♪ shery: you're watching daybreak

asia coming to you live from new york, sydney, and hong kong. in a bill: we are counting down to the market opens in tokyo and seoul korea. paul: asian stocks set for a cautious open after wall street losses with treasury yields of the highest since the financial crisis. yen below 150 to the dollar. white house is expanding export bans in china to cover powerful emerging technologies of quantum computing and ai. and the race is on to replace liz truss as prime minister. the conservative party aiming to choose the successor within the week. annabelle? annabelle: we are out of the gate for the asx 200 here, opening to the downside. a sour mood across the board in asia. for the final day of the trading week, particular focus will be on detect sector today. we did get those earnings out from snap, huge slump in the after hours with slowest quarterly sales ever.

you add to that when he had reporting on twitter, could be a major job cut on the way, so not a great outlook for the tech index. also being hit by what we are seeing in the rates environment as well, watching what is happening in the three year and tenure. tracking the moves that we had in the treasury. let's switch it up because also, the yield gap between the u.s. and japan certainly weighing into what we are seeing in the yen well, holding above that key level of 150. psychological point, also possibly one that can require intervention from the japanese government. no confirmation on whether they have stepped in or what they plan to do, the chinese yuan as well, the offshore here, the focus, given that we see expanding tensions between the u.s. and china, they could possibly expand the tech ban to include quantum computing and ai as you said, paul. and watch what is happening in the pound, given of course we do see the battle now for a new u.k. leader. and so much for us to get there

today. have not even gotten to fed. shery: we heard so much fed speak the last couple of days and this time around was from the philadelphia fed president, patrick, as well, not to mention of course we had the fed governor elizabeth cook speaking as well. but suffice to say the hawkish rhetoric has been felt across markets, now pricing in 5% peak rate. we are seeing the downside pressure when it comes to u.s. futures. and really nasdaq futures also extending those declines that we saw in the new york session, given what annabelle mentioned about potential export bans when it comes to restrictions. towards china and focus around quantum computing and ai. and of course, that is really adding to those sweeping regulations and restrictions around semi conductors also earlier this month as well. we have treasury selling continue, 10 year yield still above the 423 level. so really a lot from markets to get through today. paul: you know, for more on

today's top stories let's bring in bloomberg's leeann in london. chief rates correspondent for asia garfield reynolds. leanne, let's start in the u.k.. never a dull moment when it comes to politics in great britain right now. so liz truss is on her way out the door. who is going to replace her and when? leeann: you are completely right. this is our third prime minister this year and i just remembered, not that long ago being at downing street and reporting on boris johnson leaving office. now today it is liz truss who is going to replace her, that is the big question, but we know we are to have a replacement pretty sharp within the next week or so, according to the head of a very influential 1922 committee. so right now, the nominations are open. so mps are choosing who they

want to run as the next prime minister in the country. they will close at 2 p.m. on monday. you need to have 100 nominations to make it through to the second round. so that means three candidates could possibly be in the running by monday. and who is in the fray? so all the rumors have it that boris johnson is going to come back. if you have a look at the front pages of the newspapers right here in the u.k., that is absolutely prevalent. however, we've also got the former chancellor and he came second in that leadership contest. shery: and of course we had a very strong market reaction as well, u.k. stocks, the pound rising, the 10 year gilt yield around levels before the tax cuts were announced by the liz truss government. what is the take away here for markets? it seems at least when it comes to the u.k., the markets were clearly in charge. and i wonder if this is a lesson

for other countries as well? global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. well, there is definitely another lesson for other countries. garfield: the lesson is you do not come in with politics that are this radical and that push so hard against what the central bank was doing. that is not the case in europe necessarily. and in other parts of the central bank. it is hard to go the completely opposite way and to do so this suddenly appeared as was done. and not surprising that it is a strong market reaction and market reactions are doing better for politicians. especially in an era when central banks are trying to stop acting as the backstop for everything. they are trained to raise rates, trying to stop buying bonds. they cut japan aside. so, you know, in that scenario,

you've got to be a lot more careful about the way you craft policy. you cannot expect central banks to bail you out. shery: leeann, given the scrutiny from the markets, given the challenging economic outlook, whoever comes next is prime minister will really have a heavy load on their shoulders. leeann: that is absolutely right. they will have a heavy load, but what is so great was said yesterday or earlier today. we are going to have a new prime minister by the 28th of october. that is crucial, because on the 31st of october, halloween, we have that fiscal statement. remember liz truss big dow involved came when they announced -- big downfall came when they announced the new budget without saying how they are going to pay for those unfunded tax cuts, which sent the pound plunging. we also saw the bank of england having to intervene when it came to that.

so the big planet now is to have a steady hand in place -- the big plan now is to have a big hand in place when the plan is announced. we know jeremy hunt is the new chancellor, a steady hand, well respected within the conservative party and he is really here to bring calm to the markets. you are absolutely correct, we can see that politics and the economy have been so closely linked in this battle for liz truss. paul: just want to take a look at the day ahead for asia now. we do have the yen pushing through the key psychological level of 150. it's a nice round number. we do love round numbers. does it actually mean anything and what is the risk for intervening at this level? garfield: well, i mean, the risk for the first part and second part, both, the risk of intervening in europe is when you got treasury yields soaring you've got concern about terminal rates and the

technicals when it comes to swap rates. it is hard to push back successfully. the japanese have a lot of firepower or so, that that can get run down pretty fast when you are trying to intervene in something as currency markets. you want to choose where you are going. the key is that at least the last couple of days, the yen is higher, it has not seemed disorderly. it has been very much in response here to the yield moves, the fundamentals on the dollar-yen. so you will get plenty of job earning. you might even get some rate checks where the central bank calls around and tries to put the central bank back into the bond market, back into the currency market. but you know, the japanese might try to go in on a day when they might not be able to do too much. unless, as i say, we get a disorderly move. if things make fast, then you

could see the japanese forced to come into try to restore order. shery: leanne and garfield with our top stories today. and also to our next bloomberg scoop, sources telling us the biden administration is considering new export controls that would limit china's access to some of the most powerful emerging computing technologies. our greater china senior executive editor john joins us from beijing with the latest. and john, this is coming at a time when he had the party congress in china on the way. john: this is another sign of the biden administration, of the united states ratcheting up the pressure on china. obviously, we had the earlier defense position. out of washington, which again named china as the united states top strategic competitor. and what we see now is the united states, biden administration, taking as many steps as possible to try to limit china's access to emerging

technologies. quantum computing, it is still sort of an experimental field. the implications for the future, how greatly this technology can affect the future weeks important point for the biden administration to focus on now. paul: during his two hours speech last weekend, president xi jinping made a point of trying to push ahead for chip independence. how well positioned is china to do something similar when it comes to quantum technology? john: i would say the difference is that specifically on quantum computing, technology is so it further afield that we do not have any further applications for this technology, but the potential is gigantic. the chinese built a quantum computer which they say can do computations 100 trillion times

faster than today's supercomputers. so you can see the potential impact of the future. semi conductors are something that go into products now, so having that supply cut off to china affect the economy now. the quantum computing limitations speaks to the future, to future competition. paul: all right, bloomberg's greater china senior executive editor john lu there. let's get to vonnie quinn for the first word headlines. vonnie: pboc deputy governor says china will push forward reforms to make the exchange rate more market based. -- told a briefing on the sidelines of the coming this party conference that china is one of the few nations implement a normal monetary policy. the pboc has put it on hold since august to afford further depreciation pressures on the yuan. european a national gas surged, snapping a five-day losing streak as policymakers related to biden on it capping prices. france, italy and poland want to

limit prices but germany as opposed to the idea, saying it would endanger supply at a time of the region needs all the flow it can get to avoid blackouts and rationing. a failure to agree on a joint response risks fragmenting of the fragile eu market. the white house has accused iran of sending trainers and technicians to crimea to support russian attacks on ukraine with a rainy unit made of drones. u.s. national security council spokesperson at john kirby says iranian advisers are helping russian pilots based in crimea to operate the drones. kirby says the u.s. will consider new sanctions against iran over the weapons transfers. malaysia will hold its general election on november 19 with prime minister's party looking to capitalize in victories in local polls. the election commission fixed election day for november 5 and campaigning will run for 14 days pre-to multiparty contests will make it tricky for any alliance to win an outright majority. global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over

120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, we assess the domestic and international pressure on iran's leadership after weeks of protests over the death of a young woman in the custody of the so-called morality police. but first our next guest says it is hard to see a market bottom without a correction in your earnings -- in earnings. global advisor joins us in a moment. this is bloomberg.

♪ >> if you talk to our companies, they are becoming more cautious. their plans are being lowered. their hiring plans are slowing. we see this happening. i was talking this week with a developer of apartments whose building shares 15,000 units across the usp at major developer. next year he has cut his plans by 75%. paul: that was blackstone president and ceo jonathan grave. let's bring in our next guest, who says it is hard to see a bottom without a correction in earnings. with us we have juliette lee, aipac strategist at state street global advisors. julia, i want to return to those

are marks from blackstone group was this something you've noticed as well? our companies becoming more cautious and what is this telling us about whether or not we have found foreign markets yet? julia: we are in the middle of third corner earnings season in the u.s. and i think the thing that really stands out is the lack of downgrades that we have seen. we are seeing commentary around still a very strong economic backdrop. this is exactly what the federal reserve does not want to see. we have a look at historically where the market has bottomed out. we have traditionally seen an earnings correction come through, so we have a look at previous recessions, you usually see an earnings correction of about 30 to 50%. in the market at the moment, consensus forecast for 2023 still positive, so this earnings season is going to be very important. but watching for at least some sort of earnings correction to come through before the market season will bottom -- sees a real bottom. paul: is there a possibility we

do not get that correction that your talk about? julia: having a look at expectations, the focus has been so much on inflation and as recently as this week we see the u.s., canada and u.k. inflation higher than expected. and the question that the markets are asking is where is inflation going to peak. i think the more important question for markets to be asking is how long is high inflation going to stick around. are we going to be all throughout 2023 and also into 2024 as well? it's not just the rising interest rates, but how long those higher interest rates are going to stick around, which i think is going to be problematic for markets. while we are focusing on the here and now, i think the medium to long-term outlook is where the earnings correction is going to happen. shery: given the uncertainty you talk about, we hear from investors you need to stay defensive. you need to go up in quality, but then i have to ask how

difficult is it to really pick the right stocks at a time when everything seems to be moving in tandem? julia: that is difficult at the moment. when you see asset correlation, the highest it has been in more than a decade, it makes it very difficult for money managers. there's a few options. you can choose to be the market or you can try to get a tactical edge through things except her allocation. we've done at work from 1961, looking at different phases of the economic cycle. and which sectors tend to outperform. unsurprisingly, going into that recessionary phase, it is utility staples sector as well as the health care sector which outperforms. we have been very positive on those sectors from the beginning of the year. we continue to be very positive on the defensive positioning. add in energy, which we are also positive on. i think for investors it helps to look through a short-term,

medium-term and long-term lens. what we are seeing with medium and long-term still position defensively, we know that short-term, there are tactical opportunities. the market is so bearish lee position when it comes to high allocations to cash and lower allocations to equities. we know that that sets the stage for strong bear market rallies as well. definitely opportunities from short-term tactical positions staying defensive. shery: what about allocations to different regions, how diversified are they in terms of geographies? julia: that's a good question. we center on the u.s. but we forget that there's a lot of positive things going on around the region. having a look at australia, singapore, japan. these are markets that have outperformed freedom in singapore, there is high yield and we know in terms of those factors, quality as well as value has outperformed. high yields in these countries, that has acted as a buffer to the volatility that we have seen on the capital side.

and of course, in japan we are seeing the weaker yen. weaker interest rates, meaning that japan is marching to a different tune. add in the valuations are much lower in the region in the u.s.. what we have seen with multiples falling from about 27 down to 17. around the region, multiples are much lower. singapore around about 11 and australia around 15. there are shorter-term opportunities as well as medium-term emerging around the region there are different drivers as well. not forgetting that china is in a different part of the cycle. shery: you mention china. how much do you have to pay attention to geopolitical implications on a day like today for example. we've learned the is planning to expand export controls even to quantum computing and ai.

julia: it looks like those tensions are only escalating and it has been a very difficult year for china, especially because of not only the property market in china, but the zero covid policy. for investors, they need to ask what could possibly change in 2023 and 24. we have only seen an escalation in terms of the very slow growth that we are seeing in china or are we going to see china turning a corner and better growth coming out. we know that looking at other experiences and other economies, economies and countries exit zero covid and economic growth and rebound is very rapid. so while things are very, bearish at the moment, i think the key for investors is what could be different in 2023 and 2024 and that we could be seeing tailwinds here coming through for china. paul: before we let you go, i want to ask you about one of your sector calls and that is energy. you are positive on this space and we heard from president biden yesterday also chastising energy companies and oil companies for engaging in share buybacks, returning money to

shareholders instead of investing in production. deflect there an implicit suggestion here that there might be some sort of policy response coming beyond just releasing oil from the strategic reserve? julia: well, paul, we know that president biden is trying to get down the price of energy over in the u.s.. if we have a look at the impact on oil prices so far, they have been extremely resilient. in fact, if we have a look at the energy sector, this is a sector where we are seeing upgrades to forecast coming through. at the moment, the consensus is for growth of 146% in earnings next year. not only that, we are still seeing reasonable valuations in this space as well, so energy, the spice i guess the u.s. attempts to bring down costs, we note that there are supply-side challenges. given the attractive valuations and still upgrades coming through, i think it is an unusual space. we will probably see downgrades coming through for the rest of the cyclical space. shery: julia from state street

global advisors, good to have you with us. plenty more to come on daybreak asia. this is bloomberg. ♪

shery: here is a quick check of the latest business flash headlines. snap shares plunged after the bell on the slowest quarterly sales growth ever. a decline in advertising spending dragging on results. the maker of the snapchat app says third quarter sales rose 6% to $1.13 billion. snapple -- snap noted increased competition. shares were already down 77% this year. a bloomberg source says deutsche bank has laid off dozens of origination and advisor staffers globally within its investment banking division. the move comes as a market slump and fears of a recession crimp dealmaking. we're are told the cuts focus on

-- but at least one managing director will depart. blackstone's third-quarter profit has faltered. markets and rising borrowing costs have chilled dealmaking. distributable earnings in the third quarter fell 16% to $1.37 billion. that measure of earnings available to shareholders amounted to $1.06 per share, which did not match expectations of $.99. tune into bloomberg radio to hear more from the days big newsmakers, get in-depth analysis broadcasting live from our studio in hong kong. 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.

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shery: breaking news out of japan, we are getting the consumer inflation numbers. when it comes to core inflation,

excluding rush food, you're on here is growth of 3% for the month of september. now, this would be the highest level of inflation that japan has seen since 1991. when it comes to the headline inflation number, it is 3%, beating expectations. when it comes to the court cpi, excluding not only food but also energy as well, it is in line with expectations of growth of 1.8% or the month of september. but really, it is the core inflation number, the one that we are watching. we are talking of course about court cpi, excluding fresh food, growing at 2%, which is matching expectations, exhilarating from the previous month. it is coming in at the fastest rate since 1991 and the reason that this is important of course is the boj is targeting this number and it is above that 2% inflation target. and according to the boj, not for the right reasons, which is why it is sticking to its loose monetary policy.

so of course, we have seen it really a weaker japanese yen, exacerbating those price pressures in japan. let's bring in senior reporter for fx and rates, ruth carson, to tell us more about what is happening with the yen. we have broken the 150 level. how significant was that threshold for traders? ruth: it was a big one. two year -- 32 year low and do not forget it is going to extend. as investors push back against the established policy, it's a battle of will that we are seeing between markets and japanese officials. and just how far the yen can fall. will the minister of finance except staggering weaknesses. from households to stocks, strategists are saying there is more weakness to come. markets rate say 160 is not out of the question for the coming months. as for intervention, officials have said repeatedly that they are not keen on accepting disorderly modes in the yen.

so i think we do see violent swings, be prepared to see some jawboning and direct markets here. paul: bond vigilantes are simultaneously attacking the bank of japan's control of its yield curve policy. and who is likely to win this battle? ruth: it is such a coin toss. markets are betting relentlessly that the boj will have to give up at some point. the question though is when. most economists expect them to stick with yield curve control all the way through next year when he stepped down. even though the yen has fallen so rapidly. that is not stopping the likes of strivers to shorten in lesser-known banker trade. the boj it must join everyone from the fed to rba to raising interest rates. so definitely watch this space. shery: ruth carson with the latest on the weakness of the japanese yen. fundamentals still in play.

rate differentials with the fed. we are getting more hawkish comments from top fed officials, helping drive u.s. treasury yields higher. this is the call for higher rates this year and next continues. global economics and policy editor kathleen hays is here with the latest. kathleen, we also heard from the philadelphia fed president today. kathleen: that is one of the reasons we've seen bond yields go up today, putting pressure on the yen. raising the ante for the boj and the japanese finance minister. again, this has been the week all along. the fed aggressive rate hikes, the divergence with the boj and it does not let up. the fed has to do what it has to do, it is not looking out for japan and the yen at all. so speaking today, basically saying that he does expect rates well above 4% by the end of the year. and what is driving him? we are going to keep raising rates for a while. given our frankly disappointing

last of progress -- lack of progress. i expect we will be well above 4% by the end of this year. we know fed officials at the meeting us regard expect it to do a 75 basis point rate hike. they could do another one in december could that would be 150 basis points per that would get the fed to 4% by the end of the year. so clearly, this is in focus. it is not like this is anything we haven't heard before, paul, but he is doubling down on it. lisa cook, federal reserve board governors saying once again that she sees ongoing rate hikes. and in fact, she says today inflation is too high. it must come down. we will keep at it until the job is done and this will require ongoing rate hikes and then keeping policy restricted for some time. that is another thing that the markets keep hoping to secret when i spoke to jim from the st. louis fed yesterday, he did not talk about rates coming down anytime next year. he did talk about slowing them down, slowing down the pace. maybe moving them back to what you would call regular rate hikes.

i guess he means something like 25 basis points, paul. for now markets have to brace for aggressive rate hikes p or do i know they are priced in, but you can never know how much they are going to affect the markets. bond yields, dollars etc. until they are actually happening. paul: all right, bloomberg global economics and policy editor kathleen hays there. let's get a check of markets now with annabelle in hong kong. plenty of catalysts for markets today. annabelle: that's right, paul. we've got the asx 200 a half an hour into trade and it is a down day for us across the board. you can see every civil sector in the red today, that is really being driven by accommodation of what kathleen was just there. you got that hawkish fed coming through peer what options work spots markets see the peak rate of 5% by next year. treasury yields as well, the spark we are seeing there, highest level since the financial crisis. so that really doesn't set us up for a very down day across the board. change over now, take a look at broader sectors because you can add to that as you said a lot of catalysts where we have be political uncertainty in the u.k.. liz truss, who is going to be

the next leader there, what we are seeing in nasdaq futures as well. you can dig look at that because not only did we have snap reporting its slowest quarterly sales growth ever, you add to that that report that we had of twitter planning and massive job cut and then on top, we had the u.s. possibly expanding its china tech than to include quantum computing and ai, so there is certainly a lot of drivers here for a negative sentiment in the session. we are setting up for the japan open because we do have japan or tokyo opening in 20 minutes. just under an hour. we are seeing it weaker here today, keeping an eye on what is happening in the yen because we are about that key 150 level. a lot of top as we have been discussing possible further intervention. that certainly has been helping the biggest exporting names. a little bit of a positive there and the other positive of course, what we are seeing with the week yen is that a lot of companies inside japan had been forecasting a eight that is much stronger than the current one today, so that could be a

positive as we get into earnings season there as well. that is possibly one of the reasons we are seeing more foreigners coming back in japanese stocks. this data here on sales and purposes of japan stocks. that is an orange, bonds in blueprint comes out on a weekly basis. that is yesterday's day-to-day grid we can see for the rig wire -- the week prior. shery: we just spoke to julianne. she didn't like those japanese stocks. let's get to vonnie quinn with the first word headlines. vonnie: thank you. the u.k. conservative party is looking to quickly replace liz truss after her resignation as prime minister. a maximum of three mps will be able to run against -- able to choose their successor. just announced her us resignation after 44 days in office and is set to become the shortest serving prime minister in british history. >> there will be a leadership election to be completed within the next week. this will ensure that we remain on a path to deliver our fiscal

plans and maintain economic stability and national security. i will remain as prime minister until a successor has been chosen. vonnie: indonesia central bank has raised borrowing costs by 50 basis points for a second straight meeting to stop these line -- the slide. they hiked the seven-day rate to 4.75% at most analysts predicted the increase. the ruby has slumped since a september rate meeting. the st. louis fed says it will think different in the future about its officials participating in climate events. the statement comes after criticism of president jen bullard for speaking last week at a private event hosted by citigroup. the appearance could be seen as a violation of federal on communications that aim to avoid providing a profit-making firm with any advantage. global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: coming up, we discuss

human rights in iran after weeks of protest over the death of a young woman in police custody. atlantic council joins us next. this is bloomberg. ♪

shery: protests have continued in iran over the death of a

woman in the custody of the so-called morality police. 22-year-old mahsa amini was arrested last month for allegedly breaking islamic dress code. this prompted iranian women to risk the same face -- fate i removing headscarves in public, including most recently export climate competing in korea. they were welcomed at toronto airport as a hero. how much has this challenge the power of iran's rulers? let's bring in the director of the strategic litigation project at atlantic council. good to have you with us. so what is different this time in these protests in the duration and durability of these protests, by women, what has changed? gissou:ave been recurring protests in the country's since december 2017. a lot of casual observers of iran affairs might not be aware of that. but there have been repeated protests of this space in between each spate of protests

has grown shorter and shorter. however when some of those protests, the initial spark was due to water shortages. and a specific province or a sudden spike in gas prices. a lot of times, there was an economic or governmental management or corruption of reason that could be pointed to. this time, these protests were triggered by a demand for social change. and outrage over what happened to a young woman, just because her rights were not being respected. her rights that she is guaranteed under international law. so we see that these protests have longevity. and they involve the whole of the country, it is not only about women now. but women make up more than half of the country. and they live under a gender discriminatory legal framework. shery: you talk about international law, so what can the international community do to really support the rights of the people, especially women in iran? gissou: there is quite a lot

that the international community can do and that they can do with immediate effect. the first thing that they can do is call a special session of the una human rights council in geneva to discuss this ongoing human rights crisis. in the country and to suggest the establishments of a u.n. investigative mechanism. an investigative mechanism would help with accountability purposes, it would send a strong message that the international community is documenting and collecting and preserving evidence of these violations. and that those who are responsible will be held accountable. that is the first thing that the global community can do. there's a lot of other things that they can do, like enforcing targeted human rights sanctions. kicking the islamic public of iran off of the u.n. commission on the status of women, which is a global women's rights already. paul: the iranian regime and no stranger to receiving strong

messages or even sanctions. these things actually are likely to bring about meaningful change, how does this end? with some sort of appeasement from the theocracy or some sort of crackdown? gissou: so, when we discuss sanctions, i think, we need to make a distinction with targeted human rights sanctions. those are very underused. despite the fact that a lot of leadership in the islamic republic of iran are responsible for the perpetration of atrocity crimes and human rights violations, these designations are underused and also, there are loopholes. they will move assets to other offshore jurisdictions. what the global community needs to do is get serious about patching those loopholes to ensure that these measures are enforced. and that the officials who are responsible for these behaviors start to actually understand that there will be a penalty that is directly tied to their lack of respect for human rights and the violations that they are committing.

until we get serious about that, it will not be a very enforceable framework. paul: we have of course seen a revolution in iran before, but it does not happen very often. where is this heading? does this and with regime change or does it end with them still in power? gissou: what we are hearing now from different countries, who for decades now have had foreign policy oriented around the continuation and the duration of the islamic republic are really starting to reconsider that plan. and starting to understand that the foreign policy cannot only be predicated around the jcp they -- the iran nuclear deal and that the islamic republic will stay in power. there's an understanding that this young generation in the power and many generations before it, that have continually struggled for their rights are very dissatisfied with the status quo.

and that clearly, this is not a system that is going to be able to be sustained. and so, i do think we are seeing a big shift in foreign policy. and sort of calculations that are being made if these protests continue and it looks like they very well may, i think there is going to be a lot more recalibration that will need to be done moving ahead. shery: you talk about the young generation really being the driving force. tall us a little bit about how wide these protests are? is this a real social change, where it involves all demographics of society compounded with inflation issues , economic challenges, and now, really the social issues with women? gissou: women's rights activists have been pushing for their rights and respect for their rights for decades, so there have been strong grassroots women's rights movements. there was something called the one million signatures campaign for equality for women back in the mid to thousands. all of that was often met with

heavy-handed state security force violence. and dismantling of civil society organizations and all of that. i think what we see now is the critical mass has taken to the streets. women and girls as young as 12 years old are unafraid of taking off their mandatory job, --hijab which is forced upon them by the laws it when you have critical mass, that is when a system is really experiencing different breaking points. the islamic republic is the one that typically is using violent methods. it is using that against a population that is unarmed and unable to do anything other than to join together and show dissent. and so, that is what we see is happening here. paul: pyrite, director of the strategic litigation project at the atlantic council. thank you so much for joining us. coming up next, our prospective

investors may react to elon musk's plans to take over twitter and cut its workforce. this is bloomberg. ♪

>> these are just the beginnings

of the pain. wait until it is real pain and then major financial institutions may crack globally. not in the u.s. maybe now, but certainly internationally, there are a couple of firms that are huge and systemic and can go under. then, the fed would have two -- recession and you have a market shock. shery: ceo speaking on our audit lots podcast. be sure to check out our latest episodes on apple podcast or spotify. elon musk reportedly planning a massive cut to twitter's workforce when he takes control of the social network. for more, let's bring in a bloomberg's su keenan. the washington post reporting it could be up to 75% of the workforce. su: 75% is a massive number no matter how you look at it. this is what elon musk told

potential investors in the combined company or the company he planned to buy. washington post interviews have obtained documents from the company on the matter. and reports that elon musk told investors in his $44 billion deal to buy the company that he planned to get rid of nearly 75% of twitters 7500 workers. that would shrink the company to a scalable staff of over 2000. now, interviewing the documents, the washington post is confirming what some analysts have already stated, that there will likely be big cuts, even is elon musk yields to buy twitter or it falls through. right now, that is not the expectation of what is exacted to happen, but it turns out from the documents, the washington post obtained that twitter officials are already planning to cut the company's payroll by 800 million by the end of the year. that would mean at the departure of at least a quarter of the staff according to documents and sources cited by the post. the post also states the extent of the cuts which were not

previously reported help six plain twitter officials perhaps were eager to sell to elon musk meanwhile, a lot of analysts cited by the post say the impact of such massive cuts would not be immediately felt, but millions of users and possibly expose them to greater risk of hacks and offensive materials. i should point out that many who closely follow elon musk note the extreme manner in which he speaks. i was monitoring the conference call yesterday with tesla. he spoke about an epic quarter. and the company eventually becoming double the size of apple. then he qualified it by saying knock on wood, so it is possible to talk of 75% as part of this extreme matter of speaking, but it does seem clear that massive cuts are coming twitters way. paul: su, you mentioned that deal is likely to close. what is the deadline of getting it done? su: 5:00 october 28, next friday, is the dropdead deadline. the code has imports that -- the court has imposed that on elon

musk. and by all accounts it looks at things are moving in that direction. financing had been lined up, in place since spring. bloomberg is reporting all the investors are still in, in fact, in a new details, billionaire hedge fund titan ken griffin had supported elon musk. throwing in about 20 billion. on the spread between the offer price and the stock is the narrowest it has been at since elon musk first announced his big bid to buy the company back in the spring. that is an indication that wall street fully expects the deal to go through. stay tuned. paul: bloomberg's su keenan there. let's get a quick check of the latest business flash headlines. nds antitrust regulator has find google about 162 dollars -- million dollars over its dominant android operating system. the competition commission of india says google made anticompetitive moves, including mandatory installation of its own apps on a phones.

regulators are also issuing a cease and desist order over the alleged unfair behavior. adidas has issued a fresh profit warning as unsold goods pile up in consumer demand weakens across china and western markets. the german shoemaker says it now expects an operating margin of 4% this year, down from a prior forecast of 7%. the ceo will step down next year, following earlier profit warning in july. slower sales growth during the third quarter. the gucci brand, which accounts for more than half of the revenue was held back by china's continuing covid restrictions. the cfo told analysts the italian brands revenue from mainland declined during the quarter and the situation there is still not back to normal. shery: paul, take a look at some of those stocks that we we watching at the open. korea and japan, asia technology stocks could be active after

bloomberg reports that the u.s. is considering new export controls that would limit china has access to powerful computing technologies from samsung. and others. coming up in the next hour, here why invesco does not think risk-taking will be rewarded any over the next year. plus, former u.s. ambassador to beijing, max joins us later to discuss the possible outcomes of china's party congress drawing to a close. market opens in tokyo are next. this is bloomberg. ♪

>> this is "daybreak: asia."

counting to the major market open as we keep a close eye on the japanese, having weekend past 150 level -- weakened past the 150 level. in a country that has not seen in the past couple of decades inflation of 3% for the first time since 1991. paul: we've got the young buck above the 150 level. certainly plenty of micro catalysts to drive trading today. >> including the korean trade numbers. we just had those coming out. seeing exports falling in the first 20 days of the month. at least for china and the chip sector. we have the open here for japan and korea, the start of trading for cash treasuries. we see the 10 year yield sitting like this at the start of trade. around its highs since the financial crisis. really down to what we heard from the hawkish fed officials.

still coming through pricing. the peak in rates by next year. we are still keeping an eye on jgb's. given that we've seen the boj force to defend its program of control and even with the september data coming through in the last half hour, still unlikely to change that lessee perhaps until -- that policy until kuroda steps down next year. the young come also the yen, also affected. we are on track for a 10th weekly losing streak in nine years. it is a downbeat session, we are seeing the need to online. let's change it on now. we have the south korea trade data coming out. we do see the trade deficit coming through, you can see the figure at the bottom of your screen. want to be watching, given korea is a global while other -- one to be watching, given korea

as a global bellwether for us. other factors we are watching today is what we see in the tech sector, we see the cause deck -- the kosdaq, outpacing. we have the broader issues facing the tech sector as well. sap with its quarterly -- snap with its quarterly sales slump. other factors, the u.s. possibly expanding its tech ban on china's chip technology, or technology including quantum computing, a.i., those are all factors weighing on the sector. for the korean won, fairly flat. we have seen it reflecting broader risk issues in the sector as well, volatility stemming from what we are seeing in the u.k. we also do have u.k. futures coming online. a lot of questions around who is going to be the leader of the u.k. government as soon as next week, with liz truss stepping

down. u.k. futures, lower at the start of trade. tracking this risk off sentiment. brent crude, also weaker. we saw a little bit of optimism coming back into the session in the previous session, given that we had china possibly using is covid controls -- easing its covid controls. it is looking risk off across the board. equity weakness, really playing into this. >> our next guest does not think risk-taking will be rewarded over the next year, not surprising given the uncertainty just mentioned. joining us now is asia-pacific a japan strategist at invesco. always good to have you with us. the u.s. expansion of export controls, when it comes to the key technologies to china, you are a little bit cautiously optimistic, as you put it, on chinese a shares, how are you factoring in these geopolitical tensions? >> i was a bit surprised

to see the very stringent export controls on the semiconductor industry. i thought we had pretty much gotten out of the woods for that. certainly a negative development. i think that reflects some of the hardening rhetoric we are seeing coming out of washington, regarding u.s.-china relations. when it comes to chinese equities, i think a shares are starting to look more attractive, given current valuations, trading at 10, 11 time multiples. i think this could be an interesting time for dip buyers for china. >> especially given that beijing seems to continue to focus on those areas they are interested in. if you have more measures coming from washington, beijing is going to counter with more self reliance, investing in these sectors. are you more positive about chinese tech at this point? >> we have not really seen a

tit-for-tat measure between the u.s. and china when it comes to the technology industry. i think the chinese policy is continuing to be to try to welcome as much technology investment and foreign investment into china as possible. especially while they can. regarding some of the policies coming out of the national congress, it seems as though the government is going to certainly double down on trying to make some homegrown technologies and china. i think that makes sense. >> in in terms of risks for china, we still have ongoing covid zero policies. there was some talk about may be possibly debating -- easing restrictions. and a monk shadow cast by the property sector. if the situation continues to get worse, are you worried about any risk of contagion? >> i think investors are very much looking at two things right now for china -- the covid zero policy and whether that is going to be relaxed and also the property

sector, if we are going to see a bottoming there. from the property sector, we are certainly bumping along perhaps the bottom. i think we will continue to see more measures directed towards that sector the kind of boost both consumer confidence. we could potentially see that recovery sometime next year. >> when you place the risk of recession at the moment more broadly in the asia-pacific? >> i think the risks for recession and the region are pretty high. i think we are going to see continued removal of excess monetary growth and credit growth in the region. and also central bank tightening around the region. that will certainly translate into a bit of slower economic activity. i still think the asia region is relatively insulated to high levels of inflation. also aggressive central bank tightening. when we compare it to europe and

the u.s., the apac region looks relatively more attractive. >> david chao, thanks so much for joining us. let's get to vonnie quinn for the first word headlines. >> sources say the u.s. is looking into new export controls that would limit china's access to powerful emerging computing technologies. we are told the potential plans focus on the still looks for a field of quantum computing and artificial intelligence software. the bite administration is set to be working on a review mechanism that would scrutinize money heading certain chinese technologies. a pboc deputy governor says china will push forward reforms to make the exchange rate more market based. also saying at the briefing china is one of than -- one of the few nations implementing normal military policy. putting stimulus on hold since the cut in august to avoid further depreciation pressures on the yuan.

european natural gas surged, as policymakers remain divided on capping prices. france, italy, and pulled in want to limit price is but germany is a post of the idea saying it would endanger supply at a time the region needs all the flows it can get to avoid blackouts and rationing. risking fragmenting of the already fragile eu market. the white house has accused tehran of sending trainers and technicians to crimea to support russian attacks on ukraine with iranian made drones. john kirby says iranian advisers are helping russian pilots based in crimea to operate the drums. kirby also says the u.s. will consider sanctions over the weapons transfers. malaysia will hold its general election november 19th with the prime minister's party looking to capitalize on victories from local polls. the election commission fixed the nomination different november 5 and the campaign

period will run for 14 days. it will be tricky for any and n -- for any alliance to win an outright majority. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ sherry? >> we are seeing a broad downside when it comes to asian equities this morning. belle, what are you watching? >> taking a look here at the start of trade, what we are seeing in the chip sector, this is down to that report we had out earlier that the u.s. may expand the ban on china's access to chip technology to include quantum computing and a.i. technology. this is in the 11 area stages, according to our sources -- and the preliminary stages according to our sources, that is the stage of play for some of the major chip companies at the start of trade. factoring in that south korean trade data, given we did see chip exports falling nearly 13% on the year, this is the

september 20 days reading for korea, certainly one of the sectors we are watching closely in terms of a broader demand slump. we are also checking in on the social media companies in asia. this is down to earnings we just had out as well. we had snap, that huge drop in the company after hours after it reported its lowest quarterly sales ever. a lot of concerns here around advertising spending continuing to drag on results. and from twitter, given the company, according to the washington post reporting, they are saying elon musk is planning to cut the workforce by as much as 75%. so it really does speak to the broader issues that are facing the tech sector. it is very much a risk of session in asia today. -- off session in asia today. >> china's party congress is coming to an end.

little moves on former president obama zero. former u.s. ambassador to beijing max baucus joins us later to discuss the possible outcomes. coming up, we will look at the runners and riders, and the fall of liz truss as u.k. prime minister, and if boris johnson will be making a comeback. that is next. this is bloomberg. ♪

>> i have a bold plan to grow the economy through tax cuts and reform. >> it was becoming a distraction. that is why we immediately changed that policy. that is a kind of government we are. we will keep an iron grip on the nation's finances. mr. speaker, i think the last thing we need is a general election. we need to act now to reassure the markets of our fiscal discipline. i therefore have decided to keep the increase in corporation tax that was planned by the previous government. i am a fighter, not a quitter. i recognize, though, given the situation, i cannot deliver the mandate on which i was elected by the conservative party. i therefore have spoken to his majesty, the king, to notify him that i am resigning as leader of the conservative party.

>> well, that was quick, a snapshot of liz truss' brief time in office. let's bring in leanne in london, the race to replace liz truss as phi minister, the fifth prime minister in under seven years, what do we know about the front runners? >> and guess what? it is the third prime minister just this year. it was superquick, her tenure. 44 days in office. the shortest serving u.k. prime minister ever in history. that is how liz truss is going to go down. three of the main ones we can really draw our attention to our rishi sunak, the former chancellor. he also did really well in the leadership race. he came second to liz truss. penny is the leader of the house

of commons. she did stand in for less stress the other day on an urgent question -- liz truss the other day on an urgent question. also ben wallace, the defense secretary, but a lot of hype surrounding the return or the possible return of boris johnson, who is of course the former prime minister, and extremely popular with the grassroots tory party here in the u.k.. is currently been on holiday in the caribbean. we hearing he is on his way back right now -- we are hearing he is on his way back right now. we will see how that pans out the next few days. remember this has to be quick. one week is what we are hearing from the 1922 committee to get the next from minister in place. they want to draw a line under this disastrous liz truss government that has really not lasted long. >> however comes in, how important will fiscal discipline be, given how markets have

spoken? >> whoever comes in, the 1922 committee has actually changed the rules surrounding this. we know whoever is going to come in, nominations from mp's are going to have to reach 100. we should see three candidates come into the fray on monday. this is going to come before the 31st of october, we will see the fiscal statement and the obr outline for the unfunded tax cuts that up early sunk the pound and also caused economic turmoil. fiscal discipline is going to be absolutely crucial. i just want to bring you something jimmy rush said. his from bloomberg economics. he said whoever takes over from liz truss will face pressure to balance the books. he says on a positive side, the gap is smaller. that is because the whole of the many budget that was announced

by kwasi kwarteng before he was sacked by liz truss has had to be reversed. fiscal discipline is something that is definitely going to be extremely important. however, it is a lot about faith and trust. the question now is, can the conservative party bring the public back on their side, after this disastrous time we have seen in the economy? we are also facing a cost crisis here in the country. inflation hit 10.1% just a few days ago. and really now is the time that lots of people are saying, should there be another general election? i just got a snap poll saying 63% of the country now wants that and the opposition labor party is calling for it. >> leanne gerrans, with the latest on all the turmoil in the u.k.. with the liz truss resignation,

we saw u.k. stocks rebounding a little bit from a loss, take a look at how futures are trading at the moment. a little bit of a mixed picture. but it was clear that u.k. mid-caps were really boosted by a stronger pound after the prime minister stepped down. we continue to see the turmoil, we are expecting the new prime minister to step in the next few days -- in in the next few days. we saw european stocks gaining in the regular session with a type -- with tech leading the advance. let's bring in the bloomberg fx and rates strategy reporter, david finnerty, i wonder what the lessons are from prime minister liz truss resigning after just 44 days in office, given how the markets reacted to her tax cut plans. >> certainly i think the lesson is fiscal responsibility is

paramount in the markets right now. even though the economy is in a scenario expected to go to a recession, that the semi you can open up the checkbook as far as the market is concerned. whoever takes over is inheriting an economy that is weaker than expected, to -- expected to go into recession. that does limit what they can do. the market doesn't want to open the checkbook. so you have to think, in terms of sterling, the risks are skewed toward the downside because there are not a lot of positives in the economy. particularly with the bank of england. saying yesterday there's no guarantee that they will raise rates as much as the market expects. if that happens, that is another weakness. for sterling. . -- if that happens, that is another weakness for sterling. if the fed remains aggressive,

based on comments overnight, one way or another, you are looking at sterling weakness. the options market stays that way. we have put options on a big premium over the call option counterparts. >> let's talk about the yen. we have been hearing from finance ministers sunni chooses a key -- from the finance ministers pair with the young, fairly anchored at the moment. just above the 150 level. are we actually going to see anymore intervention? would it make a difference? >> it's a tough scenario. i don't want these one-sided moves. not excessive on a day by day basis. if you combine them all, the yen has gone down 12 days in a row. two weeks ago it was trading 145 against the dollar, now it is about 150. the catch is, it is based on

fundamentals. yields are pushing higher because of the bank of japan policy. japan's yields are staying where they are in the 10 year. the rate and differential keeps widening. it is based on the true fundamentals. the minister of finance may not like this and if it doesn't, to what degree? markets may challenge it and say, you have less firepower, you are not as aggressive as your bites, your bar, so if there is intervention, it needs to be quite aggressive to really stop this one-sided move, as far as a market is concerned. -- the market is concerned. >> david finnerty there. thanks so much for joining us. you can get around above the stories you need to know to get your day going in today's edition of daybreak.

bloomberg subscribers can go to dayb on your terminal. you can get the news on the assets you care about. this is bloomberg. ♪

>> the blackstone president and coo says he is still bullish on the u.k. long-term, despite the resignation of prime minister liz truss. he also explained to us how the investment bank is weathering the current market downturn. >> we are big believers in the u.k. long-term. near term, there are challenges obviously around energy, around inflation. but long-term, the u.k. has some great attributes. it is a country that has a real

magnet for talent, particularly in london. it's got rule of law transparency, liquidity. an english-speaking population. so we think over time, capital will come back to the u.k. pyramid as investors, has been really negative. the pound is down 17% year to date. the stocks are trading at less than nine times earnings in the market. that represents opportunity. the near term may be tough, but as long-term investors, would like to look at these things and think about the opportunity to make investments into dislocated moments, which is clearly what we are seeing now. >> on the one hand you have profit that is lower than a year ago, but on the other hand, you did still bring in almost $50 billion. i'm really curious here as to how those things really square off. do you think this environment will get tougher from

blackstone but investors are seeing through it or do you think the tough environment here is going to keep people away from private markets for some time? >> as it relates to our quarter and results -- quarter results, we are proud, because our mission is to deliver great returns for our customers, and that is what we did in the quarter, with markets down across the board, we protected capital, we outperformed. and that is really -- and that has really driven our business. that is why you continue to see these inflows into our various products, 45 billion dollars in the quarter, $183 billion in just nine months. that is what our business is, deliver solid results and investors can trust us with more capital. markets are more challenging. but if you look back over time at blackstone, through all sorts of downturns, in the early 2000's, early 90's, '08, '09, we outperformed. what you are seeing is a continued vote of confidence in

our firm and in the breadth of our platform. across real estate and private equity,, infrastructure, by delivering results, we can track more capital and focus on what we do. but we recognize it as a tougher economic climate and investment climate. >> that was the blackstone president and coo, jonathan gray. coming up -- the former u.s. ambassador to china joins us to discuss xi jinping's unrelenting commitment to strict covert policies and china, that is up next. 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...

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>> this is "daybreak: asia." here's a check on markets.

30 minutes into the trading session for japan and korea, across the board, this is a story today of what we are seeing in treasury yields. they are sitting around highs we have not seen since the financial crisis. certainly something weighing on sentiment throughout the session. also being affected by more hawkish commentary coming through from fed officials. yet to that the peak rate, 5% by next year, we are seeing the biggest most pronounced in the 10 year yields for the aussie, up around eight basis points. the asx is leading the losses today, 90 minutes into trading for that, down .9%. we are also watching the i.t. index, we are actually a little higher on the day. are we seeing a little bit ofdip buying going on given that we have the pronounced weakness in the korean won? we saw the excessive selling as well in the taiwan previous

session, that will be a sector to watch year. even though there are a lot of negative headlines fitting through. snap, with its lowest quarterly sales, twitter with his possible job cuts. we are also keeping an eye on others as well, including the yen, sitting above that key 150 level. in terms of other sentiment drivers, you can add to that the u.k. also what is coming up from china today as well, given there is this report coming through china could expand -- rather the u.s. could expand its curbs on chinese technology to include quantum computing and a.i. added to what's already in place. we have seen the chinese market walked on both sides, not only with woes and the property sector, china junk bonds, property does make the largest portion of that index.

you have the moves in the tech sector as well, really not doing much to alleviate any positive headlines coming through including possibly china easing at school would quarantine. >> let's delve into the news. bloomberg has now learn the biden administration is considering those export controls that would limit china's access to some of those most powerfully emergent computing technologies, let's bring in peter elstrom. we already had sweeping restrictions when it came to sammy's earlier this month -- semis earlier this month. how much broader edge of these new measures take these export controls to? >> it was only two weeks ago that the biden administration unveiled these very tough restrictions on chip exports to china. the market took those as a very serious sign that the u.s. is pulling back on the availability of certain key technologies.

in semi conductors in particular, it also put an additional number of companies on this unverified list. these the restrictions -- these new restrictions of sources have told us about would expand this even beyond chips into quantum computing and a.i. software, as you mentioned. it is our cutting edge areas of technology quite far into the future. but the idea is the u.s. may impose these restrictions so china would not be able to develop the technologies they would need in these areas. particularly quantum computing is very promising on has the potential to be critical in military applications and also online security. >> are there any implications there for some of the u.s. partners when it comes to chip technologies? further dividing the world into the u.s. and china camps? >> that's right, there is a bifurcation, and we are seeing

many of the u.s. companies that have been supplying chinese companies pull back from this. nvidia was one of the earliest ones, they said they were going to lose sales because of this, not being able to sell some of the most advanced graphics chip into china, it is also affecting chip equipment maker's, like applied materials -- makers, like applied materials, supplying chinese companies, helping develop their chips that can compete with the best on the world, now we are seeing them obligated to pull back. >> peter elstrom there. china's 20th party congress wraps up this weekend in beijing with the biggest mystery yet to be revealed. who will president xi jinping place in key supporting roles for at least the next five years? for more on this, let's bring in our chief north asia correspondent, stephen engle in hong kong. how is this going to play out, depending on who gets these jobs, what are the ramifications?

>> let's look at the economic team. we know the economics is he has possibly retirement age. -- passed the retirement age. as many as half of the 25 member bureau will have to retire or could retire. there's going to be a shakeup in the standing committee. on the standing committee, that is the all-powerful seven-member team of ranked equals, with xi jinping at the top and the premier usually number two. several of those, two of those individuals have to retire because of age requirements. xi is going to be sticking around, he is past the retirement age, but there are exceptions for him and his power play. when we get the new lineup of likely seven standing committee members, who is going to be the premier? li qang is stepping down.

we have to divide it into four individuals that i am looking at. let's change the page and look at the four individuals. if xi has a power play and makes it about loyalty and putting loyalists in the position of power, we are going to be watching he lifeng. he is an extreme xi jinping loyalist. he could be promoted to the appellate bureau and take over as economic czar. if so, you will be seeing a lot of he lifeng. the other loyalist that could be promoted is li qiang. he's a front runner to be premier. he is not a vice premier. you have to be elevated to vice premier first, then perhaps premier by the national people's congress in march. if these two individuals assume these roles, that tells us that xi jinping has

absolute control. if there is compromise, if they want to show unity within the party and the rival factions, look for hu chunhua perhaps being elevated. >> joining us now is the former u.s. ambassador to china, max baucus. picking up on the point steve was making, from the outside observer, it seems chinese politics is a united front. that is clearly not the case. on the upper echelons of power in china, does xi have any serious risks to his leadership he needs to balance here? >> i think a lot of the chinese leaders are concerned about the zero corporate policy and how it has affected the economy -- zero covid policy and how it has affected the economy.

many of my friends are telling me, it seems that president xi has consolidated his position. we should wait to see who the lineup is in the standing committee, whether it is more loyalists or they show a little bit of indication that is more broad -- that it's more broad support in the standing committee as a postal loyalists. >> so far in the people's congress, we've had tremendous amount of words. a lot has been said. but at the same time really nothing has been said. we have not had any major developments to hang our hat on

particularly around zero. can you see that policy getting eased anytime soon? >> not soon. maybe before the holidays, the chinese new year next year. . not until then. next spring might be a time when covid might be relieved -- quarantine will be relieved. it is very important for the economic developing of the country for the quarantine to be lifted as soon as possible. it will mean more communication, more travel, american businessman will be able to travel back and forth -- very important. i think the quarantine is very much -- has very much hurt their relationship, the economy, it is tough to deal with covid and china in a way that allows the economy to come back. >> you understand the workings of china but also how washington operates.

why are we getting this news now, that the biden administration is looking into expanding those export controls to include quantum computing, ai technologies, at a time when the communist party congress is going on? this is just upping the ante at this point. >> i think it is really, we have to leaders were very proud. it is like a face-off. -- two leaders who are very proud. it is like a face-off. it is ominous. the statement by president xi that he wants china to be a leader in the world frightens a lot of americans. at the same time they statements by the administration they want to be the leader and outcompete china in every area also causes china to be very worried and causes china to think that the u.s. is trying to prevent china's rise. and it is true in many respects. america is trying to prevent china's rise. don't forget domestic politics are very, very strong in

america today. no member of the senate and house camps in up on the floor and say something constructive about china, for fear their head will be taken off. the big ballot here still is the economy. china needs the u.s.. the u.s. needs china. $600 million in trade last year between the two countries. i think the more u.s. business can keep trying, do business, china do business, that is going to help the sanity of this relationship. >> and domestic policy also at play when pelosi visited taiwan. given the reaction you saw from beijing, how would you assess how volatile this side of the world is right now? >> i think it is very volatile. i would be very much opposed to a visit. it was a huge mistake, but it happened. the reaction was what we predicted, china is very upset.

even though china wants a peaceful resolution to taiwan, china is starting to step up the timetable pyramid is very possible. this is very concerning. the navy chief said a few days ago he expects possibly china to try to forcibly take time on by 2024. with a statement like that, it makes the trip even that much more sensitive. i think it is important for the united states to think very carefully about its relationship with taiwan because a more it pushes, the more taiwan -- the more china's going to react adversely. when i was serving as u.s. ambassador to china, the one thing that was driven home to me, taiwan is existential, it is nonnegotiable for china, and i don't think many americans appreciate that. this is really sensitive. they really risk going too far. they should be very careful. >> ambassador, always great

catching up with you and getting your insights. max baucus. the former u.s. ambassador to china. we have breaking news at the moment -- we are hearing the u.s. is weighing security reviews for ventures around elon musk's deals. the biden administration whether the u.s. should subject some of elon musk's ventures to national security reviews. that would include the deal with twitter, for the acquisition of twitter, not to mention spacex's ownership of the starling satellite network, according to people speaking to bloomberg. u.s. officials, growing uncomfortable over musk's recent threat to stop supplying the starling satellite service to ukraine. it had cost him $80 million so far he said. u.s. officials see this as an increasingly russian friendly stance, favorable to president vladimir putin, those are now

under scrutiny. officials also concerned by his plans to buy twitter, with a group of foreign investors. we will continue to watch this story. you can get more on the bloomberg terminal. this is bloomberg. ♪

>> this is "daybreak: asia." the u.k. conservative party is

looking to quickly replace liz truss after her resignation as prime minister. a maximum of three mp's will be able to run and conservatives aim to choose the successor by october 28th. liz truss announced her resignation after only 44 days in office and assent to become the sort of serving prime minister -- short of serving per minister in british history. fed officials, continuing to flag the need for higher interest rates. the philadelphia fed president says rates are likely to be raised well above 4% this year before a deposit sometime next year. the fed governor says inflation is too high and will require ongoing rate hikes. a restrictive policy for some time from the fomc. the st. louis said said it will think differently about his officials -- it's officials participating in private events. bullard's appearance could be seen as a violation of federal rules on communications that aim to avoid providing a profit-making firm with any advantage.

global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ sherry? >> we have more on the breaking news earlier, sources telling us the biden administration is discussing whether the u.s. should subject some of elon musk's ventures to national security reviews, including the deal for twitter. let's get more from su keenan. what are officials worried about? >> they have become increasingly uncomfortable about what they view as a not so russia friendly stance and a recent threat he made over twitter to withdraw supply -- withdraw the supplying of starling satellites, to ukraine. he said it was costing him $80 million so far and perhaps he should withdraw it. a lot of concern because this is a crucial tool, certainly has become a crucial tool in ukraine's fight against russia. this is an increasingly --

they see this as an increasingly russia friendly stance, these officials apparently. what is important to realize is he tweeted on the 18th spacex welcome -- will continue to supply ukraine for free. they are in the very early stages as officials consider with the legal options are. the legal considerations here would be significant. this again is a private company. this was a threat must have made that he did not carry out. he is providing the service and continuing to do so. it will be interesting to see how this plays out. mike and 2019, musk famously smoked marijuana on a joe rogan podcast. at that point the pentagon said it would review musk's federal

security clearance because it raised concerns about musk's mind at the time. they have contracts with the pentagon on using its satellites, it has flown astronauts up to the space station. for this reason they were looking at it at that point, the results are unclear, but the review or not review had no impact on spacex. >> su, the washington post, also up with a report on a plan to cut 75% of twitter's staff, and that the same time, and alert -- an alert saying they are no plans for companywide layoffs. how do we square this circle? how do we know was going on here? >> we will certainly take the word from twitter's official counsel. no plans at this point for a layoff. but the washington post, out with a very interesting story -- out with a very interesting story, citing corporate documents from twitter as well as comments musk apparently made

to a number of investors, as he was putting together finance and interest in his deal to buy twitter. according to the washington post, he told prospective buyers that he plans to get rid of nearly 75% of twitter's workforce, 7500 staff members. cutting that would shrink the company to a skeletal staff of just over 2000. in reviewing the documents, the washington post confirmed what money analysts had been saying all along. even if the deal didn't go through, there might have to be a massive layoff. importantly it was twitter's own documents that showed they planned an $800 million cut back toward the end of the year and that would at minimum result in a staff cut of about 25%, according to some of the people close to the matter that reported. very interesting details here. >> bloomberg's su keenan,

keep an eye on the news out of twitter today. plenty more to come on "daybreak: asia." this is bloomberg. ♪

>> the pboc deputy governor says china will push forward reforms to make the exchange rate more market based, while continuing to implement prudent monetary policy. the asian stocks managing

editor, lianting tu, joins us now with more. >> i think it is safe to say from the market perspective, we are not seeing much of a positive impact from all the stimulus on the monetary and fiscal side. chinese shares closed yesterday at the lowest level since 2008. the yuan is on track for the biggest slump this year since 1994. it seems more economists are comparing china with japan, talking about how china may face a last decade because of stagflation and an aging population. i think the answer is really obvious. people are just watching out for what china is going to do with its covid zero policy. >> what about macau casino stocks? how does this work out for them, given that we saw a pretty good bump overnight? >> we did see a bump overnight.

analysts were excited about local media reports talking about how macau may welcome some mainland tourists back to the city from november. if you look deeper into it, we actually reported that last month exactly, about how the macau chief executive similar plans. the market is really jumpy. traders are holding onto any positive news. to be fair, there was a little bit of a positive -- there were a bit of positive news out there, though it came 24 hours ago, about how macau's motorcycle grand prix riders may face shorter quarantine periods. >> lianting tu, with what to expect that the china open. as we head towards the markets in hong kong and china, these are some of the stocks we are watching. asia and talk for sure, given that there could be -- they

could be active after bloomberg reported the u.s. is considering new export controls to limit china's access to powerful computing technologies. >> still to come -- the bank of singapore's eli l. we'll tell us what he sees volatility and the u.k. markets after liz truss' resignation. we will discuss china's that . that is that for "daybreak: asia." coverage continues care would stand by for "bloomberg markets: china open." this is bloomberg. ♪