haidi: you are watching daybreak

asia. annabelle: we are counting down to the market open in tokyo. haidi: the top stories this hour. asia stocks are set for a positive open after treasuries are gaining and the dollar is lower. the move may be dampened by earnings with the u.s. tech names, shares are falling in extended trade. we are live with australia's finest minister after a budget warning of higher debt and deficits lie ahead. annabelle: we have the asx 200 coming online unchanged in these are of trade. a modestly high start but we will have a lot of concerns around confidence in the session. it weaker dollar is helping as well as the pullback in yield that is supporting factors in the session. we are focused on the big tech

earnings coming out of the u.s.. you can see the reaction we already have in nasdaq futures at the start of trade here dropping. that is playing out in what we are expecting for the japanese session today, we have the nikkei futures in the red. new zealand is in the green and also buying what is happening in the offshore, holding up of the key 7.3 level. a little bit stronger this morning, weaker or rather given what we are seeing in the dollar -- weaker, rather, given what we are seeing in the dollar. given the party congress is out of the way, that is the focus for china when it opens in a couple of hours. very much focused on technology. shery: u.s. tech is pressured, we have a microsoft --. we have microsoft popping. headwinds are coming from a strong dollar. the slowest pace in five years

or so. we have had alphabet under pressure given that they missed both the top and bottom line. we are watching texas instruments because their quarterly forecast signals the deepening slump in the chip industry. they have done what he will compared to their peers. they may be facing headwinds going forward. twitter is the exception, the upside, we saw the boost in new york session as well as the bloomberg news that elon musk wanted to finish the acquisition of twitter by this friday. haidi: staying with technology and the big earnings, that has poured cold water over market sentiment. let us run with alphabet. what was most disappointing here? >> the core and business is not immune to the global advertising market broadly which is a slowdown. they gave granularity that they are seeing a pullback from

advertisers. if you look at the breakdown in the businesses, youtube missed expectations by a much wider margin and in my conversation with the cfo, they pointed out that your comparing numbers to a strong quarter last year. -- you are comparing numbers to a strong quarter last year. that is a direct response, that is the problem. a stronger dollar and currency headwinds playing a role here too. shery: especially given microsoft topped estimates. the stock is falling. >> they recorded their slowest pace of growth in five years. look at the asia cloud unit that if you strip the move out of the currency, you see growth dropped by five percentage point in the current period owing to currency headwinds.

the signal that the street is getting that the key driver of growth for microsoft which is cloud is starting to slow down what is worrying. it painted a picture of weakening consumer demand as well which will be a worry. haidi: how does this set us up for the rest of the week? >> not good. look at equity market futures, it is interesting because we went in knowing where we stood. look at the five biggest tech names by revenue. bloomberg all over the terminal is writing a drop relative to a year ago, the biggest drop in three years. the third consecutive month of dropping profits. look further afield on the terminal whether you use this or another function and the street saw a recovery in earnings going into next year. you wonder how much these earnings reports from microsoft and alphabet chatter that image. there is a lot of concern that

the big technology names which often act as defensives because of their balance sheet, they are not surviving as well in a difficult environment and the worry is that the forward-looking commentary does not look as if things are going to get better in the near term or into next year. shery: we had these rallies the last few days, it is good to put it into perspective. those are the big tech earnings. let us bring in mark. it was telling us about the disappointing earnings. we have the share buybacks on track for the biggest year on record? >> as a share buybacks will not count for too much if sentiment does change negatively. when you have the major technology companies, they way

too heavily on the whole u.s. market and on the global markets. if this is a turning point for the major technology companies in the u.s., that will be a major headwind across all markets. we will see how it plays out when the u.s. cash market resumes on wednesday. you could find a situation where the futures are down 2% or 3% in asia. even before the u.s. reopens and that would be hard work for european equities and it will be a big dampener on what we see in asia as well. you cannot underestimate the investors giving up on the major tech companies. it will be a very large factor in how people view stock markets for the weeks ahead. haidi: the nasdaq golden dragon index saw a bounce, the biggest intraday gain in weeks. that follows the 14% downside. is this giving credibility to

some of the voices including the likes of those assigned at this selloff is disconnected from fundamentals and that there is value in china? >> i think a lot of people would like to know if this is a major turning point or not for china equities. our colleague in new york wrote yesterday on his, this is the buy of the century. on many valuation metrics, they look compelling in comparison to their peers around the world. go to take into account that china has a covid zero policy and the power has been concentrated in the hands of one person with the president. there has not been much change in the way that they view with suspicion the wealthy people in the tech sector in china and the property market. a very precarious position in china.

many of the fundamentals have not changed. that is why evaluations have become so relatively low in china. whether you can have a major turning point until they remove covid zero is a big question. if you look at the chances of a quick term rebound, after any market drops by a large amount, you can see rebounds of 5% or 15% in a short period of time, we have seen it with the s&p 500. from a tradable point of view people will be thinking for the next couple of weeks, maybe china stocks can have a bounce, yes. shery: breaking news, we are getting the latest from sk hynix when it comes to third-quarter operating, it is coming below expectation. when it comes to 2023 investment spending, they will be cutting those investment spending on the

capex by more than 50% as compared to 2022. where giving you an indication of this chip sector is headed. we had seen texas instruments also point to our quarterly forecast that indicated more, the korean semiconductor maker has already been down 30% year to date. chip stocks have all been battered because of china growth concerns and tension between beijing and washington and sk hynix operating off of profits and missing expectations. it is below expectations, hynix saying it will gradually reduce production on less profitable products. we know that we have seen this rising in inventory and exports from south korea coming from global chipmakers, we have a similar picture from samsung this month reporting for profit drop in 2019 and we are seeing sk hynix also cutting their 2023

investment spending by half from this year. let us get to the first word headlines. >> rishi sunak has reappointed jeremy hunt as chancellor as he gathered a team to fight the profound issues fighting the u.k.. he has to strike a balance between rewarding loyalist and entering party unity. liz truss fired her over a national security breach. elon musk has pledged to close the acquisition of twitter by friday. the lender is providing $13 billion of debt financing to finish putting together the final credit agreement, a process of signing documentation. the move marks one of the last steps before sending the cash to musk. the chinese bank has vowed to

protect the healthy development of the stock and bond markets. the comments were made at meetings made after the communist party congress rather than reaction to this week's slumps in financial markets. a russian court has upheld the prison sentence handed to american basketball star brittney griner for drug possession. she pleaded guilty to possessing fit canisters sanctioned -- possessing cannabis canisters. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: we spot the red flags in the recovery with carl tannenbaum. ♪ haidi: we are live in timbre for a -- in australia for a budget

debrief with katy gallagher. ♪ ♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward.

and helping you plan for future generations. this is "the planning effect" from fidelity. >> the global economy teeters on

the ed with a war that is not ending home a global energy crisis that is escalating, inflationary pressures persisting, economies slowing. at some of them already in reverse. we intend to avoid the turbulence from overseas, we cannot escape it completely. >> there is an opportunity to build on this, we need to see responsible budgeting. haidi: they shut up treasure about the global risks to the australian economy -- the shadow treasurer talking about the global risks to the australian economy. >> thank you. am joined by -- i am joined by katy gallagher. we heard from the treasurer and the shadow treasurer describing

some of the medical conditions that the whole world is facing in terms of rising -- macro conditions that the whole world is facing in terms of economic conditions. katy: you are right to point out the global uncertainty that exists. we put together this budget in uncertain times against a backdrop of rising inflation and rising interest rates around the world. issues in china, obviously, issues in ukraine with the war and the russian invasion. if i spend an uncertain time. we find our spot was putting together the most responsible budget we could reflect those times. i think there is no shortage of spending ideas and people coming forward with ideas about what they would like, it is a responsible budget that shows spending restraint in light of the inflation challenge. i think i am forward in budget

deficits and having a discussion in how we meet spending challenges against a budget in structural deficit. >> you did managed to retain key promises around paid parental leave and childcare and payment expansion as well. you kept the tax cuts from the previous morrison administration. i couldn't help but notice that election promise to not have mentioned it in budget speeches. it is something you would have rather not have done? katy: we are reflecting the budget as it exists, that is why it is not mentioned, it is bill into the budget estimates. our focus is in light of the global uncertainty we talk about is what we need to do right now over the short term and you see that in the first two years will we really are

stating our spending investments and looking at returning as upside from commodity prices -- the upside from commodity prices. there is no doubt we will have a discussion about all parts of the budget and how we deal with the deficit and the spending challenges and pressures coming our way. >> i meant to return to the topic of debt. that is passed one trillion australian dollars, the interest bill alone is 1.2% of gdp. something has to be done in terms of revenue and taxation reform? >> i think it is on both sides. we have to look at the receipt side of the budget and the spending side. we found 22 billion dollars in savings and redirection of spending. there is more work to be done. that is on my desk how we continue to make sure that we are seeing every dollar spent go where it is needed. what we are trying to do is not pretend the australian people's

budget is in great shape and we can build all of the costs that are coming. people expect to have hospitals funded and they should expect that. we will not pretend they will not put increased pressure on the budget. we need to have that conversation with the australian people. >> wage growth is something you have been pointing to. it has been calling for a number of years. not even 2.6% in the second quarter. why the optimism? katy: we are seeing wages moving for the first time, that is interconnected with some of the labor shortages and demand for workers we are seeing. we have a government that is about getting wages moving. we are not going to see wages exceeding inflation at the moment and that is where it is hitting people's pockets. we have had a decade of stagnant wages. people are going back.

we have this cost-of-living pressure that is coming now and we see that reflected through the budget papers. we expect people to start getting reasonable pay increases. we have a government that wants to see that. it is not going to be what we expected only one tote as a government because the challenges have exploited faster than we would have expected. -- have expanded faster than we would have expected. >> we have the budget forecast and inflation hitting, 7.3% -- 7.25%. the deficit in terms of rising commodity prices, do you think we could have a pleasant surprise in terms of inflation as well as central banks tighten and have a growing risk of recession in europe and the u.s.? katy: it remains to be seen.

obviously, the treasury forecasts are reflected in the budget. we are expecting him to peek in the december quarter during expected to be longer because of the sharp increases in electricity and energy prices. before heading back down again. that is the best advice treasury gives to us and we had that way. -- head my way. it will require energy from the government. >> thank you for joining us, we will have the third quarter inflation numbers for australia out at the bottom of the next hour or it will be a closely watched metric. back to you. shery: this is bloomberg. ♪

shery: we are watching shares of sk hynix.

they are planning to cut investment spending by more than 50% next year. let us bring in annabelle for more on the results. annabelle: keeping with the numbers that came through in the last few minutes, we saw in the third quarter profit numbers 60% drop here. operating profit declining $1.7 trillion. you put that in contrast to what analyst had been expecting which was 2.5 trillion won profit. that also missed the estimate of 12.2 million won. the problems and only facing sk hynix but also where the inventory levels and wheat exports and thinking about inventory levels with all the numbers doubling in the previous quarter. as i said, those warnings have been coming through from other

chipmakers, pc supplies, the semiconductor market is heading into a sharp downturn there will be lasting until at least the first half of next year. you have the concerns around recession risks also soaring inflation and that is forcing customers to cut back on their spending. haidi: it was the reduction in capex spending which follows what we have seen from other chipmakers. that was one of the big headlines. annabelle: cutting capital expenditure by at least 50%. it speaks to the significance of the own growing -- on the growing pessimism. concerns here not only about recession risks but the other factor that plays into this, that is how these chip names in korea and taiwan are getting stuck in rising geopolitical tensions. this push for the u.s. to crack down on china's access to

technology. as i said, it is a problem facing them. the weaker numbers from tmc. samsung reporting the first profit drop from 2019. micron slashing production. is affecting the entire sector. haidi: let us get a quick check on the latest business flash headlines. texas instruments tumbling in trade after its earnings forecast flight a slump that is spreading beyond personal computers and phones. cancellations increased this quarter. it does see the automobile industry demand remaining strong. texas instruments is the largest maker of analog and embedded processing chips. general motors beat the estimate on record revenue. $1.89 a share.

it will have a profit share of up to $7.50 a share thanks to sell the best suvs and is trucks -- its trucks. >> we are seeing strong average transaction pricing and we continue to be able to build on it. we are starting to see inventory build up a little bit. while below levels in the past. we are seeing a strong consumer for our products. 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.

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>> volker dealt with growth and

inflation. on top of that, financial stability, if they pay the, it will be because of financial stability. it will not be because they decided to not target inflation anymore. >> speaking about the fed's fight against inflation. also jay powell is in a tougher environment than what previous chair paul volcker was in the 1980's when he managed to rein in inflation. the fed will be pivoting to a smaller pace of rate hikes moving forward is one of the things helping a little bit of investor sentiment this morning. the market, moving higher. some factors could be waiting on the outlook today. really coming through and what we are seeing particularly for u.s. futures. when you take a look at big tech earnings, dropping after hours today. you can see alphabet after its

earnings miss, microsoft, really weighing on the earnings -- the strong dollar really weighing on the earnings. texas instruments, flagging a weak fourth-quarter outlook. a big miss on third-quarter numbers. it does not pretend well for the tech heavy index's career. the other factor of course weighing on the outlook is what happens in the china session as well when that gets underway. take a look at what we are seeing in terms of foreigners. a lot of trepidation around if foreign investors can return to the market. whether or not it will be net positive or net negative for the economy. you can see the massive drop. we had the exit us on monday with the huge selloff across the board -- exodus on monday with

the huge selloff across the board. >> xi jinping's tightening grip n power, our next guest is called tennenbaum. great to have you here and sydney with us. we know there were some on a domestic governance challenges for this leadership over the next five to 10 years and beyond. we still see them saying there is a disconnection from market fundamentals. as the uncertainty something that shrouds everything else? >> the uncertainty is clouding the prospect of growth in china. they've had a 30 year run that's run into hard times on the back of a property market correction. their export clients either in recession or heading there.

the export growth is somewhat limited. they are heavily leveraged. they have a demographic challenge that's going to be the worst in the world. trying to keep up output is going to be difficult. investors are wondering if china would be subject to the same kind of sanctions russia would. in that case would they have access to the liquidity of the investments in those markets? those are headwinds for chinese shares. >> you talk about the external pressures. we've seen that expressed through the semi conductor story. is a decoupling what we are headed towards? >> unfortunately, i think we are heading towards more than less of a decoupling. it's really already here. let's not forget there are a record number of sanctions already in place by western countries against jenna and vice versa. this is taking it to a whole new level. the globalization that was beneficial for all the players

and for global inflation seems to be coming undone. >> carl, will this bifurcation lead to increased inflationary pressures given that we are basically building more redundancies? what does this mean for say northeast asian economies depend so heavily on the tech exports? >> that's a great point. if you believe as i do globalization was one of the reasons why inflation was quiescent prior to the pandemic, a reversal cap help but have the opposite impact. companies are looking at alternative supply chains. perhaps closer to home and more secure. those don't get constructed overnight. they can be expensive and logistically difficult. countries and companies are headed very much in that direction. our southeast asia -- for southeast asia, the opposite will be a significant challenge for many economies. >> when the boj and japanese

authorities insist on inflation at least in japan is transitory given years of disinflation and deflation they faced, does this make sense, took a boat loose monetary policy going into the boj policy decision again? >> i think it does. while japan has the illusion of inflation, a lot of that is coming from the energy side and other transitory factors fundamentally. japan still has the headwind of very poor demographics pushing downward on inflation. the bank of japan needs to keep at it until they have firm signs inflation is back into positive territory. >> we know the government wants the boj to watch more carefully for the impact on the currency. do we see this tension building between governments, the central banks? is there a tug starting to play out in that relationship? >> i think that's absolutely true. governments and central banks

collaborated during the pandemic to speed relief to recipients. now it's clear where central banks need to go. but governments want to stimulate, which will make the inflation problem worse. governments are now paying substantially positive interest rates on their borrowing and probably pushing on the central banks to find a spot where they can settle down so the costs don't go further out of control. >> carl tennenbaum, chief economist northern trust. breaking news -- the numbers out of bristol-myers. slightly better than anticipated third-quarter results coming from the pharmaceutical giant. we are watching third quarter revenue coming at $11.22 billion, slightly better than expectations of 11. -- of 11.14 billion dollars.

slightly better than analyst estimates. we did see those results come up early because there had been -- they had been inadvertently released on the company's website and then taken down. analysts had been watching for the impact of the significance of the drug facing a level of generic competition. let's get you to vonnie quinn with the first word headlines. >> australia's warning of mounting debt and deficits in the years ahead as the treasurer held down spending to avoid further fueling inflation. treasury figures showed the deficit will widen from 1.5 percent of gdp to 2% in 2025. largely driven by her spending on the nation's disability insurance program and rising borrowing costs. >> the global economy teeters again on the edge with a war that is unending. and global energy crisis that is escalating. inflationary pressures

persisting. and economies of slowing. some of them already in reverse. while we intend to avoid the worst of the turbulent overseas, we can't escape it completely. >> imran khan says he plans to start a protest much to islamabad on friday demanding early elections. ousted by a no-confidence vote in april but is made to -- but is making a major push to return to power. the government says elections won't happen until late next year. the former hong kong media mogul jimmy leigh has been found guilty of fraud for breaching the terms of a business property lease. already serving 20 months in prison for his role on antigovernment protests. lai also faces charges under the national security law. will be sentenced under the latest conviction in november. a study has found that new covid

boosters don't to any better than the old the results need to be confirmed in much larger studies. 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. ♪ >> nat gas prices dip below zero for the first time since 2020 is booming production overwhelms pipeline networks. the bring in our bloomberg energy reporter. this is quite surprising given that recently u.s. regulators were warning of shortages here in the northeast. >> yeah. this is a little bit of good news for consumers. maybe temporary good news. a lot of this has to do with the natural characteristics of natural gas, difficult to transport and store, just wants

to evaporate up into the air. when you get a situation like right now when production is booming and running out of pipeline space, storage space, producers basically have to pay somebody to take it on, or they have to start the expensive process of shutting in production. even in texas, regulators won't let you just waft it out into the air because it is so potentially harmful to the atmosphere. >> in europe, the energy crisis has taken a bit of a surprise turn. we are now in a gas glut? >> not exactly. this is a very -- it's good news, but it's probably temporary good news. europe has done a really great job of spending a lot of money to lure lng cargs in, -- cargos in, people are not using air

conditioning and heat. . we are getting into a bit of a situation where there is not enough storage for all these tankers. there not a lot of place to put natural gas if you have too much aluminum you can put in a warehouse, too much crude oil you can stick it on a tanker, but gas is a much different animal. for the moment, it looks like we are having guests glu -- gas glut and prices are having to go down in the market to push back cargoes. if you look back into january and february when the cold winter months will have taken their time to deplete the inventories, prices are up a lot higher. the market is indicating the crisis is not over. is just going to be delayed a few months. >> we will take some good news over no good news, our asian energy reporter, dan murtaugh. coming up next, we will hear about this week's volatility in chinese markets and the city's plans. this is bloomberg.

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>> you are watching "daybreak: asia." some headwinds facing investors this wednesday -- not only do you havethe , we did see website trending across the mainland and

-- mainland indexes. the a-shares indexes still do to end the day in positive territory up around 1.5%. the question is, can this last? it is pretty and clear for investors how low stocks can go. president xi's made it clear he's got other priorities than setting a floor for the stock market. indicators, telling us we could see a relief rally on the way. you have that psychological aspect. we are really not seeing any sort of major dip buying as of yet. >> investors should focus on china's long-term outlook. nicholas aguzin spoke with us on the initiative. >> we have seen some of the tech names being impacted the most. that was a reaction of all the investors' questions about the

future, around volatility around the world. at the same time, i think it's important to see that the long-term -- this we have seen from the gdp numbers that came out of 3.9% growth, it was a little bit better than expected -- is precisely the point that we want to usually focus on, the long-term opportunity, everything that's going on, the companies that are being created. so, this clearly different views in terms of which we it is going to go -- way it is going to go. investors are trying to understand which positions to take around that. >> i'm looking at the current breakdown. i kind of wonder whether that's enough to really get the economy back on an invigorating level of path for growth. >> the covid limitations and restrictions at some point will go away. the question is one is the right time? right now the limitations are set to a minimum.

there is a really large event next week that's going to take place with all the financial leaders from around the world going to hong kong. i am actually quite excited about this opening phase we are seeing in hong kong. because we do see that if people have an interest in being there, investors see this as their connectivity bridge into china. lots of excitement. >> maybe windows opening up for issuers and ipos. is that what you are hearing from clients in terms of a shift in 10 cement -- shift in sentiment? >> third quarter, we had more than twice of the ipos we had in the first half. when we look at the whole year, over 60 ipos in the years raised over 10 billion dollars. it's been a tough year for hong kong. that a sense of fear. but we can see -- for hong kong, that is a tough year. but we can see markets more stable, more consolidated.

it looks good in terms of the pipeline. i agree with the comment that this may be a good opportunity to start thinking about what's next. >> we had some dramatic events on the lme throughout this year. the speculation is that still not enough has been done to regain investor confidence. volumes are still very much low. what needs to be done here to win back some investor appetite? to get this back into the health and shape it is famous for over the years? >> the lme has 145 years of history. i was there yesterday. we launched our lme week, where metal producers and consumers from around the world get together as part of a tradition of how to trade. and we have seen a lot of vibrancy. coming from the vibrancy of all those metal producers, coming

here to saudi arabia where you see this vibrancy in this market and everything, there are things we are analyzing, we have an independent review looking at what happened earlier this year. and based on that, we will assess what are the best measures to take and go forward. there was an announcement yesterday about some adjustments to what we call lme passport that essentially gives a lot of sustainability data to the met als being treated in our exchange. >> do you think the lme might be worth more on the different ownership? would you consider selling? are you in any active discussions? >> a lot of the manufacturers and producers of some of these metals are in china. there is a natural fit in terms of the connectivity. the key thing is, how do we get the most out of that advantage of being uniquely positioned as hkex? that's what we have to focus on.

how do we get that advantage into lme? >> that was the hkex ceo, nicholas aguzin/ -- nicholas aguzin. be sure to tune into bloomberg radio. plenty more is ahead. this is bloomberg. ♪

>> here's a quick check of the latest business flash headlines. doubling down on drug manufacturing in the u.s., buying opportunities in europe and at home after the launch of its pharmaceutical arm. the planned expression of lotte mileages will build on the $116 million of a bristol meyer clinton new york. the south korean conglomerate is looking for more buying opportunities in europe and boston. microsoft shares slumped in late trade after its weakest

quarterly revenue growth in five years. sales were throttled by a surging dollar and a drop in sales of windows software to pc makers. excluding the dollar impact, sales further cloud services rose 42% also below expectations. alphabet's revenue and earnings fell short of expectations, too, as google's search business began to show signs of weakness. the google parent reported third-quarter sales at about $57 billion, missing analyst projections of $58 billion. net income was $1.06 per share, less than wall street's estimates of $1.25. adidas intends to sell intending yeezy product designs after ending its partnership with ye, formerly known is kanye west. adidas has indicated it will

make the change next year. the company expects a $247 million earnings hit after terminating its relationship with the star over comments it calls "hateful and dangerous." the comments had been out there for a while to make it clear. we did say that break down of these other collaboration relationships, with gap, galenciaga, no longer continue -- balenciaga, no longer continuing business dealings with ye. in a sense you have to wonder whether the time they took to break off this relationship has resulted in that risk of consumer backlash, because this now feels like a story that's ended and kanye west, ye, the brand names and businesses he is

to have professional relationships with. >> addas has been under pressure from some time here would when speaking to analysts scum of the potential upset of dissolving the partnership. basically fewer expenses. >> these are the stocks we will be watching when trade opens in korea and japan. chips and focus on those disappointing earnings reported by industry giants, including texas instrument. sk hynex saying the memory sector is facing unprecedented deterioration. watch out for a renaissance quarterly financials due out later today. we are also keeping an eye on these stocks. lotte launching its pharmaceutical arm. lotte biologics. >> let's take a look at our trading when it comes to the day after the budget. we see the tailwind weakening somewhat for the start of trading in asia given the downside we saw in the big u.s. tech names.

. disappointing earnings from alphabet and microsoft. we are seeing some of those sectors that have been seeing -- been seen as positive beneficiaries. positive upside when it comes to trading in new zealand as well. nikki futures, a little bit negative at this point. we will be starting to wash the trade -- we will be starting to watch the start of trade in china. coming up in the next hour, we will be talking investment strategy with christina w., and the critical medicals executive -- metals executive joins us to talk about the nasdaq.

>> this is "daybreak: asia." counting down to asia's major market open. disappointment from results in microsoft and alphabet. chipmakers and focus as well. >> will continue to watch the countdown for chinese equities and chinese assets. we did see the recovery rally in the nasdaq golden dragon index. >> that's right. still fairly muted trading across a lot of the session. particularly with chinese stocks, pointing to this level of concern among investors. we do have the open for japan and south korea upon us. forecast treasuries this morning, we have seen them around the 4.1 level. still coming online in that range this morning. that sets us up for the weakne ss for the japanese yen ahead.

strategists, saying it is still going to be fairly range bound around the 147-149 range. as volatility in u.s. yields fx those continue, it makes it difficult to assess where the main yet level for the yen is at. certainly it is helping assist any good this morning trading up around .6% -- the nikkei this morning trading up around .6%. we did have the earnings out first sk hynix. fairly higher at the start of trade here. planning to halve its capital spending next year from the current levels. in a profit plunge in the last quarter -- it did see a profit plunge in the last quarter. it is not the first chipmaker out there to be reflecting weaker from facing the sector. in terms of that, the

kospi, and the green, the korean won, getting a little bit of strength. in terms of what we are seeing in australia, we are one hour antitrade for the asx 200, we are still clinging onto gains here, perhaps dollar softness playing into that. also the pullback we have been yields. still watching of course what's happening in the grid space. we are seeing further weakness here. a lot of concern around the supply outlook, that is certainly one factor weighing on the prices. >> our next guest, saying one recent positive for markets has been the easing of commodity prices. joining us now is christina w. but to have you back. we heard from real estate billionaires talking about the price swings we have seen in this energy sector. take a listen first. >> the volatility in the energy

space has been so extreme, just think about it, within a 12 month period, the price of oil vacillated between 30 and 120. that is an incredible level of volatility. making investment extraordinarilys difficult and challenging. >> is this an opportunity, if you are looking at the downside and prices, for these companies that are reporting earnings? >> yes, i think you are absolutely right. the volatility with an energy pricing has been quite difficult for markets definitely. we have seen that through corporate earnings as well. the one difference we have this half of the year is that commodity prices are easing. corporate's are not going to be facing the same level of input cost treasures they had in the first half of the year. i think having said that, the environment is still kind --

is still quite uncertain. we do have to continue to watch for from the -- for fundamentals. >> we all the fundamentals have been pretty strong for the tech giants during the pandemic. we are starting to see the disappointing learnings now start to factor in. where do you see this sector going? >> we are quite cautious on the tech sector. for quite some time now, the sector has been met with several headwinds. it's been longer than just one quarter you've had supply chain disruptions, inventory corrections. in the near term, especially from what we are hearing from incorporates and the recent results coming out, this is a weakness that will probably continue in the near term. even if they are positive on the sector with no longer term, we are also quite cautious on tech in general in the near term. >> you say china requires a

nuanced view. the problem is we are trying to work out what the nuances are over the past few weeks and days. take a look at this chart. the biggest gain in about three weeks. . that follows the 14% plunge. if you look at growth fundamentals, there's probably an argument for value. how do you get past the political uncertainty on the regulatory uncertainty? >> i think with china, as you mentioned, it does require a nuanced view. have decide -- i think from our perspective, there are fundamentals from a growth level that will support within certain sectors or themes. for example, the political angle within china as we have seen out of the congress results last

week, the theme of localization within china is one that remains intact and if anything has been reinforced the past week. if you are looking for a growth opportunities within the market, it's not about blindly buying into the ongoing weakness but choosing where there is alignment with where policy is likely to be headed. >> without alignment, you point out things like national security wealth playing into the narratives. the payoff can be pretty high. you think with the consolidation of leadership, you basically get a straighter path to policy execution. >> you're absolutely right. i think whether you agree or not with how president xi has switched up his leadership, the one thing we can conclude from this is that if you think about national security, the says perhaps a faster path towards

that. there are plenty of beneficiaries within china that do well under that environment. >> when you take a look at the currency effects for companies like microsoft, we have started to see that the effect of the stronger dollar, how does asia hold up when it comes to the currency impact looking through the earnings? >> i think it would depend on the other line company. -- on the underlying company. we had areas results. what we can expect going into the current set of results, you have exporters out of north asia, korea that have done quite well, but you have to see how that plays into the margin profile of these companies.

>> we do have an alert for those trading in hong kong. we are hearing from hkx, halting volatility control and the derivatives market, saying the halters due to an external vendor software issue. the cash market is not affected and is operating as usual. the hong kong futures exchange is trying to work with the vendor to resolve the issue. they will make announcements in due course. let's get to vonnie quinn with the first one headlines. >> rishi sunak has reappointed jeremy hunt as the finance chancellor as he tackles what he calls a profound economic crisis facing the u.k. he has to strike a balance between rewarding loyalist and ensuring party unity. bloomberg has been told elon

musk has pledged to close the acquisition of twitter by friday. sources say the lender is providing $13 billion in debt financing and finished putting together the final credit agreement and are in the process of signing documentation. the move marks one of the last steps before actually sending the cash to musk. china's central bank and foreign-exchange regulator have found to maintain the healthy development of the country's stock and bond markets. also reiterating the yuan would be basically stable. comments that were made at the party congress rather than in reaction to this week's markets. australia is warning of higher debt and mounting deficits. the treasury figures showed the deficit will widen from 1.5% of gdp this fiscal year to 2% in 2025. the increase will largely be driven by higher spending on the nation's disability insurance program and rising borrowing

costs. >> the global economy teeters again on the edge with a war that is unending, and global energy crisis that is escalating, inflationary pressures persistent, and economies slowing. some of them already in reverse. while we intend to avoid the worst of the turbulence from overseas, we cannot escape it completely. >> 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. ♪ >> we are getting some lines not from a conversation from u.s. president biden speaking to rishi sunak. the third u.k. prime minister this year. congratulating rishi sunak on his appointment. they have agreed to work together to support ukraine. the two leaders also agreeing to work to address challenges posed by china. president biden hosting a bilateral meeting also with the

israeli president today as well, coming through from the white house. we have seen the new pm, rishi sunak, naming an experienced cabinet to lead the u.k. through a profound economic crisis. we have now also seen that conversation between president biden and rishi sunak. let's get you over to belle for a look at the early movers. we have been focusing on downside when it comes to chip stocks and companies at the moment. >> still we are seeing a modestly moving hide today. . the question is how much of the depressed outlook for chipmakers is already baked in or priced into the shares. in terms of the reaction, we are seeing the sk hynix unchanged. the big headline we have been discussing is all they cut capital expenditure? they also had a 60% drop in third-quarter profit. they were not the only ones purporting numbers.

we had texas instruments with earnings after the bell in the u.s.. they also saw numbers pointing to demand weakness that is now spreading to the industrial markets. switching on now, we had a lot of other earnings as well after the bell that are really weighing on the nasdaq in the futures trading, including the likes of alphabet, earnings missed, we had microsoft, the revenue forecast fell short of expectations, and we saw the impact of a stronger dollar, slumping in the after hours trading. finally a bit more positivity with the numbers that came through from gm. we had basically general motors affirming that its guidance for the year, it's earnings also came in stronger. luxury sales of its cars and suv's are what held up demand. in terms of the reaction, we are seeing the automakers a bit higher and japan and korea, a bit lower.

a bit of a mixed bag so far. >> still ahead, the critical metals executive joins us live to discuss the spac deal to go public on the nasdaq. first sk hynix cutting capital expenditure for next year by have after profit plunges. the debrief is next. this is bloomberg. ♪

>> microsoft end alphabet kicked off the first in a series of big tech earnings. investors did not like what they heard, sending both socks tumbling. alphabet missed. microsoft disappointed with its outlook. su keenan us with the latest. the strong dollar was a big thing here. >> we are hearing a reversal after hours. big tech had been performing well in the last few sessions. you will see a big decline. alphabet fell as much as 7.4% after hours before pairing its losses just a bit. the hits were from the strong dollar and weak revenue. google's advertising had been seemingly immune to that, in terms of weakness in digital ad

sales earlier in the year. apparently it is no longer immune. youtube also missed compared t to prior yearso. the comparisons, you have to remember a year ago, this is a company that was flying high, particularly with its ad revenue. turh said the microclimate remains complicated. that we are in a challenging environment. not too different a story with microsoft. even though microsoft beat both the top and bottom line. leading quarterly sales, rising 11% to more than $50 billion. but it was the slowest growth in five years, throttled by the surging dollar, falling pc demand, and weaker ad revenue, tumbling further once the cfo on the conference call dove into the outlook, saying revenue growth for the cloud unit would

be under pressure going forward. that is a closely watched measure of corporate demand. they said that could drop 5% in the current quarter. all of this is going to be of concern after wednesday's open. the zure unt as a bellwether of -- unit is a bellwether of corporate demand. microsoft also talking about strong energy costs going forward. so, again, that stop down and extended trading. >> looks like also the twitter musk drama may be reaching a conclusion. we are getting close to a closed deal this friday. >> it certainly looks that way. we know according to people close to the matter that musk was on a video conference call with the bankers and pledged to close on friday, 5 p.m., the deadline the courts have no impose for the deal to close. sources say the lenders have

finished putting it together. they are doing the final credit agreement. they are in the process of signing documentation. this move marks one of the last steps before actually sending the cash to musk. this could be the final chapter in this high-level month-long drama of whether he would actually close after trying to walk away from the 44 million dollars deal. twitter stock, behaving in a manner you think that it would. trading as high as $53.18. approaching the $54.20 acquisition price. they really think this deal is going to happen this time. the devil is always in the details. there are probably many on wall street saying they won't believe it until they see it. stay tuned. >> anything could happen when it comes to elon musk. su keenan there. we've had another dire warning from a global chipmaker, this

time from sk hynix. the memory chipmaker has slashed next year's warning of an unprecedented downturn in demand. let's bring in stephen engle and hong kong. we add this to the long list of chip warnings. . this is about the post-pandemic dra on demand -- drag on demand from pc's? >> not just computing, texas instruments is also going to slow down go beyond just computers and phones into automobiles and industrial equipment. i will get to texas instrument in a moment. sk hynix in the memory chip business, confirming what other companies have been saying already. we have those warnings from micron and others, slashing output plans in response to dwindling to borders, tsmc cutting its cappex spending this year by 10%.

samsung reporting its first profit drop since 2019. you see the trend here. now with texas instruments, those shares sank considerably overnight, spreading beyond the computer industry and phones. t.i., texas instrument has the largest customer list in the semiconductor industry. but producers of cars and industrial machinery contribute more than 60% of the sales of -- of its sales. you look at sk hynix, operating third-quarter profit fell 60% to 1.7 trillion w on, miss some estimates consider ably. sk hynix diagnosed the semiconductor memory industry is facing unprecedented deterioration in market conditions. >> you can get a roundup

of all the stories in today's edition of "daybreak: asia." go to dayb . you can customize your settings so you only get the news on the assets you care about. this is bloomberg. ♪

>> widespread power cuts may be a sign of things to come. water rose are also hitting the massive dam part of a global how drew power crisis that is being made worse by global warming. let's find out more with dan murtaugh. how about his association and the risks associated with

hydropower production? >> the situation is pretty bad almost everywhere in the world. if you look at the u.s., september and october will be the lowest output months and six years for hydropower. china's hydropower dropped by 30% year-over-year in september. in europe, there's been a drop of 75 terawatt hours this year. all around the world, the world is having to lean on more fossil fuels to make a further gap. that is leading to increased emissions. emissions which were sort of looking like they might have peaked last year and the power sector are now looking like they may increase again this year even after all this effort through the different climate programs to try to curb emissions. what we are trying to do is halv e them by 2030 and instead they are still climbing up. a large part of that has to do with these droughts. the weather is always fluctuating and seasonal pure

lead but what we are seeing with climate changes there is an increased frequency and intensity of these kinds of droughts and heat waves that are really affecting hydropower. so it is the cool irony of climate change, hurting one of the technologies that could help a bird -- avrt it. >> are there other ways it could be solved without necessarily increasing fossil fuel use and thus emissions? >> yeah, there are. right now, if you look at china, one province's government is looking at building thermal power plants, increasing the risk of burning will fossil fuels, more missions. but there are other ways of filling the gap. one of the more popular ones out there is combining floating solar power -- solar panels

on top of reservoirs, building power lines and using sort of geographic balances. one hydropower is low in one place maybe you can bring in electrons generated by wind and solar and the other to keep things in balance without resorting to more fossil fuel use. in the near term, what we're looking at is probably going to be an uptick in new coal power plants. >> that was bloomberg's asia energy reporter, dan murtaugh. general motors beat third-quarter profit estimates on record revenue. passing analyst projections of $1.89. gm also maintained its full-year profit targe of $7.50 a share. lotte group, doubling down on

opportunities in europe and at home after the launch of its pharmaceutical arm. the planned expansion of lotte biologics will build on the $160 million acquisition of a bristol-myers plan to new york. the south korean conglomerate is looking for more buying opportunities in boston. more to come. 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.

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>> let's take a look at the

inflation numbers we are expecting out of australia. a key reading given the pathway the rba finds itself having to choose between in terms of potentially slowing the rate of rate hikes as we see the past through particularly when it comes to the property market. we saw the budget update as well as the significant changes when it comes to expectations of the fiscal health for australia's economy in the future. we are seeing some of these numbers come through when it comes to the third quarter trimmed mean cpi rising 8% quarter on quarter, higher than the 1.5% expected. rising 1% quarter on quarter. a little bit softer than that, 1.5% of expectations. a rise of 1.8% quarter on quarter higher than expectations of 1.6%.

of the trimmed media number also beating expectations for the year on year basis. 6.1% against 5.5%. consumer prices on a year on year basis rising 7.3% against estimates of 7%. let's bring in our chief asia correspondent. we see this continuing to add to the challenges policymakers have when it comes to the direction of the central bank in terms of raising rates. the pressure points we are starting to see across the border economy -- the broader economy. >> the narrative out of australia was inflation was meant to be coming off the boil a little bit. economist's were talking about cheaper petrol prices and wage pressures have yet to take off. expectation was the core reading is certainly going on the wrong direction and that is going to light up this whole debate again. what the rba will have to do,

the got some attention for slowing down the pace of rate hikes recently, now there's a question whether they were hafted to larger interest rate hikes despite the concerns on the impact on financial stability. these numbers out of australia show you how broad-based pressures are now. it's not going to be a simple unwind. it's clearly heading in the wrong direction as to where the rba wanted it to be. >> the rba, 20 other direction, what needs to happen, do they need to adjust? >> most people are saying that the spending measures are not necessarily inflationary. it seems to be fairly careful hand from the new government. they are not going to be going in opposite directions. people are saying that wage

prices in australia have not taken off. that is very important. that will take some pressure off them of course. when you have these core readings in terms of where inflation is headed, it does mean they will have work to do. the debate will be about, can they go by these 25 basis points or larger size moves? if larger size moves, you will have a lot more scrutiny. still a very tricky balancing act for the rba. >> we spoke to the australian finance minister, katie gallagher. she says a government put together what it thinks is the most responsible budget and highly uncertain times. she told paul allen more work needs to be done in finding budget savings. >> it's a very responsible budget showing spending restraint in light of this inflation challenge. going forward, we will have to

have a discussion about how we meet those expanding challenges against a budget deficit. >> it did manage to retain some key promises around paid parental leave, the childcare payment expansion, but you also cap the tax cuts from the previous administration. i couldn't help but notice that election promise did not get mentioned in the budget speeches. is there something you would rather not have done? >> we are reflecting the budget as it exists. that is why it was not mentioned. it does not come in for another two years. our focus really was focusing on what we needed to do right now over the short term. you can see that in the first two years where we really are staging our spending investments, looking at

returning the upside we've got from commodity prices. returning that to the budget, starting the weaker budget repair. there is no doubt we will have to have a discussion about all parts of the budget and how we make the challenges of meeting debt, dealing with the deficit, and the spending challenges coming our way. >> getting gallagher speaking to bloomberg's paul allen. >> the former pakistan prime minister says he plans to start a protest march on friday demanding early elections. he was ousted by a no-confidence vote in april, majoring a major push to return to power. elections will not happen until late next year, the government says. a russian court has upheld and nine year prison sentence handed to brittney griner for drug possession. pleading guilty to possessing cannabis oil and vape canisters

saying she had made an honest mistake. the biden administration has offered to exchange for two other russians jailed in the u.s.. jimmy lai, found guilty of fraud. the 74-year-old serving 20 months in prison for his role during the term 19 antigovernment protests. he also faces charges under their beijing impulse national security law. lai will be sentenced in november. booster shots from moderna and pfizer don't do any better than current vaccines in raising antibody levels against the dominant covid strains. the research contrasts sharply with pfizer and be on tech's -- biontech's claims earlier this month. the results still need to be confirmed in larger studies. 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. ♪ >> hedge funds are taking a conservative turn which is adding selling pressure to stocks and bonds. and is tracking industry trends. >> that is quite interesting, what is going on in the hedge fund industry. we actually have seen hedge funds outperforming stocks and bonds. when you take a look at the net leverage data, we've got these numbers from goldman sachs and morgan stanley. we understand that goldman sachs has cut their net leverage by almost 20 percentage points to 66%. that is a year low. morgan stanley, also reduced by similar levels. what's driving that is this concern you can really see reflected in this chart, as the fed tightens, and puts further pressure on belt-tightening here. what we understand is they want to make sure they are not getting too close to levels that

would force them to sell, reflected in the relative health of the sector as well. you can see liquidations for hedge funds are still below that mean here, the 2015 average year. -- here. >> coming up next, we have a big spac measure. tony stage joins us to explain the deal creating a $970 million nasdaq listed company in this critical metal. this is bloomberg. ♪

>> take a look at these australian lithium stocks. they have just been soaring. pilgrim minerals, looking like 66% year to date. sizable upside when it comes to allkem, liontown. focus has been on chinese producers pushing to keep up with the aggressive investment in overseas assets as well as trying to secure raw materials including lithium at competitive costs. european lithium has agreed

to go public on the nasdaq for a merger with sizzle acquisition. this could be the first licensed lithium ion in europe. with us is tony sage. great to have you with us. you have not had much sleep over watching how the debut was made. how did you find the reception, given it is a very volatile time for the market to be doing any kind of deal or making a debut? >> spac deals have not been so popular in the last six months i would say. but for sizzle's stock price to hold up overnight is fantastic. they have gone through a massive dilution with the purchase of the wolfsburg project. to hold up quite well,

we've done a good job in explaining it to the shareholders of the spac, that it is a very good deal for them and a good deal for the european lithium. because in australia, we are swamped with so many different lithium stocks in australia itself. being in europe, there's a lot of skepticism. but it will be the first -- it is the only licensed mine in europe. that skepticism, being in a bigger market,

a bigger market where we're going to be more accepted. again, i always reiterate there's so many lithium players in australia that the fund managers here sort of ignore a smaller operation in europe. and again, i was i keep on saying underneath the scapegoat, but the mine is completely

underground. the plant is going to be built underground. we've had absolutely zero environmental issues come up with all three levels of government. that's the local the state and the federal. in fact, they're pushing us to get this going. they want to see this area of austria become a a long term eva site. are you from mine? want through are you able to look beyond europe at this point? any plans for expansion and after this. yeah, look, once we've got the the market cap, if you like, of us being listed, once we get through the approvals, we'll be able to look beyond europe that we've got an eye on a few deposits in europe ourselves. once we get to a critical mass. so yeah, we won't only just be operating in the wolfsburg mine as critical metals going forward. and how do you or can you predict prices going forward?

do you see a level of demand, destruction happening at a certain point? no, no, i don't. as i said, a lot of the supply is going into china and china. own eight are growing as it was with rare earths. and at some point, if china decides to completely electrify its taxi, bus, etc., etc., fleet, they might need all that lithium legislation probably-- and theyt nationalizing their industry. the vote went to 102-60.

they need a swing to nationalize the whole of the mining industry, that is the way it seems to be going. i think that uncertainty has driven the price government lithium hydroxide is now at $75. $350 a ton for the concentrate. it's now at $8,000 a ton. i don't see that you are going to see any new projects stopping the rise. >> tony stage, got to have your with us, executive chairman at critical metals. this is bloomberg. ♪

>> chinese stocks have rebounded after losing more than $90 billion worth of market value of the day before. that historic selloff was triggered by president xi spooking international investors. bloomberg columnist says it will take a few gentle gestures from beijing to stabilize the markets. shuli, what sort of gentle gestures do we need to see an order for investors to want to invest in china at a time when you also have a slowing economy? >> well, global investors are

very worried about xi jinping's party slogans. for example,, and prosperity, the associate that notion with wealth destruction because it was first floated amidst the big china tech correct on last year. one thing beijing could perhaps do is invite the self-made millionaires back to beijing and say what you could do to help us develop china's tech frontier. to show that china still appreciates private. entrepreneurship another thing people are worried about his so-called circulation slogans. basically focusing on china's domestic economy. the people are worried that it is a signal that china is closing itself to the world. especially with three years of covid zero and border lockdowns. another thing beijing could do is say, let's quit the number of quarantine days or reopen the

chinese border, let the foreign business and come see china for themselves, that overseas chinese go home to see their families. is been three years. >> you say that gut wrenching volatility and downside be expressed in the stock market, msc i china underperforming its global peers. where's the national team? are we going to see them come back? and that will provide some stability or signaling to the market? >> i think we don't even know who the market team leaders are at this point. the pboc government is not going to be there. when we look at the pboc statement overnight, it feels like the audience is towards one person, president xi jinping. they kept talking about the party spirit. instead of trying to stabilize the market. at this point, we don't even know where the yuan or china government bonds will be going because the pboc government is

going -- it is basically a mess up there. >> maybe we should be asking the question rather than where's the national team, who was the national team now? we are just over half an hour away from the opening in china and hong kong. david ingles joins us with what he is watching. stocks managing to find the floor, with the you want. >> 15,000, i know we like to talk about nice, round numbers. the reason i think that one was important is because the blowup up that we monday actually took out some nice round numbers and that actually took out a lot of output options. that access to the point shuli was talking about, volatility. the i'm sure you want is unfocused again, again moved by the allowable limit of 2% from the fed. we will look at what's going to be happening. what the vix looks like.

is it yuan weakness or dollar strength? it. . is still largely dollar strength. recently the yuan has fallen against the basket. that might be something to consider. it is also a big earnings day today. i'll coming out with earnings against the backdrop of a slowing economy. when you look at projections for gdp this year, they have fallen in tandem with ex earnings expectations -- with earnings expectations. big miss, as far as a materials and the industrials were concerned, underscoring the point that this is still a slowing economy here. >> talking about misses, we have seen the disappointing earnings from those tech giants here in the u.s., really being felt across asia. those are some of the stocks we

will be watching when it comes to the tech sector. we are also watching semi conductors, given of course disappointing earnings from sk hynix and texas instruments. both signaling the global chip slump is riding. >> we will be talking through the latest selloff with fidelity international investment director catherine y., plu eric francis. met is it for "daybreak: asia." stay with us. " bloomberg markets: china open" is next. this is bloomberg. ♪ te a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect.