haidi: google and welcome to

daybreak australia. kathleen: u.s. megacap earnings showing a tighter fed policy and a strong dollar. haidi: i met up plunging after hours after in -- meta stocks plunging after hours. kathleen: let us get a quick check on wall street. 24 hours, disappointing megacap tech stock news weight on stocks today. a three day winning streak, the biggest loser was the nasdaq. nasdaq futures continuing the

decline, 2% for the day, the s&p 500 is down just under 8%. the futures hitting above, getting a bit of a bounce. yesterday it was microsoft and google reporting such results after the bell. met out, we will talk more about that, now 19% -- down 19%. the bond market, let me touch that because it was interesting, the 10-year note fell below 4%. as a bank of canada, that was the big news in the morning, if 50 basis point hike instead of the expected 75. the fed have a lot of economists and pond water saying that is probably not going to happen.

oil is of the most in a week, u.s. exported a record amount of crude on record, 11 point 4 million barrels in one day last week. the dollar is down nearly 1%, the lowest level in three weeks. look at these tech stocks again. apple is reporting tomorrow and that will be a big focus. alphabet yesterday now looking so hot. twitter, elon musk walking into headquarters carrying a sink, he will talk with employees on friday after the store in the washington post that he may fire 75% of the workers. his first job is not just to tweet things out and let people know that the new boss is there and we will see what happens next. annabelle: twitter earnings are on the table for next week.

this slide we see in companies who rely on ad revenue online and putting more perspective into the size and the scope of losses because meta stock is down 50% and it lead to declines for its online peers. snapchat is down 80%, pinterest is another one that slumped. alphabet kicked us off earlier this week, reinforcing the concerns of a slowdown in the market. this is down more than 30%. more concern around the health of these companies are facing an environment of high and rising rates. we have a head when coming into the session but the flipside of that you are mentioning is a pullback in treasury yields -- we have a headwind coming into the session and we are seeing a pullback in treasury yields. also new zealand is trading flat here at the start.

there is another factor that can always unseat the apple card, those are the tensions between what china wants and the west. haidi: you see the to-and-fro when it comes to the types of trading momentum that we see. the nasa golden dragon index, take a look at that as an -- the china golden dragon index, take a look at that as a proof of a record selloff. the the best two day gain. we saw some verbal support for the yuan from the regulators saying that they want to see stability. we have the chinese bank selling dollars to drive the big rebound we saw in the yuan as well. this is the question, what does vision paying -- what is xi

jinping planning to do with his power? how much does that competition with the u.s. still play into that? it is a massive bunch of contradictions in terms of economic growth while walking down cities, technological supremacy while we see restrictions. we see wuhan coming under lockdown again. kathleen: i want to come back to the golden dragon index. it was down 21% a couple of days ago. investors vote with their feet and their vote is we will wait to see how this all shakes out. the bank of canada was quite a surprise. the biggest economy in the world. they were expected to do a 75 basis point rate hike. instead they do 50. the bank of australia, surprising people with 25 instead of 50.

because this was less and because people are waiting for the fed and the bank of canada following up with what the fed has been doing, that got people saying maybe they are going to be -- the fed could be opening the door too. also, like the fed, the bank of canada is giving us hawkish language around inflation as they worry about inflation. you may not remember if you are not following the bank of canada closely. they did a 100 base rate hike. october had a 75 basis point hike. if a central bank that has been so aggressive like the bank of canada has been ready to start not saying we will stop hiking rates, but to ease it out as they see the risks around recession feeding the narrative of what the fed may do. haidi: let us get some of the

big stories dominating trading today. let us bring in ed ludlow and emily. this continuation of the bad news flow out of technology, meta was a disappointment. >> investors soured when it came to revenue. softer than the street was expecting. it was a tough advertising environment because of granular detail on the weakness that they are seeing around large advertisers and areas like e-commerce and finance when it comes to the specific ad markets. the thing that investors are upset about is the spend on meta reality labs, the transition into the metaverse. that recorded less revenue than expected and right now people are not buying headsets and are not committed to having the investment in the unit,

they are asking them to cut that. moderate the pace of growth. after 2023 they are trying to arrange for investors and say we are looking carefully at our business operations being more efficient and a headcount. the headcount reduction going into 2023. kathleen: meta getting less meta it seems. we are getting pain in the tech sector. how is about playing out? we are probably looking at what you are saying and what is expected. >> core housing data was not enough or equity investors today, these are two events normally would spark optimism, a pivot, now the fed will turn, it

was all about big tech earnings today. we saw the nasdaq 100 dropping 2%. we saw some pretty jarring movements under the surface where investors were rotating into value stocks and small caps. we had the russell 2000 up 4.5% to finish the day. we have not seen the nasdaq trail small caps this much since 2021. investors were looking to where to put cash and showing the federal reserve that lifted when we were in the monetary stimulus period, it was lifting all boats. that is not what is happening when you have earnings the disappoint investors. haidi: there are a couple of big macro stories and geopolitical stories that are stressing investors out. this dim outlook when it comes to the chipper sector and what

that means for broader demand. >> going back to the earnings because it has been that equity investors seem to be punishing companies who miss on earnings more weather it is in the technology sector, whether these companies are exposed to geopolitical risk and have the stronger dollar weighing on them. bloomberg intelligence was compiling the data between if a company missed on eps and sales and how the stock performed one day after the earnings report. we are saying it is less than average. the bank of america also compiled this data. they go back to 2000. look at how companies are performed after missing both on eps and sales. it has trailed the s&p 500 by 600 basis points. these are investors pouring out of the stocks that are missing earnings at a pace we have not seen in the last few decades.

again, a lot of jittery investor nervousness around these earnings that were supposed to bolster the market. it is not just happening -- it is just not happening. alphabet missed on eps and sales and their stock falls. kathleen: elon musk sounds like donald trump. people love him or cannot stand him but he is always entertaining. the thing that makes him so endearing to some people. >> he walked into the twitter headquarters and i am told by twitter insiders that the sink you see him holding, the joke is he is in the building and he wants twitter staff for that to sink in, that he will by

twitter. that is what would an employee's take on the situation. we have reported in the last hour that equity investors who are buying into the equity and financing portion of the have transferred funds elon musk's team. he had held a conference call with the banks that he was going to give the borrowing notice to the banks that the debt cash would go into escrow thursday and that it would help market the debt portion of this deal because it has to be sold to wall street. we are moving towards a situation where this deal closes by 5:00 on friday. that is imposed by a judge and elon musk will own twitter. what happens after that is another discussion for another day. kathleen: there you go. u.s. officials have been forced to scale back a plan to impose a cap on russian oil prices following skepticism by investors and growing risk in an

markets. why has the calculus around the price cap changed? >> when janet yellen started on this plan back in may, we were looking at a pretty different set of scenarios in the global and financial markets. oil prices and energy prices were volatile but we did not have spillover risk from the u.k. adding to potential financial stability risks. we also did not have the level of escalation from president putin we are seeing now and if i more turmoil ahead with the federal reserve leaving a lot of developing -- seeing more turmoil ahead with the federal reserve leaving a lot of developing economies behind. this has changed quite a bit in five months and by the time it comes out next month or so it will look a lot different than

it did. haidi: there are concerned this was leading to greater volatility. what differs from the initial proposal? >> insiders in the biden administration are telling me that in the beginning as they were building their proposal they were looking at a price range for the price cap at which to put a lid on the amount of money you can pay for it russian crude and between $40 a barrel and $60 a barrel. there were trying their best to hew to the lower end of that and it will be 60 or maybe even above $60 a barrel. that means russia can make more money and finance more of their war initiatives. the key goal of the price cap plan is to keep russian oil on the markets in order to keep stability in energy costs but at

the same time limit the amount of revenue that putin gets from these deals. that is being stymied a little bit. when yellen sent out a coalition around the world to limit the amount of money that russia could make out of oil sales, she was hoping the administration that companies would -- and the administration was hoping that companies would sign on. we are seeing is beyond the g7, few countries are willing to sign on right now. china, two major buyers of oil has completely ruled out joining . that is also complicating are undermining some of those efforts -- and undermining some of those efforts. haidi: let us get over to the first word headlines. >> antony blinken has again accused china of trying to speed up its seizure of taiwan.

china is undermining the decades long status quo that has kept it out of the u.s. from going to war over the island. beijing's taiwan affairs office as china is closer than ever of realizing reunification of the motherland. vladimir putin has overseen drills simulating a nuclear retaliatory strike. it included launching intercontinental ballistic missiles. they said it was a routine exercise. jeremy hunt is facing a fiscal shortfall when he sets out the government's tax and spending plan last month -- next month. rishi sunak has delayed an economic statement. list truck -- liz truss backtracked on her economic

plan. iranian state media is blaming extremists for a mosque attack. gunmen stormed a shiite mosque. the attack came as protesters elsewhere marked 40 days since the woman's death in police custody sparked the biggest antigovernment protests in a decade. 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. haidi: a bank capital led group is taking hitachi metals private. the private equity space in japan with bain managing director david gross loh. wyatt nancy thanks -- why nancy

thanks equities can be a good buy in a bad neighborhood.

>> you are going to see inflation in the u.s. it began to come under control. it will be a two-year period. you will begin to see that both hopefully quickly. i think people are overestimating the federal reserve's actions as they underestimated it. kathleen: that was steven mnuchin speaking. let us bring in nancy daoud. it is nice to have you back on the show. i want to ask, this feeling that the fed has not finished hiking rates. the main factor, something hitting the tech stocks in the past 24 hours, what are you pricing in right now into your portfolios and regard advice to

customers about what the fed will do? do you agree with steven mnuchin it will not be as bad as people think? >> i believe that mr. powell is going to raise the interest rates another 75 basis points in november. i believe him when he says that. there is a lot of noise in the market that he will not go as far because of what happened in canada and other countries. i do believe that they are going to stick to their guns and raise the rates in november and again in december. mainly because the only reprieve that will cause them to pause will be signs that inflation is subsiding. we are not there yet. that is really the big story there. no matter what the noise is about, that is in fact going to happen. until then, we are going to have a very volatile time until the end of the year.

kathleen: we wait for inflation to come sustainably down. that could take a long time. if that is the case, what does that mean for technology stocks that can be so sensitive and other stocks the people used to make money? >> i do not think it will be that long. i think it is within the next year and possibly into 2024 which is in the scheme of things is not long-term. tech stocks have taken the biggest meeting of all in this environment because interest rates are never a good thing for those stocks. it was nice to see a bit of a reprieve in the last seven or eight days in the market. that was helpful. the reality is interest rates will drive these stock prices down because of the nature of what they go by. haidi: we have seen others

performing in a separate direction. we see the sliding situation when it comes to the broader market rather than the year end benefiting value? >> i do believe that value stocks are probably the best bet at this time for the faint of heart. it could be very daunting to go through these major upswings and then a huge downswing again. it will i believe continue. although we have had a really nice october so far and it has been good to see some green as opposed to a dismal september, there will be more of this. the only thing that will begin to turn this around will be inflation numbers that are showing some improvement for a good number of months, not just

once or twice. haidi: anything international? >> that is a tough story. unfortunately we have stayed close -- minimal in international stocks. the reason really is because we saw a early on in the year that the rest of the world has not really recover it as much from the pandemic or nearly as fast as the u.s.. many cons of the russia and ukraine were, there is so much turmoil in europe, this is more than it has affected us. western europe will be going into our session and there is a great deal of turmoil in the u.k.. there is a great deal of concern about supply shortages and the cost of energy. even when you find these small nuggets of perhaps some profits

by the time you have the currency exchange, the dollar is still strong. it is best to stick with the u.s.. haidi: great to have you with us. more to come on daybreak australia. this is bloomberg. ♪

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u.s. officials have been forced to scale back on plans to impose a cap on russian oil prices. instead of a strict ceiling, the u.s. and europe are likely to settle for a more loosely policed cap at a higher price. they were told that they cap could exceed their range. the bank of canada signaled it is nearing the end of his interest rate hiking campaign. the lending rate is up by 50 basis points instead of the 75 basis point expected by most economists. the governor says while the hiking cycle is reaching the end, more are to come. we need -- >> we need to relieve price pressures. we expect growth will stall in the next few quarters and growth will be close to zero. when we get through the slow down, growth will pick up and our economy will grow solidly

and the benefits of low and predicable inflation will be restored. >> wuhan has locked out one of his district after 18 covid cases were found. 900,000 residents have in order to stay at home until sunday with all nonessential businesses closed. china reported more than 1200 cases, the highest number in two weeks. lockdowns are in several cities including a city that is home to 19 million people. a new report paints a grim picture of global warming. it says earth is on track to warm by more than two degrees celsius by the end of the century despite plans to cut greenhouse emissions. the good news is that predictions and omissions will not increase after 2030 -- emissions will not increase after 2030. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. kathleen: nasdaq futures

pointing to further losses after another big tech earning disappointment. let us discuss with annabelle. we could be facing more market declines ahead, it seems? annabelle: that is what we are hearing because when you take a look at some of the moves who are seen in after hours, given the note from meta with the slump in the digital ad outlook. peers also declining, alphabet, similar issues. a lot of concerns about the health of the tech sector weighing on the bottom line for companies. the impact of a stronger dollar, inflation, rising rates. a lot of pressure on apple given that stock and amazon will be the first one is reporting. the heavyweights on the index. pimco is among those saying that this could be a signal of what is to come. we have not seen the bottom yet for stocks. that is because the concerns as

i was mentioning. pimco has been applying into this, what they have been doing is resetting their shorts higher and using that as an opportunity to get more underweight stocks. we did speak with the portfolio manager there. she says the bottom line is more pain is ahead here. we have not seen the worst of the selloff. haidi: morgan stanley thinks the bear market in the u.s. could end sooner than what investors are pricing. annabelle: we had an interview with the chief u.s. equity strategist. he is a well-known stock market skeptic. he correctly predicted the slump earlier this year. he is saying that actually was stocks could move higher in the months ahead as investors transition to face inflation and rates risk in the market. he says in terms of the timeline, he shared that with

us, take a listen. >> the bear market will be over in the first quarter. this is subject to revision. i want to be clear if the market starts to trade off again, the s&p breaks down and blows through 3650 on the downside, will be bearish on the downside again. annabelle: the s&p 500 can reach around 4150 in the first quarter of next year. over the long term we should say towards the end of next year, declines for stocks back around the current levels of 3900 and then the overall bottom for stock is around 3000 for the s&p 500 500 index. haidi: bain is expanding in japan as competition heats up among the biggest private equity firms win deals.

david, great to have you with us. why japan? why these special interest in that market? what opportunities are you seeing? >> great to be here. japan is really coming into a bit of a golden age for private equity. there has been a tremendous amount of development and the infrastructure support and the private equity transactions we and others do. has been a serious focus on governance and large corporations, they are trying to be more efficient and therefore divest some of their business operations. you also see a lot of founder owned businesses that are looking for succession alternatives and that is grading opportunities. we are saying the convergence of a number of these forces that is creating a lot of opportunity. haidi: i have to ask about the

weakness in the yen. is that creating more value? >> as a short answer is it is hard to tell over the long run. we are having a focus on the long-term growth opportunity. can you really transform companies over a 5-10 year period. currency will move up and down. we will see where where that goes in the future. there is some economic drivers behind that in what is happening in interest-rate property and the doj is really holding the line here. in the long-term economic fundamentals, that is what we are focused on. they seem decent in japan over the next 3-5 years. a lot of businesses have opportunities to grow. kathleen: you expanded it to japan in 2006 and since then you

have completed more than 25 investments. what has been the hardest thing about doing business in japan? has it that started to change? has it gotten harder? >> had been involved in japan in this area for over 20 years and i think it is the education process to bring people up to speed about what private equity is and what it is not that has a long-term focus that builds businesses and helps drive efficiency and longer-term success. in the beginning people are not familiar with this model. talking to key business leaders and government officials and doing transactions and ultimately we are successful about repositioning and growing them, that enhances the credibility. the biggest challenge and what has been accrued in the last couple years.

kathleen: what is the change that japan needs to make most urgently right now? >> i think it is this continued process of greater focus on long-term shareholder value and equity. even greater transparency and globalization of businesses. there are tremendous technologies and amend his r&d assets in japan. in some cases, this is not had a global focus. in some cases they have been focused on too many things. this notion on focusing where they had strengths and trying to be successful and not five or 10 areas, having a global mindset, those are things that are long-term structural changes that will increase productivity and help japan generate economic

growth. haidi: with the cost of borrowing rising outside of japan, we are using opportunities for deals? -- where are you seeing opportunities for deals? >> asia is different because you have not seen the same pace of interest rate increases. in japan and korea, there are significant opportunities. india, we are seeing a real interesting period in india where you see the benefit of some of the rebound of the covid dislocation. the structural changes in the economy that have been pushed forward by the modi government and the population secular growth that has been experienced. that is grading a lot of opportunities. we also see opportunities in china. china is going through a transition right now. there are sectors benefiting from enormous growth, health

care, consumer areas. service areas that are supporting the manufacturing base. in short, there is a lot of growth. this is the most growthful part of the world. there are increased borrowing costs creating pressure by their is a tremendous growth opportunity. -- but there is a tremendous growth opportunity. kathleen: coming up, antony blinken says beijing is trying to speed up his seizure of taiwan. more on our interview with the top u.s. diplomat coming up next. this is bloomberg. ♪

haidi: antony blinken told bloomberg in an interview that he believes beijing wants to speed up his seizure of taiwan. this is average and paint consolidated his leadership by installing loyalists in top government positions. let us bring in stephen engle in hong kong. i thought from the party congress speech that there did not seem to be a sense of urgency when it comes to the taiwan strategy. what exactly is antony blinken accusing china of? >> china has long played the long game on the reunification with taiwan.

he read the signs and you read through xi jinping's speech at the party congress and national security and security as a whole has been raised in priority. he mentioned taiwan and the party congress. they put it the communist party constitution resisting any independence moves by taiwan. he has amped up the rhetoric on taiwan for sure. antony blinken was at the bloomberg headquarters and he essentially expanded on comments he made last week that he feels that beijing has accelerated the timeframe for reunification. let us hear from the secretary of state. >> what has changed is this. as decision by the government in beijing, the status quo was no longer acceptable. they wanted to speed up the process by which they would pursue reunification.

>> in the interview, he also accused beijing of using coercion to try and speed up or pave way to force taiwan to choose reunification over the path of independencebeijing offd their desire to eventually unify the mainland with taiwan. this is what they taiwan affairs office spokesperson in beijing says. we are closer in ever than history -- we are closer than ever in history, we are also confident of their invocation of the motherland. we are more than capable of realizing national rejuvenation. beijing is putting this as more of a priority than in years past. the long game may come the short term priority -- it become the short term priority.

kathleen: xi jinping has limited the participation of past leaders in china's decision-making. what does this mean when the former president was ushered out of the national congress? >> we can read a lot into that. the world has seen the video of the 79-year-old man looking fairly frail and the state media of china has indicated that he was ushered out of the great hall of the people for health reasons. given xi jinping's stacking of the standing committee with loyalists. you draw the parallels. was this buck ushering out of the old guard? a news agency readout of the decision-making process by xi jinping for his standing committee essentially said that xi jinping sought the advice of party leaders but not the old

party. the last party congress, when the readout of xi jinping's decision-making for the standing committee included old party comrades. there was no mention of old party comrades. it is reading tea leaves and between the lines. clearly xi jinping has stacked his standing committee with loyalists. we have seen the market reaction all this week. essentially xi jinping is closing ranks and essentially having smaller groups of confidants in his decision-making processes. kathleen: more than ever what is happening in beijing is one of the top concerns for investors around the world. that is stephen engle. the implications of xi jinping's vision is on the agenda in singapore. for more, we are in part eric -- joint by eric.

you are watching this, what this means, all of this, for the long-term capital flows into china. >> i feel like an amateur in the presence of stephen engle. we will talk about investors. that is something i do understand. the initial read on monday coming out of the communist party congress was that xi jinping's remarks at a what stephen pointed to, the stacking of the standing committee with loyalists is going to be terrible for investors. over the past couple of days we have seen the nasdaq golden dragon china index rally by more than 12%. people's fears have been eased. there have been noises and statements out of official tiny organs lending support to the market. that is for the short time.

we will see many such rallies any time there is actual or expected state support for capital markets. over the long run, it is hard to reconcile xi jinping's ambitions with the objectives of foreign investors. innovation specifically, the tech economy. innovation thrives when the market is able to reward the best ideas and capital is unimpeded by state interference in the economy. those are absolutes in this country, in the west, in the west at large, and although china was always a trade-off, people were willing to go for the growth and recognizing the limitations. we should go into some of the limitations that appear to be in place now, with the slightly more careful reading of xi jinping's remarks.

you have to go through it in detail as we know that human has done. -- stephen has done. haidi: going into this party congress, although the directions you went through, there is the yearning from some investors, you have to have risk appetite. >> may be more than ever! haidi: if you get the policy alignment right, it could pay off lucrative lee. when the consolidation of power it means the execution and the policy is more straightforward than ever. >> that requires so much faith in the ability of the central government to allocate capital efficiently. we do not have to buy into the tenets of capitalism but one thing we can say is that it has worked to generate economic growth over the past 150 years. they weaken mesh -- maybe we

can extend that. what the president articulated was the covid zero policy may be permanent, the has serious implications for growth. to imply that china is distancing itself from the air of market-oriented performance. -- from the era of market oriented performance. state owned enterprises, you will see the first time that word appears in the context of state capital and state owned enterprises. he has prioritizing some sufficiency in technology as opposed to a free exchange of ideas among companies and across borders. he has redoubled the commitment to the chinese context. there is a new militarism and a willingness to confront challenges from abroad including from taiwan or from what he perceives to be taiwan's allies. there is a doubling down on

security and the purse equation -- persecution on the state. that is what china has been calling for us 1978, economic development. kathleen: and makes me wonder if people have doubted what the fed has done. we will see if xi jinping does those types of moves. thank you for joining us. do not miss the new economy forum taking place next month november 15 through 17th in singapore. we will have full coverage with interviews on tv and radio. watch the full event on bloombergneweconomy.org.

haidi: we saw a rise in full-year cash profit, a be on estimates -- beat on estimates. what about the outlook? >> the outlook is clouded according to anz. pressures are rising over the next six months. the bank is well-positioned to

withstand this. a key number out of these earnings were the interest margins, 1.63%, up from 1.5 8%. this was expected to go up as the reserve bank of australia has been pushing rates higher. it has gone on more than expected, the pace of the rate increases is starting to slow. we saw the smaller than expected height, anz says more probably the environment will keeping supportive for those margins in the first half and seeing more mortgage lending recover. this was a sluggish area for the bank in the first half as well, seeing 6% growth. the bank says that that will continue to improve going forward. we are launching a digital loan product from next month. kathleen: do they need to be careful about framing the story around the results? >> the net interest margin

result is one that they have to be careful about bragging about because this is great news for shareholders. positive and it is up 1.4 two a dollar 46. the bank has been very slow to pass on the benefit of rising rates to his deposit holders. not so much as mortgage holders. it has got to be careful about bragging about this result. haidi: that is it for daybreak australia. we do have the start of trading in sydney in a few minutes time. daybreak asia as next as we countdown to the thursday session. this is bloomberg. ♪