haidi: good morning and welcome

to daybreak australia. annabelle: we are counting down to asia's major market open. shery: i am kathleen hays, for the top stories this hour, markets brazing for wednesday's the decision as a job openings rebound, -- as job openings rebound. haidi: rumors to end covid zero, beijing is not aware of any plan. annabelle: bolsonaro falls short of conceding the election defeat to lula da silva. shery: stocks are opening on the upside this morning. the federal reserve showing solid gains in new openings for

jobs, if it is a wednesday meeting, the owner open the door to slow down at a rate hikes ahead, we saw that it medigap stocks, apple is down pretty sharply, nasdaq is up. energy is the biggest gain or. -- gainer. in 2022, stocks erased again 01%, the most for any year since the financial crisis, bonds are little changed. the 10-year note was 4.05%. we see a follow-through on the negativity, that is almost unchanged on the s&p 500 futures. the golden dragon index was the big story. china stocks, the unverified tweet or the social media posts that they may end the covid zero strategy now, unverified by the foreign ministry by the way. golden dragon index close to 4%.

it was up by as much as 7% on the day. it is so interesting, if china will end covid zero, start up now, that could be good for commodities. oil was two dollars higher on the story. annabelle: the question is can the rebound last? as you say, we are in venmo today. the speculation that the fed may need to stay aggressive, in asia we have a pretty range bound session, expect volumes to be thin as well. not so much for the meeting later but it is down to the press conference, what a jay powell will signal in terms of the size and pace of rate hikes ahead. you see the move in a big tech, we had it in the treasury yields and the shorter duration and the stronger dollar that came through as well. let us check on the fx space how the stronger dollar is playing out and the risk off tone coming

through. we are seeing the the kiwi, -- we are seeing the kiwi, piercing the ongoing divergence between the u.s. and japan playing out in the session. in the offshore yuan. as well. the divergence between the u.s. and china could spark further outflows. gaining given the optimism around reopening, the question given the comments from china's foreign minister, is this a day two rally as well? haidi: particularly as we know this is the inflation point that chinese equities and assets including the currency are waiting for, we do not expect the reopening to happen until the summer of next year. this is what we saw, it was unverified, quite a lot of credible sources had reported. hong kong, we spoke to a guy, it

is a big boom bust and chinese equities and he said that the reopening committee has been formed, led by a standing member. they are reviewing covid data to see their newest reopening a scenarios and targeting march 2020 34 reopening -- reopening and targeting march 2023 for reopening. we see stocks bouncing off of the lows of 2005. regardless of where this goes forward as we get more details, it is clear this is the catalyst that markets need for chinese assets to rally. kathleen: once you get past the party congress and xi jinping gets his unprecedented third term that would be pretty quickly moved to the end of covid zero, let us move on to something that was not so good, the job openings and labor

turnover survey. it has gotten a lot more importance of people are watching the number of jobs out there available. there are a lot of dogs to be made available, the economy -- jobs to be made available, the economy must be pretty strong? what happened, 10 point 7 million new positions in september versus 1.3 openings in august. above the forecast of 9.8. this was more services type jobs. you have a jobless rate of 3.5%, average hourly earnings at 5% year-over-year, is this the kind of thing that will make the fed worried about recession? while this make the fed -- will this make the fed market is still tight? this could fuel inflation? this so much attention. let us move on to the u.s.

markets. let us bring in emily and janelle. share this support for us. >> we started to see the s&p 500 falloff. it started the day in positive territory. the labor market is still tight and we started to see stocks fall off. it is not good for anyone hoping for the hawkish or dovish pivot from the fed. they are focused on the labor market. in terms of what to expect going forward, everyone is waiting for the 75 basis point rate hike tomorrow. a lot of investors are focused on what powell talks about in the press conference. that is what market waters are going to be paying attention to. jp morgan's trading desk had a know it we were to get a 50 basis point rate hike we would see the s&p 500 surge 10% on

wednesday. that is not their base case. we are more likely to see a stock trading flat after the decision or maybe a little bit positive or lower. they do not have a clear idea. they are expecting the fed will do what the bond market is already pricing in. haidi: does the jobs data complicate or frustrate the downshift plan for the fed? >> complicate for sure. several officials were a little bit relieved in the previous report when they saw that drop openings were coming down. what we are learning is that they are backup, we have 1.9 openings for every unemployed person. or that suggests is continued strong demand for workers, more persistent wage pressures, and definitely more pressure on the fed to stay at rest with the writings. -- ratings.

kathleen: their terminal rate is 4.5%, some have even opened the door to 5%. that was suggested that whether the effect of 75 and 50, 50 and 25, they will keep raising rates. >> tomorrow we will be looking to see from powell if there is any indication that they are willing to go higher than indicated in a previous projection. if they are willing to do so perhaps with smaller rates because rates are no longer at zero. likely, you will keep his options open. they have looked away from outward direct guidance. that is what we all want to hear and what are they thinking? we will have to see what happens next to stop inflation from getting further out of hand. haidi: we have to talk about the extraordinary reaction to the unverified social media reports

of a plan towards reopening for china? does this give us a glimpse at least into what the potential upside could be once we do get a confirmed report at some point? >> it could. has a foreign ministry said it was unaware of any plans -- the foreign ministry said it was unaware of any plans to remove covid zero. once we do get a clear indication that covid zero is going to begin to be phased out, that could lead to a more sustainable rally. i was looking at chinese stocks, all your we have seen these little upside surprises, these little movements where there is a bit of optimism that covid zero could be dialed back but it is not sustainable. there are some debt buyers -- dip buyers. there is a taker with a $5 billion etf but it has seen $2.9 billion in net positive inflows as it has fallen. it is down over 40% and hit a

five year low yesterday. there is an appetite among some investors and they want to go in now and not wait for the kind is i tuesday, even a little bit of speculation that covid zero would end was enough to bid up the stocks. for a sustainable rally, my sources are saying we need clear information from the government that the policy will dial back. haidi: we have to see if they will buy on that rumor. we had towards the front decision, let us get you over to vonnie quinn. >> china's times says they will strive for a better economic outcome. china is rebounding thanks to supportive policies. services activity contracted,

things could worsen in the coming months as beijing sticks with strict covid controls. hong kong may raise a storm warning due to tropical side as leaders gather for a banking summit. they will consider hosting the number eight signal between 2:00 and 7 p.m. local time. that could force an afternoon closure of the stock markets, some say the summit will proceed as planned. netanyahu looks poised to return to power after the fifth election since 2019. exit polls suggest that his party is said to have the majority needed to form a government if it is joined by allies on the far right. israeli politics have been deadlock between two factions divided by their support or opposition for to netanyahu. -- for or to netanyahu.

new zealand house prices fell, the first year on year drop since june of 2011. while useful for a seventh consecutive month, sliding 1.3% from september. 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: the brazilian president has broken his silence on his election loss, promising to respect the constitution but stopping short of conceding to lula da silva. let us bring in our consultant, it has been a stressful couple of days since the runoff count. what do we know? does this constitute a concession or admission of defeat at all? >> it has been a tense couple of days. we have had protests and road closures and really it is

unusual for brazil that a president, the losing candidate would not concede to the election. you mendo bolsonaro did not -- although bolsonaro not say the words i can see to the election, it is being considered a speech, he will obey the constitution as he has always done. once he was done with his brief speech he spoke for less than two minutes his chief of staff came in and said the president has authorized him to start the government. markets at are political analysts and the supreme court have come out and said this was a concession speech. things are back to normal. kathleen: time to move on. the new president is s ending an envoy to government,

the first of his agenda. how is this going to go? what do you expect in his early days? whether his opportunities and challenges -- what are his opportunities and challenges? >> we are watching for cabinet picks. he was pressured by markets, especially between the first and second round of the election, all of october, pressure on him to name a finance minister who he would pick to run his economy team and give the markets a clue about what his plans are. he did not do that. all of the attention is to how he will make the cabinet. he will have 10 or 12 parties at his coalition that he has to accommodate in the government. he has already mentioned he will increase the number of ministries by about a third we are expecting to accommodate the people and split the economy ministries that bolsonaro put together into three other ministries.

what we are watching for his names to get some idea of policy. we are not expecting anything this week. tomorrow is a holiday for brazil, officially the transition will be led by his vice president. in will begin on thursday. -- it will begin on thursday. kathleen: business proceeds. still ahead, carmen reinhart joins us as we discussed the upcoming rate for decision and how i strong u.s. dollar could bash a strong u.s. dollar could cause albums in developing nations. also the catalyst of the year end market rally. this is bloomberg. ♪

>> he has said i am going to stay out of the fed's needing when it comes to the hiking cycle. president took a different position and got in the fed's grill any time that they would raise rates. the president has argued that they are the first and foremost inflation fighter and that is

where we are going to stick it. haidi: jerry burstein on the president's right position. data showing that the solid u.s. labor market bolster's speculation that the fed may remain aggressively tight. arc as to the midterm elections could be a year end rally -- our guest says the midterm elections could be a catalyst for a year end rally. looking at what the most bullish scenario outcome is going into the midterms, why are you so positive that midterm results could actually be a positive outcome for stocks? are you expecting more of a divide in results? >> that is the theory behind it. if we look at history, this is what has actually happened. after the midterms and the next six month period of time, it

tends to be the best season for equity markets and in fact between now and the end of the year the average has been over 8%. if you look at the period of time, it is average 15% and if we look at arrows that were similar to where we are now, -- eras that were similar, there is no promise or guarantee we can not have but that has been historically the case. haidi: in the meantime, we are looking ahead to the fed, the fact that the labor market data and drops numbers continue to frustrate the move to taking a step back. is that something that markets are pricing in right now? lorreen: there is no doubt about it. the adopt number indicated what we will hear tomorrow -- jobs

number indicated what weight will hear tomorrow. the markets will move based on what their guidance is. the success in slowing down the economy, we see inflation numbers going down. wage growth is still there and jobs are still there. that is what they will tackle next. kathleen: you point out that analysts are looking for earnings to start growing again. they are growing in energy, they are going -5%. in terms of reaching 7% year-over-year in the second quarter of next year, does this depend on the fed having paused its rate hikes? know, we have to go to 5% or higher to get stubborn inflation down. what due to earnings? -- what will that due to earnings? lorreen: the picture can change. we have been talking about an

upcoming recession. that depends on what happens with the fed, how fast things slow down and on earnings as well. analysts have been looking at 2023 and seeing a recovery in earnings, that will depend on what actually happens and what happens with businesses. what we have seen with technology companies is that and spending has gone down precipitously. we know that businesses are slowing down and we will see what happens next year with earnings as well. kathleen: what will drive the recovery? will it be we slow down a lot? the fed keeps hiking rates? markets say and companies that we have survived this even if. . is that we are counting on --

have grown, is that we are counting on? lorreen: we had economic data going down, we will see the markets recover ahead of time as well. kathleen: we are looking for to the rally. thank you, as for you, you can get a roundup of the stories you need to know to get your day going in today's addition of daybreak. subscribers can go to dayb and customize your settings so you get the news that you care about. this is bloomberg. ♪

kathleen: let us get a check on

the headlines. elon musk says that he will have a user system called blue. -- escorted out of the company's offices. uber shares surged, a rise in rides are easy concerns about inflation. the chief executive says results were boosted by the reopening and a shift from retail to services. >> inflation has affected everybody and i think as that raises prices, i do not think prices will go down to pre-pandemic levels. kathleen: the second largest maker of computer processes has

popped earnings estimates, $.67 a share and $.65. they data unit posted a 45% revenue increase from a year earlier. amd is signaling that inroads in the server chip market will bolster its finances. we will talk fed policy and any sign of potential pivot with former world bank chief economist carmen reinhart. she is concerned about the fed pausing its rate hikes too soon. she says the funds rate has to get above the inflation rate for it to bring inflation under control. this is bloomberg. ♪ xfinity rewards is a program whose sole purpose is to say "thank you" with experiences big, small and once-in-a-lifetime. sometimes it's about cheering hard enough

to shake the stadium! sometimes, it's as simple as movie night right here at home, on us. you mean the world to us. so we're bringing you closer to what you love. kinda like this. welcome to 30 rock! join xfinity rewards for free on the xfinity app today. our thanks, your rewards. hi, my name's steve. i lost 138 pounds on golo and i kept it off. so with other diets, you just feel like you're muscling your way through it. the reason why i like golo is plain and simple, it was easy. i didn't have to grit my teeth and do a diet. golo's a lifestyle change and you make the change and it stays off. golo's changed my life in so many ways. i sleep better, i eat better. took my shirt off for the first time in 25 years. it's golo. it's all golo. it's smarter, it's better, >> you are watching daybreak it will change your life forever.

australia. the brazilian president has promised to respect the constitution but stopped short of conceding to louis desilva -- lulu desilva. they began the transition process. bolsonaro broke his silence after losing to lula da silva. the job openings unexpectedly rebounding in a low -- the aggressive. campaign to curb inflation. the available positions increased, exceeding the median estimate of the bloomberg survey which forecasted a drop to 4.8 million openings. north korea is threatening the u.s. with powerful measures if

the u.s. military does not end exercises, south korea and the u.s. are conducting drills. many have warned that the north could raise the stakes even higher with a nuclear test which would be the first in five years and the seventh overall. spacex has launched its falcon heavy rocket, carrying classified payloads for the u.s.. the lodges are handled by the more powerful falcon nine, it has a dozen launches plan over the next several years. 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. kathleen: the federal reserve is expected to hike another 75 basis points tomorrow, the question is whether officials opened the door to a 50 point rate hike in december and a pause early next year.

our next guest says it is crucial for the fed not to develop cold feet and maintain commitment to bring down inflation. the harvard kennedy school's carmen reinhart joins us now. it is great to have you back. let us start with the meeting. and repeated 75 basis point rate hike and inflation has not budged much. some fed officials seem to be saying that we have been aggressive, we can slow it down. i do agree -- do you agree? carmen: i think it is premature to look for the other side at this stage. we have a deeply negative federal funds rate. inflation around 8%, on a 12 month basis. even with a forthcoming rate hike, i have not really seen historically many episodes where you get inflation down with

significantly negative real interest rates. kathleen: put this in context, how negative rates are now, in the sense of the funds rate being below the inflation rate, not above it, the rogue rate, this is a very extreme time even among extreme times? carmen: the era of zero for long is extremely unusual historically. only during the two world wars and the 1970's which was very inflationary, have we seen interest rates stay this low this long, this negative. exits have been complicated. meaning that you need strong nerves, you need to begin to see

the impact on the real economy and on labor markets. before you really hit the disinflation. haidi: one of the other things we are starting to see is this a divergent path being taken by the government and central banks. we saw that play out in the u.k. and i think that goes to one of the underappreciated risks you talk about which is volatility and fixed income and also fx markets as well? carmen: the era of low for long, low inflation, low interest rates, it breeds low volatility and fixed income markets. at the moment look at the equity market and volatility has picked up somewhat but it is not unusual. you look at fixed income markets and since inflation has come

back, volatility and fixed income has returned with it and i think this is something that we will be living with. as long as inflation remains stubbornly high, let us not forget to preview for europe, it is not looking good with inflation rates above 10%. haidi: we have not even gotten to the tiny slow down. -- chinese slowdown. should there be a better coordination between countries regarding things like currency? carmen: global coordination would benefit on many fronts. we are seeing a rise in geopolitical tensions that are quite evident.

they were evident before the russia and ukraine were, more evident now. one thing that is different from the aftermath of the global financial crisis of 2008 and 2009 is that china was a big engine of growth. not just its impacts directly on the global growth, but also it was real engine of growth for emerging markets. we do not have that now. coordination or the ideal but i will not be looking for it in this kind of environment. kathleen: we are hearing some talk from officials, leading democrats saying that the fed should slow down. they should not push up on unemployment? is that what we are going to be seeing more and more of now? are you concerned that the fed may give way to that and say we

better ease up and not be too tough on inflation? carmen: there are many, including what you have mentioned, there will be many pressures mounting on central banks. let us not forget that in the u.s. and the advanced economies, debt levels, public debt levels are also at historic highs. no one in government really can embrace the idea of the effects of higher interest rates, slowing the economy. adding to debt servicing costs. the pressures are likely to increase on that dimension. there is also going to be pressures all central banks coming back on concerns we saw about economic fragility. in the euro zone, there is pressure as to what happens with widening spreads between say italian debt, and -- the

quantitative easing measures of the last 15 years have played a big role in stabilizing those spreads as well. there will be pressures on central banks on several fronts to either slow down or perhaps reverse the bar of i view as needed for bringing inflation down. kathleen: the fed will keep hiking rates to get four point 5% or 4.75 percent. -- 4.5% or 4.75%. when the fed keep hiking -- what the fed keep hiking until they see inflation below 8%?

how do you gauge that? carmen: i do not think we need to keep seeing hikes. i think consistency will be the most important. i think that the risk i worry about is what for a lack of better term one could call cold feet. so far it is easier to be hawkish on inflation before we see the signs emerge on economic activity, before we see the real weakness develop. i think the speed is important and has been important. i think consistency will be the premium as we enter 2023 and the impacts of the tightening we have seen take hold on the real

economy. haidi: how much do we worry about debt resurfacing when it comes to emerging countries? not just in light of rising rates but of course as you highlight, the stronger dollar as well. carmen: i am not of the extreme gloom and doom we are in the border of another major debt crisis. the pulp are tightening -- the paul volcker tightening ushered in a major emerging-market debt crisis. i am not looking at that. you have to see that we are -- we have gone from a long period of very favorable conditions for debt servicing for emerging markets and that is coming to a screeching halt. do not also forget that emerging-market debt is

overwhelmingly in dollars and the dollar has been appreciating which means that the real debt servicing costs are mounting because of that. i think emerging markets are going to be in for a period of very limited capital influence and more sketchy access to capital markets. let me -- at the world bank, a real preoccupation was not so much with the middle emerging markets but what is happening with the low income countries. at the moment i have to say more than 60% of the 74 low income countries are already either in debt distress or high risk of debt distress. we have not seen that in decades. kathleen: even before the u.k.

had its issues, there were some moments that looked like an illiquid treasury market. that the treasury should or could slow down the tapering of the bond purchases and they keep saying or -- they have tools to deal with with illiquidity that happens. are they going about this correctly? what will they have to do in an event like this? carmen: there is no way of hitting around a stabilization in reduction of central bank balance sheets. central bank balance sheets have really -- they exploded for the first round during the mobile financial crisis and of course, during the height of the covid pandemic. i think that there is no more

elegant way of doing this. i think balance sheet reduction is going to be particularly challenging for the ecb and also for some of the reasons i noted earlier. have to worry also -- they have to worry about the slowdown of purchases from the global financial crisis from the periphery countries. we will see what financial fragility risks that slow down brings about including also more possible u.k. type events, given the volatility and the higher volatility we alluded to earlier. haidi: professor at harvard kennedy school, carmen reinhart always such a pleasure having

you with us. you can turn to bloomberg for more on the decision, go to tliv . coming up on daybreak, staying committed to hong kong. we get more from our interview, next, this is bloomberg. ♪

kathleen: you are watching daybreak australia. let us discuss the morning calls. strategist say this will be a favorite of many managers? annabelle: citigroup is saying the investors basically need somewhere to wait it out for opportunities to come along and where is the most attractive place? that is in cash, especially with the yields rising after eight central-bank decision. they have a portfolio developed by strategist and it is overweight cash by 18%. this is the latest in a lot of defensive calls on the course. if you look at this chart, the dollar is trading at the upper end of its craving envelope -- trading envelope.

this looks at moving price averages and we have seen a lot of investors holding back from moving into risk assets and staying in cash. we will see money manager stepping into cash piles eventually, many at citigroup say that will be slow to materialize. haidi: also slow to materialize is the lifting of covid zero restrictions, this would have a massive impact on the yuan. annabelle: yes, morgan stanley has a new note saying that when we do see an easing of covid zero restrictions that is when we could see the elevated volatility around the dollar yuan that has been to the upside that will subside quite a lot. it does hinge on an end of the severe pandemic policies. they are sticking with the to assist us in the market it is unlikely to happen before the national party congress that happens in march next year.

if we did see it sooner, it would give china a better chance of hitting his 5% or rather the 5% gdp growth by next year. if you change, there was a lot of optimism around this potential reopening in the price session. unfounded reports on local messaging services, when you take a look at the equity, you see the valves in the index, look at the longer-term basis, those investors who bought into the reopening hopes have been burned in the past. kathleen: once burned, -- twice burned, once shy. growth prospects, despite geopolitical concerns, we have an interview regarding the turnaround. >> i look to the group, we have

a strong market, we are the leading franchise that is in mortgage growth. the asia pacific middle east, the great growth opportunity that we have. i look to this region it is hong kong, china, singapore, india, the trade and the major growth opportunities alongside the great franchise in indonesia. >> how you look about the increased tensions in the u.s. and china? is a change how you view growth in this -- does it change how you view growth in this region? >> the millionaires in china, they will grow by 100% over the next five years to 12.5 million. wheat monitor and watch carefully for geopolitical tensions but you the european and swiss-based company, -- but

we as the european and swiss-based company, we are well-positioned. >> you are looking at banks and other financial institutions that if and when china does heat up, tensions with taiwan and we see new u.s. sanctions, how does that impact the operations in china and hong kong for credit suisse? >> this is difficult to forecast but we are making sure that we put our businesses into a shape that they can continue and are making sure that in any case of this happening on the sanctions side that they comply with whatever we need to comply. >> the bank is thinking about this right now? on how to potentially -- is it part of your everyday discussions? >> we do not discuss about ring

fencing, but you take that into consideration. potential future fallouts or tensions. >> are you considering redirecting resources to other parts of the region? like vietnam or indonesia? what markets can you increase your presence in? >> i laid out where we think we have to keep opportunities. whatever is happening from a geopolitical perspective, there will be inherent growth, in particular in china and certainly, hong kong will continue to play an preeminent role in our -- whack preeminent -- a permanent role. >> that will not change relations in china? >> that happen for one or two years, we take a long-term perspective and we will see and

we will observe how things are developing. >> you are trying to launch our china onshore wealth business, or timeline you have for that? given the fact we have seen quite a few bankers leave, does that delay the launch in any way? >> we are looking to the future of economic development of china. we have investments and licenses and we would continue to invest and build it up. kathleen: that was the credit suisse german-speaking to us in hong kong. sure to tune in to bloomberg radio to hear more from the big newsmakers and getting in-depth analysis in the daybreak name. you can listen in way of the app , radio plus, bloombergradio.com. but the more ahead, this is bloomberg. -- plenty moorehead, this is bloomberg.

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haidi: asia hsbs ceo said he wanted to be -- chief said he wanted to be the ceo before the exit. the ceo said it was about

broadening the senior managers. novo gratz may cut up to 20 present of his works force -- 20% of its workforce. a spokesperson says wildl -- while the firm works to improve its workforce. kathleen: speculation is that beijing will ease its covid rules, we are watching santos, php, rio tinto, and mineral resources. a fintech officer joins us from the singapore fintech festival, keep it right here, this is bloomberg. ♪