this is "bloomberg "daybreak: asia." haidi: the top stories, a cautious open ahead for asia after u.s. stocks and treasuries decline with fed officials stressing the result to fight inflation with title policy. ftx new leadership reveals the chaos left behind as they struggle to locate billions and missing assets. xi jinping keeps up efforts to mend ties with u.s. allies warning against big competition in the asia-pacific. >> in kuala lumpur, malaysians are set to elect a prime minister. >> geopolitics are looking to end up this week which has been so dominated by these leaders meetings and the potentially

impacting the economic impact for the region. look at how we are setting up this final session for the week. asx opening a little flatter. kiwi stocks are down by .10%. chicago nikkei futures looking tepid. the strength of the dollar is one to watch. we are also watching the aussie dollar holding steady at the moment. we have had two days of weakening on the back of the dollar. goldman expects the move higher to be choppy and lower quality. >> it was certainly a down day for u.s. markets. it was the hawkish fed speak market after hearing there might

be a calibration, a slower pace of rate hikes starting with the december rate hike, 50 instead of 75 got themselves into a mode thinking they would get doublespeak from the fed. jim bullard says he think the peak rate is going to be at least 5%-five .25%. s&p futures are coming off of a loss of half us -- have a percent. as for bonds, the 10-year note up about eight basis points. you can the bond price is a little bit lower which means yields are continuing to rise. oil having quite a bit of a selloff. down to about $82 per barrel. continuing to look at the weakness in china and concern that continuing covid cases might cool demand. haidi: bringing in a strategist.

ending the week with more uncertainty when it comes to the fed keeping its options open trying to bring home the message of their commitment. >> think it's pretty clear that the fed speakers they don't want traders getting ahead of the situation. the idea that some people were thinking there was going to be a pivot from the fed was very unsettling to a lot of fed people when they haven't even reached the ceiling that they want for the terminal rate. trying to reinforce the message that there is some way to go before they reach this rate which is somewhere around 5% judging from what the fed speakers have been saying this week. then they would want to hold that rate somewhere at that level for quite a while maybe through the entire of 2023. they have said repeatedly or at least jay powell has said he doesn't mind seeing unemployment rise.

we saw a few analysts suggesting that the u.s. could lose as many as one million jobs next year. that's only going to happen if the fed holds. we could get to a situation where the fed reaches the terminal rate the first few months of the year that holds it all the way through 2022 the -- 2023. that would have an impact on equities and commodities as well. it could be the reason why we see oil starting to fall already. the fed does not want to see markets getting very euphoric at the idea that rates are going to go up and come down quickly. that is not the case, they are going to hold rates for some time and that's going to cause a bit of pain. >> what is this going to mean for markets next year? if i am looking to invest in stocks if the fed isn't going to

keep hiking rates, if i can look for companies to invest in. do people say at other parts of the world look better even as many of them if you look at be ok or rbnz meeting next week if their headwinds persist also? >> it's going to be an important year to be a stock picker in 2023 because it's going to be choppy and erratic. it's not going to be across the board where you can buy equities and expect gains. you have to be selective. one of the factors will be if the dollar is starting to peek. if we have seen the highs that is supportive for emerging markets. overnight, we have seen very good results for alibaba better than expected so we will probably see a bit of a boost.

if the big tech companies such as tencent and alibaba are starting to do better, if china is doing more to support property and generally coming out of the covid zero situation, that that is good for asia in general. there will be some bright spots, but here's going to be difficult. >> advisors overseeing the ftx bankruptcy have a long list of allegations against former leadership and they are pulling no punches. >> just to give some context, this is basically the latest point in the crisis. this is filing into a bankruptcy court and it's coming from the man who is now in charge of cleaning up the mess. it is the acting ceo who also oversaw the liquidation of enron so he knows what he's talking about when he says we are seeing a bit of a crisis. in terms of the allegations against ftx, they are a long

list. firstly, software was used to conceal the misappropriation of customer funds. you can add to that that corporate funds of ftx were used to buy personal items for employees including homes. issues around security that would include a single unsecured email that was used to produce private keys around the world. then there was the issue of account keeping. the allegation is that sam beckman freed communicated in ways that auto deleted in short order. there's a lot to get through here. >> dare i ask about the recovery of phones? >> really just a fraction has been recovered so far. one saying about $740 million in

cryptocurrency has been located. that is being stored in offline cold wallets that is a storage method that is used to prevent hacks. advisors saying they found around $560 million in cash that can be a trip you did to various ftx entities. the problem also lies in the quality of the statements from the company because as we are finding out, ftx did not maintain a centralized control of cash and it failed to keep an accurate list not only of the account holders also the account signatories and did not pay sufficient attention to the credit quality of its banking partners. on top of that, the firm that did some of the auditing, this is a company that touted itself as being one of the first to open an office in the metaverse. ftx leadership is now saying it's basically working from the ground up. they also are finding out how many employees in the company

and what their conditions were. >> extraordinary details in the story. let's turn to geopolitics. xi jinping says the asia-pacific is no one's backyard as he pitches for greater cooperation at the leader summit in bangkok. stephen engle is joining us live. xi jinping delivering his vision for the region or did he? stephen: both of the big superpowers u.s. and china making their pitches to asia-pacific nations for their visions for the future for strategic cooperation as well as development cooperation. joe biden is not here. he was it -- xi jinping has made the trip to bangkok today. he was here yesterday.

he has already met with other leaders and he was due to give a speech yesterday afternoon at the ceo summit ahead of the leaders gathering that starts today. we got an advanced copy of that. it was canceled at the last minute, but we have the verbatim . he says the asia-pacific is no one's backyard and it should not become an arena for big power contest. no attempt to wage a new cold war will be allowed either power or by the times. that is his pitch and it was a similarly worded speech to what we have heard earlier this year. another has made strategic visits to south pacific islands including striking the cooperation deal with solomon islands. there are lots of geopolitics, they are big down in the south china sea. the u.s. is trying to counter china's moves in the indo pacific region through its more

recent trade agreements with 13 indo pacific nations. that is something that the u.s. trade representative is here trying to pitch and we are going to get a speech later today from, harris -- from kamala harris. she is set to give a speech defending joe biden's stance against critics. that is how we stand right now. the first day of the leader summit. >> xi jinping and others meeting. what is expected to be the result of that? they have been far apart and countries are nervous about china's rising power looking to potential military aggression, etc..

where do you think xi jinping stands on the and how is it going to go between these two leaders? stephen: there are legacy issues dating back to world war ii between china and japan. japan is a staunch ally of the u.s.. it's a close issue to japan. there are legacy issues. xi jinping and kishida met yesterday. essentially, both sides agree to work out their differences and to work at improving bilateral relations. the backdrop, i want to bring up the new zealand prime minister. i had officer just speak to her yesterday. -- i had the opportunity to speak to her yesterday. i wouldn't say new zealand is

neutral, but she took a neutral stance and said careful of world politicians. trying to stoke fear at a time of geopolitical tensions. >> our openness is what has got us to the point where we have seen such rapid development through our epic economies. now for the next time, we have the opportunity again we just need to bring more people with us. inclusivity in our growth will be what allows us to continue on in this way. if we don't, we will have dissatisfied citizens and more politicians who stoke fear. stephen: another busy day here as the effect leader summit begins two days of talks. >> let's get you to new york,

vonnie quinn has the first word headlines. vonnie: the u.k. chancellor has certified tax hikes and spending cuts. the tax on oil and gas companies has been extended. he says the country is already in a recession. nancy pelosi has announced she will step down as the house democratic leader. it comes after republicans secured a slim majority in last week's elections. this concludes her tenure as the first woman to serve as speaker and open so way for a generational change in leadership. >> with great confidence in our caucus, i will not seek reelection to democratic leadership in the next congress. for me, the hour has come for a new generation to lead the democratic caucus that i so deeply respect. vonnie: the ukrainian president

appears to have softened his insistence that the rocket that struck poland this week was russian. he told the new economy forum that caused only by ukrainian air defense weapon. >> i don't know what happened this time, we don't know 100%. i'm sure this is a russian missile. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. >> still ahead, why they don't expect a recovery over china's physical property market. and coming up next, can to go says -- ahead of research joins

us next. this.

>> even under these generous assumptions, the policy rate still is not at zone that would be considered sufficiently restrictive. to get to this level of policy we will need to increase the policy rate further. >> that was the minneapolis fed president. speaking about the central banks rate hike path. joining us is the head of

applied research at apec for qontigo. when it comes to making sure the markets understand their commitment toward reaching their inflation goal, what does the issue of optionality present for investors? it clearly doesn't give them the certainty they are looking for when it looks at us earned -- slowdown then a pause. >> that's one of the issues, the data that we get is not sufficiently bad to be good or sufficiently good to be bad. it kind of leaves them without the means to make a decision. they have been looking for this elusive pillar since july and since july, they started believing in it without corroborating data. lately, we have better data on inflation. we've had a strong economy better or less bad than expected earnings. it is a bit of a mixed bag and one data point only one month worth of data. the fed we know is still on an

upward path for interest rates and they are not going to stop. they're trying to avoid a repeat of 1994 when they surprised markets with rate hikes and that didn't go well. they're trying to be as transparent in communication as possible. i think the market needs to give them time and to wait. most of the investors are doing that because volumes are much lawyer -- lower than the first half of the year. >> looking ahead to next year, i was a little shocked by the number of guests we spoke to who warned that the risk was stickier inflation. that the price pressures are structural, a lot of these issues when it comes to commodities prices, soft commodities prices, the ongoing war in ukraine, all of the other contributors to volatility a be accelerated into next year. is that a risk that markets perhaps are not looking at? >> it is definitely a risk.

on top of the usual cycles, we have had a massive qe program for over a decade which has printed trillions of dollars in the economy somewhere now that can be marked up. we also have supply chain disruptions in the form of extreme weather events. geopolitical risks that are going to increase in frequency and in importance. we have a movement toward deglobalization instead of the last 20 years globalization go out and build things wherever they are the cheapest, now it's everything comes back home for national security reasons. all of that is going to be disruptive for supply chains for a while. that is going to raise prices, yes. the fed and other central banks all of them seem to have gone that memo they are rectified inflation because if you let that creep up, went to be much harder later.

9 if you are an investor looking at the economy and what the fed is doing, the fed's went to hike the key rate up to at least 5% and some say even above that. if it goes up and stays there, if i am an investor, i say at least i know what the fed is doing, now i move on or how do i make money if rates don't come back down to a level where they are very conducive to investors and there's the liquidity out there, is it going to be a long-term change for investors? >> i think there's definitely a change and most of them know that. since q1 of last year, they have started to implement strategies that look to underweight companies with a lot of debt, a lot of leverage including growth companies or text companies. -- tech sector companies. revenues that are big that have diversified revenue streams.

they also say they look for companies who are able to pay dividend yield and keep their investors. they also know that from the fear of missing out it's no longer in place. you have an alternative. once are attracted especially hydrated corporate bonds. -- highly rated corporate bonds. most investors most institutional investors are aware that there is change in the world and it is for at least some time. they have already started to align their portfolios or their asset allocation along those lines. -specifically in asia, it's a broad question if you are looking at individual companies. when you look at bonds and equities, where do you find the most enticing opportunities? which countries? >> the first question for investors especially for emerging markets is with a

stronger dollar and higher u.s. interest rates, you get a higher debt servicing burden. they're moving away from companies or countries that have a current account deficits. they're looking for countries that have a lot of cash governments could step in and stimulate the economy somehow. we see that with china trying to help the real estate sector. imagine you were in a country where the government did not have that much cash to help then you are in trouble. they are staying with from places where no help can be expected because the financials are not there. >> head of applied research for apec at qontigo. much more to come, this is bloomberg. ♪

>> a quick check of the latest

business flash headlines. alibaba surged as u.s. traders digested mixed second-quarter results. executives are optimistic on china easing pandemic restrictions. a second big -- bid for oz minerals. bhp says it has extended almost $19 per share. coming up next, we are live. nations prepared to vote

>> breaking news when it comes to japan.

price inflation coming through. cpi rising 3.6% year on year veteran than expectations. -- better than expectations. the estimate was 2.4%. the higher prices of non-fresh food and other imported items was a big contributor to the level of inflation. we are expecting core inflation to stay around 3.5% going into the second quarter than slowing down in the first quarter to 2.8%. let's get to vonnie quinn. vonnie: the new ceo of ftx is laid out a list of allegations against the former leadership slamming them for nonexistent oversight and its use of client funds.

in a sworn declaration, former enron liquidator says he has never seen such complete failure of corporate controls. he also said advisors have located only a fraction of the digital assets they hope to recover. the st. louis fed president says policymakers should raise interest rates to at least 5%-5.25%. jay powell said earlier this month that rates would need to rise more than previously expected due to disappointing inflation data. monetary authorities in indonesia and the philippines have delivered a large inflation -- rates. the philippine central bank raised to the key rate. xi jinping says the asia-pacific region is no one's backyard and

should not become an arena for big power contest. in a written speech, he pitched his vision for greater regional cooperation saying any attempt to weaponize relations should be rejected. his remarks were released after his in person speech was canceled. australian emergency services warned that severe flooding could last into the new year. three seasons of abnormally high rainfall have left the soil so saturated that even small amounts of rain or triggering flash floods. the flooding is also hitting crops and elevating food prices. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. and 120 countries. i'm vonnie quinn. this is bloomberg. >> malaysians go to the polls on saturday with uncertainty running high. foreign inflows may be at risk with -- appearing elusive.

what is different about these elections? >> since the shock defeat of the party that won 13 out of 14 elections in 2018, malaysians have been trying to move away from identity politics. he wants stability, integrity, and like most people they are facing rising living costs. what is at stake is the economy. in terms of moving away from identity politics, we know the former prime minister is in jail serving 12 years for his part over 1mdb. then there is the reigning prime minister putting his hat in the ring. let's look at the main contenders. >> malaysians ruling party has one in election since independence except the last one. in 2018, tainted by the 1mdb scandal, the prime minister and

his party was swept from power replaced by the longest-serving prime minister. he had campaigned and was pardoned from a jail sentence and promised the leadership but that never happened and two years later, the coalition collapsed. now as malaysia prepares to go to the polls again, one is in jail serving 12 years over 1mdb. if his party wins, the possibility of a pardon is very real. the former prime minister and one-time deputy hits a coalition that broadly supports the same policies. the main opposition alliance is led by anwar ibrahim. then the 97-year-old is running in the elections again hoping to stop the other from regaining power.

>> there will be almost 6 million new voters heading to the polls tomorrow. it's worth noting it is a public holiday. they lowered the voting age from 21 to 18. we are hearing that about 40% of people under 40 are disappointed with the politics and what we have seen happen in the last four years of these identity politics ruling malaysia. you also have 70% of malaysians saying they can't meet basic needs. it's really going to be around the rising cost of living pressures determining a lot of the outcome. >> a lot of that will come from the important conversations that you have lined up. >> absolutely. in the next hour on bloomberg daybreak: asia, we are going to

be talking to a director of strategy. this is an asian focused think tank talking about how much voter turnout are you likely to get. how disappointed are malaysians and politics as a whole? they want to raise their cost-of-living standards and they want to have their say. and later around 10 a.m. singapore time, we are going to speak to a researcher saying that another party could get a lot of the vote and upset the ruling. >> a lot going on in that election. coming up, credit suisse says

the latest property measures -- more on that ahead this is bloomberg. ♪

>> we are trying to find a path that is super for china.

>> looking at can i be a foreign company and succeed in china despite the politics, the answer is getting tougher and tougher. >> if we are provided with proper market access, we would love to contribute to creating a better pension system in china. >> china's international represent -- reputation is very low so he needs to work out of this and have a peaceful relationship with the u.s. to do that. >> this one meeting will not change things overnight because there has been such deep distrust built up over so many years. >> speakers at bloomberg's new economy foreign and investing in chinese markets. investors have been cheering any signs of easing in tensions between beijing and washington. adding to that the optimism

about the easing of covid zero. we have been tracking what that means for equities. one of the interesting side effects of that has been this big rotation into stocks and from bonds. a lot of money coming out of the fixed income space. because of that we are seeing a sharp selloff in bonds. this chart taking a move -- a look at the move in the benchmark. also markets are starting to reprice what is the economic outlook for china. let's take a look at some of the bond yields over two weeks. investors are saying expect choppy trading ahead. we might see the 10 year yield moving beyond 2.9% given that policy is still saying accommodative. expect more volatility, but perhaps the selloff we are seeing so far is not yet a

turning point for chinese government bonds. >> thank you for setting us up for our next guest. senior credit analyst at creditsights. what do you make of what's going on in the chinese bond market? >> right now, the sentiment has turned quite a bit because the reopening hope as well as a lot of property easing measures so people are thinking maybe the risk sentiment should come back and that forced the selloff on the onshore bond market. it for us, we think the outlook is still not exactly clear. yes, we are sure there is going to be a destination a final covid reopening but there is winter coming up, the vaccination rate is still very low so there is uncertainty and of course we are still seeing a lot of downturn for the chinese property market. >> want to question what's going on in the bond market. this is nothing like happened what in the u.k.. you can look at other parts of

the world like the you -- korea where they have their own reddit crisis. -- credit crisis. in china, a lot of firms are pulling back from issuing corporate bonds. these are signs that there is some sign of investor concern. they worried about what's going on. is there something to be worried about? why are they doing this? >> i think for the chinese corporate not issuing the offshore dollar bond, we know the chinese government is doing a lot of monetary easing and onshore rates are coming down. the chinese corporate's especially the large state owned enterprises, it is much cheaper to issue bonds on short. it is still out of a little bit of political concern because of the u.s. chinese tension of offshore bond dollar bond might be getting a little bit tricky to issue. we also have a lot of default coming out of the high-yield property developments. the sentiment toward chinese

offshore dollar bond hasn't been great so far. >> how do you view the fiscal impact of covid zero? a lot of that financing is to come from future financing from government debt vehicles. this is back to the old problem that china had before it started its deleveraging campaign. >> i agree, i think china is going back to the old policy book of a lot of infrastructure stimulus and it does put some strain on the fiscal budget. i think most of the strain is coming from the land sale. the property market is going down a bit so the land sales are coming down. that is putting a huge dent on the local -- local government financing. a lot of governments are issuing special-purpose bonds. that is helping them to keep the get filled in but in no way, they are borrowing from tomorrow.

we know the stockpile of local government debt there. >> talk about the risk of another wave of zombie companies. is that a medium-term risk? longer-term risk? how are you seeing this play out? >> this is more of medium to long-term risk. over the near term, we are seeing a covid reopening that is going to be a positive catalyst for equity and want markets. -- bond markets. it is ok but i think for the medium-term, we all know the banking asset has some pressure because they are basically extending credit to the property sector as well as funding the local government financing vehicle. in the longer term, the banking sector will be of concern and how the central government could resolve the local government hidden debt, this is also another challenge. lastly, there also concerns about chinese growth model going

to the future. if it is more state capitalism, there will be a concern of the efficiency of the large state-owned enterprises. >> how quickly do you expect to see that property market recovery when covid zero and? even prior to covid, the structural problems within the property sector were already present. >> i agree with you, i think the structure problem has probably existed before covid. toward the second half of the year once the economy is opening up, we are going to see some picked up the manned in the first year. we are not so concerned about first tier cities. it's more of the trouble of the lower tier cities because of population outflow the weaker industrial economic base we think this is going to be more of a medium to long-term structural decline for these property markets.

>> great to have you with us as always. coming up next, we speak to the former formula one champion about cofounding the green tech festival. this is bloomberg. ♪

this is bloomberg. ♪

>> a quick check on the business flash headlines. boeing says it is shaking up its defense business. the new chief is compressing eight divisions into four. the defense business has dragged on boeing's finances this year with cost overruns. applied materials have a forecast as supply chains improve. the outlook brings fresh optimism that the chipmaker can whether the downturn. asia's richest person is thinking of setting up a family office in new york or by to manage his wealth.

the founders are in the process of hiring a full suite of office managers. his wealth has surged to $60 billion. >> our next guest is a formula one world champion but he is turning his champion to environmental protection. he has cofounded the greentech festival which focuses on sustainability. is making its debut here in singapore. >> not just an interpreter but also an investor. good morning we are happy to have you with us. talk to us about the greentech festival. what is it hope to achieve? >> we founded it for years ago because i co-own the electric formula one world championship. there was nothing happening around the racetrack so i was like why don't we create a

festival where we do conference, exhibition awards? we started this in berlin and it was well received. it was a great impact straightaway so this year we are on a world tour of new york, london, and singapore. i think singapore is a great location because for this region you are at the forefront of sustainability. >> this is about green technology, green platforms. is there a lot of buy-in in terms of countries? >> absolutely, yes. europe is probably the most advanced, but we are now seeing u.s., london. london we were surprised at how the whole finance sector is getting behind the idea of sustainable investing and green finance. here in singapore, we are positively surprised as well how the government is very recently got behind the idea that we need to accelerate the sustainability here.

doing a lot of work now and also green plan 2030 has been launched here in singapore with very ambitious plans for green buildings. planting one million trees, working on water security food security. very ambitious and it's fantastic to be here. >> we know you have been investing in green startups from the beginning. for years, an early investor in some companies. talk to us about the potential in this one? >> bolo copter is starting a pilot project with three rooftops. then there are going to be transfers. i know you live there so i will put in a good word for you. maybe we will see if you can get

one for you next year for your commute. these are exciting times because it's about decarbonizing the commuting as well and making it easier for us to live outside of cities, to come into the cities at a portable -- affordable rice points. when it comes to life is when the pilot goes out and it becomes fully autonomous. that is somewhat in the future, but it's looking very promising. >> the energy transition has really struggled because of the background of energy security crisis. have you felt that in terms of talking to investors, stakeholders about these challenges going ahead? >> of course, we have felt that a lot in europe as well. for all the negatives out there, the small positives is these electrification some of the business models around because of the higher price points for petrol and other fossil fuels,

they really look much better now and they're starting to come to life these business models. that is really accelerating the shift in the startup landscape now. in investment moneys and attention and everything. that is something i find is very promising for this shift to greater sustainability. >> talk about electrification. how soon will will see full electrification of f1? >> that is a topic that is very dear to me. i'm proud because our sport is positioning itself so strongly for net zero 2030 sustainable events by 2025. also using synthetic fuels 100% by 2025. that is the path i have chosen. it's all very promising. yesterday i was on instagram and they were showing a call made from desha cart made from recycled plastics.

they are really making an effort and i think that's great because the sport has such a unique opportunity with the reach that sports has which is something i am now leveraging on as well. we need to use the reach we have to get engaged in the greater good as well. >> thank you for being here. >> we would love to see those races in person. these are the top stocks we are watching when trading opens in korea and japan. shares of asian copper producers will be in focus. asian energy related stocks might be active after some

tumbled. moving onto the next hour, we discussed the global economic outlook with international economic officials. the market opens in seoul, korea and tokyo coming up. this is bloomberg. ♪

>> this is daybreak asia. we are counting down to the market we are going to see how the hawkish fed speak filters through to the asian opens in tokyo, seoul. it is something that certainly had u.s. markets. i think people realize this is a new story from the fed. >> we are watching the recovery rally in the dollar. a choppy set of games going into next year. we are also watching the geopolitical overlay with the leader summit kicking up in bangkok. >> we do have the open here of japan and korea. we are watching the treasury moves in the two-year. investors basically coming to

terms with this new fed playbook that rates will be staying higher for longer. it did jump as much is 13 basis points. contracts for may and june indicate the fed funds rate to peak by next year. still the yen focus today. the third straight session for that. it is not just the dollar strength coming back. it is also part of the inflation story in japan as well because we did have those inflation numbers out in the last 30 minutes. cpi inflating to a 40 year high. 3.6% in october. will they change the outlook? that is not likely. a little explanation as to why

he is sticking with such easy settings. the nikkei in the green today. let's take a look at what is happening in korea this morning. as -- of interest to us today is applied materials. the outlook is better than expected. what is driving that is the supply chain improvements which is helping offset the economic weakness. a good outlook from the biggest maker of chipmaking equipment. the korean won so weaker today. -- still weaker today. let's also take a look one hour into the trading session for australia. still hanging onto those gains. wti also looking a bit high today.

>> for more come out let's bring in mark greenfield. -- for more, let's bring in mark cranfield. >> soft cpi print, the fed is speaking with the relatively hawkish tongue. they do not want the market getting too ahead of itself. there was still another inflation report to come before the fed meets in december. so there is a lot hanging on the data between now and the next meeting. the fed has left the door open. the important thing is it is still hiking. there is no question the fed is anywhere near taking a pause. they have not reached the plateau they need to get short-term rates up. as jerome powell said, he needs

to manage expectations. he does not want markets getting too ahead of themselves. the fed has done what it needs to do. interest rates can come down sometime next year. that is not the message the fed really wants to give people. it is a question of caution and getting people used to the idea that short-term interest rates need to stay there for quite a considerable period to cool down the u.s. economy. >> the impact on the dollar as well. are we going to see a resumption of dollars strength? we have a note from goldman sachs socks -- sex talking about a lower quality rally. >> the decline best started when

the bank of japan intervened, it is still playing out. that was reinforced by the message from the cpi data. the u.s. dollar has lost quite a bit of ground in the past few weeks. it is reasonable to say we might have seen the peak for this year. whether or now the dollar can go high again is an open question. we are going to see individual stories coming through, whether it is china, the pound or japan itself which has had a very high cpi report. traders will have to differentiate between one currency and another. from that basis, we will see some pretty indifferent trading over the next few weeks. we are pretty close to year end now. the story for the u.s. dollar is

not going to be a clear-cut one at all. rate differentials will increasingly bear out. some countries have been raising rates quite quickly. we have seen a massive rebound in the korean won. that is one of the leaders for the asian space. the chinese one has also strengthened quite a bit. it will be interesting for foreign exchange traders. whether or not the dollar can rise in 2023, we will see how aggressive they are in december. >> think you. mark cranfield there. and incur shery ahn is headed to mexico city for the conference. it happens against an

environment of high inflation as well. let's discuss the growth prospects for latin america with augustine costumes. we have seen broadly across emerging markets a picture of more resilience in other scenarios where the global downturn had been impactful. but it is an inconsistent growth picture. >> obviously, the current situation has had an important impact on latin america. one of the traditional

challenges has been for the exchange rate. the key currencies in latin america has been very resilient. the main currencies have appreciated against the dollar. some think that was very hard to think in the past. that does not mean from the growth perspective that there are no challenges. they have been affected by trade issues, by the commodity issues. there was a challenge in trying to bring together measures to strengthen stability and engineer more growth in the region. >> here at the bloomberg new economy forum this week, there is been concerned about the inflationary price outlook next year. that we are dealing with a

deeply entrenched structural source of inflation. are you concern the same sources of volatility and downside for the global economy this year will flow into next year? you speak of this policy reset for the global economy. what does that look like? >> there are some structural issues that might be more difficult to take care of. one of the ones we have not seen completely fully is how much structurally labor markets have changed. as you know, this circumstance very important. the other is how much supply chain events we need completely solved. traditionally, it is short-lived, but we do not know

if the change for example in the energy market will keep some of the energy prices higher for longer. we have to be very watchful. given that we need more information, that is very critical for central banks to be patient in terms of a -- starting to think of changing in the tightening process. tell us -- >> tell us about the fact that you can live in low inflation or high inflation worlds. if a pound of meat cost you $39 in new york city you do not want to keep paying that much. on the other hand, at least the prices do not keep moving higher and everything will just.

>> it is a process. it is important that we keep preserving the economy. i think we have been for a long time on low inflation regime. as inflation gets higher and higher, prices could be more stabilizing. the way businesses and employees react is far more damaging to inflationary processes.

that is why it is important that these more structural issues do not circle into the economic environment. >> i have to ask you about ftx and what has happened in the crypto world. i am linking this to your innovation hubs. i imagine your team -- i met your team in october. does what is happening there, is in a setback for that kind of research that is developing all across the world, or is it a booster? >> it is definitely a booster for the work we are doing. i remember in 2018, i mentioned

these crypto currencies were an environmental disaster. what has happened has gratified our view. we understand society wants to have [indiscernible] at the same time, improve all the payment systems that are available. i think we need to respond to the demand of society and we are doing it. but the way is not through cyber currencies. as we have seen, they lack trust and institutional settings. >> i want to ask you, it is the 25th anniversary of the officer didn't mexico city -- of the

office in mexico city. >> thank you very much. let's get to vonnie quinn. >> the new ceo of ftx has laid out a list of allegations against the company's former leadership, slamming them for the misuse of client funds. john says he has never seen such a complete failure corporate controls. he also says advisors have located only a fraction of the digital assets. nancy pelosi has announced she will step down as the house democratic leader. the decision comes after republican secured a slim house majority in the midterm elections. it opens the way for a

generational change in the party's leadership potentially. >> i will not seek reelection to democratic leadership in the next congress. it is time for a new generation to lead the democratic caucus. >> a dutch court has convicted two russians and a ukrainian bus carrying out that he attack that brought down the malaysian flight which killed all the people on board. the court sentenced the three men to life in prison. russia said it will study the verdict before commenting. 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. >> still ahead, we take a look at malaysia as uncertainty runs high as voters like the fourth prime minister in as many years.

but first, we will discuss president xi jinping's warming relations with the united states. this is bloomberg. ♪

>> on the critical flesh book question, my analysis is that neither side now wants a war over taiwan. the reason for that is not because of the lack of nationalism. the reason is because both sides

are concerned they might lose militarily. >> the former australian prime minister on tensions between the u.s. and china over taiwan. president xi jinping is pitching for greater regional cooperation at the apac meeting in bangkok. no attempt to wage a new cold war will ever be allowed by the power by our times, he said. >> with he and biden agreeing to resume cooperation, let's take a look at the state of business sentiment. joining us now is craig allen, president at the u.s.-china business council. i know you up and looking at this closely. what do you make of the latest message from president xi jinping? >> president biden and president xi jinping had a three hour

meeting earlier this week and i think the main outcome of that meeting would be the establishment of some working group mechanisms on the number of important issues, including climate, trade and investment. we will have to wait and see, but it is a part is a -- positive sign. talking is better than not talking. >> in terms of the business community in the u.s. and also those doing business in china now, are they eager to believe that something can change in the right direction or are they still worried? >> i think that 2021 was an excellent year with trade and investment both increasing at a rapid clip. 2022 has been more difficult.

we are suffering from the impact of the zero covid policies and a sharp slowdown in the chinese economy. i think it depends on the policy choices made by both governments. we are happy there will be at least some form of dialogue on the important economic issues, whether or not they will make breakthroughs remains to be seen. in early december, the chinese will have their economic conference to talk about these major problems. at the close of that conference, i think we will have indicators as to where economic policy will go and how they will address the acute problems they are facing in real estate, youth unemployment, local finance, among others. >> to what extent, because we talk about we have signs from

high-level leadership, but business to business relations continue. that has been the case when it comes to australia. is that the case for american businesses, or is there an increasing sense that china is a market that has become too hard and they feel guessing on welcome? -- yes the unwelcome? -- too unwelcome. >> on the supply chain side, there are investments, the marginal investments are going to other economies, incremental investments, as companies choose

china plus one or china plus two strategies. everybody is to avoid a single point of play -- failure in their supply chains and that makes sense. companies worried about their supply chain adding investment elsewhere. the main concern i would have is that there are relatively few new entrants into the market. those not in china are finding that easy to look elsewhere. >> at the bloomberg new economy forum, we spoke to experts and we have seen a lot of these vc funds still managing to raise funds. is this likely to continue and

is there a concern that these hot spots of investments could come under regulatory string? -- strain? i believe there is a movement to bring greater government regulation in the united states, particularly those that may have national security implications. for example, in the semiconductor sector. if there are american investments that are going into chinese companies that may be supporting them -- the chinese military, they should expect regulatory scrutiny. in addition to that, most governments are clamping down on data, particularly cross-border data flows, in a very broad

sense. there is a great deal of regulatory efforts underway in both governments and that could slow business integration. >> always great to have you with us. craig allen, president at the u.s.-china business council. more to come. this is bloomberg. ♪ ♪ we all have a purpose in life - a “why.”

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>> today inflation is unacceptably high in the u.s..

it's elevated in many other countries as well. >> some of the fears include, consumer protection, community development, and financial stability, can help support inclusive growth. but monetary policy cannot address these issues directly. haidi: some of the latest comments from fed officials. when he took office earlier this year, he also added that inflation is having more disproportionate impact on low income households and that is why it is so orton terrain in prices to create an economy that works for all. where the sense -- the federal end up, they need to try terrain inflation, that is what was affecting the sentiment going into trade despite that, we are looking optimistic. annabelle: for korea and japan

we are seeing the kospi leading gains up .7%. there are factors adding into that. we had good news coming out of earnings. applied materials. the world's biggest member of a chipmaking equipment. they gave a more optimistic or cast on supply chain pressures. you can that as well. alibaba, good earnings as well. the company optimistic about the outlook for covid in china. these are the tailwinds coming into the session. australia is higher for a second straight day. currency, we're looking flat in yields what, let's switch it on. we have the reaction to the japan inflation data, that is been coming out this hour. governor kuroda, speaking in parliament saying we have seen inflation above target for the past seven months but it is likely to go beyond -- below the 2% target in the coming fiscal year, because of that, he says that fiscal policies need -- monetary policies need this

accommodative. he says rates should stay easy for now. we didn't have inflation, coming in hot in prior readings. japan ink -- inc, struggling to pass cost on to consumers. foreigners buying up stocks for three straight weeks. kathleen: seeing some good deals. let's get to vonnie quinn with the first word headlines. vonnie: monetary authorities in indonesia and philippines delivered a large interest rate to support currencies. thank indonesia lifted its benchmark rate by half a point with plans to keep inflation within target next year. the philippine central bank raised 75 basis points to 5% signaling it could become less hawkish. u.k. chancellor jeremy hunt is outlined $65 billion in tax hikes and spending cuts so the government can plug a hole in its budget. it will be had with higher taxes on wagers -- wages and

dividends. attacks on oil and gas has been extended. the british economy is in a recession that will shrink output by 1.4%. ukrainian president zelenskyy appears to have softened his insistence of the rocket that was dropped in poland was russian. he told bloomberg that image is suggested that the damage could not have been caused, only by ukrainian defense weapon. nato the u.s. says it is unlikely that it was caused by russian missile, while lang the blame on moscow. >> i don't know what happened this time. we don't know 100%. the world also doesn't know what happened in that situation. i'm sure this is a russian missile. vonnie: 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 around the world. i'm vonnie quinn, this is bloomberg. haidi: the chinese president xi, says the asia-pacific is no one's backyard,a s he pitches

for greater regional cooperation at the aipac leader summit in bangkok. stephen engle joins us from thailand. of course, this was supposed to be a speech and ended end of -- in and ended up being remarks. the message in terms of what he wants to see for regional operation and competition remains the same. stephen: absolutely. the u.s. and china are the two superpowers of the world, and have been pitching their visions for development and security the asia-pacific including and the island nations. new guinea's prime ministers here meeting with others. there's a lot of geopolitics. of all the bilaterals that will begin today, they began yesterday. xi jinping spring with fumio kishi. they will go today and tomorrow. xi jinping's speech was scheduled for 5:30 yesterday at the bloomberg -- aipac ceo summit.

it was canceled at the last minute. we got a verbatim of the speech and here is the main highlight. he says the asia-pacific is name was backyard and should not become an arena for big power contest. no attempt to wage a new cold war will ever be allowed by the power or by our times. now, we are going to get another vision of asia-pacific engagement from, harris, the u.s. vice -- kamala harris, she will give a speech today in bangkok. it will pitch a u.s. version of engagement in the asia-pacific at a time where there are some skeptics about the united states and their dedication to this part of the world. given xi jinping's urgency to establish better ties in this part of the world, the u.s. would be urgent as well to get there vision for security and economic engagement through the indo pacific economic framework trade agreement that joe biden

announced earlier this year when he was in the asia-pacific. kathleen: bilateral meetings today, what do we know about that? after the part of congress there was a dominant message from xi jinping. he's got a new -- new key players on his team. what do you think they are doing? what rush are they leading xi jinping? stephen: xi jinping is on the offensive since the party of congress closed. he has returned to the world stage and has gone to the g20 in bali. he is at apec in bangkok. the meeting last wednesday between biden and xi jinping, was -- a set a warmer tone between the two leaders at a time when many people say the relationship between china and the u.s. is at -- kishida and xi jinping have long legacy issues,

dating back to world war ii between japan and china. both of these leaders, in their brief statements, said they're going to work to establish better dialogue and work to create better bilateral relations. we will have to see as japan is a staunch ally of the u.s. kathleen: ours the -- asia correspondent, stephen engle. malaysians go to the polls on saturday with uncertainty for investors running high. foreign inflows may be at risk with a decisive vote increasingly -- appearing increasingly elusive. juliette saly has a preview. juliet: malaysians ruling party has won every election since independence, except the last one. in 2018 tainted by the multibillion-dollar 1mdb scandal the prime minister and his party was swept from power, or place by the country's longest service prime minister. he had campaigned alongside the

party of former adversary abraham, he was pardon from a jail sentence for sodomy and promised for leadership. that never happened. two years later their coalition collapsed. now as malaysia prepares to go to the polls, he is the one in jail serving 12 years of woman db. -- 1mdb. this time he is being led by the current prime minister the former prime minister himself and what time a deputy has a coalition that supports the same policies. the main opposition alliances led by ibrahim. then there is mahathir, who at 97 years old is running again. haidi: let's get you where juliette saly is standing by with her next guest. juliette: yes.

so much at stake in the selection in my next guest says the 2022 election is going to be one predominantly by tiktok we saw 2018 at dominated by whatsapp. social media is playing a role. let's get sue myrick -- let's get to my guest. we were listening in about the ongoing politics and identity politics of a malaysia, can we move past this and focus on the economy? >> thank you so much. the economy has are -- been our top concern in this election season given that malaysia is recovering from the post-pandemic and there still a lot of issues especially global inflation issues. weak employment, numbers have been declining but concerned with wages have been our topmost priority for the voters in malaysia. as you can see, among all the

parties and their manifestoes in this campaign, they've all been focusing on the economy. juliette: it's gotta be coming down to the swing voters. the voting age has been lowered from 21 to 18, which means you have nearly 6 million new voters. how much overall has social media played? --how much of a role has social media played? >> it has been phenomenal read we are seeing new platforms gaining traction among the 18 to 20-year-olds, as well as the 21 to 29-year-olds. as i've said before, tiktok is a dominant social media platform, especially among the 18 to 20 years old and 21 to 29 years old. consumption of medias there and perception is driven. all of these political parties who are campaigning in the selection have been competitive. the battle has been fierce on the social media ground. juliette: it's hard to see who will win this election when you look at the polling. so many undecided voters.

but the opposition leader ibrahim is on front. how much goes to the pm party? >> for ibrahim's main opposition party they have run a steady campaign. in 2018, the party benefited from the swing vote of the undecided. this time around the undecided will be split. we have seen on the ground there is a surge for this new coalition led by covid era prime minister. this is gaining traction. we have the incumbent, who's very strong with ground machinery. in the last 24 hours of a campaign, this -- they stabilize themselves. it will be a competitive battle. the race is still very much wide open to foreign majority government in malaysia. juliette: he talked about the economy and the rise of cost-of-living.

we're singh this globally. what do hear from malaysians heading to the polls given that we have been moving away from the one mdd scandal -- one mbd scandal -- one mbd -- one bmd scandal. >> cost-of-living issues are essential in the selection of urban areas. rising cost of living is a problem. savings have been depleted because of the pandemic. these concerns are very real. all these political parties all have been addressed ways to get out of the pandemic in terms of the economy and how they can take malaysia to the next level. if not, malaysia will be stuck in the middle and the parties have been discussing ways in their visions to take malaysia forward. juliette: a world boeing -- world bank service as families

have been struggling to make monthly income. we thank you so much for your time. sending it back to you. kathleen: great conversation. juliette saly, following the elections in malaysia. we will discuss which metrics investors of alibaba set their sights on, after a mixed second-quarter earnings report. this is bloomberg. ♪

kathleen: we are watching alibaba as hong kong shares after latest earnings sent adrs a searching -- surging. let's bring in a bloomberg intelligence a senior analyst catherine lynn. let's start with the basics. what stood out from alibaba's results? >> right, clearly the very strong margins across key businesses, such as the international commerce logistics, really set out from this results. the company may be able to continue to hold on to the leader can structure -- a structure for the rest of the year. haidi: what about the lift of margins through the rest of fiscal 2023, if we resume the number of covid infections as the rise? >> clearly, that's one of the

swing factors. something i think the whole market is monitoring. we're seeing an easing of covid curves. yet, sentiment underground, with the number of cases rising, is igniting fears of the threat of the virus. that's not going to help sentiment or buying impulse in the near term. we will have to wait for the next one to two months for clearer signs, particularly as we step into the lunar new year. it's earlier in january, in a couple of weeks time to see whether that will be a trigger point for consumers -- consumer sentiment. kathleen: there's been a delay of alibaba was completion of a dual list in hong kong, should investors be concerned? >> the company still on track for a primary hong kong listing. there's been delays in the completion because of a stock

ownership scheme they're looking at. if we actually get an escalation of the u.s./china tensions and talks of the risk of a false listing coming through, that will put volatility on the share price. fundamentally, i would not be too concerned. haidi: that was bloomberg intelligence senior analyst for the asia-pacific consumer, catherine lim. breaking news out of gong show when it comes to the -- guang zho, 9244 new local covid cases for november. we have seen loosening of restrictions when it comes to the lifting of policies for high-risk areas in these districts. the districts are remaining in lockdown. we have seen more of an indication that policy makers will want to focus on a targeted approach to these knockdowns as

we continue to see these big jobs in covid cases out of china. let's get you a quick check of the business flash headlines. they gave a better forecast for the current quarter, supply chains improve. the outlook rings optimism for the biggest maker of a chip many fracturing equipment can whether the industry downturn. sales into china's -- china will be shy, due to export restrictions. there's a second bid in a deal that will expand the mining giants copper assets. bhp has offered more than $19 million a sale. it comes months after the initial bid was rejected of $17 a share -- $17 million a share. be sure to tune into bloomberg radio to hear about today's big newsmakers. we are casting live in our studio and hong kong. you can listen in by the app, or

bloombergradio.com. more ahead. this is bloomberg. ♪

>> we're never going to reach the 10% we had 10 years ago. they will be growing at one, 2%, 3%, not the growth in india's

experiencing. but they will be recovering on the market will recover. kathleen: veteran emerging-market mark mobius on china's outlook. speaking of china, volatility back in spades for china's government bonds, trading choppy after the notes recorded their biggest selloff since 2016. there was a volatile year. let's bring in sophie award to -- horta e costa. is this a one-time event? what does this tell us about the bond market and investors? sophia: -- sofia: the risk on mark -- on sentiment was so sudden, you saw how rapidly stock prices rose and the short squeezes ofxi's three pivot. your singh investors withdraw their money from -- you are

seeing investors withdraw their money and rotated to the stock market. just out now, we have the securities daily, saying these fluctuations are market oriented and people should view them rationally. acting to calm the market. it will be interesting to see is whether the central bank feels the need to inject more liquidity into the banking system at it's daily market operation today. if it does, that would signal that banks need the extra cash and there is more volatility to come. if it withdraws a liquidity, it's signaling that there is no panic in the market, there's no need for more funding. it's a very, very interesting time for the bond market. haidi: the index holding onto his quarterly review. anything interesting of which should be added? sofia: we could see the index be

expanded to 18 members, another step in what has been a long revamp of hong kong's benchmark. it was only 50 members for a long time. nothing too exciting to note. i would say, looking at what movers could drive the index today, alibaba had a strong session after the stocks had a very weak session in hong kong yesterday. that could provide the index with some gains. the hang seng index revamped itself by adding tech names when the tech selloff began. so, it used to be an index that was full of banks and you could call them boring stocks. when the index provider added the exciting growth names that is when growth became unpopular. if we do see a rotation in these growth names, which looks like it could happen now, that could propel the index higher.

haidi: our chief china markets correspondent. some of the stocks we are watching ahead of the markets opening in hong kong the china. alibaba's hong kong shares will be in focus. adr's jumping despite revenue and the second quarter missing the average analyst estimate. watching energy stock, they could see active trading after we saw oil tumbling on fears of a global economic slowdown. to that end we will be watching the likes of petrochina, oil filled services in particular. oil is poised for a weekly decline. these concerns over the broader economy we see. let's take a look at how we are trading in today's market action, as we head into the end of the week. last trading session, asian stocks are edging higher in the friday session even with these hawkish fears. pushing home the rhetoric that they are committed to getting inflation right.

we are seeing climbing, inverting the u.s. yield curve. when it comes to the equity sessions across japan, australia, the kospi as well, also seeing some of the smaller gains. hong kong futures are trading up. well, coming up, black rocks tells us why they see long -- as potential beneficiaries and 2023. we will be joined by shawn yang, and he will tell us when it comes to jds earnings. we are talking -- looking at alibaba and the hong kong session. our coverage continues.

>> happy fri