kathleen: you are watching

daybreak asia. haidi: we are counting down to the market open in tokyo and seoul. agent stock futures are positive despite wall street losing ground on disappointing earnings. the dollar falling to a six week low. facebook's parent meta plunging after hours on an advertising slowdown. we hear from ravi as the exchange rate moves. >> i think so far they have been managing at well. kathleen: breaking news on south korea's economy slowing down a bit in the third quarter of this year. slowly exports and a weaker currency, rising interest rates

weighing on growth. the monthly number came in 0.3%, down from a 0.7% the previous quarter. gdp and year-over-year, 3.1% up from 2.9%. rounded off, two quarters in a row. look at the sectors inside because it of the detractors here is manufacturing, down 1%. if you have production of electricity and gas and water supply down, construction being down 0.1% in the second quarter. 1.8%. transportation is down, under 1%. real estate, that is important with rising rates, down 0.3%. flat the month before. different factors in there. the slowdown in china is one of the biggest concerns for people watching korea's economy and wondering what the bank of korea will have to do next.

give us the whole view of asian markets. annabelle: you mention what the bank of korea will be doing with the gdp numbers, big tech really feeling the impact of those rising rates. also here in australia we are seeing anz benefiting from a rising rates environment. also more momentum for housing loans, that also is a private driver. we have anz bank higher, they are concerned about the outlook but we are building into a fourth straight day of gains for the asx 200. a few factors benefiting the boost. we have the moves in bond yields in the three and 10 year both falling. reflecting those advances we saw in treasuries as well as the rally in prices. also being driven by the change in the dollar because the flip

of that would be the pullback we saw in the dollar index below the 50 day moving average year. the two day drop tuesday and thursday. what is important to know about this is it reflects concerns here in the market that the fed may need to be less aggressive. the u.s. and a new home prices come in, they fell in september, the concerns around how healthy the economy is and i have also seen that way on the tech stocks. kathleen: a wild ride in the past 28 hours with what the companies are reporting earnings and how they have been reacted to. meta down 19% in after-hours. the metaverse is more expensive to build out as sales weaken. a combination of twitter and elon musk going into the quarters with a sink in his hands.

alphabet rebounding a bit after getting pummeled in trading. google is down another 7%. the best person i know to talk about this is ed ludlow. >> let us start with meta. investors really soured. below expectations. we went into this knowing what the story is, softness in the ad market and it is causing executives on the earnings call to speak on that. her budgets have been reined in. what investors are not liking here is a zuckerberg and meta's commitment to spending in this transition to the metaverse. they said that we should expect deeper losses in the meta reality labs unit and through 2023 they will start to moderate the pace of spending and become more focused on headcount reduction and more efficiency and optics.

that is what investors wanted to hear right now, signals that they would cut costs sooner rather than later. that is not what is coming from meta executives. haidi: is the twitter and must finally sinking in? >> will it happen? whether it sinks in for me ever, elon musk did walk into twitter headquarters carrying a sink as he tweeted twitter insiders tell me is let it sink in, i will own twitter. bloomberg has reported equity investors in the new entity have already transferred funds to elon musk's legal team as a part of this deal. elon musk held a conference call with the bankers on the debt side of the deal. we believe that the borrower notice has gone into the banks and the banks will transfer the 12.5 billion dollars of debt proceeds into escrow in the next

24 hours and everything tells us we are on track for this deal to close by 5:00 p.m. on friday. let us talk next week about elon musk. the share price reacting such that this deal is set to close. haidi: there is never a dull moment when it comes to elon musk. stocks snapping up the three-day rally earnings. meta highlighting the fed hikes and the surging dollar. let us go to mark. the technology dominates the narrative and it is interesting we saw the dollar really reversing the recent direction. we are excited to see the currency effect play out. >> people are complaining about the strong dollar. the major companies in the united states take those issues

to the white house and then you may start to see the u.s. administration changes tax slightly and not be so supportive of the strong dollar policy. that has not happened yet but it is something traders are watching out for. right now, it biggest impact is in the treasury curve. we have seen a couple days of lower treasury yields and has an impact on the performance of the u.s. dollar so much of the dollar strength we have seen has been driven by the momentum in rising u.s. yield and other markets. that has been a big player in what we have seen. we have the ecb coming up later today, they are expected to do 75 basis points. the euro is about parity. that is a good move if the euro is breaking out of the long downtrend, that is a big wake-up call for currencies everywhere. this is the second most important currency in the

markets. when that starts to move, it can brag many things with it. all eyes are on the ecb today. got there with a hike and talk about changes to the system of lending money to banks in europe . it is controversial because it has almost been a subsidy to the banks in the climate. that will be a further burst to the euro. a lot more is going on in the central-bank world and we are aware, the federal be closer to the end and some of us have work to do. kathleen: china, let us go there. there is a big movement in the ghosn china index and the two big days of gains, does this make sense? they will calm down and went to see what really happens in china after the party congress. there is enormous volatility in

all things related to china equity. the volatility is getting a bit ridiculous. that's probably because we may have seen some capitulation from foreigners especially on monday this week. it was record sales by foreigners into the great china complex. that is hoping to get people comfort that maybe we can be close to a bottom if the last bullish people are finally out of the market and that is the beginning of a turning point. a tremendous amount of bad news has been priced in. the economy is party congress has not been taken very well by investors. there is not a complete surprise to people who watch china more closely. the biggest issue is the covid zero policy that needs to be removed. in terms of absolute evaluations, people are looking at china as they have been for a while. china stands out as being one of

the cheaper markets on a global context. you have the short-term traders who are looking at certain technical factors. if you take the index when it goes to 28 percent rebound, very close to 5000 this week it seems to be bouncing off of that. you have some optimistic short-term traders who think they can make a quick return even within the context of a long bear market. with the global markets, a little bit better or lower on yields, there is no reason for a few days of rally in the greater china area. kathleen: actions speak louder than words. we have to see how xi jinping follows up on this. that was mark. let us get to vonnie quinn with the first word headlines. >> southeast asian officials are doing a decent job of allowing markets to absorb shocks from the u.s. monetary tightening.

speaking us to bloomberg television, nas managing director -- >> it speaks to an anchoring of confidence in the economy and dislocation. a whole lot of things can happen when the exchange rate moves too fast too far. i think they have been managing up well. if the dollar appreciates much more rapidly than this, yes, we do have to be concerned. >> u.s. secretary of state antony blinken has accused china of trying to speed up its seizure of taiwan. china is undermining the decades long status quo that has kept it and the u.s. from going to war over the island. beijing's taiwan affairs office as china is closer than ever in history to realizing complete reunification of the country. vladimir putin has overseen military drills simulating a

nuclear retaliatory strike. it included intercontinental ballistic missiles and cruise missiles. the u.s. says russia had announced the drills calling him a routine exercise. jeremy hunt is set to face a shortfall when he sits out to take your the spending plans next month. market movement since the former prime minister backtracked on her budget plans mean the delay could save taxpayers $17 billion. 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: still ahead, samsung is set to announce its latest earnings report. supply and demand for the chip sector. we will have traders who are bullish on levels of cash.

rick explains why, next. this is bloomberg. ♪

kathleen: let us take a quick look at the treasury market. quite a day today with a day today with the 10 year benchmark dipping below 4%.

it has been a steady rally lower lately, the bank of canada doing a 50 basis point hike instead of 75. more signs of weakness in the u.s. economy. look at the two year yield, 4.0%. the 30 year at 4.13. we have u.s. mortgage rates, fixed rate mortgage up to 7.17%. the news making the investors feel like that will slow down the economy and it is time to buy more bonds. we will find out the opinion of someone who has been buying bonds for a long time. with the u.s. 10 year note yield falling, a classic warning of recession. people are wondering if central banks may be ready to get on board. let us bring in rick rieder, cio at blackrock.

good to see you again, rick. rick: thank you for having me on. kathleen: let us start with your view of the bond market. you could say that yields are so high and the fed will be so aggressive to bring down inflation and cause a recession, is it there a part where it is time to buy? rick: if you think about what has happened, this has been the fastest hiking of rates we have seen in history. simultaneously, the bank has been draining liquidity. this has been a historic move higher. you are pricing or you have got to pricing the terminal rate for the funds rate at 5%. i think some of what you said is important. we have to see when you see the mortgage rate, you have to see and i think the fed will start talking about there getting closer to pausing. it is slowing down about the bank of canada.

the front end of the yield curve, we have to buy the front end assets, treasuries are 4.5%. we have securitized assets, you can take not a lot of interest rate access, not a lot of credit risk and get paid 6% and 6.5%. you do not need to worry about the volatility and the yield curve. kathleen: i want to run a sound bite, he is the head of the poc and i wonder if you have any thoughts on if such an aggressive rate hike or who is out in front of the fed, who has also done 100 basis point hikes is saying i do not need to do 75% basic -- 75 basis hikes. he is not worried about recession but he is worried about inflation. >> we need to relieve price pressures. we expect growth to stall in the next few quarters. growth will be close to zero.

once we get through the slow down, growth will pick up, our economy will grow solidly, and the benefits of low and predictable inflation will be restored. kathleen: what is he telling us? what does it mean for bonds? rick: i think we are reaching a point where they are recognizing they have moved rates enough and even if you will go for more, you see a similar thing from the are b.i.. these things work through the system and it takes three months , 3-9 months to see the lag work its way through the system and see how it bites in the housing market. you talk about the technology, companies are worried that he topline revenue will slip and you have to bring your cost-based down. all of these things are working their way through the system. you can reach a point where you can start to slow down the hikes. we are not easing. people describe it as an

inflection point, all that means is you will slow down the pain that is taking place up to this point. you get a pause, you pause at a place that is restrictive which still dampens economic growth and should dampen inflation. that is a big deal, that is not going from tightening to easing. we will slow down the hikes and pause at a place that is restrict the -- restrictive. haidi: you were saying every day feels like it is a month, we keep throwing out these words like you say unprecedented, historic conditions that we are seeing this year. when you take a look at the debacle that is what the u.k. just went through, does that make you worry more about the tug-of-war between governments and central banks between fiscal and monetary and the chance of a policy accident in that space? rick: 100%. when you move policy this

aggressively, you get the u.k., when you are tightening monetary policy and easing fiscal aggressively, the world does not know how to deal with that. you also have the u.k. come all of a sudden you have the leverage. it was in the pension system and you saw most people did not know that there was leverage in the pension system. when you move this quickly, you run the risk you over tighten and you have to see where the gearing is. the housing market and commercial real estate market are places that are always where you get financing and have significant financing on a roll over your debt. once you move this much we have to see that and see how that plays out. see how the rollover financing manifests itself. it is unclear. how that will play out. these are historic times. we are coming out of covid zero policy, may be emerging in china, a war that is unclear as

a resolution, these are all tricky things i think once you raise rates this much you have to sit back and say out of all of these influences around the world, including the dollar would you talk about earlier, how does this all work through from here? haidi: it is super tricky for corporate borrowers at the moment. we are seeing interesting tactics to put off these payments. does that mean it is ever more salient to do shorter tenure and higher quality? >> you have to expect in an economy that is slowing, the brakes pick up. you described seeing some implicit leverage that comes through in terms of easier financial terms for high-yield companies and leveraged loan entities. you have to be a bit more careful. the yields were pretty

attractive when you can buy single high yields at 10%. the point being take a bit of exposure but be careful about how much you take. we are running lower than we have historically. if you do your research around some of these companies you are pretty comfortable, they have turned their debt out and free cash flow is pretty generous. whatever other state in higher-quality -- what i rather stay in higher quality? i would rather do that for a while and see what plays out from here. kathleen: since we have had the big concern in liquidity in the treasury market, i have interviewed the cleveland fed, the st. louis fed, neither seems concerned about the financial instability. what do you see there? rick: i am not concerned structurally, the illiquidity is everywhere.

treasuries, inflation swaps, it is everywhere. you have to be there. why is that the case? that is because of the convention levels are so low across the globe. you can look really silly in 24 hours. people are cautious. i do not think it is a structural issue illiquidity. i think this is a natural period of uncertainty. people are going to wait and see some things transpire. the depth of the markets, the depth is incredibly shallow. that is why you are seeing across the globe these massive moves. markets are superthin. the volumes are heavy but the liquidity at a price is really shallow across every market. haidi: great to have you with us. that is rick rieder, cio at blackrock.

this is bloomberg. ♪

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>> singapore central bank chief believes asia is not at serious

risk of a recession. he spoke exclusively with bloomberg. he was asked about the base case for -- best case for economic retraction around the world. >> that is likely. imf set the baseline is that a third of the global economy is headed towards a recession and the three jurisdictions mentioned are the ones at greatest risk. it is not unexpected. the markets expect it. but i do not think it amounts to a global recession. it is not a baseline view. it would require china and india to be near recession. >> but china already is in a recession. >> they are looking at just below 3%. most of the year is out. next year is uncertain. but there were no strong reasons why they need to be in that kind

of condition. if you remember, the reason why the major economies are going into recession is because of rapid tightening, which is totally necessary to bring down inflation. china has their own set of challenges dragging down growth, and the regional economies in asia are not at serious risk for recession. a slowdown in the global economy is not altogether bad. it relieves inflationary pressures provided the slow down is mild, short, and shallow, meeting over the first half of next year. if that can lead up to some easing in labor market tightness and slowing economy leading to inflation coming down in the second half of next year, i think the world economy is in a better place. >> the mighty dollar at a 20 year high.

there currency, our problem. currencies are reeling from the mighty dollar. at some point do you think the fed will have to bear in mind the pain, damage, carnage in this part of the world? >> that's a bit dramatic. [laughter] exchange rates are meant to be shock absorbers but if they move too much, too fast they become shock amplifiers. so if you look just at malaysia, thailand, indonesia, philippines, inflation is 5.4%. not unduly high but high enough for central banks to be concerned. u.s. inflation is much higher, 8.4%. so u.s. fed tightening has been faster than in most countries because they are facing an inflation problem they need to deal with.

i think they are doing the right thing. the implication is when you have differences in inflammation rates, it will reflect that. all economies have the concern that there is always a risk that it gets out of hand and the exchange rate depreciates to rapidly and leads to an anchoring of confidence in the economy. a lot of things can happen if the economy moves too fast, too far. but i think they have been managing it well. they have been expending some reserves but when they feel it is getting out of hand, they intervene. i would say so far they are managing it quite well. fundamentals are stronger than they were five years ago. if the dollar appreciates more rapidly than this, then yes, we have to be concerned. >> the mas manager speaking with

haslinda. picking up what they were saying about fx interaction we are seeing, dish intervention we are seeing, eight of the four largest economies in southeast -- four of the eight largest economies in southeast asia have seen their currency depreciate and we see them digging in to try to stem the losses. thailand is down more than 20%. it signals when he was saying about trying to strike a balance between allowing currencies to depreciate to absorb the shock of rate rises but not stem too much. the direction of the dollar is a big factor we are watching in trading this morning. it is below the 50 day moving average for a second session.

it is playing down to the moves and treasury yields. i will get to the nasdaq in a moment but we are also watching the golden dragon index. we are seeing a raising most of my days selloff and not could be something that keeps supporting the offshore yuan but we are back well below the 7.3 level. looking at nasdaq futures, they were turning positive, 4/10 of 1% higher. japanese futures coming online in singapore. that gives us optimism about how much a weaker yen could boost corporate profit. in terms of what else we are watching, new zealand and the green and earnings in focus in australia with some big numbers out from a major bank. haidi: a 5% rise.

a handy beat on estimates. the strong result we see in lending. >> we see challenges on the horizon, cost-of-living pressures easing. growth will outstrip cost. the number we want to focus on is the net interest margin. it is up substantially from what we saw in the first half. we have had the reserve bank of australia tightening although the pace of it has eased. most big banks have been enthusiastic about passing the cost on to customers. in terms of home loans, anz has had a sluggish appearance but has restored momentum in growth. applications are back in line with their peers.

there will be a digital product next month. a few reasons to be optimistic. >> what about framing the story around resilience? >> that was a good profit from anz but you have to look where it came from. the net interest margin and how enthusiastic the bank has been about passing on rate increases quickly and in full. less enthusiastic it seems when it comes to passing on rate increases to customers who have deposits and savings. so this has been excellent for shareholders and they will enjoy a slight increase to the dividends. customers might be looking and saying, this is us who paid for it. this is through the land in the banking industry a few years ago.

customers getting a raw deal does not play well in the public arena. we will hear from some other big banks next month. >> paul allen here in sydney. there is a lot more to come on daybreak asia. this is bloomberg. ♪

>> this is daybreak asia. u.s. officials have forced to scale back to impose a cap on russian oil prices. the u.s. and eu are likely to settle more for a cap at a higher price. officials proposed at $40 to $60 per barrel but we are told the cap could exceed that range. the bank of canada has signaled it is near the end of its hiking campaign. they boosted by 50 basis points instead of 75 that was expected. the governor says while the hiking cycle is approaching the end come. , there will be more hikes to come. >> once we get through the slow

down, growth will pick up, the economy will grow solidly and the benefit of predictable inflation will be restored. >> elon musk is at san francisco headquarters at twitter. he changed his social media descriptor to chief twit. wuhan has locked down a central district after 18 covid cases were found. 19,000 residents have been ordered to stay at home until sunday and non-essential businesses are closed. china reported 1200 new cases yesterday, the highest in two weeks. a new report from the u.n. paints a grim picture of global

warming. they say earth will warm by more than 2° celsius by is the surgery, despite plans -- by the end of the surgery, despite plans to cut greenhouse emissions -- the end of the century, despite plans to cut greenhouse emissions. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: we are waiting for details of quarterly earnings when it comes to samsung. we are looking for details. the guidance that game -- the direct -- the guidance they gave was downbeat. what do we expect from the release today? >> that results of earnings should come in any moment now.

we expect not much of an upbeat result to be announced by samsung. they will focus on how samsung will adjust. for them it could be different because it has a memory chip business and foundry and logic chip business competing with intel so it may not scale down spending but it will have to take into account the slowing down in demand. yesterday we saw meta, google,

they reported down news results and that could also [indiscernible] because the silicon valley customers are all big customers for samsung so the company might have to scale down. >> in terms of forward guidance, do you expect them to talk about the strong dollar or slowing global demand versus recession, or will they stick to the technical aspects like chips? >> the dollar is expected to boost quarterly earnings samsung will report. the strength of the dollar has

been so huge that we have seen the local currency fall to the lowest level since 2009 and foreign investors have started buying samsung shares. the buying may indicate more investors believe there might be a bottom of share prices and maybe local currency weakness against the u.s. dollar might be reaching [indiscernible] so that is how the dollar matters in terms of samsung. haidi: a preview as we continue

to wait for details on samsung current -- quarterly earnings. with us, we have eight korea technology expert. is the memory slowdown sharper than expected and when will we see the possibility of recovery? >> good morning. thank you for having me on your program. it is sharper than expected. a couple of months ago they would not have expected this kind of demand decline. but we do see signs of recovery in terms of supplies and companies in the last month have announced production cuts so

this should lead to a better supply demand balance for the second half of next year. in terms of demand we expect it to pick up in the second quarter and production cuts will be more visible and in better realignment in the second half of next year. >> when it comes to the impact of china, does samsung put -- potentially benefit? is samsung seen as the next big vesting in asia? >> yes. samsung benefits from the new restrictions imposed by the u.s. government in multiple ways.

first, the new export restrictions from the u.s. play in favor of korean suppliers and restrictions will stop that development of chinese memory suppliers. with the new rules in force it is unlikely chinese supplies will secure equipment and technology. on the foundry side, given the geopolitical situation, it plays in favor of samsung. near term investor focus remains on memory. strides being made by samsung and we expect the business to

have a solid growth. kathleen: how and why is the foundry business so important and why does it make you so optimistic about samsung's prospects? >> foundry is important because it will be the next growth driver, or at least that is how the company expects things to be. samsung is already number one in the memory business. they are also number one in cell phones. foundry is the only major business area where they have a small presence. the market share is about 16%. there is room to gain shares. kathleen: texas instruments

talked about how much inventory rose at their meeting this week. they said they are not worried about that because the chips they are making can sit on the shelf for a long time. how does that same aspect of the business apply to samsung? are there inventories building and will they be able to maintain those levels, waiting for business to pick up again? >> in the past it would've been difficult because technology migration is very fast so in a way, chip becomes outdated in 18 months but the pace of technology migration has slowed significantly and the gap between different supplies in terms of technology has narrowed in the last few years. so that means the shelflife life of chips has increased in a way

that they are not at risk of becoming outdated. so yes, companies have more flexibility in that is what others are doing. even though it there inventories are building, they're not concerned at cutting the production and even though they are accumulating now, once demand recovers they will be able to sell it in the market. haidi: there is a one-year waiver when it comes to the chinese operations for some of these companies. going forward, how do we expect that to impact capex, and is there uncertainty over what happens to these operations and factories that could be impacted by the sweeping curbs? >> samsung has only one

[indiscernible] in china. and it has a one year waiver after the export restrictions that were put in place last month. so far the companies are confident they will be able to renew their waivers and should not have problems carrying out operations but going forward it is clear there is a risk that efforts in korea will [indiscernible] capacity expansion by these companies. kathleen: in terms of looking down the road in the future, we

know china wants to become a leader in chip production and they are a long way from that. we know the established leaders. what will determine who the leaders are in the future? is this a set of companies we will be dealing with 20 years from now? what will determine that? >> that is a difficult question because technology can change very fast. as far as the memory companies are concerned, we think the future of dm is dm for the next 10 years in the future of nand is nand. anyone can come up with a completely new idea and future memories could be very different than the memories of today. that is certainly possible. but i do not see it happening at least for the next 10 years.

so i think for memory semiconductor's and some other parts of semi conductor, you will probably be dealing with the same companies for the next 10 years. kathleen: thank you so much. korea technology analyst at cls a securities. you can turn to your bloomberg for more. go to tv to get analysis from expert editors. markets in asia are looking up as local currencies strengthened against the dollar. for more let's bring in our senior stop reporter. how is the outlook for asia today? a lot of volatility in the last 24 hours. >> good morning. basically markets seem to be in a tug-of-war between the possibility of the fed pivot and

worries about a global recession. overnight the bank of canada has raised rates by 50 basis points and that came after the central bank in australia also opted for a smaller rate hike than expected. so investors are starting to feel that central banks are starting to get worried about the accumulating impact of the rate hikes this year and that the federal reserve might indicate -- haidi: we have to leave it there.

>> we are counting down to asia is the major market open and as we await details of the results from samsung, the broader downside being propelled by tech in general was continuing to weigh on markets kathleen:. some dismal tech earnings in the last 36 hours coming out of the u.s., reminding demand is weaker and when that is weaker in one part of the sector, it will hit chips. that is what we expect to see in those results. >> keeping investors on their toes. the flipside is what has come through in the treasury market. cash treasuries are coming online with japan and korea and the 10 year yield sitting around the 4% level.

we will watch this closely because it had just it's been a big determined. the boj posting the results of their meeting later tomorrow. no expectation of change but i believe the samsung earnings are here. haidi: they kept us on our toes. these are the details. third quarter consolidated net coming in at a slightly less than expected total. three quarter sales also missed expectations. operating profit coming in, missing expectations. splitting into business units, consumer electronics sales beat expectations. mobile network sales was a little better than expected.

display sales missed expectations. display operating profit a beat. chip operating profit, these are the key numbers. the estimate was much higher. chip sales, we knew that would be disappointing and miss the estimates. the third quarter consolidated net coming in at just about 9.1 trillion one, missing expectations. the operating profit for the third quarter at 28,000,000,001. we will wait -- 28 billion one. we will wait to see the impact of the u.s. china curbs and investors want to know about capex given the conversation we

have had from texas instrument. >> trading already sliding down 3/10 of 1%. sk hynix rose yesterday. cutting back on capital expenditure plan. some prudence. samsung already down half a percent. it is one to watch. the cost at index is still -- the kosdaq index is still gaining. we have seen weakness in the korean won but the weakness can help mask and some downsides in the samsung report so investors will be watching it closely. kospi in the green.

let's switch to australia. we are one hour into the session. anz results are out. they slumped at the start. but australia seeing the benefit of lower yields on the weaker dollar playing into what we see in the oil space and questions resolved around demand given ledger exports out of the u.s. haidi: we see more lines coming out of samsung when it comes to the memory inventory. adjustments will likely continue into the fourth quarter. chip sales, 23,000,000,000,001 -- 23 trillion won. getting some details on color to what we knew would be disappointing. our next guest remains

pessimistic on long-term equities. max, the numbers from samsung are adding to the drumbeat of downside we have heard from the likes of texas instruments. that in addition to the underperformance of big attack. what is it tell you about the overall outlook -- big tech. what does it tell you about the overall outlook? >> demand is slowing down, as many expected and feared. it is happening may be faster than what most investors thought but it confirms the fact that we live in a difficult environment and going forward you should expect overall lower earnings and bottom-line. that means what we have seen in terms of the move up in equities

from last week could potentially go short-term but longer-term the space will likely continue suffering because they gain the numbers we have seen will likely continue being under pressure and geopolitical risks are still out there and the inflation picture remains extremely turbulent. haidi: samsung says they see overall demand expected to recover late in 2023 and made the point that the strong u.s. dollar helped they gain. at this point in earnings when we see the impact of currency play out in a significant way, how much of that are you focused on when looking at stock opportunities at the moment? >> the strength in the u.s. dollar has been remarkable and it will play on the positive or negative side, depending on

where you are looking. but it is more short-term. the big strength in dollar we think could keep going longer but it is likely to turn around by the middle of next year. we expect depreciation to kick in. looking at valuations, you have to look at the longer-term growth and demand and if margins are under pressure, how will the top line behave going forward, what kind of advantage does the company have. so it plays a role but it's not a major role when looking at fundamental position. kathleen: i get the feeling that a lot of investors around the world are thinking once the central banks slow down rate hikes and things turn around, the market will come back up. is it possible that inflation

stays high and even if banks stop hiking, rates stay where they are and it prevents turnarounds that people want to see? >> hoping is always good. it's good to be a little optimistic, but i agree with you. in terms of hiking, especially from the fed we will see future hikes to slow down. but rates are likely to remain higher for longer than what the market expects. we do not think the fed will cap as soon as the market thanks and that will put pressure. so definitely the fact that they will not hike further at the same pace is a relative positive but you are not going to see a v-shaped rebound. you are still in a situation where the environment is restrictive with higher rates

and still trying to bring growth down. inflation will only come down if [inaudible] is up. kathleen: is china investable? some say china stock is cheap, especially if you are a domestic investor in china, it's a good place to invest. do you agree? is it less good for foreign investors to put their money there with so much uncertainty about the path she paying is taking -- the path president xi she paying is taking? >> in terms of international investors, what has happened last week has dramatically increased geopolitical risk and uncertainty regarding where policies are going in the country. that has been reflected.

for domestic investors, the big tech names are cheap but it's different situation than a few months ago. before we were scaling slightly back in terms of exposures. we remain in the space but have scaled's given the news. kathleen: you can turn onto your bloomberg for more on samsung earnings. you can get commentary and analysis from bloomberg expert analysts. let's get to annabelle. >> also we can see samsung is

pulling down sk hynix that was rising in the previous session because investors seemed to like the cut to capex. samsung has been more cautious around announcing changes to capital expenditure but today the big focus on what came through in terms of the losses in the chip division. numbers fell well short of the estimate and we will watch this closely throughout the hour and into the earnings call that starts at 10:00 a.m. locally. japan is moving high today. we see dollar weakness. treasury yields falling back. social media stocks, meadow flags concerns around the outlook for ad spending. it has been a major concern this week.

this is another sector very much in focus. >> singapore's central bank chief says officials have done a decent job of allowing markets to absorb shock from monetary tightening. speaking with bloomberg, they urged peers to remain vigilant if the dollar appreciates more rapidly. >> there is always a risk that it gets out of hand and the exchange rate depreciates to rapidly and leads to a lack of anchoring of confidence in the economy. a lot of things can happen when an exchange rate moves too fast, too far. but i think so far they have managed it well. but if the dollar appreciates much more rapidly than this, yes, we would have to be concerned. >> antony blinken has accused

china of trying to speed up the seizure of taiwan and told bloomberg china is undermining the decades long status quo that has kept them from going to war with the u.s. over the island. vladimir putin is overseeing regular military drills, stimulating a territory strike. these included rehearsals for launching ballistic missiles. they are calling them a routine annual exercise. jeremy hunt is set to face a fiscal shortfall. he and the prime minister have to land a planned economic statement to mid november.

the delay could save british taxpayers $17 billion. iranian state media are blaming sunni extremists for an attack that killed 16 people in a shiite mosque. the attack came as protesters elsewhere marked 40 days since the death of a woman ignited some of the biggest protests in more than a decade. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. kathleen: still ahead, a big earnings week for chinese banks with investors eager to see how investment woes are weighing on the lender. and mark zuckerberg asks investors for patients as meta-

continues their earnings. this is bloomberg. ♪ at fidelity, your dedicated advisor will help you create 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.

haidi: samsung down 27% year to date. this is how investors are

reacting. we see a modest upside despite this spirit already a lot of it would have been priced in given earlier guidance. a chip slump. earnings following warnings from texas instrument and others with lowering of capex outlook following record spending but the income number coming in for the three months ending in september. we are watching for commentary when it comes to the impact in china regarding cost curbs. the foundry group seeing the highest profit to date. perhaps that is why we see a measured response from investors. >> it seems the foundry business is a bright spot. the weakness we have seen in the

wine can also help mask some poor numbers but going through headlines, the net income, in dollar terms we are talking about $6.4 billion, lower than expected. the chip division is samsung's most important. it showed the overall decline we see across the industry in semi conductor prices. operating came in at $5.1 trillion. the estimate from analysts was over 8 trillion. that difference will be the focus of the earnings call that kicks off in 40 minutes. it follows the from what we saw in sk hynix that reported a big drop in the third quarter.

whether samsung will do this, we already heard from an executive early this week in the memory chip division. they are being more cautious and saying cuts are not on the table as of yet but they plan to take cues from the market and manage capacity in a more flexible manner. kathleen: actions have been pretty mild. sometimes investors take a while to absorb. it's only been a short time. what does the reaction tell us on what do you expect? >> i think it's an indication. we already had samsung flagging concerns because we get preliminary numbers earlier in the month and this is just breaking out the divisional performance. a lot of this was already flagged. the market is already priced in.

it comes down to the weaker one that can help unmask broader issues in the company but we will see fluctuations between moves to the upside and downside but probably the chip sector is a focus for us, given we have a lot of earnings, including sk hynix and texas instruments. we will be watching the earnings call closely. kathleen: it shows how smart it is to get that guidance. let's go on to meta-. it is in the news. weaker than expected revenue forecast for the fourth quarter as they continue struggling with a week advertising market. ed ludlow has details. >> what spooked investors was the tepid forecast for sales.

revenue will be between $30 billion and $32.5 billion. below expectations. the softening advertising market is hurting meta-. we knew it would be a case. as it went on it was clear what was spooking investors is mark zuckerberg's commitment to fuel and fund the transition to the metaverse. he says reality labs will continue to have growing losses through 2023 and then they will start to moderate the growth of the capex investment they are putting into this transition into the future from meta-. there was acknowledgment that they have to look deeper at the operating costs the company has. they will be more careful with headcount and only assign new headcount in high-priority growth areas and start to

moderate headcount in other areas and be more efficient with how they spend but for now a big part of what is driving losses in investment is the ai infrastructure that zuckerberg continues arguing is essential because the latest ai is needed to improve algorithms that power the core facebook platform and the behind the scenes software work going into that future metaverse. haidi: coming up, the u.s. is reworking the plan to impose a cap on russian oil prices. we will look at the energy markets next. this is bloomberg. ♪

kathleen: officials have been forced to scale back plans on

imposing a cap on russian oil officials -- i cap on russian oil prices. >> is very tricky. sources close to the matter tell us the u.s. is essentially backing off the initial plan. this follows months of the u.s. really pressuring eu nations to go stronger with price caps and sanctions against russia. now instead of a ceiling observed by a broad cartel of nation, the u.s. and eu are likely to settle for a more loosely policed cap at a higher price. the concern is that russian gas exports to europe have been completely cut at various points and they are concerned it would be catastrophic for europe so

they want to punish russia but the concern is retaliation and the market souring. so the prescott was imposed at the end of the final quarter but now instead of strangling the kremlin by imposing a strict lid, it is a much looser plan. haidi: an oil prices are trending higher in the asian trading session. >> oil is advancing for a third day. it is popping up above 88 in asia trading. the u.s. reported record exports of crude and fuel boosted by the demand outlook. we are seeing the dollar weakened in the last few sessions on that is supportive of higher commodity prices. after racking up for consecutive monthly losses as can -- concerns about slowdowns gain traction, crude has rebounded in

october. oil stocks for diesel, a major problem in the u.s. right now, the storage situation rapidly devolving as we head into winter. an unusual situation. supply is unusually low. now areas in the northwest -- northeast are rationing fuel and the problem is trickling into the southeast. something to keep watching going forward. haidi: coming up, antony blinken doubling down on accusations against china and the taiwan conversations. that is next. this is bloomberg. ♪

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>> clearly china will have a significant slowdown in that will impact the world economy. i think the world needs to come together on this situation in ukraine and we need at least a temporary cease-fire if there is not a long-term solution. >> steve mnuchin reflecting what we see across country results. the slowdown in china's economy and the chip sector and u.s. tensions playing into it given that washington now is trying to curb china's access to advanced chip technology. the possible fallout on major chipmaking companies like korea and taiwan and the companies samsung will be closely watched in the earnings call that starts at half an hour from now because samsung reports and earnings missed in the last half hour and a lot of the downturn of the court performance for the chip division. so far in reaction samsung is

fluctuating. sk hynix giving up some gains from yesterday when it rose 1.5%. investors seemed to like the capital expenditures and that will be another big focus for the earnings call but probably today in asia, earnings has been a major theme for us given what we had in the u.s. but we are also focused on the moves coming through in expectations that the fed will be less exempt -- will need to be less aggressive with rate hikes in the coming months. we are risk on an equity being led by the kospi. and the currency space, the flip side with moves and treasuries is a weaker dollar and it is coming through this morning. it also plays in the commodity space because any commodities

priced in u.s. dollars, more attractive when you see softening. haidi: singapore central bank chief says southeast asia has done a decent job of allowing markets to absorb from u.s. tightening while protecting currencies. haslinda asked if he sees a recession coming for europe, the u.k., and u.s. >> that would seem likely. i think the imf has said the baseline is one third of the global economy is leaning towards recession and i think that three jurisdictions you mentioned are the ones at greatest risk. i think the markets expect it. i do not think the global recession, that is a distinct downside view because it would

allow -- it would require thailand and china to also go into a recession. china is looking at just below 3%. most of the year is out and going into next year's uncertain. but there are no strong's reasons why they need to be in that condition. the reason why the major economies are going into recession is because of rapid monetary tightening, which is completely necessary but china is not facing the same risk of recession. china has their own problems.

challenges dragging down growth, and the regional economies in asia are not at serious risk for recession. a slowdown in the global economy is not altogether bad. it relieves inflationary pressures provided the slow down is mild, short, and shallow, meeting over the first half of next year. if that can lead up to some easing in labor market tightness and slowing economy leading to inflation coming down in the second half of next year, i think the world economy is in a better place. >> the mighty dollar at a 20 year high. there currency, our problem. currencies are reeling from the mighty dollar. at some point do you think the fed will have to bear in mind the pain, damage, carnage in this part of the world? >> ok. that sounds attached to dramatic. [laughter] exchange rates are meant to be shock absorbers but if they move too much, too fast they become shock amplifiers. so if you look just at malaysia, thailand, indonesia, philippines, inflation is 5.4%. july to august.

not unduly high, but high enough for central banks to be concerned. u.s. inflation is much higher, 8.4%. so u.s. fed tightening has been faster and harsher than in most countries because they are facing an inflation problem they need to deal with. i think they are doing the right thing. the implication is when you have differences in inflammation rates, the exchange rate reflects that. all economies have the concern that there is always a risk that it gets out of hand and the exchange rate depreciates to o rapidly and leads to unanchoring of confidence in the economy. a lot of things can happen if the economy moves too fast, too far. but i think they have been managing it well. they have been expending some reserves to moderate depreciation but when they feel it is getting out of hand, they intervene. they are allowing it to

depreciate as it should. i would say so far they are managing it quite well. fundamentals are stronger than they were five years ago. that puts them in good stead. if the dollar appreciates more rapidly than this, then yes, we have to be concerned. kathleen: that was the mas managing director speaking exclusively with haslinda. antony blinken says he believes beijing will -- beijing wants to speed up the seizure of tehran. let's bring -- seizure in taiwan. let's bring in stephen engle. this is a contentious issue. what is blinken accusing china of exactly? >> she really did read to voice

and cadence and detected some anger, in particular, the u.s. moves to go to taiwan. he did not mention nancy pelosi. the beijing leaders essentially added this to the constitution, opposing any moves in taiwan for independence. in august into september we had games led by the people's liberation army to intimidate taiwan after nancy pelosi's visit so tensions are amped up and antony blinken speaking exclusively at a bloomberg event in new york essentially said he believes xi jinping has sped up the timeline for reunification

coming we do not know if it would be by peaceful means or by force. >> what has changed is the decision by the government in beijing that the status quo was no longer acceptable. that they wanted to speed up the process by which they would pursue reunification. >> the spokesperson for beijing's taiwan affairs office essentially said beijing has the will and capability now more than ever before to reach not only national read unification but reunification -- national adjudication but also reunification of the motherland. haidi: and we are seeing growing signs in beijing that she's he

paying has limited the participation of other leaders. >> the whole world saw the video of the predecessor being assured to the side at the closing of the national congress saturday. that is a figurative and perhaps literal example of the old guard being pushed off to the side. one could say a rival faction. the state media described the exit as being for health reasons but the symbolism is stark. what bloomberg has looked into is how the news agency basically laid out some reasoning for xi jinping choosing loyalists and

how he chose the standing committee we saw sunday and they said he sought the opinions from 30 senior party heavyweights but no mention of past leaders like that 79-year-old or 97-year-old. at the last party congress, xi jinping consulted 57 people, not 30. and it essentially included old party comrades. no mention of old party comrades now and reading between the lines, it perhaps shows that he is consulting with a smaller circle of confidence -- of confidants in his decision makings. haidi: stephen engle with the latest. let's get to vonnie quinn with the latest headlines. >> bank of canada signals it is nearing the end of its rate hike

cycle. they boosted by 50 basis points instead of the 75 expected. the governor said while the hiking cycle is approaching the end, there are more raises to come. wuhan has locked down a central district after 18 covid cases were found. 900,000 residents have been ordered to stay at home until sunday. non-essential business is closed. china reported more than 1200 covid cases nationwide tuesday. the most in two weeks. a new report from the u.n. paints a grim picture of global warning and says the earth is on track to warm by more than two degrees celsius by the end of the century but that admissions will not increase after 2030. elon musk has made his presence

felt at the twitter headquarters before his takeover. he walked into the offices carrying a kitchen sink and changed his descriptor to chief twit. he plans to take that company private. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. kathleen: coming up, we preview this week's earnings for chinese banks with fixed ratings. this is bloomberg. ♪

>> we remain focused on china. if you look to next year for gdp growth for the forecast of china, it will be up there with high growth rates of other markets. i think we need to take a neutral view and we are committed to china and as we see the economy pick up i think we should be a beneficiary both inside and outside china. kathleen: speaking of bank

earnings we are getting results from most big chinese lenders on friday. our next guest says the earnings outlook is facing headwinds. joining us is grace will. grace, it is great to have you back. these are big banks and these earnings are very important. they tell us a little about the economy. one of the big problems for the banks is the weak economy and corporate's and households are not borrowing. there is so much going on and they are having net interest margin challenges. a big slow in earnings in the first half. how do things look now? >> in terms of the margins outlook there will still be pressure in the next couple of quarters.

it reflects broad expectations that banks are expected to lower costs in order to support economic recovery. that against a backdrop of weak demand on the retail front means a lot of lending will be driven by infrastructure, that sort of lower yielding loans and against that with the lingering domestic property stress we expect charges will remain elevated so against that backdrop would be the earnings outlook being somewhat suppressed. we also considered the pandemic restrictions that are impacting constraining business consumption. kathleen: you note in some of your research that banks have to

resolve existing loans while recognizing new nonperforming loans. a vicious circle rather than a good one. you note it is especially related to property developer loans and xi jinping did not say much about how property developers would fit into his upcoming plans. how big is the problem now, and have big for the banks? >> intensive banks direct lending exposure to property developers, it remains manageable, 6% to 7% for the sector overall but it is the implementations in terms -- in -- it is the implications about how long a recovery will take and the impact it has on homebuyer confidence. at the moment there are still concerns around [indiscernible]

in terms of bank loans they -- the long-term issue is how to resolve homebuyer confidence in the market. haidi: grace, as kathleen said, it is a vicious cycle. how to restore confidence in the property market when there is not a strong cap -- catalyst when it comes to demands. is it possible we will see an improvement in demand without covid zero being lucent? -- loosened? >> short-term there will still be volatility. it is not as if one time you relax restrictions and things will rebound immediately.

we believe it will come back once instructions -- restrictions ease further. but although authorities have lowered mortgage rates but really there is an interim generation that is probably the main driver driving housing incentives. haidi: you talk about the fact that when it comes to affordability it's about income generation instead of just where interest rates are because we know in that respect the pboc is cyclical to most central banks. >> yes but in china because of prudent regulations that have always been in place regarding residential loans, the average

mortgage loans are 40% to 60% so risks, there's a lot of room to absorb possible volatility and at the moment it is that decline in housing transaction that is the bigger issue. haidi: grace, always great to have you with us. coming up, futures pointing to a second day of gains when it comes to hong kong stocks. we will get a preview of the china open next. this is bloomberg. ♪

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haidi: u.s. listed chinese stocks have rallied another day. a second day of gains. the sentiment seems to be turning around with a massive selloff we saw earlier this week. sophia, given that we saw the pboc regulations coming together and rallying stability for the yuan, how long lasting do we expect the positivity to be? >> that's a good question. it is not really positivity, it

is more recognition that the competition elation monday might've gone too far. just a capitulation monday might have gone too far. we will likely see some strength feed into the market in hong kong today. a note just landed from the morgan stanley team. jonathan gardner saying right now you need to acknowledge the enormous range of potential outcomes for chinese out -- outlooks. there is a huge difference and you are looking at 13% returns in the base case but what they are saying is is so difficult to value risk because right now there are so many different outcomes and it could go either

way. kathleen: with their metrics, and assume what is the economy. we still have covid zero in place, not good for a lot of companies in china. markets seem to have had a huge reaction to the xi jinping congress speech and other willing to put it to the side. how does the team assess that? >> they are looking at what policy risk means. the property market, covid zero, they were already there and will continue to be there until we see a fix from the policy side. it in the bookcase morgan stanley is saying a stronger team could have a more coordinated response to the crisis and to everything that has been holding back the economic and market recovery. but in the bear case this is what we saw monday. it increases policy uncertainty because we do not know if xi

jinping is prioritizing capital markets and as one guest to said, if he actually cares about investors. that is the key concern. kathleen: i wonder if we see the big drop in chinese stocks and feeling good about them coming back, if he cares more than he thought he did. we will see. some stocks we are watching ahead of the opening in hong kong and china. tech stocks in the u.s. will be in focus. disappointing earnings from samsung. that is it from daybreak asia. keep it right here for china markets open. this is bloomberg. ♪

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