Skip to main content

tv   Bloomberg Daybreak Asia  Bloomberg  October 30, 2022 7:00pm-9:00pm EDT

7:00 pm
7:01 pm
>> welcome to daybreak asia. breaking news in sao paulo. brazil's election has been decided. the electoral colder -- court called the election for lula da silva over dryer bolsonaro. we watch reaction from these two sides. for now, 99.9% of the votes are counted and it is 54 point 8% against 49.2%. >> this is a return for lula who was president from 2000 and three until 2010. the left-wing former union leader riding the commodities boom. the last time he left office he was one of the country's most popular politicians. then we saw economic collapses under his success, a massive corruption probe as well.
7:02 pm
those were later tossed out on procedural grounds to allow him to come back to politics, come back into the second round of voting. now, we are hearing, elected as brazil's new president. confirmation from the electoral court. bolsonaro was elected in a landslide in 2018. is he going to concede? there have been allegations from his side when it comes to electoral fraud and such. >> we have seen president bolsonaro ratchet up against brazil's election authority. on friday said he that he said he would respect the results. a look at rio de janeiro live. that is bolsonaro's headquarters. you are seeing voters wearing the colors of brazil, lots of yellow. in sao paulo, it's very loud.
7:03 pm
i hear cars honking in celebration. there are a lot of lula supporters that are very happy on this day to have the former president come back for a third term. he of course comes back with a lot of baggage as well from his corruption scandals in the past, despite the fact that during his administrations for two terms, from 2003, he had the commodity super cycle helping his government. let's bring in our bloomberg news managing editor. jp, what do you make of these numbers? they are pretty close. >> the electoral court, what it does, is when it reaches a point where the election cannot mathematically change it announces that. that is what just happened. lula is 2 million votes ahead and now the election,
7:04 pm
mathematically, cannot be won by bolsonaro. what happens next? now, everybody looks at what bolsonaro will say. is he going to concede or not? i just have breaking news from brazil's speaker of the house who said, congratulations to lula and that the will of the people should be respected. that is putting some pressure on bolsonaro to come out and concede. we will see if that happens. >> he has already attacked the electoral authority so much and for years built doubt around the electronic voting system. this morning already went to look at what he was referring to. what is the likelihood he will come back and say no? >> well, it's up to him. but the problem is, what can he do about it? imagine he says, ok, i don't believe that in these results. i demand a recount. it's very easy to recount them.
7:05 pm
and these are 2 million votes that he is behind. this is not a small margin in absolute terms. in the other thing is, by his rhetoric, a lot of resilience still believe in the system that honestly and objectively has worked. obviously, the result is very thin. it is probably the election with the smallest margin of victory for a candidate. >> this says a lot about how lula might govern, right? this movement of bolsonarismo is still very popular in the country and in congress. >> exactly right. his allies did very well in congress in the first round and here in her -- the state of sao paulo there are some of his main allies.
7:06 pm
now, the outgoing president will be in a position, with the three main states governed by hands allies, perhaps a very strong position in congress. what this means is lula will not have a lot of space for any radical move. we will not see a very radical leftist agenda with this kind of institutional setup. >> bloomberg's juan pablo spinetto breaking it down for us. incoming president lula, if this goes and bolsonaro concedes, he may not be moving too much to the left. that could be a positive for the markets. >> resilient assets have been among global out's. that's one to start as those assets start to trade within the
7:07 pm
next hour, one of the etf's in japan. we have australian markets coming online, the asx 200 taking cues from the wall street close friday. we saw a gain for u.s. and asian stocks last week. we are also watching what is happening in the bond space this morning, given we have an rba decision tuesday. policymakers are facing a tough decision. should they go with smaller hikes or make a u-turn and back larger ones instead to try to rein in inflation pressures? we saw a big move in bonds late in the month of october with the three year yield dropping around 50 basis points alone on -- last week. that stayed in place today. the aussie dollar is weaker. we are seeing dollar strength returning, driven ahead of the fed decision wednesday. the yen is trading fairly flat. the set up for the rest of the asian region, new zealand is online in the green, chicago
7:08 pm
nikkei futures fairly flat. we are also watching china given we have that key pmi data out. this is really at economy struggling to recover in the face of the property slump and covid controls. >> yes, challenges for central banks and governments are a bid theme this week. as every other week. the fed, the bank of england, the rba are all meeting this week. the fed and boe could on these -- at least 75 basis point rate hikes. our chief correspondent from asia garfield reynolds joins us now. we are in the final leg of the year and it feels like the markets are looking for a stronger indication to what the next year holds. >> i think you are looking at the way it is sitting up. you will be shocked when i say this, there is potential for another burst of volatility. last week the fed was quiet.
7:09 pm
we had the bank of canada only hiking by 50 basis points and some words out of the ecb that sounded less fully hawkish. we had the rbnz talking about why there are strong expectations that the rba this week will only go by point 25 points. we are then set up for the fed and in the boe to almost certainly both go 75 basis points. what will the rhetoric be? will they say to end -- and the investors hoping for a slowdown in policy aggression, no, it is too early for that? if they do say that, you have this whirlwind of investors who bought into bonds hoping that these high yields will protect them against further losses, against further increases in yields, and against volatility.
7:10 pm
alternatively, if you get something that looks like a definitive pivot, you can get strong bond and start -- stock rallies as investors celebrate the end of the tightening. >> garfield, here in brazil, already there are questions about when the central bank will start cutting rates. what do the moves in developing economies and this dovish take on central banks mean for emerging economies that perhaps have suffered from pressure under currencies this long? >> well, emerging economies are usually at the pointy end when it comes to policy moves, both from the point of view of, it is more fluent and more constrained because their currencies are so exposed, to her interest rate differentials, and also -- pure interest rate differentials and also when the fed moves that
7:11 pm
gets carried through to emerging markets. they have been earlier to move on inflation then developed markets and now they are facing that conundrum, we don't want to hike anymore because our economies are struggling. in fact, we are looking to offer relief. the difficulty is, it is hard for them to offer sustained relief until the fed, at the very least, slows down, along with the rest of the developed world. that is the conundrum rate large for every central banker. we want to watch inflation and we would like to avoid destroying our economy to do so. the question is, can they get inflation under control without massive economic damage? so far, there has been fairly serious economic damage going on. we are getting to precisely that point. will central banks stop before they destroy the village to save it? >> garfield reynolds is here in sydney.
7:12 pm
let's get to su keenan with the first word headlines. >> turkey and the u.n. are looking for ways to salvage a to safely export ukrainian grain following moscow's dishes into leave the packed for -- following an attack on the black sea naval fleet. russia said it would suspend the agreement after ships were hit by drones it blamed on ukraine. the extent of the damage is unclear. workers are leaving apple's biggest iphone plant in china after snap covid measures left many of the 200,000 staff facing inadequate living conditions. online posts show local authorities arranging buses to take workers to mandatory isolation. elsewhere, fresh lockdowns have been imposed from wuhan to china's industrial belt on the east coast. beijing is boosting international flights and fast lanes to boost investment. president biden blamed political rhetoric for the attack on house speaker nancy pelosi's husband.
7:13 pm
he said this includes denial of the 2020 election results. an intruder hit pelosi's husband with a hammer early friday in the come -- couples san francisco home. the attack put u.s. lawmakers on edge with midterm elections less than two weeks away. bloomberg has been told elon musk is preparing a round of layoffs at twitter days after taking ownership of the social media platform. a source tells us the billionaire asked managers to list team members that could be let go. separately, axios reports musk plans to cut 30% of staff in some departments with product and engineering management said to be severely trimmed. global news on air --global news 24 hours a day on air and on bloomberg quick take powered by more than 2700 journalists and anaylsts in over 120 countries. i am su keenan. this is bloomberg. >> the south korean president
7:14 pm
promised a thorough investigation in support for those affected after a crowd crushed during halloween celebrations in seoul that killed more than 150 people. let's bring in bloomberg's you young lady. . in the narrow alley behind this hotel, how did this happen and what is next? >> authorities are trying to find out what happened on saturday night in south korea. the first emergency call was made at 2:21 p.m.. we are finding out that the majority of the victims were in their tens and 20's, and female victims outnumbered male victims. we are seeing that the alley that most of the crowd crushed happened in is really narrow.
7:15 pm
it is only 11 feet wide. you could probably fit five or six adults, typically. there were too many people there as they tried to celebrate the first halloween cents the pandemic related restrictions were lifted for the first time in three years. now, as you said, this is probably the most culturally diverse and internationalized district in seoul and there are a lot of foreigners living here. it is -- near the u.s. military base. i go there for international cuisine with my friends. it is in the central seoul area. typically, it is the prime halloween location for people. we are discovering from the witnesses and media reports that it appears there were very few attempts to control so many crowds in the streets and roads, even though there were a lot
7:16 pm
more people than usual here because it was the first since south korea lifted the ban on big outdoor gatherings. it will be one of the worst peacetime disasters ever in south korean history. >> the question is, how was this allowed to happen? you said there were plainly too many people in the area. what is the call for an investigation, and perhaps, changes to make sure this does not happen again? >> there will be a lot calls for investigation, thorough investigation into a disaster like this. especially, there will be screwed anti-about why there was not much police presence or attempts to control the crowd, even when a lot of crowds were expected to fill the streets on nights like halloween. already, the safety minister
7:17 pm
said some of the police force was diverge it to protest -- diverted to protest demonstrations in other parts of sold and --seoul and the halloween celebration had no clear organizer and people just scattered. you taiwan - there will be questions about why there was no attempt to control human traffic or subway stops. the death toll been too high. >> ahead, decatur pharmaceuticals ceo christoph weber joins us to discuss the company's earnings and growth strategy in the face of a weak yen and recession risk. coming up, first, the bank of
7:18 pm
england and the fed are expected to hike rates by 75 basis points this week. we get a preview and the rest of the calendar. this is bloomberg. ♪
7:19 pm
7:20 pm
>> live in sao paulo, brazil, looking at live pictures of celebrations around former president mullahs headquarters -- lula's headquarters. the former president has been elected as the next president of brazil by the electoral court that called this election with
7:21 pm
an over official announcement. the key question now is, will the incumbent president bolsonaro concede, especially when the margin of victory for the former president, lula, was so narrow? winning at 50.8%. we are already seeing congratulations role in. emmanuel macron congratulated lula on the brazil election when. >> let's look at the week ahead elsewhere. the fed is expected to raise rates by 75 basis points wednesday, the fourth straight meeting so far. the u.s. central bank is seeking to cool of the hottest inflation in four decades. the boe and rba have policy decisions this week. u.s. labor market indicators friday. employees -- employers are
7:22 pm
expected to have added 200,000 jobs in october. monday we have inflation numbers from the euro zone as the region deals with economic blowback from the war in ukraine and we are waiting from gdp numbers from hong kong and poi numbers from china. backing expectations of a 75 basis point fed hike this week, moody analyst katrina joins us. as we get to the end of the year, there is the feeling heavy lifting is behind most central banks. are we nearing the time where we start talking about, if not a pivot or pause, a plateau? >> it depends on what economy we are looking at. when it comes to the fed, we are still looking for a 75 basis point this coming month. as we move into next year, we will start to taper down rate hikes. it will go down to 25 basis points in the u.s. eventually as well. back to the rba, we will already
7:23 pm
see they are past the big hurdles when it comes to outsized rate hikes. last month they moved down to 25 basis points. we are expecting another 25 this month. >> for australia does the possibility of a soft landing look more or less likely at this point? >> it still likely at this point. at the end of the day, the labor market is still incredibly tight. but, risks are elevated because the reserve bank of australia has already delivered the massive 250 cumulative worth of rate hikes. it will be interesting to see how consumers take the massive amount of hiking in stride. we have already seen the housing market cooled down, but households are still spending. that is the result of the labor market being tight, and we will start to see that come off. i do not think it will result in
7:24 pm
a hard landing for australia. i think it will be more sustained softening. >> talking about the low unemployment rate. in the u.s. we have seen that too, a five decade low. what it seems the optimism is still strong when it comes to the strengths of the economy. >> we have seen the u.s. economy roaring ahead, but momentum has definitely slowed and i think the fed will continue to focus on the strength of the labor market. while we have seen some softening, it is still tied beyond comfort levels. wage growth is incredibly high too. that's not consistent with inflation moving back to 2% in the u.s.. we will continue to see another 75 basis point hike this month from the u.s.. then we will see a slowdown in
7:25 pm
coming months from the fed. keep in mind, it takes time for the monetary policy transmission mechanism to fully materialize in the u.s. economy and that is why we still have recession odds in the u.s., uncomfortably high for next year. just to see how the impact of those outsized significant hikes. >> when it comes to chinese pmi and the broader economy, we are expecting the latest readings to show a struggle to grain -- to gain traction for the recovery. that is a surprise given nothing meaningful really changed economically and perhaps there is more uncertainty after the party congress. >> domestic headwinds in china do remain significant and that will not ease materially next year. china is still sticking with a zero covid policy, a significant challenge to households and businesses in china. we have seen policymakers there shifting stance a little bit to be more vocalized about
7:26 pm
lockdowns, it is still causing uncertainty and economic damage. that is the key pain point domestically. >> it's always good to have you with us. this is bloomberg.
7:27 pm
7:28 pm
>> >> look at how fx is tracking this monday morning as we get to a big weeks for central banks. the dollar is catching a
7:29 pm
7:30 pm
haidi: -- >> you were watching "bloomberg daybreak: asia."
7:31 pm
early minutes of the opens we have in korea and japan. taking a look at assets that have significant exposure to brazil, it will be the first reaction that we do see for investors, lula de silva taking his third term is president, a dramatic comeback for this left-wing politician. edf in tokyo tracking the funds are linked to resilient assets, and these companies that have exposure to the country. let's take a look at the broader set up for the session, very much for taking cues we had from the late rally on wall street on friday with earnings from apple, certainly hoping to unseat or defy the tech rout we have seen over the past few sessions. 1% of the upside, nikkei futures just coming online in singapore, pointing to significant gains there. also a big watch for us, what is happening in china. we are just wrapping up the earnings season, so it 90% of
7:32 pm
companies have so far reported, and it has been quite a big miss, disappointing season with more than half of them missing topline estimates when those are available. a lot of concerns or questions on how long china can keep up with its policies of covid zero, and some investors out there saying given how much the country now it needs funds, it could be forced to give it by the end of the year. that has been weighing on china stocks listed in hong kong, taking a look at this terminal chart, steve dropped for the hang seng enterprises index, down 9% over the course of the past week. we have not seen a drop of that magnitude all the way back to 2018. a lot for investors to be contending within these markets. haidi: a lot going on when it comes to the crypto market as well, hong kong playing opposed to high-profile crypto executives as well as bank
7:33 pm
executives, regulators on fintech and the audience. our chief asian correspondent stephen engle is there and he joins us now from the hong kong exhibition and convention center. for a while it has been singapore versus hong kong when it comes to supremacy in the crypto space in asia, and we are seeing moves from where you are. >> you are going to start with the hong kong-singapore comparison right off the bat. let's get into that because they are both holding fintech summits november 2 and fourth compared to the hong kong fintech we which -- week which kicks off today and it will be hong kong pushing their overseas sales pitch into overdrive and saying we are back in business. sure there is zero plus three arrangement for self-monitoring that could limit the actual number of disciplines here
7:34 pm
physically. we have christopher, the economic development secretary and treasurer of hong kong on local radio saying they are expecting 12,000 actual physical participants. the estimate before that was for 20,000, so it is below. singapore expecting about 60,000, so potentially three or four times more than in hong kong. so that is the comparison. singapore has gotten a head start on opening up on the number of fronts, opening up early this year where hong kong is showing signs of opening up. what we are expecting today and tomorrow at fintech week, it is a five day event, conferences and speakers. we are likely to get details of the bloomberg's group we had last week, essentially that hong kong is going to open up as a global platform for local
7:35 pm
cryptocurrency trading -- global cryptocurrency trading. we need to get more details on that as hong kong does not change from a more conservative approach and seeing the head start that other areas like singapore, other places in east asia are getting a head start. we will get a keynote speech from the financial secretary, paul chan, who will not be in person because he contracted a covid in riyadh last week and we will hear from christopher hoy as well later today. annabelle: -- shery: stephen engle there. we have breaking news at the moment, we are hearing vice president joe biden as congratulated the former president of brazil lula de silva for winning this runoff election. it was a very close election. we have seen the electoral court here in brazil called the election for lula.
7:36 pm
we are waiting to see if the incumbent president bolsonaro does in fact conceived, but at this time we are hearing from world leaders including emmanuel macron of france congratulating lula as well as u.s. president joe biden congratulating it also lula da silva. >> we start with the tragedy in south korea, south korea's president is giving it to be addressed promising reviewed safety measures after sending's credit crash in seoul that killed 153 people. it happened in a narrow alley as tens of thousands of people celebrated halloween, first such festivities since covid restrictions were lifted last month. the news said 97 of those killed were women, and 20 were internationals. a bridge is collapsed in the western indian state killing at
7:37 pm
least 60 people and leaving several others injured. mobile news reports said hundreds of people were on the suspension bridge when it gave way, with the still missing. no immediate cause has been given for the collapse, but the bridge just reopened after renovations. china will host up leaders this week as president xi jinping kicks off his third term in which he has vowed to increase his nation's global influence. vietnam's communist party chief was do to become the first foreign leader to meet xi sent leadership was shuffle. it is also expected to meet this week with the pakistan prime minister, the german chancellor. mark out residents -- macau residents have been ordered to do rapid test after three cases were found. the gambling hub could soon allow tourists. officials lockdown the resort
7:38 pm
after worker tested positive along with her two sons following a visit to the mainland. staff and guests are being put in quarantine. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan. this is bloomberg. haidi: china is stepping up its virus lucked out after president xi jinping cemented his grip on power. workers are leaving apple's biggest plant after covid measures left many of the 2000 staff facing inadequate living conditions. let's bring in our managing editor. covid zero continues, and the repercussions continue as well. >> it is not only continuing, but it appears to be getting wrapped up post congress. we saw xi jinping read of course
7:39 pm
it at the party congress contrary to what some people were expecting. we have seen lucked out like a moves across the country, you have still got the best parts of the northwest, xinjiang lockdown, schools shut down in junco -- chengdou. i'm not a huge amount of cases -- not a huge amount of cases definitely some in that factory, the biggest in the world. it has gone into a closed loop where the workers are only allowed to go from there company dormitory to the production lines, tested regularly and kept inside a factory bubble in essence. it seems as though some of the workers do not want to be subject to those restrictions or are afraid of the outbreak inside the factory and are leaving the factory.
7:40 pm
we are unsure if this is having any impact on production, but it appears as though they aren't leaving, walking out of the factory, and some of those departures facilitated by the city government and governments where those workers live. annabelle: -- shery: we did not really see any indication of where the covid zero policy was going during the party congress. what seems to be the endgame for these leaders right now, and could we see or walk us like this from different businesses? >> you have been seeing these put in place wherever there is a lockdown in a particular city, and they do enable a factory or manufacturing site to keep going during a lockdown, but they do this set to take those workers being shut out from the outside world, should families. there have been incidents of
7:41 pm
unrest and violence and other factories, notably the supplier want --- qanta during the lucked out a month ago. you can likely anticipate a push back to where that do a private -- do deprive people of their families and their ability to move around, and it does pose a risk for the continuation of the covid zero policy. that said, xi jinping giving very little if any indication of how he intends to play this out. we spoke to experts last week from economists to scientists to would investors, and the consensus is they will not ease this policy particularly going into winter, because the risk is too high because of the love acceleration -- low vaccination rates particularly among chinese elderly.
7:42 pm
shery: emma o'brien with the latest on china's covid zero policy. we do have plenty more to come. this is bloomberg. ♪
7:43 pm
haidi: it is time for japan ahead on daybreak: asia. luminary and production sales
7:44 pm
are due in the art. bloomberg estimates industrial output fell 5% on the month in september. companies that report earnings today include japan tobacco and marotta manufacturing and the government says two of its citizens died in that halloween crowd crush. shery: i drugmaker reported operating income for missed estimates at a raised its revenue for net profit forecast for the fiscal year setting a weaker yen as the president and ceo is joining us. good to have you with us. you raised your forecasts in a weakening trend of the yen. do you expect this to continue, and how will this impact your business going forward? >> i think you -- thank you, shery.
7:45 pm
first, we are going to innovation. we have 10 products that are fueling our growth, transforming medicine and vaccines. so that is the basis for our growth, and we are fully global. more than 80% of our revenue is coming outside of japan. the biggest revenue source is the u.s. market and the dollar. so when they get an depreciates it is also eating our growth, but the fundamental growth is through 10 products growing at the rate of 20% on average per year. shery: given the rosier outlook, does that mean you might entertain the idea of increasing shareholder returns? >> we are very much focusing on shareholder return. we just went through a period of acquisition, which we will
7:46 pm
finish now. we are focusing a lot on reducing our debt. this is almost over now, so we can focus on the growth and shareholder returns. this is a big focus for us in the coming years. haidi: what about acquisitions? what disease areas and drug areas would you be looking at? >> so we are focusing on four therapy area, that is our r&d strategy. we are focusing on business development, not large m&a because we have to scale now to compete globally. that is very much a focus for us in the past few years. we are focusing on reaching our pipeline, and we have a pipeline of 40 new products, so it is a
7:47 pm
broad pipeline. we are enriching through business development, targeted business development. we are looking at middle of the stage products that can be lost before the end of the decade. haidi: in terms of specific drug areas, i want to ask about that dengu drug program. how do you forecast the sales for this year? >> so we are just getting approval for this very exciting dengu vaccine. a vaccine that has a high level of efficacy. after 4.5 years the efficacy is 84%. these are also vaccines that could be used broadly, so it will be easy to use and administer for a country like brazil actually. so we are planning to launch in
7:48 pm
2023. the first launch we have been in indonesia and we will launch in many countries starting in 2023. this is an example of life transforming vaccines in this case, which will fuel our growth in the future. haidi: almost one third of first half revenue growth was driven by the drug for adhd. do you face a bit of a financial cliff in terms of how you plan to offset that? can you share those plans with us? >> so, the product that i was talking about feeling our growth, this is not part of the product. generating incremental revenue almost equivalent to the total revenue. 2023 would be a tough year in
7:49 pm
terms of growth for us because of the decline. the long-term outlook is very positive again because of this growth of the product, which is driving our growth. we see our growth slowing down only in 2023 and restarting to grow in 2024 and beyond. haidi: before we let you go, what do you think is the one change that japan needs most right now? >> well, for a developed country, you grow if you innovate, and if this innovation is relevant locally, so i think for a corporation in japan, or japan to grow we need to continue to invest on innovation and all type of sectors, including the pharmaceutical sector. and then add the capacity to
7:50 pm
commercialize innovation globally. this is what we are doing at takeda. we are investing in r&d and coming up with life transforming vaccines. and we have no global scale, which allows us to commercialize innovation globally, bring this product globally, and that is what is driving our growth. haidi: great to have you with us, we appreciate your time. plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪
7:51 pm
7:52 pm
>> [speaking foreign language] shery: former president lula de silva addressing supporters in a hotel as he has just won the brazil presidential elections. we are waiting for income of president jair bolsonaro to speak anytime now. the congratulations have already started to roll in from the french president emmanuel macron as well as the u.s. president joe biden. taking a look at live pictures
7:53 pm
at a hotel in sao paulo as lula de silva speaks to his supporters. let's break down what happened tonight with the brazil bureau chief. it was a close election, but what are we watching now? >> what we are watching for is bolsonaro, because there is a big question on whether he will concede that he lost the election as delectable court is called election as well. he has been questioning the validity of the results and electronic voting systems for a while now, and with such a close election, 2 million votes between them give or take, the question is what will you say. we are expecting him to speak. we are not sure when that will happen, probably sometime tonight, but that is the main thing we are watching for. shery: depending on what he says or does not say it investors in the market will react to that. >> for sure, because it once it
7:54 pm
area you are dealing with lula, who is not investors' favorite but they are priced in. bolsonaro not conceding the election opens another can of worms markets. you will go into this legal battle, and it is not good for investors or the country. shery: for our reviewers joining in, former president luiz ignacio lula de silva as won the brazilian presidential election and is speaking at a hotel in sao paulo. given the close election, the" results, given that the congress is really dominated by bolsonaro 's allies as well, what does it mean in terms of some of the economic policies that lula could rule out? >> that is a good question. there was some reaction to congress because of that, because it was seen even if lula wins, congress will hold him back. under the think investors will
7:55 pm
be watching for tonight when lula speaks for tomorrow are his cabinet appointments. he declined and refused to say who his finest chiefly to be. there are a few clues but no one knows. it once he starts announcing it and you will see whether it is a former central bank chief or a more political name, you will see a lot of market movement is a reaction to that because it will give you some policy direction. shery: it would be arrogant to start naming cabinet members before elected. watch whether or not the incumbent president jair bolsonaro will come out anytime to concede the seat or challenge the results. haidi: shery in sao paulo, we will continue to watch this developing story, a huge electrical result across the emerging market of brazil. take a look at some of the data we are watching what it comes to here closer to home. japan industrial production
7:56 pm
coming out, and we have seen the preliminary number for september coming in at a contraction of 1.6 percent month on month, a missing expectations of .8 of 1% fall and pulling back from the 3.4 percent gains we saw in the previous reading. year on year, the number coming in it 920%, weaker than the 10.5% in expectations at the number was better than the prior reading of 5.8% there. we are also getting retail sales, and those numbers seeing a higher reading than expectations. the market opens in seoul and tokyo are next. this is bloomberg. ♪
7:57 pm
as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. ™
7:58 pm
7:59 pm
shery: this is "bloomberg
8:00 pm
daybreak: asia" coming to live from sao paulo. we are counting down to asia budget is major market opens. it is official, luiz ignacio lula de silva as won the brazil of isaac. the leftist former president talking in a hotel in sao paulo with his victory saying the economy must work to improve everyone's lives. where watching to see whether the incumbent president jair bolsonaro will concede defeat. haidi: huge implications for this enormous emerging-market. it comes against the backdrop of global central banks continuing their struggle against inflation. we will get a further indication of that with the bank, the fed, the rba meeting this week. let's take a look at how tokyo and seoul trading is kicking off. annabelle: very much focused on how the 10 year yield is coming online, the opening of #its unchanged at the start.
8:01 pm
analysts are saying they yen to be vulnerable to any renewed selling pressure ahead of the fed meeting this week. it is one of the big headlines for us. in terms of what else we are tracking, fairly risk on throughout the session taking cues from what happened in the wall street session on friday. apple's earnings help to renew or relieve skepticism around the outlook for tech companies and the nikkei up more than 1% at the start. let's change it to what we are seeing in the korean session. we did see at least if no trading at the 10 year yield at the start of trade, still futures had been lower coming into the monday morning, and so that is something weighing on nasdaq futures. you can see we have that cost at -- kosdaq outpacing border gains. a little bit weaker to start trade, but still it is coming off its best week since march. so certainly also when we will
8:02 pm
be keeping. turning out to what we have got for australia, one hour into the trading session for the asx 200, and we are still in positive territory being led higher by the rate sensitive id sector this morning, up nearly 4% at the start of trade. yield wash or is given we do have the rba decision coming up tomorrow, investors really focus on what the rba decide to do. with a continue with their smaller rate hikes or face a u-turn and back out-szed once i had given that we see inflation at elevated levels. we are seeing a huge jump in the week contracting trade, we had russia exiting a deal that allows you grain crops to exit or move from the black sea, the countries that are most in need of it was about a surprise acted from that, we have the likes of the u.n., turkey tried to turn that situation around, but it does put questions around food
8:03 pm
stability for millions of people around the world, and you can see that jump in the contract nearly up 7% at one point. also keeping brazil. -- an eye on brazil. shery: with the wind of former president lula where watching for a market reaction, as swift or strong it could be. you have as few socks and asia exposed to brazil. take a look at south korea's wireless power, which gets a percent of its revenue from brazil. we have seen gains for that stock. muted reaction when it comes to the japanese nihon nohkayu trading up just over 1%. we are still seeing what the reacted will be there. the overseas reacted very key in this presidential election given that investors are markets were not very optimistic about a leftist government coming back into power, but given how close the elected was edibles in our's
8:04 pm
influence being strong in congress, will we see more optimism going forward? let's discuss this with the latin american managing editor joining me in sao paulo. dan, it was a close election and yet we have two hear from bolsonaro himself. >> we have now heard from regional leaders, international leaders. joe biden as come out and congratulated lula, and that was a key step in prompting bolsonaro to come out and recognize the results. we have heard from some of his allies in brasilia, who are accepting the result, which is a positive in. shery: there was a lot of concern about potential turmoil give it a we have seen episodes of violence during the campaign. bloomberg economics but the cost of turmoil at $12 billion. >> we did not see the violence during the election today.
8:05 pm
there were bizarre things over the weekend, there were allies running outside of the streets with a gun. so far so good in terms of violence around the connection between the two sides, and we are just waiting for that one speech from bolsonaro. we hear he is headed to the presidential palace now, so we hope you will be speaking soon. shery: when it comes to economic policies unmentionables and our's influence in congress. does that mean lula's policies will not veer too much to the left? is this a positive in terms of markets ended investors in the business friendly environment? >> in the first round what investors are bolsonaro did much better than expected they were comment -- calmed by that that lula was not being given a blank check to do all kinds of radical policies. it is a close result. he has had to build an alliance with center and center-right
8:06 pm
politicians. there was how people have to do things by consensus. shery: a breakdown of what the markets can expect as we continue to watch whether or not the incumbent president will come out and concede defeat. haidi: let's look at broader markets, our next guest is positive when it comes to japanese equities and said the gun should not depreciate too much further. the chief global strategist we just -- joins us now from tokyo. why are you so constructive when it comes to tokyo equities when we see a lot of fun china white. they yen volatility aspect is something to keep others a beneficiary of some of these companies and a real headwind for others. >> you are right. it is never a clear picture as to where to go interesting in any stock market, but japan is pulling out of its recession,
8:07 pm
you can see tourists everywhere in tokyo, which is out for the yen. stabilization of the end would help foreign sentiment interesting a japan. they will say they want to make money through the nikkei as listed in the currency. the economy is not looking like it is going to enter a recession like other economies around the world partly due to this late opening in the pandemic. the other thing that is good about the economy is on a production and auto exports in particular are starting to surge. they doubled in september on a unit basis from last year. a lot of good things happening. corporate earnings are basically fine here, they are dropping a little bit, but nothing close to what is happening in the states for instance. haidi: we have seen japan's alpine falling in september, one
8:08 pm
of the signs we are seeing indications of a global slowdown. you mentioned earnings, a big week for japanese earnings. what are you watching for? we talked a little bit about the yen effect. >> on balance, the earnings i seen, have been really good. what is just as important is the guidance, and unfortunately in japan's society corporations tend to be very conservative with therefore the guidance, in this case with the world on edge you never know if that is not the proper thing to do or not. in general they do not like to stick their neck out and make big predictions as to whether things get better or worse. some awesomeness -- optimists are disappointed with guidance. analyst know that it is always conservative. so the key is to watch what happens to earning expectations by analysts and really not the guidance. shery: of course, one of those
8:09 pm
countries is considering a rate cut is brazil. we are noticing the market reaction from lula's election victory. edf linked to brazil's talks in japan jumped 4% at the open, is getting more than 4%, this as lula speaks at a hotel in sao paulo saying brazil will regained the ability to lower it investors. what does this mean for markets in developing nations in emerging countries when we are seeing perhaps a dovish take to some of the global central bank decisions, and some of them like brazil started to move early already? >> there are so many factors indeed as to how developing markets in asia will progress, and a lot of it is due to
8:10 pm
political instability, and hopefully there will be a smooth transition in brazil. that would be a great sign in every aspect and might encourage people to think that even in some place like thailand there could be some sort of transition do something more stable than the present situation. politics always is important. in terms of how things developed. like you mentioned on your program into brazil, it seems like it will not be moving far to the left, and as far as i am aware in asia, there is not the sort of movement for the left, so it tends to be more positive for the stockmarkets in this region. shery: lula saying he will fight to end deforestation in the amazon as he speaks in sao paulo tonight. we have seen esg related stocks in focus given that of course
8:11 pm
environmental policies were not a strong suit for the incumbent president jair bolsonaro. where is the sector headed not only just in brazil but globally given the energy crisis? >> i did not catch everything you said there, but essentially, yes, i think the esg aspect of brazil will improve, and that will help encourage it investors to put more of their money there, as esg is a very powerful force. it is an essential factor as what we do as asset managers these days, so every little bit will help with that. i think politicians and companies in all of asia have to be aware of esg being a key aspect for attracting foreign money, and i think we can see more and more signs were that. it is a necessity more than option for governments and corporations even in this
8:12 pm
region. haidi: always great to have you with us, john vail. let's get you to su keenan. >> we start with south korea, the president as given it to be addressed promising review of safety measures following 70's crowd crushed in seoul that killed 153 people. the tragedy happened in a narrow alley as tens of thousands of people celebrated halloween. it was the first such festivities since covert restrictions were lifted last month. the news said 97 killed were women and 20 were foreigners. workers are leaving apple's biggest iphone plant in china after covid measures left many of the 200,000 staff facing inadequate living conditions. official online post showed local online authorities arranging buses to take workers to mandatory isolation. fresh lockdowns have been imposed in wuhan and china's
8:13 pm
industrial belt. beijing is boosting international flights at a fascinating and a boost to investment. president biden as blamed political rhetoric for the attack on house speaker nancy pelosi's husband. biden says this includes denial of the 2020 election result. an intruder in policy's husband with a hammer inside their home. the attackers put u.s. lawmakers on edge with midterm elections less than two weeks away. turkey and the yuan are looking for ways to salvage a deal to simply export ukrainian grain. it follows mask up's decision to leave the pack following an attack. washington said it suspended the agreement after its ships were hit by drone strikes a blamed on ukraine. the extent of damage to the vessels remains unclear. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan. this is bloomberg.
8:14 pm
haidi: let's take a look at some of the asian food stops that might be on the move. we saw the big move in the price of wheat. annabelle: jumping as much a 7.3% in one session, but don't do what su keenan was just discussing, basically russia has pulled out of a deal that would allow ukraine wheat or grain exports from black seaports, and in terms of the reaction, we are keeping an eye on what is happening in food stocks listed here in japan. all of those moving higher. the biggest move for graincorp in sydney. we can look at another sector we are watching, this is the reaction, investors having their first chance to give their views have the outcome of the brazil election. this is the etf listed in tokyo that tracks the brazilian benchmark, and it is coming a little off of its eyes but still trading up 3.3% after lula da
8:15 pm
silva takes his third term as president. also keeping an eye on some companies in asia that have exposure to brazil's economy. shery: there might be a little more optimism in the markets given that we have seen bolsonaro and lula's race very close. will former president lula and incoming president lula after moved where the economic center? we ask what is next for latin america's largest economy with benito berber. this is bloomberg. ♪
8:16 pm
8:17 pm
8:18 pm
haidi: traders bracing for a fresh spike in food and commodity prices. we saw the big move up with a price of we just in the last few minutes after russia budget get exit from the ukraine grain deal. russia suspended the deal after drone strikes against his naval fleet, claiming without evidence that one of the drones might've come from a granger -- grain ship. this is fairly typical of the reaction that we see from moscow in terms of the linkage between how they retaliate against what they view as being military tactics or tactics in this work -- war. >> a couple of things to bear in mind, we do not have any evidence that this strike did come from the safe passage corridor. the other to bear in mind is this has been a long time coming. we have seen ukrainian grain
8:19 pm
exports dropped substantially not only due to a backlog in turkey and ukrainians accusing russians of not providing enough support to move those ships, about 100 ships in the queue waiting to get through. this is much less about the strike itself, much less about grain then putin tried to reclaim the advantage in negotiations. it is trying to screen foreign currency and squeeze the ukraine economy not only this year but in the future. shery: we heard from arrested official that they did not definitively rule out a return, so what does this mean if president putin is trying to gain leverage, at what point could he change his mind? >> it remains to be seen what will actually convince them. the ukrainians have wanted to add one extra port. russia and wanted only a
8:20 pm
pipeline back online, and that is extremely dangerous, it is extremely flammable. not clear what they would need to see. they say they are carrying out this investigation. the investigation will find whatever russia wanted to find. it will depend on progress elsewhere mainly on the battlefield. shery: our bloomberg columnist. qatar's energy minister says european proposal to set limits of the price of natural gas are hypocritical. speaking exclusively to bloomberg he also told us it may be challenging to meet next year's energy demand, including from asia. >> it will be difficult to meet next year's demand, so it depends on what russia will do.
8:21 pm
you see a lot of factories closing down but there was a lot of switching going on. how much of that happens will also dictate the result of fuel or maybe a different outcome. i hope that they have it for winter. in my view it will take until 2025 to get a good resolution. >> do you think asia is better prepared to tackle the type energy market for the next couple of years than europe is? >> i think asia is actually in a tougher position. some of the advanced asian countries do not have a lot of the conversion to different fuels. some countries are much more on coal and fuel oils may be able to withstand less gas in the future. >> a couple of months ago you promise not to divert cargoes of
8:22 pm
lng headed to europe that you could potentially divert to asia. that was an easy thing to say when you said it, because the prices going to europe were much higher than they were going into asia. is that going to be as easy to say? some of your biggest clients, you are saying they are keeping our supply here. >> when we said it it was not about the price issue. it was in the beginning before we knew what the ramifications could be and what the prices would do, enterprises came later. it was much earlier than the prices. i understand what you are saying, but it is difficult to judge what is going to happen and how long we will remain with that. it can be a thing where we divert, but for now [indiscernible] haidi: qatar's energy minister is speaking exclusively to bloomberg's simone foxman.
8:23 pm
get a roundup of the stories in this edition of today' of debris. find dayb on terminals and available anywhere in the bloomberg app. customize the settings so you get the news on the industries and assets that matter to you. this is bloomberg. ♪
8:24 pm
8:25 pm
>> right now all central banks are blamed up and talking dog. are investors skittish as the fed pulls with the punch for the easy money and that will lead to a lot of mispricing and uncertainty. >> we are not only in fiscal dominance in this game of chicken between central banks. it is a debt trap. >> it is really a fed driven down that we are seeing, and it will take the fed to correct it. >> may be the fed could signal a move toward smaller increments
8:26 pm
of rate hikes next week after the meeting. >> the labor market is still strong, but it requires a fed that has a lot more skill and a lot more luck. >> that means you need to see higher unemployment, and if that is the gold they are failing miserably. >> i think that -- her back. annabelle: some of our guest on our poll question, what is your fomc trade. so much angst for optimism amongst investors. that was washed sometime ago in the latest meeting. in terms of what we are expecting this week and said -- instead, if we get dovish commentary from fomc it could end up hurting investors instead , based on what they have been telling us in the results of the bowl survey. we had 250 people responding to that, and what we understand in terms of the trading decisions ahead of the meeting will have actually been buying up the
8:27 pm
dollar, and they also expect a two year yield to climb into your end. does set the stage for the fomc meeting the kicks off tomorrow. haidi: let's get a check of other headlines we are following this era. bloomberg has learned that credit suisse has invited 20 banks intimates for morale issue. wells fargo and jp morgan are among those being courted to join the consortium. the bank' is new cfo was set up for due diligence on friday. cathay pacific will start using rusted airspace again months after russian apostrophes were in ukraine upended global flight best. this makes cathay pacific earliest of major allies to do so. it has attributed its decision to strong headwinds and payout issues. binance is looking at ways that
8:28 pm
cryptocurrency can help the social media platforms. it is an investor in elon musk's takeover of twitter. it says changes could help some of twitter a bunch of his injuries including the growth of accounts. hong kong kicks off a big week of fintech. we take you to the summit next as vive -- vivien khoo joins us. this is bloomberg. ♪
8:29 pm
8:30 pm
haidi: we do have australian retail sales and private sector numbers crossing the bloomberg.
8:31 pm
we aren't seeing when it comes to mobile institute inflation -- retail sales number month-to-month coming in it .6 of 1%, slightly higher than expectations and keeping it on pace in terms of the clip of growth we saw in august as well. private sector credit month-to-month, grid .71%, beating expectations and a bit of a deceleration from the previous month. year on year, private sector credit growth coming in it 9.4%, in line with expectations. and of course, we also had october readings for inflation gauges as well from the melbourne institute earlier. they came in a little bit higher when it comes to month-to-month for the month of october. this comes amid the rb eight week in terms of rba facing another close call in terms of its rate decision. we have seen inflation continued to soar despite wage growth being relatively contained. annabelle: surely debate going
8:32 pm
to be watching out for this tuesday with the rba, will they need to go for an outside site even though they obviously move to 25 basis points. rba at one of the big ones we're watching as well as malaysia, but we are very much focused on the fed, and this is the state of play as we head into that meeting. in terms of the reaction we are saying it a markets, we are fairly risk on, but mainly being driven by what happened in the wall street session on friday. specifically apple earnings were good enough to alleviate some of the concerns of the tech sector. in terms of gains at the start of trade, negate trading -- nikkei trading up 1.3%. we had dollar strength coming into the session, swap that we are seeing currencies moving a little weaker, but he really watching what is happening with japanese yen, this morning, traders saying it could be risk of a further selloff as we do approach fomc with decision due wednesday. also seeing a bit of retreat in
8:33 pm
the bond space this morning, being led by the longer end of the curve. there are other big events we're keeping an eye on this morning, particularly what is happening in brazil. shery ahn is covering with that, lula da silva taking his third term as president, a stunning comeback really for him. in terms of the ratchet we have this etf that does direct the resilient benchmark, and that has been up as much as 5%. we are also keeping an eye at what is happening in the we contract as well given that we had russia pulling out of a key deal that allowed ukrainian exports out of the black sea. that does put food security very much back in focused and displaying into what we are seeing in the cory hardrict this morning also some of the big movers including graincorp you can see at the bottom of your screen. shery: let's get to su keenan with the first word headlines. >> we start with a bridge that is collapsed in the western indian state giving at least 60
8:34 pm
people at leaving several others injured. local news reports says hundreds of people were on the suspension bridge when it gave way with the money still missing. there is no immediate cause that has been given for the collapse, but the colonial era bridge just reopened after renovations. a bloomberg has learned that elon musk is preparing around of layoffs at winter just days after taking ownership of the social media platforms. i sources tells us that billionaire asked managers to listing members to could be let go. axios is reporting that must plans got up to 30% of staff with engineering said to be severely drained. china will host top leaders as president xi jinping gets off his third term in which he has vowed to increase his naked to address global influence. vietnam's communist chief was set to be the first leader to
8:35 pm
meet with president xi senses third term. macau residents have been ordered to do three days of rapid covetous from sunday after three new cases were found. the new cases are dampening hopes that that the gambling hub could soon allow doris back for mainland china. officials lucked out the mgm resort after a worker tested positive along with her two sons that follows a visit to the mainland. staff and guests are being put in quarantine. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan. this is bloomberg. haidi: hong kong is moving to legalize retail trading of digital tokens just as singapore looks to impose breast restrictions on consumers. singapore's central bank chief told us the city state was to limit risk to retail investors. >> it depends on what we both
8:36 pm
understand the crypto hub to be. if by crypto hub you mean we want to be a hub for digital asset activities, or application use cases in trade finance, post and free-trade capital market activities, yes, we still want to be a crypto hub. if you mean we want to engage in more tokenization of financial assets to fractionalizing and monetize their use, yes. to unlock economic value, yes, we still want to be a crypto hub. but if you mean whether we want to be a hub for the trading of cryptocurrency, no, that is not part of the vision. we did not stated so in radically before, but now we are standing at more emphatically.
8:37 pm
we do not want to be a hub for mere trading of currencies. there is an asset ecosystem we are promoting. >> is singapore losing out? in terms of its regulation even, what does singapore offer that they do not? >> i do not think we set ourselves out to compete with other jurisdictions especially in regulation. we have to do what is right for us, what is necessary to contain the risks, and the rest are primarily to harm retail investors. there are some risk on money laundering and terrorist financing. i do not think any jurisdiction is considerably lax when it comes to anti-money laundering credentials. we have to the controls on the, and today who might have seen the latest round of measures, i think they will be among the strictest in the world with
8:38 pm
respect to retail excess of cryptocurrencies, and we think that is necessary, but i do not think the cryptocurrency is looking at only that. in fact, those players only looking at selling to retail investors will probably not come here. they will move to other jurisdictions, and we wish them good luck. but those who want to do the things that we mentioned, i think they will find singapore a compelling place, because i think that this invitation would make for innovation through projects and so on where we look at activity with industry to experiment with regular and industry working together to experiment and use case for digital assets. that is not easy to see in other places. >> isn't it important to also include reach out to be part of an ecosystem? joe gives you the volume and get to the profit for these companies as well, and that allows you to function. >> so we are not saying it has no place, which is why we continue to get licenses to these layers trading in
8:39 pm
cryptocurrency. we have just put stricter guard rails, i think it will reduce the volume of trading. i think the main point we are making is we accept cryptocurrencies have a place in the larger digital ecosystem, because they are the tokens native to the blockchain the power much of this activity. they need to have an expression in the form of financial sector and access to investors. hopefully, the more accredited investors and institutional investors rather than retail investors. so they do have a place, and we allow it, but i think we do need to tilt business model stored use cases where the revenue stream comes mostly from those use cases. haidi: singapore's central bank chief speaking equitably to as haslinda amin. hong kong's fintech week has
8:40 pm
begun. let's get over to the event where stephen engle is standing by with our first guest. >> thanks a lot, that interview dovetails very nicely with the beginning of the hong kong fintech we. the biggest, most overt hard right out so to pitch this city as potentially a digital asset of internationally. they are getting a bit of a start because hong kong was late to reopen of course, as we all know, and maybe they are falling behind other areas like dubai and singapore digital assets opening up as well and creating a regulatory framework. into particular, what we are hearing, we are going to get details this week a potentially this mandatory licensing for retail cryptocurrency trading platform care in hong kong. for more on that, let's bring in vivien khoo.
8:41 pm
we were just listening to ravi. he was saying singapore, given the turmoil and implosion of the cryptocurrency market since november of last year, or perhaps needs to be more guardrails for the retail side of crypto trading. what have you heard from hong kong that will give hong kong a competitive advantage? >> sure, i think we should look at hong kong and singapore living in parallel from the perspective that they are both building up a framework for better guardrails. i do not necessarily see that as a competition and, although other people may feel otherwise. hong kong is in a good position moving toward a digital hub, and whatever it puts up for retail, i do not think it will be a free-for-all. it will be a framework that allows a certain portion to reach out surveyed. >> argue cautiously optimistic
8:42 pm
as they opened up to retail investors? the previous regime was more geared toward professional investors and those with portfolios and excessive $1 billion. the voluntary licensing plan only biting two platforms. the retail side, once that opens up, the world was a hong kong is the place to go list. >> the way i see it is the perception of opening for retail it just makes hong kong more attractive. whether it will attract more on how waves come in it will be what we have to see down the road in terms of how it plays out. >> under john li and this government, think of the site security, and digital security is a big issue. the one thing i have heard talking to people is hong kong tends to be a little more conservative, a little more risk-averse. does that were to hong kong's favor or its detriment when trying to attract the talent and
8:43 pm
platforms that are necessary? >> i think hong kong is on par with any countries in terms of how it wants to build its control framework. in digital security right now, there is not a globally consistent definition, so i think g20 and other regulators have been trying to get that fixed, but i think the globally coordinated purchase is going to be the thing that matters, and hong kong is clearly participating as part of the global. >> that is the next question, if we have a global set of rules, how do you balance that did not deter investment but spirit? -- spur it? >> we are far from that. different countries have different edges. singapore focuses on the payment token side, and hong kong right now, what is in the market is they might look at how derivatives will help support
8:44 pm
the hong kong market, and maybe certain tokens can be offered to retail. >> tokenizing stocks and bonds? we are short on time because i think paul chan is going to give his video speech edit we are going to get blasted out. it will get really loud here at the beginning of hong kong fintech week. shery: stephen engle joining us from allowed place, and sao paulo the same thing as we continue our coverage from brazil on the presidential election. plenty more to come. this is bloomberg. ♪
8:45 pm
8:46 pm
>> this is "bloomberg daybreak: asia." i had of the leader summit in bali we are putting a spotlight on key issues the group is facing the post-pandemic era. managing inflation and recession risk top of agenda especially for the world's biggest economies. in latin america two countries looking i'm resilient, brazil and mexico -- looking remarkably resilient, brazil and mexico. voters have narrowly backed led to silva for another term.
8:47 pm
the bank has reacted early and aggressively to inflation and signaled rates will be held steady at the highest level in five years. shery: let's bring in benito ber ber, good to have you with us. what does a lula presidency means not only for brazil's economy perhaps for better integration with the rest of latin america? >> thank you for inviting me to your program. look, i think the arrival of lula again to the presidency of brazil, first of all, comes at a time when the country is very divided, so i think he is going to have to have a tough time in terms of uniting the country. and the second probably challenge he will have is to send a message to the market that he is pragmatic, and he
8:48 pm
will follow fiscal policy. and i think kind of the overall message to the world is perhaps in terms of a green agenda. i think lula will move certainly more than bolsonaro toward protecting the environment, the amazon and follow policies that are sort of behind these goals. and in that sense, brazil will rejoin the rest of the world and to get agenda that is sort of proenvironment. shery: do your point, does that mean we could perhaps see more progress on the stalled free-trade agreement between the european union and --. brazil is the largest member but we know that environmental policies were a key measure. >> i think definitely lula will
8:49 pm
help in terms of unlocking that sort of -- in terms of what has been stopping that particular trait issue -- trade issue, but i think overall there are many things that the rest of the world are looking at brazil with a certain hesitation toward the destruction of the amazon and things like that. and i think lula will probably take a complete different policies that will ensure the rest of the world that he cares about protecting the amazon. haidi: in terms of the broader macroeconomic environment, we continue to see the fed to see the fed moving very aggressively. we are expecting under the 75
8:50 pm
basis point move. to what extent does that continue the trajectory of dollar strength, and how do you see that play out against emerging-market currencies, including those of brazil? >> i think that is a very good question. in general central banks in latin america, particularly bcb, f started hiking early and aggressively, and that has helped to stabilize currencies. but there is another factor that has helped all latin american countries and specifically brazil, which is that commodity prices have been high, even with oil prices going down a little bit. they remain significantly higher above long-term averages, and that has also benefited latin america and specific brazil. so i think that this trend of the dollar on the back of a
8:51 pm
hawkish fed will probably affect all em countries, but a little bit less latin american countries and specifically brazil. it is true bcb has not stock-taking, it's not that 1375. it will probably stop somewhere between march or june of next year, mid year 2023, but i think that sort of these are the factors of having very high gary and the factors that i mentioned having to do with high commodity prices, which translates into positive terms of trade talk to the economy will support the currency. the last thing i want to say,
8:52 pm
sorry for the long answer. the one factor that could derail a brazilian asset market is the perception that the lula administration is not fiscally responsible. that is a risk that could potentially risk brazilian asset prices. haidi: i was going to mention that, the perception of fiscal responsibility and credibility. what it moves would you want to see from the new administration? we are expecting reforms to income tax, for example. is that going to be enough to persuade investors when it comes to that credibility? >> i think that is a key question. certainly, a tax reform will be very important, but i think the commitment to a series of fiscal rules will be very important in terms of calming the market in a
8:53 pm
way. i think that there has to be a discussion about the framework around fiscal rules that has two have been very fast, but before that we have to have the nomination of the finance industry and his or her team, and i think that will be the first signal of president lula toward pragmatism or not and toward sort of fiscal responsibility or not. i do believe he will give the right signals and eventually he will adopt a prudent fiscally responsible policies. haidi: great to have you with us, benito berber. as we count down to the g20 summit we will have more analysis on the challenges facing the group mondays at 8:40 a.m. hong kong time here on bloomberg television.
8:54 pm
more ahead. this is bloomberg. ♪
8:55 pm
shery: take a look at how brazilian related as that traded in asia are looking right now. we have seen positive sentiment especially when it comes to japan related edf with the brazilian stocks. really getting more than 4% as
8:56 pm
we are also watching wireless power which got about 8% of its revenue from brazil last year. these assets being watched given that luiz ignacio lula de silva has made a dramatic comeback to priscilla presley is presidency, the two term former president winning by a narrow margin, saying the economy must improve everyone's lives. lula focusing on his previous two terms that lifted millions of residents of poverty. that is it from "bloomberg daybreak: asia." coming to you live from sao paulo, brazil. our markets coverage continues. this is bloomberg. ♪
8:57 pm
8:58 pm
millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save by talking to our helpful switch squad at your local xfinity store today.
8:59 pm
9:00 pm
david: gdmo

42 Views

info Stream Only

Uploaded by TV Archive on