them still focused on inflation, and at the core, that remains their primary reaction function. but increasingly we are seeing central banks react to external conditions imposed by fx weakness. what the bank of indonesia should be turning the markets today is that fx weakness, particularly in the rupiah, is potentially starting to become a concern. shery: of course that is happening when we continue to see dollar strength. you don't think they will be a fed pivot anytime soon.

how crowded is this long dollar positioning, and with the change if we have the fed firmly on the aggressive hiking path? guest: that is the question everybody is thinking about. by any measure, the dollar valuations have been so stretched for such an incredible period of time. you've had the markets continuously trying to predict the fed pivot and call for a risk rally, a setting of the dollar so many times, and so many times they have been proven wrong. seems like what will need is not only a turning point in the economic data but also in the fed's reaction function in order to really unlock the extended valuations and positioning to reverse. but as we have seen so far this year, these bear market bounces fail to deliver on that.

what will be key is you will need the lessons from emerging markets, people need to definitively see a peak in inflation data, stabilization in inflation data before the fed can pivot. paul: the big question i guess is when that will happen. but it is not just a matter of if we get to that point, but when we do, do you imagine that things could unravel quickly? guest: definitely. the positioning as we mentioned, it has been one-sided for so long. particularly in the asian space, you look at things like dollar korea, dollar-yen, those gains have been so extended for such a long period, basically it has been a one-way trade. i think the positioning there is probably the first that could unravel. once we see the unlocking of the

dollar weakness, i think the rally could be pretty fast and sharp. but as you mentioned, it is a question of timing. when are we going to see the turn in the economic data and in the fed? i don't think the time is now. paul: the offshore yuan hitting a low we have not seen since august of 2010. where is the bottom? how do you judge policy makers in terms of the job your doing in managing its decline? guest: what we have noticed over the last couple of months is that despite the fact that investors everywhere are thinking about the bearish fundamentals happening in china with the subdued economic activity and this persistent covid zero policy looking thinge country's borders, a lot of the

currency weakness has been driven by the dollar-yuan pairing, as opposed to the dollar weakness per se -- they the yuan weakness per se. every time we come out with estimates and forecasts about what the dollar-cn will trade, ith higher given the price action. that being said, the pboc has been doing a good job in terms of managing the move higher. it is clear they are not defending any specific levels. there is not a lane in the sand kind of situation rather than them managing the volatility and liquidity, managing the speed at which the onshoring offshore yuan depreciates. for them that is the main objective.

shery: especially if you have the party congress and you want stability, by policymakers, are you finding anything interesting coming out of president xi jinping's speech? something that could change your calculations on how you perceive the chinese markets? guest: unfortunately, no. nothing that is particularly informative for the markets. like last sunday or throughout this week. looking at the structure of the new standing committee and the politburo federal, in this week's decisions, that will be something to look out for. but we have to remember fundamentally that the party congress is about setting medium to long-term goals, five to 10 years. fx markets and bond markets do intend to react to those sorts of decisions. that being said, one thing we are on the lookout for is how covid zero policy will be

evolving or changing after the party congress read from our perspective, that will not be something decided at the party congress, it will be a decision that is independent of the party congress and independent of local factors. things like how quickly china can rule out its vaccine, roll out its vaccine. things like with the w.h.o. removed the pandemic label on covid? that is what the market is on the lookout for not just this year but throughout the course of 2023. paul: emerging market strategist galvin chia, thank you for joining us. let's get to vonnie quinn with the first word headlines. vonnie: facebook says it -- slowing economic activity raises inflation concerns, amid some indication

of inflation pressures. the outlook is more pessimistic. bloomberg has learned that a group of justice department prosecutors believe there is sufficient evidence to charge donald trump obstruction of justice, about the path to an actual indictment rise in the examination of the records. iran's supreme leader ayatollah ali khamenei has boasted about the capability of military drones produced in his country, in comments reported by state media. iran has been accused of providing russian with drones used on attacks on even other cities. the u.s. proposed sanctioning three generals and one entity for providing military support to russia. 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 bill burck. shery: coming up,, the u.s.

homeland security chief warns that cyber security threats are growing at home and throughout asia. our exclusive interview with other hundred mayorkas, up next. -- alejandro mayorkas next. this is bloomberg. ♪

shery: a sea of red across markets in asia right now. the energy space, the only sector that is greening ground as the wga maintains gains -- wti maintains its gains, despite the fact we saw the biden administration confirming release of oil from the strategic petroleum reserve's. materials and tech leading the declines today. paul: the u.s. homeland security secretary says cybersecurity threats are growing both at home and throughout asia. speaking to bloomberg, alejandro mayorkas warned about the nation's activity coming from china, north korea, and iran. sec. mayorkas: malicious activity from the prc is a real and present threat not just for the united states but for other countries as well, and that is why i traveled 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. >> have you seen china become more aggressive in stealing u.s. data in recent years? sec. mayorkas: they have been aggressive for quite a number of years so this is not something new, some new development on the horizon. but in watching other countries and seeing their response to the threat or perhaps sometimes not a sufficiently vigilant response to that threat, we are seeing china become very, very aggressive in serving its wares, seeking to really invest its infrastructure in other countries. we feel compelled to share the perils of allowing that to occur with our close partners and allies. >> are you seeing the same activity in other parts of the

world? sec. mayorkas: we are, and we share the information with our partners and allies. the sharing of information is so important because we have to reinforce the core principle that cybersecurity is not bound by geography, not by borders. given the increasing interconnectedness of the world. so a cybercrime against one is a cybercrime against all or potentially it can have ramifications for all. >> we have seen the biden administration impose restrictions on chips. now there is a harsher tone when it comes to the cyber tactics of china. is there a sense that the biden administration is adopting the china policy that was adopted by the trump administration? is it reverting to that? sec. mayorkas: it is very important, it is a core

principle that we promote democratic and suppose around the world, and we do so in a way that is consistent with our values, and that is what we are doing. we seek to promote a fair, open, transparent, and accountable marketplace not just of commerce, but of ideas, of freedom of expression. haslinda: i want to touch on china's digital footprint. it has been expanding especially with the silk road. we have seen the likes of god states embracing china's influence. are you concerned about that? sec. mayorkas: we most certainly are. we don't make decisions for other countries but we want their decisions to be fully

informed. haslinda: coming up in the elections, are you concerned about attacks? sec. mayorkas: over fbi has published an alert with respect to the exploration by chinese actors, to assess whether there are vulnerabilities. we have not seen any expectation. shery: that was u.s. secretary of homeland security alejandro mayorkas. a quick check of the latest business flash headlines. tesla tumbled after sales fell short of wall street estimates, on delivery and production bottlenecks. the ev maker also warned it is unlikely to achieve full your delivery growth of 50% this year as land. musk flagged a potential share buyback worth up to $10 billion, subject to board approval. ibm surged in extended trading after sales beat expectations.

sales rose 6.5 percent in the third quarter on strong demand. however, ibm says currency fluctuations would cut full-year growth by about seven percentage points. asml surged after predicting a less impact the restriction of china's access to edge chip technologies. the dutch equipment supplier expects u.s. curbs to affect around 5% of its backlog. it sees sales of this quarter of up to $3.5 billion, which were top analyst estimates. this company fell in late trading after posting a third-quarter loss. the results come five weeks after it warmed over top for quarter due to lower metal prices and higher costs for raw materials. aluminum prices are down more than 20% this year on rising

global inflation and surging energy costs. and of course the risk of a ban on russian experts. tune into bloomberg radio, and get in-depth analysis from the databricks team broadcasting live from our studio in hong kong. listen through the app, radio+, or bloomberg.com. plenty more ahead. stay with us.

shery: the offshore yuan is under pressure after hitting its lowest level since august of two attorney tone. let's bring in lianting tu. lots of submissive right now when it comes to the party congress with excel laughs not just in the yuan but also chinese stocks. is this basically an understanding that nothing much is going to come out of this huge meeting? dan tim: yeah -- lianting: the golden dragon index last night was sold off.

the index is at its lowest since 2013. what is driving the selloff? it. seems to be speculation that the lineup of thpplause politburo members, which will be officially announced this weekend, could mean that xi will have a much stronger group overpower than anticipated. the anticipation is that he will appoint some allies, but there is further speculation that he will probably appoint all his allies for the politburo committee. that in turn could mean that covid zero could be here longer and the reopening of the chinese economy could be delayed. paul: we heard very little in terms of potential stimulus from the people's congress, but we are getting a loan prime rate decision today. i guess we shouldn't hold our breath either? lianting: exactly. economists at bloomberg expect

the loan prime ratio to be on hold and that will be in line with their expectation for the pboc's one your key rate to be on hold, which will be announced later this month. they also expect no rate changes in the fourth quarter. the larger issue really is that china does not really need liquidity, and lower rates will not be good for the yuan. the issue here is really slowing demand in china or a lack of demand because of covid zero. shery: we are still seen from the party congress, more talk about supporting critical high-tech. also some of the areas that authorities are focusing on. have we seen any upside on those sectors or have most of those things been already priced in? lianting: we saw a small move in high-tech manufacturing sectors because of his emphasis in the

speech over the weekend, last week. and this seems to be short-lived. like you said, the emphasis on developing self-reliance of technology has been around for months, if not years, and i think right now people are really disappointed that there was no fresh measures on the property sector, and also no change in stance on covid zero. i think all that we can see is continued selloff at the moment and it seems to be quite strong. paul: bloomberg's asia stocks managing editor, lianting tu. some stocks we are watching ahead of the market open in hong kong and china, asian energy related stocks. in advancing. traders are struggling with president biden's move to tap the reserves. we are keeping an eye on chinese oil companies. shery: and look at how

currencies are trading at the moment. the yen is close to the 1.50 level. the korean won oh-so-close to month lows. the offshore yuan continues its weakness at around 726 level. coming up over next guest: says why investors need to the spike in u.s. units. this is bloomberg. ♪

david: this is my kitchen table and also my failing system. -- my filing system. i have been an investor. the highest calling of mankind i have often thought was private equity. then i started intevi