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shery: you are watching daybreak: asia. haidi: counting down to the market open. us really has come online. asian stocks poised for a cautious open. u.s. equities closed off eyes as investors weigh midterm results. millions of americans casting their votes with the fate of president biden's economic agenda in the balance. we will have live updates from washington. cryptocurrencies plunged as doubts grow about bytedance's takeover. shery: south korea jobless rate at 2.8%. lower than expected. very near record lows we have seen. a very strong root -- strong labor market despite a series of

rate hikes. perhaps giving it more leeway for central bank policymakers. we are talking to .8%. korea adding six and sunday 7000 jobs -- 677,000 jobs. more positive data. surplus in south korea pushing the korean yuan high. what are you seeing? annabelle: still watching the open we had for the asx 200. stocks in australia moving higher for the fourth straight session. tracking moves we had on wall street even after we did see traders defensive in late trading. that is also showing up in bond yields. the three and the 10 year dropping. tracking treasuries, given we had the collapse of the ftx exchange. that cast a long shadow not only over bitcoin, extending their losses. other risk assets in general.

across broader asia, we've got japan futures and new zealand looking mixed ahead of the start. traders cautious ahead of the oh -- ahead of the open. the yen around its strongest level in about a month. also watching offshore yuan in china, given we have covid cases around a go april high. also casting doubt over all of this optimism. haidi: which is why we saw pressure on oil prices. we are seeing it again. wti down .4%. below $89 a barrel. pressure for futures at the moment after we saw volatility run rampant in the new york session. three sessions of gains for the s&p 500. after swinging between gains and losses, the plunge in cryptocurrency doesn't help. not to mention, it's midterm

election day. what will happen to congress? a key question. haidi: let's get more on the day's top stories, including midterm elections with our u.s. government reporter emily wilkins. and our cross acid team editor. i will start off with you. how big could the loss be for democrats? >> there is a lot of unpredictability in this election. so many races are close. there's a high likelihood that i the end of the night, we are not even going to know who controls the senate. there are just so many races. publicans have a potential to have a good night. they could secure large margins in the house. that would make it easier for kevin mccarthy to get bills and legislation passed. remember, we would still be going into a divided government. even if they take the house and

senate, they are not going to be able to get a ton done. instead, we would expect to see a republican led congress focused on investigations. investigating hunter biden as well as the origins of covid-19. republicans have stated they have reason to believe that it came from a lab in china and they want an investigation that looks closely at that. we certainly could see impacts from those. the big question is whether or not republicans can take the senate, then how big their margin is in the house are going to be the two things we are watching. >> we also had the drama unfold between -- traders are more anxious about what this means for crypto. >> definitely. you can see that in crypto prices right now. we had this saga starting over

the weekend where there was uncertainty about what was going on with ftx. the ceo of finance nz which has agreed to buy ftx tweeting about tokens. exiting from ftd tokens. there is a lot of concern about what is going to happen. prices are down 10% to 20%. people are still wondering what the ramifications will be of this huge deal. >> we have seen crypto act as a bellwether, a risk as set for where the broader markets go from here. today with the midterm elections at play, what were you watching? >> it was interesting to watch the intraday trading session. as crypto crisis -- crypto prices began to plunge deeper

and deeper into the negative, we saw for quite a few minutes the s&p 500 and nasdaq plunge into negative territory. they did rebound, but i was watching how this news about crypto was spreading into the broader risk asset market. but as we headed to midterms, strategists i speak to are talking about how we might not know if the results are determined in the next few days. that could add market volatility. we know market stocks do not like events where there is uncertainty. they like to know in a decision is made. we could be in for more volatile trading sections ahead. shery: over the past year we have seen a lot of social issues galvanize parts of the population like gun reform, roe v. wade, ukraine. but it seems like voters may be

voting on pocketbook issues. what does that mean in terms of a shakeup in social issues and geopolitics? >> this election has been all over inflation and rising prices, the pinch people feeling deaf people are feeling at the source. there was a short time during the summer after roe v. wade was overturned where lots of people were thinking this could end up being about abortion. certainly it has played a role. democratic voters are usually not likely to come out in midterms like this. there party is in power, they have incentive to stay home. when democrats talked about abortion it was to say to their base, if you think everything is just fine, guess what? you can't. you need to get to the polls and vote. there was also discussion about what happened on january 6, attempts to overturn the legitimate 2020 election.

democrats have raised those things to try to get voters to the polls. the midterms are about to turn out. there about who is coming out and getting their voters out. even with democrats having turnout, it -- issues like inflation. especially when the message was that it was going to be transitory and that it would go down. they tried to talk about low unemployment, but that has not stuck. there are a lot of americans who are upset with high prices and are quick to blame biden and to say change needs to come and that they intend to vote for republicans for that reason. haidi: back to you and the market implications of the midterms, especially long-term. analysts saying perhaps this is a good thing for the federal reserve. a gridlocked congress means not a lot will be done in terms of policy or stimulus that could lead to more inflation. what are you hearing?

>> gridlock, not always what americans want to see. that it is often good for markets because it prevents any passage of a law or regulation that would be potentially providing instability to business. stocks generally like that. i have been watching the dollar because that will give you a gauge of how traders are thinking about how much more aggressive the fed is going to be. we have seen in the last three days the dollar declining. the worst three-day route for the bloomberg dollar spot index since march of 2020. amid the covid crash. i was looking at other data that was saying dollar weakness has been providing the bid up for stocks. earnings and midterm election uncertainty, we are seeing weaker dollar boost risk assets. volatility ahead with the election. >> good to have you both, both

of our emily seer. -- both of our emily's here. stay with us for our special coverage of the u.s. midterm elections starting at 9:00 a.m. hong kong time. you can also turn to your bloomberg. get commentary and analysis from bloomberg's expert editors. for now, vonnie quinn with headlines vonnie: thank you. russia and the united states are expected to meet to talk about resuming inspections of atomic weapons sites. a small step towards reviving arms control talks suspended since moscow invaded ukraine. respa warned putin that any use -- president biden warned putin that any use of nuclear weapons would be a mistake. the u.k. and european union's month-long dispute over trading rules in northern ireland. the eu has begun testing the u.k.'s live trade database that tracks goods moving from britain. if satisfied, it could pave the

way for a deal on customs checks in the irish sea. china has expanded a key financing support program designed for private firms including real estate companies. the move promises to help developers sell more bonds and boost liquidity. the national association of investors widened the program to support $35 billion in debt sales. the additional aid comes after pboc called for more support. the number of visas granted to overseas workers in hong kong fell about two thirds. fewer than 14,000 general employment visas were approved in 2021 compared with 41,000 two years previously. the appeal of hong kong has also dropped for workers from mainland china. down 39%. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: still ahead, wealth

management recommends revisiting investment-grade corporate bonds in the u.s. and asia. jp morgan's joyce chang sees international equities as more attractive. this is bloomberg. ♪

♪ shery: look at how futures are trading. we are seeing more upside early in the asian session after we saw u.s. stocks gaining for a third consecutive session. what it was a volatile, swinging between gains and losses as cryptocurrencies plunge over doubts about the ftx finance deal. we also have midterm elections. final numbers could take weeks. but at least we are going to see a semblance of what it means when it comes to control of congress. our next guest thinks international equities could trade better than those in the u.s.. joyce chang, chair of global research at j.p. morgan chase. we are in international markets are you seeing opportunity? i am seeing in your notes you

think the dollar will continue to gain ground. >> i still think with the dollar we want to stay defensive. we are doing that more through options than through cash. looking at international equities, we have seen a d rating so big, it is really a wide discount to historical averages. 10 to 11 times forward pe's offering a significant cushion versus bond yields. i think the euro zone and the u.k. have cheapened. take a look at the u.k., and i know it is contrarian, you are at a record discount. very high dividend yield. recently -- is going to come from weaker sterling. international equities could have a moment, even in china we are looking at growth for the next couple of quarters at 5%. given the contraction that was underway and hitting rock bottom on china, there are more

international opportunities that stand out right now from a pure pricing point of view. in the u.s., the fed is still the key call to watch. shery: midterm elections in the u.s. as well. we are hearing from nancy pelosi, saying that republicans will use a debt ceiling vote to cut social security. when you are thinking about the fed and inflation concerns and how much tightening they will do , how does the fiscal side of things play into the equation? >> the elections, the midterms, are usually a referendum on the government. a divided government means we won't see any new legislation. a lot of the focus is going to be on oversight and investigations, rather than what you can reverse. it is how well you can implement the engine -- implement the agenda.

gridlock that could be forthcoming is with the market has been responding to. but -- is unlikely. taking a look at where the fed is, we have seen such an aggressive move over the last three months. 200 basis points higher for where we have the top end of the fed funds target price at 5.2%. a lot has moved, but the next fed mood -- fed move will be another 50 basis points. you will not see a pause in to the first half of next year. i do not see that you are going to be able to do that much more on the fiscal side with a divided government, but the fed is going to remain very much focused on labor market conditions. you had very strong labor demand that has still remained in place. haidi: economic gridlock when it comes to a response from policy could also have an impact on the dollar. take a look at this chart. losing that support level, the

next level we are watching for the bloomberg dollar index is the 100 day moving average. the steepest three dater klein we have seen since march, 2020. obviously you still have the fed in hock mode. how do you weigh the implications? is it a risky bet to be betting against the greenback? >> i still think it is going to be one where we look at the interest rate differentials and we still think the fed remains -- it is going to go may be slower, but for longer. a lot of this has gotten priced into the market but i would not say this is a turning point for the dollar right now. i still think in particular, emfx here is not out of the woods. i would still keep the defensive positions on. i think we are at a phase where bonds could start doing better than cash. that is something we are more

focused on peer particularly as we look at investment-grade bonds in the u.s. right now. yields right now are very attractive. >> you talk about a transition to a markets regime or trading strategy for you have a need for both portfolio longs and shorts. is it more integral than ever in the months and years to come to really pay attention to individual stockpicking? >> after so many months of bearish sentiment, the market basically is reacting to any good news. having a more incremental impact on the market than bad news. that could be a signal we are transitioning in the market regime from trending toward a trading market where there is a need to have both portfolio longs and shorts, rather than just being one directional. a lot of the bad news has been priced in the euro zone and u.k. which is one reason equity standout.

you also have rock-bottom prices in china right now on the equity market side and a 200 basis point move on the fed fund rate. we are in a very direct -- we were in a very directional market at one point and now value has emerged. value has been created. on the fixed income side, you could see more rotation in the bonds. international equities, now you are at valuations where -- a lot has been priced in, there is still recession risk into the fed will remain on the move. i will say that the market volatility we have seen come i do not think this is going to subside anytime soon. but i think there is more room now to -- portfolio needs for longs and shorts. shery: when do bonds start to do better than cash? are we going to see more upgrades? we have seen uncertainty. >> we have taken a close look at

what is happening in the high-grade market and we see about $160 billion that is going to move from high-yield to high-grade. what we call the rising stars. if you compare this to the fallen angels, high rate bonds that are going to go to high-yield, it is only $15 billion. that is a ratio of 8: one. it is more attractive now to be thinking about the investment-grade bonds, given the yields we are at. being able to get 6% in some of these bonds is actually looking very attractive and i think you will see the numbers begin to reflect that is some stage. we could be at more of an inflection point here. >> joyce chang, always a pleasure, global research at j.p. morgan. you can get a roundup of the stories you need. terminal subscribers can get it and it is available on mobile.

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♪ shery: counting down to the start of trading. stories we are watching. in japan, the current account balance for september do later in the hour. japan logged a record trade deficit in goods in august. also pressuring the yen even more. we are watching earnings reports from nissan and honda after nintendo cut sales forecasts for the switch consul due to chip shortages. in south korea, the jobless rate staying unchanged at 2.8% in october. we are seeing a strong labor market holding up in the face of

rising interest rates. we are watching crypto shares following news of white dance's takeover. being an eye on mill next and sbi. also watching the chairman of the financial services commission in south korea meeting with has of major banks. haidi: let's check the latest business flash headlines. national australia bank estimates high interest rates lending business. cash profit was four point since that $4.6 billion. pepsi years says banked strong balance sheet as high inflation interest rates challenging. -- will be a final dividend. citigroup and barclays have started eliminating jobs and their investment banking operations, joining other major lenders in responding to plunging revenue from businesses. sources say dozens of positions

at citigroup were cut this week. -- underway at barclays expected to total 200. right alt plans to boost dividends with a sweeping overhaul. electric vehicle businesses. shery: coming up, weak advertising as tv losses weigh on disney. this is bloomberg. ♪ millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing,

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vonnie: japan's cabinet has approved a budget to fund economic stimulus aimed at easing the impact of inflation. the fiscal years second supplementary budget will be funded by bond issuance. the prime minister hopes to enable the bank of japan to keep rock-bottom interest rates for longer. the restarted a key u.s. legal fight, natural gas export terminal may be delayed. we can see analysts say work continues following an explosion this year and has yet to request authorization to restart. bad news for european buyers struggling to replace russian gas supplies. report says it is targeting a november restart. someone who bought a powerball ticket in california has won a record 2.0 4 billion dollar jackpot after more than three months without anyone hitting the top prize. selected 10 hours after the monday night draw was delayed

due to technical problems. jackpot ticket was sold that joe's service center in the foothills northeast of los angeles. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: cryptocurrencies tumbled amid doubts over binance's potential takeover of their arrival. -- spoke with emily chang. >> it is hard to judge too much until the facts are in but it appears ftx got into a liquidity crunch and there was risky behavior they were engaging in good it appears binance is wanting to acquire ftx but we will see if the deal goes through. the broader story, zooming outcome is that over the last few years, companies like coinbase that are pursuing a trusted approach to mobile have been trying to secretive tory

clarity and sometimes in the absence of that we have seen customers basically going offshore to these unregulated exchanges and occasionally we will see blowups like this unless that is resolved somehow. is this a validation of our strategy we have been taking for the long term? i think. emily: analysts are looking at this, and if the deals go through, as a seismic shift in the competitive landscape. how are you thinking about that? does it mean you will need to evolve your strategy at all? >> no. i do not think our strategy changes. we try not to look too much at what competitors are doing, just at what customers want. by the way, most of the interactions we have with our competitors are cooperative and friendly. we are trying to grow the space 100 ask and it is not so much a competitive thing most of the time.

that said come i think binance and coinbase are taking different approaches. we are building in a trusted, compliant way. we are trying to get licenses in the countries which we operate. we are not just a trading platform. we do not think trading is the be all end all. the reason i got excited about this is that i want there to be a more fair, free and global financial system where there is more economic freedom. we are enabling people to do all kinds of things with crypto. earning a living, commerce, remittance, even accessing web three. we are going to continue to build towards that. our strategy does not change but this could have an impact in terms of the regulatory landscape and how policymakers are going to engage with different parties going forward. emily: would coinbase consider buying ftx u.s.?

>> i had a number of conversations with people over the last 24 hours. there is reasons that would not make sense that i am not at liberty to share. i'm going to let other people share that if and in -- if and when they are ready. binance is looking at the details of this transaction as well to see if it makes sense for them. haidi: brian armstrong. let's see how the market reaction will be in asia, especially with chris the related shares. >> we are going to be watching those very closely in japan. also in korea at the top of the next hour, given what we were hearing specifically that this issue with binance ftx really underlying how important regulation is in the industry and what is really needed.

more regulation of the sector before it can gain mainstream adoption. taking a look at big names we are tracking. given that we also saw big moves initially and cryptocurrencies to the upside on this report. but later, once more details came through, we started to see a big drop. also taking a look at at the biggest plays, including bitcoin which is extending its slump. it earlier dropped 17% and is still lower on asian trading. >> take a look at how after hours trading is going for disney. you are looking at crypto at the moment which is a little bit of a mixed picture. but we do want to take a look. there we go. pressure. 6%. those are other streaming companies in the u.s. as well. we had fourth-quarter earnings results, disney sales and profits missed estimates. ceo bob jpeg did say the fourth quarter was a peak for streaming

losses. perhaps a bright spot. disney plus subscriber data beat estimates. su keenan is here with the latest. what was your take away? >> as you said, sales and profit missed estimates painted because of the cost of an -- cost of investments in this relatively new streaming service. take a look again at after hours. at one point, shares were down 10%. the good news for investors, new subscribers break surprise beat and the ceo says losses are now at their peak. >> our financial results this quarter represent a turning point as we reach peak dtc operating losses and assuming we do not see shifted the economic climate, we still expect disney plus to achieve profitability and -- in fiscal 2024. su: more on disney plus increase, this was bigger than expected. it has only been three years in the making.

12.1 million subscribers worldwide. but the company did say they expect subscriber growth to slow in the first quarter. that is where we saw peak downturn in the stock. the ceo believes the losses will start to shrink as we get into the first quarter. drop into the bloomberg and you can see income has been an issue for disney. the stock down 30%. this in ad sales was a key theme. and -- driven by disney plus more than doubled 1.4 7 billion dollars due to higher programming expenses and the cost of global expansion. >> what did the company have to say when it came to pressures coming from inflation? >> theme park profits doubled to $1.5 billion. the ceo said that if inflation is impacting spending, we are not seeing it at the parks. l street was expecting 21

percent more, get hurricane ian because florida theme park $65 million in the company says it also has no visibility on a reopening date for the shanghai theme park shut down due to covid-19. shares have been under pressure year to date. that is clearly the ceo's focus. they are talking up the new black panther movie that opens this weekend. the original storage -- chadwick boseman died and they are beeping -- beefing up supporting characters. single-digit sales for profit growth in 2023. she said the company will be looking to cut costs. the black panther movie highly anticipated. in the u.s. and around the world. >> su keenan with the latest. up next, stanley charter wealth management on the outlook for the corporate bond market and why yields are looking increasingly compelling. this is bloomberg. ♪

♪ >> our next guest says bond yields are getting increasingly compelling and favors high-quality corporate in the u.s. and asia. abhilash narayan, senior investment strategist at -- wealth management. what are the opportunities you see at the moment given there is still great uncertainty over

when and if we see the fed pivot? >> absolutely. that is the biggest question we have seen. we have seen the domino effect with hundred expectation swinging wildly over the past week. when we look at the past, one thing that really comes out is that bond yields tend to well before the last fed rate hike. while there is a possibility of 10 year treasuries moving slightly higher from where we are today, we expect them to trend down towards 3.75% by end of q3, 2023. if you look at the yields offered by investment-grade corporate sin the u.s. and asia, they are starting to look increasingly attractive. we believe that rebalancing away from higher-yielding parts of the bond market and from equities into ig bonds is looking more compelling. >> in fact, the preference for ig bonds in asia, does that suggest heightened recession

risk? >> yes and no. clearly the global economic backdrop is a bit more challenging as compared to what it was at the start of the year. but we think asian dollar bonds, especially investment-grade -- is underappreciated. if you look at average credit quality, if you look at the volatility, that is far lower than the -- you see in u.s. ig corporate's or other high-quality bond markets around the world. the annualized wallet has been around for .5%, which is subdued compared to other parts of the bond market. we think that asian bond markets are defensive because there is huge participation from local and regional investors that makes it less -- to inflows and outflows. this is a piece we have had from the start of the year and asian markets have outperformed and we

expect that outperformance to continue for the next six to 12 months. shery: there has been lots of concern about credit risks in korea. and broadly, asian petrol underperforming under pressure. what do you think? >> if you think in asian perpetual's, they have been under pressure. naturally they are the more high meet of the market. we have seen credit spreads widen, more so in the case of perpetual's. and also extension risk rise. we have seen more stress coming through from both the default of onshore asset-backed security in korea as well as the initial announcement of non-colorful perpetual. in the past color days, the company has come back and said they will call back. that will boost market sentiment. if we think about the risk of spill over into the bond market, it is limited. if you look at the steps taken, korean regulators seems to

suggest they believe they are trying to do the best they can to maintain the stability of the market. and if they are asking were working with a smart insurer, the risk of a noncall perpetual by other larger korean financials has reduced. the second thing is you have to look at the valuations. 50's come 60's, 70's to the dollar. there will be some cases of -- but the risk is -- to the upside. >> that picture of authorities stepping income is that a reason why we could see more support for the equity space? we have seen only south korean or taiwanese authorities talk about a bottom for markets and how they are closely monitoring markets. >> that is certainly something that markets are watching out for. asian stock markets in general across most major countries,

financial sector tends to be one that has a higher rate compared to the sectors in the u.s. and other markets. so, yes. concerns in the financial sector have an outsized impact. the bigger catalyst for asian equity markets, the countries within asia, will be the outlook for potential easing of covid regulations, given the trade linkages. when you think about the valuation for chinese equities, they seem to be quite subdued. the ratios are close to what we saw during gfci. when you combine -- asia along with some regulatory steps that are being taken to support the market, there's a good probability of -- equities outperforming the global markets. >> when it comes to chinese equities and assets more broadly committed as a matter of timing. how can you be sure to get the timing right?

what indicators are you looking for? are you watching vaccination levels? >> you are right. it has been a call that has been difficult to get right. we think that any meaningful relaxation of dynamic covid zero policy is unlikely to kill q1. but it depends on your time horizon. if you are in the markets for -- valuations are cheap. earnings estimates for chinese equities had been beaten down quite a lot. by contrast, there is greater risk of -- divisions downwards. we think that if we do start to see more optimism come through, then there could be a large rebound in chinese equities similar to what we have seen over the past few days. >> good to have you with us. senior investment strategist at standard charter wealth management. here's a check of the headlines.

cathay pacific voting today on appointing their longtime manager as the new ceo. lamb is a chief commercial officer, set to succeed the current ceo augustus tang. the leadership shift is said to be backed by the airline biggest shareholders. microsoft proposed $69 billion takeover of activision-blizzard facing a european commission investigation. the eu is concerned the software giant could foreclose pc and consul access to block proserv franchises such as call of duty. kristof says it will work with the eu to address any concerns. ubs german officers searched by prosecutors in what sources tell us is a money-laundering investigation linked to sanctioned russian oligarchs. the swiss bank confirmed the raid and said it is fully cooperating with authorities.

a spokesman rejected any allegations of money operate -- money laundering or tax evasion. up next, a check on japan's currency. yen balls getting together. also a preview of the market open in tokyo. this is bloomberg. ♪

>> we are getting japan current account balance now coming through. the current surplus coming in at 909.3 billion yen. paying special attention to this figure, given we have seen japan's current record trade deficit being seen, just about ¥2.5 trillion under the trade balance in goods compared with a estimate that was ¥2.4 trillion and the shortfall. we are seeing that balance by the end of august, a surplus of ¥58.9 billion. the adjusted balance was ¥530.5 billion. watching of course implications of the weakening yen. we are seeing the yen potential to weaken past 150 create quite a bit of damage when it comes to

japan's exporters. a weaker yen has traditionally been a boon for most japanese exporters but when you take a look the high import costs, that is certainly bad news for companies. japanese exporters, given the level of yen weakness. shery: you mentioned weakness but we are seeing traders show more interest in long yen positions as well. this is a haven alternative to the dollar as u.s. growth slows. more from our editor paul jackson. what is this? is this uncertainty about global economic headwinds? paul: yes. concerns about the outlook for the u.s. and global economy are growing. if you look at the language coming out of the fed, powell has said smaller rate hikes could be coming soon. that is kind of one of the key

signals investors have been looking for to find the turning point from when this inevitable strengthening of the dollar tide turns. the commentary is complicated by powell saying there is going to be a higher terminal rate for markets. it is a mixed message. the signaling is not as clear as it could be. also, it is too early to call whether the tide has actually turned or not. i think we have got that u.s. cpi figure coming out later this week. that will be a key focus to see whether this trend of dollar weakening continues and the yen strengthening. japanese policymakers must be very happy at the moment. >> we are seeing this $29 trillion yen budget being

approved. is this likely to have a meaningful impact on inflationary pressures? paul: part of the measures a quarter of that extra budget are measures to deal with the impact of rising prices inflated by the weaker yen. the government thinks this package will shave 1.2 percentage points off inflation. extra spending, what does it mean? it usually means more inflation, right? in this case, the measures are reining in inflation. it might not be as inflationary as you would expect one of the key takeaways is japan is resolute, staying the course, trying to support the economy from these rising prices.

that is giving boj continued backing to continue with its rock-bottom interest rates. >> paul jackson. take a look at some of the stuff we are watching. asian stocks with exposure to the u.s. when it comes to health care related stocks could move if republicans could make strides in the house and senate. we will be watching nintendo. also, we must be watching cryptocurrency stocks. bitcoin tumbling on the news of by finance potential takeover. to and series were mixed and huawei investment are ones that will be in focus. shery: their concern is what happens when cryptocurrencies plunge, right? we have seen cryptocurrencies -- act as sort of a bellwether for

where the market goes. take a look at u.s. futures. we are seeing an upside to the asian session after we had a volatile session in new york. three sessions of gains for the s&p 500 but swings between gains and losses given market sentiment took a hit. the lowest level since november 2020. also, midterm elections, that is what we are discussing. investors keeping an eye on who controls congress and the economic agenda. we talk strategy with blackrock shortly. also, a big day for chinese eco-data. we count down the latest inflation numbers with ing. market open in tokyo is next. this is bloomberg. ♪

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>> this is daybreak asia. counting down to asia's market opens as we await fallout from crypto route that hit wall street. we are waiting for polls to close across the u.s. and what that means when it comes to midterm elections and control of congress. >> turnout is everything. the implications for these midterms globally could be more significant than ever, particularly gridlock for economic agenda. we will bring you those results as polls close and early results get in. straight to the market open. >> gridlock can be a net positive for equities but we are looking ahead to the opens for japan and south korea. also crack -- cash treasuries and a pullback in yields.

investors continuing to position for a drop in volatility. we have the key inflation print do you come a but the start of yields moving fractionally higher. we are also watching a pullback on the dollar. continuing to see strength coming through in the japanese yen, now getting closer to the key 145 level. it really tells us there is growing interest between investors in long positions on the japanese currency as a haven alternative. also, the nikkei gaining a little bit of ground at the start. this as investors are optimistic ahead of the midterm election results in the u.s., given stocks do tend to outperform during periods of gridlock. polls suggesting republicans could make gains. changing to the session we have in korea. we will be watching closely some of the biggest crypto exchanges

in korea. as well as japan. given what we had in the u.s. with binance agreeing to buy the exchange ft ax. this was not so much expected in the markets. a lot of the industry had been expecting for ftx to survive its liquidity troubles. pointing to revelatory concerns. that could also hit the biggest exchanges in asia. also, continuing to see strength come back into the korean yuan. perhaps a signal there is risk appetite. that is also playing out in australia. looking at the open for the asx 200, one hour into the trading session we are still seeing gains for a fourth straight day. what is interesting is the disconnect we are seeing in the commodities space given we are continuing to see a drop for brent crude at the start. that does tell us how much traders in that sector are focusing on covid. casting a lot of doubt around

reopening. shery: higher energy prices and gas prices and inflation was top of mind for voters in the u.s. the state of the economy as well. our next guest says places to weigh potential u.s. recession, thomas taw. blackrock. good to have you with us. have markets fully priced in a potential recession in the u.s. or elsewhere? >> good morning. that depends on how big a recession investors are looking at. for the most part, yes. it is quite obvious the macro data is deteriorating, the earnings picture getting more muddled. and yet, we have a risk rally. this is the key question, how investors have been positioned throughout the year. if you look at the moves into cash, short data treasuries and

defensive equities throughout the year and get to a point where you are max defense of and start to see a risk rally, it becomes a problem for performance. i can certainly see a case where we will continue to see from a -- fomo, but that doesn't really change the economics or macro data we think is going to continue to deteriorate. shery: especially given that around the midterms we have seen a pop for u.s. stocks. when it comes the policy picture, it is pretty muddled. is there a take away when it comes to investments? especially across asia, that could potentially get impacted by the political dynamics here in the u.s.? >> you mentioned it earlier, but it is all about inflation.

i expect both parties will be running on some sort of rhetoric around inflation. that is really what is causing rates to move and u.s. dollar to move. that is what is causing everything to move. the issue here is that rates have come off a little bit and we see equities moving higher and risk assets moving higher but all it takes is one data print possibly thursday, who knows, to the upside and all those returns come crashing down. it is a very difficult environment to be taking risk on at the moment. that has been the view for us over the longer term as well. >> we are getting beijing reporting the highest daily new covid cases locally in five months. in terms of the numbers, they are certainly not trending in the right direction where we might see signs of reopening. as it surprise to the resilience of this rebound? even with unverified reports being refuted by public health authorities.

or commit is it an indication of how far the selling had you on? >> i personally think it is more of the latter. i am not seeing investors move back into chinese equities, whether that is onshore or offshore, or even for reopening trade. the consensus now is we will get something started around march next year. no one really knows but you are also talking about the world's most populated country. how long is that reopening going to take? are there going to be stages? no one knows. this is more of a case of short covering, particularly in offshore at the moment. tactically, it is a good place to be but i do not think long-term investors are moving back in to china at the moment, given how much uncertainty there is in that economy. >> is hong kong a lower risk exposure? we certainly seem to see that in

terms of buying from mainland institutions. >> it appears so but also if you look at offshore china hong kong, it is more they rate story. it is more they valuation story. it is more of a regulatory story. that is where the whole thing started. they 80 already listing story around hanks stocks. in terms of how short the market has been on those particular names, it is also difficult to gauge. certainly there has been a lot of shorting in those names. the short covering higher volatility and higher beta certainly makes sense to be moving in that direction. also, less impacted by what the actual policy of reopening is going to be in china. that seems to be the place where money is moving. >> tell me about regulatory concerns. we are watching crypto closely.

given that recently these crypto assets have traded as risk assets, could they be a bellwether for the broader markets? >> i do not really think so. i don't really cover crypto. i don't talk to investors about crypto. certainly it is a risk proxy. at one point they were talking about it being an inflation proxy. the main thing for us is looking at whether there is spillover to the rest of the market. we did not see that last night and i do not see that having a big impact particularly for institutional investors. maybe on the margins of the retail space but at the moment, i am not really seeing it being a big question for foreign investors. >> take a look at the trajectory of the u.s. dollar. a steep three-day selloff. the bloomberg index losing the -- that obviously has implications.

is it a risky bet to be betting against the dollar in this respect and becoming more bullish to asian beneficiaries? >> it is a huge impact for emerging markets in general. we have seen investors moving back in over the last month or so, probably -- china but for the most part back into em. a lot of the story is about positioning. long dollar has been a consensus trade throughout the entire year. it does make sense to seek come of it -- see some of it coming off and risk coming back. i still think if you look at the interest rate differential, what the fed doing versus the ecb and boj, on a fundamental basis it still makes sense to be longer-term long u.s. dollar but

in the short-term you will see more of this unwinding of positioning particularly if risk continues to come into the market. >> great to have you with us. thomas taw, blackrock. let's get the vonnie quinn. vonnie: russia and the united states are expected to meet in coming weeks to talk about resuming inspections of atomic weapons sites. a small step towards reviving arms control talks suspended since moscow invaded ukraine. president biden warned putin that use of a nuclear weapon would be an incredibly serious mistake. the u.k. and eu are close to a major breakthrough in their month-long dispute over post-brexit trading in northern ireland. the eu is big on testing the live trade database, tracking goods moving from mainland britain. if satisfied, it could pave the way for a deal on customs tracks in the irish sea. stoked tensions. china expanded a key finance

support program for private firms including real estate companies. there move promises to help developers boost liquidity. the national association of investors widened the program to $35 billion in debt sales. the additional aid comes after the pboc called for more support. cryptocurrencies tumble amid doubts of takeover -- binance's takeover of ftx. the -- says they were facing a liquidity crunch and that he signed a nonbinding deal. -- confirmed the agreement in a tweet. the possible takeover comes after a bitter feud between the owners. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: let's get to those crypto movers. what are we seeing?

>> so far, mixed reaction in terms of the biggest names in japan. these are companies that i their own crypto, have exposure to exchanges. the uncertainty this deal brings to the market because it is nonbinding does mean binance could simply walk away. some in the market saying it presents an overall vulnerability for the second repaired we can take a look at whether the moves are playing across in korea. these are also mixed, mostly to the upside. there is an issue around regulation in the industry because it does also point to that there needs to be greater legislation for the to become largely more accepted by broader markets. but also taking a look again at how bitcoin is trading in early asian sessions. we are seeing extending losses. it dropped around 17%. shery: we will have more on crypto coming up. binance's move to take over

there rival reverberating across the industry. china facing deflation pressures with previous ppi numbers with ing. this is bloomberg. ♪

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♪ shery: breaking news out of china. long ago is lockdown a second district given rising covid cases. we had seen beijing report the highest daily new local covid cases in five months. given the rise in covid cases is causing concern as authorities in china -- non-covid zero policies. we are hearing that china is locking down their second district from 9:00 a.m. today. now warning of this covid spread risking more disease this is a southern city. now locking down a second district. paging reports the highest

number of cases in five months. we will see how this reverberates across markets because we have seen downside pressure, potential concern for demand as china imposes more covid restrictions. in the u.s., we are firmly focused on the midterm elections. voters across the u.s. are headed to the polls to decide control of congress. and state capitals. we have seen voting happen but we will not see the final results for weeks. given that there are places that are very closely contested. not to mention we are seeing problems with voting machines and systems. they have been sporadic. unsubstantiated claims of fraud. let's bring in emily wilkins. we had at one point speaker pelosi say that whatever the outcome, democrats will respect the election vote. it has again come to this.

>> yes. we have already seen rumors percolating online, concerns that some of these issues with ballots in areas like arizona could be signs of larger fraud. election officials say there are technical issues, but all ballots will be counted and everything is going to plan and there is nothing to be concerned about. this is the issue we ran into in 2020. we had folks coming out, spreading misinformation and falsehoods. now we are beginning to see that again in 2022. the big question is going to be, what is going to happen? which of these races are going to be contested? what does this mean for 2024? that is going to be the big one that folks are worried about. there are individuals tonight that are on the ballot that say 2020 was not legitimate.

that is inaccurate. they are promising to make sure various states go for republicans in 2024 and there are a lot of questions tonight about election integrity and what that is going to look like both in this election and the next. >> emily you have said before this is all about turnout. we have seen georgia where we are nearing a record for turnout in a nonpresidential midterm election. what is that telling us? in addition to pre-voting. emily: turnout this midterm has been particularly large compared to others. that just tells us we are seeing engagement from both democrats and republicans. certainly there had been republican areas with big numbers but there were big numbers of male in votes which tend to be democratic. it seems both parties have done a good job telling voters they need to get out of the polls. from what we are projecting, republicans are expected to have a good night, they are asked --

they are expected to pick up the house and could gain control of the senate. as far as their early vote, it seems more and more americans and voters are engaging and plugging into this election. exactly what the final outcome will be, we are going to have to wait a couple of days to understand who is going to be controlling the senate next year and potentially longer than that. if we see another runoff in georgia, it could be early december before we have clarity on exactly which party will be controlling either chamber. >> emily wilkins in washington. stay with us, we've got special coverage of the u.s. midterm elections beginning at 9:00 a.m. hong kong time. midday in sydney. you can also turn to your bloomberg. live commentary and analysis from expert editors. this is bloomberg. ♪

♪ >> taking a look at crypto. we had a big. they plunge across main cryptocurrencies. doubts about the ftx binance deal starting to grow. bitcoin fell as much as 17%. we are seeing it still off by .8%. ether still lower .3%. uber galaxy solana down almost 26%. the broader crypto index seeing that off by 15.5%. and of course we heard from the ceo, stunning the crypto world with the announcement he was planning to take over the rival

ftx.com. he said he was seeing a liquidity crunch and that has given rise to broader concerns we are going to see another wave of volatility amidst these liquidity concerns. let's get over to john austin. when it comes to asia trading on some of these crypto assets and firms in particular commit is a mixed picture. what we know so far? >> this is a stunner. it is such a turnaround from the way things were. -- was riding high and now his binance exchanges being acquired by binance. binance can back out of the deal. it is not necessarily binding. we will have to see exactly what they do, what happens with the companies that ftx has invested in. there are quite a lot of them. what happens with some of these tokens? in the process of this back and

forth with -- over the past few days, there was a lot of uncertainty and turmoil within the markets. he mentioned solana, a lot of these have taken a tumble. people have been reminded of some of the volatility from previous years and we will have to see if this deal quiets that or it continues into coming days and weeks as there is still more uncertainty and we figure out the exact implications of the deal. >> especially when we know the letter of intent is nonbinding. what does this mean in terms of this actually happening? if this was a more regulated space, we would see more regulators at play. but in this environment, what are we watching for? >> great question. we will be watching out for what regulators say and it is two of

the biggest exchanges. binance is the biggest by volume. ftx is one of them. is it like having coke buy pepsi echo -- coke buy pepsi? if binance ends up wanting to do the deal or just take parts of ftx. there are a lot of questions to be determined. shery: the binance binance drama over ftx and. we have seen crypto exchange bosses and their fortunes plunge because crypto has been under pressure. you talked about the galaxy bloomberg index and we have seen 70% plunge since its peak. that has taken the portions of the binance head down with it.

but really, we have to put it into context. he still has a net worth of $16.4 billion. >> 94% of sam been freed's net worth in one day. we were talking earlier about ramifications when it comes to political donations. he was one of the biggest political donors to the democratic party. he was at one point the biggest crypto donor when it comes to these donations be made by out-of-state billionaires across a number of these races. we saw he made a pretty big donation of $1 million when it comes to the texas governor's race. huge implications when it comes to whether that money is going to dry out her donations. it is part of a broader effort by the crypto indices and these billionaires within crypto to gain clout within political they mentioned it shery: especially

if you do not know where the environment is headed. we are in the thick of earnings seasons. you can take a look. best really a banks. met estimates. higher interest rates boosting lending business. cash profit was four point 6 billion u.s. dollars. up 8.3% from a year ago. ceo ross mcewan says the bank is working on keeping a strong balance sheet as high inflation and interest rates challenge borrowers. disney shares fell after the bell with fourth-quarter sales and profit missing expectations. weak ad revenue at higher than expected losses dragging down earnings. earnings fell to $.30 a share. more to come. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can

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air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> japan's cabinet has approved it $198 billion extra budget to fund a stimulus package aimed at easing in nation. the second supplementary budget will be partly funded by government bond issuance. the prime minister hopes to enable the bank of japan to enable rock-bottom interest rates longer. the start to a liquid guest terminal may be delayed until next month. work continues following an explosion earlier this year and has yet to request authorization to restart. it's bad news for europe. the number of visas granted to overseas workers in hong kong fell by about two thirds are in the pandemic. fewer than 14,000 were approved in 2021 compared to years

earlier. arrivals under a government scheme are down 35%. someone who bought a powerball ticket in southern california has won a record billion dollar jackpot after more than three months without anyone hitting the top prize. the winning numbers were selected after the drug was delayed because of technical problems. it was sold in altadena. make amenity in the foothills northeast of los angeles. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. haidi: china's latest consumer price data is due later today with inflation now a growing fear has covered zero has to man, economists say they will fall into deflation in october.

cpi is expected to drop below zero also pushing growth outlook worries. economists are cutting the forecast to them of zero. our great up china chief economist joins us from hong kong. the headlines are not trending in the right direction. local cases in beijing are the highest in five months. we are hearing of a second district in lockdown. do we get to the point when we look at deflationary pressures where policymakers can't afford covid zero anymore? guest: the chinese government says that they put the priority on lives rather than economic performance.

what i see is that the shanghai expo indicates china is testing the water. so far, the comments on beijing is authoritative within china. public opinion matters. haidi: public opinion matters. we are seeing at the same time, some signals of the pathway to reopening. you watching things like elderly vaccination rates? guest: it's difficult to say. it's not just about the rates

but things that are why these in china which are quite different from the rest of the world. this is one of the factors that the chinese government understands. they're trying to source mrna. shery: given the concerns, are deflationary pressures inevitable? guest: if your question is about cpi inflation, i am not really concerned about deflation because the weak economy should point to deflation with higher

energy prices for winter. and that's out. it could come down after the winter demand for energy. we may have near zero cpi inflation. ppi could be in deflation. shery: you can see the potential forecast right now from economists. let me ask you about concerns over the global demand picture. we have unexpectedly china exports and imports both falling. guest: it's a mystery. we actually expect in ing, we

expect a small recession. this will impact china house arrest exports and manufacturing. it means some boost in domestic markets is either from infrastructure or consumer demand, consumer demand depends on covid measures. haidi: three expected change from the pboc? guest: whether there will be a change in pboc governor is not the main factor here. the pboc is not independent from the chinese government. it is a department.

the medical is in charge, the policy direction is similar to the current policy. shery: that was my question. if we see authorities wanting to change the policy, what channels were they do? guest: it's memory three landing -- read lending. they lend to some banks. the china agricultural banks. then they lend to local governments directly or other departments directly to focus on the policy objective of the central government.

-- it's more consistent compared through commercial banks and different projects. it may not be efficient as an investment target. anyway, they're not looking at efficiency. they're looking at finishing the policy. haidi: demographics for the super long-term is in a nutshell a lot of problems for the country. guest: indeed. we are uncertain about the reopening of china from using covid measures. actually, we do not know the timing. the technology war with the u.s.

, therefore china is going to invest a lot in high-tech area that is not bound -- bad for china. when there is investments, the economy should grow and there will be more jobs for that sector. shery: always good catching up with you. the economic challenges china face. this is getting harder given the new covert infections continue to rise despite strict lockdowns. david ingles joins us now. but these numbers into context. david: i had a look at the numbers two sundays ago. it took about seven to nine days for numbers to double, then that went down to five days. this week on monday november 5. on saturday, the number was up

4300. yesterday, 7300. very early signs this might be going up exponentially. wenzhou is concerning. this is a key economic hub. there will be a lot down about 20 minutes from now. we're going into the lockdown until the end of sunday. that's on the back of the first year chart lockdown. the reason i bring up these places, we were talking with socgen yesterday. she was saying arbery at a

turning point? you are seeing local governments across china overwhelmed my wits happening. it could come next year. onshore and local media as it pertains. that could drive markets. as things stand, we could be getting the latest case numbers any time, that's the nationwide new local covid case numbers. haidi: how expensive it's been to run covid zero. you are looking at debt to gdp numbers trending in the wrong direction. you mentioned the markets, does this mean investors are still

seeing a possibility out of covid zero sooner than the year? david: you can look at it both ways. the overall strategy was becomes impossible to stamp out the outbreak. when you look at it next year, local government have latched on and china, the amount of spending the government has put into things like infrastructure to put a flooring growth. that comes into? cheer. local government finances is something we have to talk about

more next time. there is not a lot of capacity because of everything testing. where does that money come from? raise more bond money. more bang for your buck as they say. we will continue to track this closely. back to you. haidi: reacting to those numbers out of beijing. another district being lockdown. coming up next, the bank of virginia -- india sees an opportunity -- the bank of england sees an opportunity despite crisis in many parts of the world. that conversation is next. this is bloomberg. ♪

shery: we have breaking news out of one joe. they have lots down the second district from 9:00 a.m. on rising covid cases. now they are reporting new cases for november. we continue to see surging case numbers. rising concerns about more lockdowns and restrictions across china. anger is growing among

policymakers to restrict movement. they have locked down a second district. let's turn to some comments from the former bank of england governor. renewable energy assets, the answer to both energy security risk and efforts to fight climate change. we spoke with him on the sidelines of the climate summit in asia. >> collateral will be scarce, it's hard to predict exactly when. you get the jump to liquidity situations. you have to plan for a tail risk.

the tail risk and manifest in the most liquid and as you get farther afield, pricing for liquidity, another point i would add is look, we're moving to the medium-term where we have higher inflation on average. we have higher volatility. you should get paid for that. we should a term premium and i'm looking at the 10 year today. what has is in effect in the near term. not saying that is necessarily wrong, but this path does not return to the low rates of before. on the balance, to i think the fed will have to do more? yes. we will see.

let's see how the data goes. my senses inflationary pressures are quite significant. >> what does this mean for the rest of the world? >> we will be in a higher interest rate environment over the near term. financing for egypt, south africa. part of the question is, how do we do you risk elements of the ramp ups?

we need markets like credit markets to truly develop, lots of headlines. the carbon price in individual jurisdictions, i do not hold my breath. they work when they come in. there is the politics with them and we won't see it anytime soon. haidi: that was the former bank of england governor speaking with bloomberg. let's get you a quick check of the headlines. one company plans to reinstate dividends with a sweeping overhaul. the french automaker is going ahead with a complex split of its vehicles. the steps include teaming up with a chinese company. the cathay pacific board is meeting today on me --

appointing a new ceo. microsoft has proposed a $69 billion takeover of activision blizzard. it's facing a european commission investigation. the eu is concerned that giant code close consol access. these are some stocks are watching at the open. in china, tencent on disappointing earnings by disney that can be contributed to rising streaming costs. we are watching property shares. china expanding a key support program to support developers, crypto related shares. of course, speculation on mother or not the deal will go through. keep an eye on some of those names across china. coming up next, the latest from

battleground states as u.s. polls start to close. this is bloomberg. ♪

shery: results are trickling in for key senate, house and state races across the u.s.. let's turn to emily wilkins. what are you seeing in terms of

some results and potential indications of the significance and control of congress? reporter: we have a close eye on a number of races. several in virginia. these are house races. democrats, whether or not they're able to survive can be a bellwether for the rest of the night. with that will look like for republicans, jennifer wexton is there. usually that would be considered a safe district for democrats. republicans in close races in virginia and have the venue.

if we're going to be seen in any sort of red wave,. haidi: one about foreign policy? -- what about foreign policy? what about social issues? what about social issues? reporter: there are number of issues in the next congress. as far as foreign issues, there are questions on ukraine and how the u.s. will continue to support ukraine. they are pushing back on the russian invasion, but they can't give him a blank check. there has to be accountability.

china is a huge question. we have seen republicans and democrats be hawkish on china. they have a lot of bipartisan consensus. it could deal with china and beijing. haidi: the bloomberg government reporter with the latest. as paul's close midterm coverage continues. lumber journalists across the ground in's -- in key battlegrounds. midterm elections are taking shape. that's it for daybreak asia. special midterm coverage is next. keep it here, this is bloomberg. ♪

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