haidi: a very good morning and

welcome to "bloomberg daybreak: australia." >> we are counting down to asia's major market opens. kathleen: i am keeping a close eye on the credit markets. the top stories -- concerns beijing may return to stricter virus restrictions after china reports its first covid related death in more than six months. and court documents reveal ftx owes its biggest creditors over 3 billion dollars as crypto exchange's continue to face the fallout from its collapse. and elon musk considers firing more twitter employees as soon as monday with sources saying he is targeting sales and partnership teams. it is great to be here in seoul. a big week for the markets and

for the bank of korea as they get ready for a meeting where they were expecting a 50 basis point hike but now people are saying odds hovers risen for a 25 basis point hike after the turmoil of the credit markets in last month. the economy is looking ahead to some tough times. we are watching for exports, they will be out in a couple of hours. inflation is getting better. maybe the 25 basis point has increasing odds at this point. haidi: increasing odds and i have to say increasing odds of a collapse as we got into the final hours of cop 27 though negotiators have walked back from the brink of collapse. it was approved without a single opposing voice and this was seen as a historic victory but it has come at a cost. a gauche eaters did not secure

-- negotiators did not secure commitments to some efforts. the phase down of all unabated fossil fuels also failed as well. to a lot of negotiators and countries, this came as a mixed victory that came with a lot of unfortunate compromises. annabelle has more in hong kong about how markets are looking to start the week. >> this is a market that has been dominated on views on when the fed will start to pivot. with fed officials really keeping up their views they will need to stay higher for longer. this is the last close for the friday session in the u.s. traders shrugging off concerns. also being reflected this morning in what we see for

aussie futures and new zealand fractionally in the green. moves in the 10-year gilts, moves higher but still options trading on bedding whether the fed will change the pace. let's look at what is happening in commodities. we are seeing a bit of a different perception. we saw a weekly drop for oil and copper. concerns around recession which would be induced by the fed and other central banks hiking rates and what is happening in china given we see covid case is still rising. a test for officials and how they plan to deal with those. we are also seeing in the offshore yuan this morning. kathleen: that is such a big story. china's first covid related death in nearly six months has

sparked concerns that beijing could see a return to heightened restrictions which is something markets are watching closely. the managing editor for asia global business emma o'brien binds us. how could this affect the way the government moves ahead? everyone was geared up toward this gradual move of changing the rules and moving in the direction of beijing being more loose and now what will happen? >> i think in the wake of all of that exuberance around the easing we saw two fridays ago, a little is being lost but china still does have the most stringent covid curbs that in the world. still strict quarantines on entry. they are still doing lockdowns. they are trying to make the curbs more targeted. that is what you are seeing on the ground somewhat. you are not seeing citywide, broad sweeping lockdowns like we

saw just before the party congress. but you are still seeing districts shut down, individual schools told to study from home, that sort of thing on the ground and the concern is that we will move further away from the more targeted approach as the cases start to get higher. you still do have a mandate from chinese officials about bringing outbreaks under control according to the rhetoric. they are still targeting zero transmission in the communities. it is the conflict that could lead to harsher restrictions on the ground in beijing. haidi: there is a real risk of the rolling back of these targeted measures if we start to see more deaths. emma: for taila these are the ultimate test for china because -- fatalities are the ultimate test for china.

just over 5000 for the total pandemic in china. so much has been made of that by the party and by xi to see a strong wave of deaths will really be a big test. a man who died over the weekend, this was the first death since the shanghai lockdowns. he was an older man, an 87-year-old dying in beijing and china does have a key vulnerability when it comes to its elder population because you do not have the same levels of vaccination among the older people you do in the rest of the population and other parts of the world. only 66% of those aged over 80 are fully vaccinated compared to a similar rate of 90% for similar groups in the u.s. they are clearly vulnerable when it comes to older people.

it will be a real test over the next couple of days of whether they can tolerate this higher level of cases. whether that is a shift or if they start to basically put broad sweeping lockdowns in place piece by piece. haidi: emma o'brien with the latest on the covid situation in china and in the meantime markets will bring a bullish consensus for chinese shares. that has been emerging as a theme on wall street. newfound optimism on xi policy pivots. the return of the chinese consumer is a big story for them going into next year and they are expecting china to see the biggest earnings boost out of any of the regions. does it feel we are getting ahead of ourselves or is the optimism warranted? >> china, for all of its size

and all it means to the world, it is still in the emerging market category. you have a lot of capacity for rapid shifts in policy and perceptions. part of the reason why shares jumped so far recently is because they had fallen such a long way down. there are also concerning antecedents. we had this coming out of covid china was supposed to lead the world but it turned out they had a different approach in a lot of ways i just comb it -- not just covid but also common prosperity. the question is -- will the reasons go away, one in particular potential reason for caution is this is an extremely rapid jump going up more than 20% in 11 or 12 trading days. we had a similar jump in april and that did not end well.

we have had a handful of similar surges over the last decade or more none of which ended well. if you want to find a blue -- a bull market turnaround that ended up being sustained, you have to go back to 2008. that is a long way back. people talk about this year as feeling like 2008. the question is, is this a turnaround for china? or is it a false story? kathleen: even though i'm sitting in seoul, and i am focused on the bok and the fact that global aggressive tightening, even our bloomberg survey shows it is one of the biggest risks they are looking at right now for their economy but crypto still lingers. is that something the market is starting to put behind us or is it still front and center? >> well, it is still getting an enormous amount of attention

p ory and partly because part of the fascination is there are a lot of people that had a lot of money at risk that they worry they will not get back. it is on the radar. it helps perhaps two underscore there are reasons for caution about getting too bullish. we are in a different regime now then we were in 2021 when crypto , when it seemed the sky was nowhere near the limit of where it would go. there is that sobering aspect to it but in general perhaps it even encourages investors to go, ok, we need to look for places where there is some sort of fundamentals that we can base our investment decisions on rather than just going -- crypto will always go up at some stage so pile into that or some of the other riskier bets.

we were talking just now about china and the korean wan, and korean shares. those are risky as well but you have guidelines, and a greater history that tells you that historically we are at levels that rarely sustain this. if ftx is encouraging people if they are going to take risks to be a bit more careful in doing so. kathleen: if that does not encourage them, i do not know what will. that is a good way to start the week. garfield reynolds. let's move on to some other big stories like twitter's offices reopening on monday after a mass exodus of workers forced a shutdown down last week and sources say elon musk is considering firing more employees this time targeting the sales and partner groups. the staffing issue, what is the

latest and what are people inside or that are still inside leaking out about this one? su: the tour moil does can -- the turmoil does continue. there could be a new round of firings. this is after the 50% staff firing and he initially took over and then the exodus that began late last week when way more technical employees than expected declined to take up elon musk on his ultimatum, sign up to work a more intense and hardcore version of your job or leave. most of them left. it forced the offices to close on friday. we know elon musk called and a lot of coders. that underscores concern. the app is increasingly vulnerable to hacks and bugs and big events like the world cup may overload already stressed twitter systems. you are looking at elon musk

smiling on the date he took over saying let that sink in but what is also sinking in is the burn rate. $4 million a day and that may have increased because of the severance packages for the employees at of already left. we know twitter advertisers have caused becoming nervous. elon musk posted late thursday that the site hit another volume record and there are media analysts saying this is not sustainable usage. this is on a highway when there is an accident and there is a lot of rubbernecking. people tuning in to see what is going on. we know elon musk posted a 24 hour whole -- should donald trump, a candidate for the presidency again, be allowed back on the site. he was banned permanently and 52% of the users versus 48% said, yes. elon musk said his account is being reinitiated.

donald trump was reached over the weekend and said there may not be a need to. let's see if it lasts. an indication that some are concerned about the future of twitter. and the naacp concerned donald trump could be back on the twitter site and is urging a lot of companies who advertise on twitter to consider pausing their advertising for now which would put more financial pressure on the platform. back to you. haidi: su keenan with the latest. over to vonnie quinn. vonnie: malaysian political leaders have until 2:00 p.m. on monday to inform the king of their choice of prime minister after the vote produced the first ever hung parliament. the opposition leader says he has the numbers to form a government despite falling short of a simple majority. the former prime minister also says his coalition could take power with the sport of two regional parties. the imf says the rise of trade barriers against china and other

countries could cost the global economy $1.4 trillion. christina your give up says the potential loss to asia could be more than 3% of gdp. she wants asian countries to work together to overcome fragmentation. the world is going to lose 1.5% of gdp just because of divisions that may split the region into two different blocks. for asia the loss is more significant because asia is so integrated and global value chains. they could be 3% or more. vonnie: the world's biggest single sporting event, the world cup has begun in qatar with a lavish opening ceremony. qatar has been under scrutiny. there are concerns about human rights and its criminalization

of homosexuality. and the hosts were beaten by 2-0 in the opening match by ecuador. kathleen: still ahead, cop 27 wraps up with a deal on compensating developing nations but little headway on further emissions reductions. up next, you will hear why our guest believes the fed is set to slow its pace of rate hikes. kim forrest shares her investment strategy shortly. this is bloomberg. ♪

haidi: take a look at the week ahead. the fed is in focus on wednesday.

minutes from the november meeting and more details about the plan to raise 75 basis points for the fourth straight time. central banks and focus on wednesday. other policy decisions coming from new zealand and pakistan. as a europe marches into winter, the eu energy ministers meet in brussels on thursday to lay out a detailed plan. and on friday, the strength of the u.s. consumer will be tested again with black friday sales. october non-cash sales track ahead of 2021. later on monday china's big banks are expected to keep their loan prime rates unchanged. kathleen: looking at past financial crises haunting south korean policymakers as they rush support to the local credit market. stress points include a rise in inflation and a slowdown in exports. bunty of data coming out this

week including consumer confidence, ppi and business sentiment surveys. and that is your week ahead. our next guest says the u.s. bond market seems to think the fed is going to slow the pace of rate hikes and she is also in that camp. let's bring in kim follow -- kim caughey forrest. it is a big week. inflation yes has slowed its pace of increase a bit but fed officials have made it very clear they need to see continued sustainable declines and they are in no way ready to pull back from moving the key rate up to at least 5%. where does that leave your investment strategy? kim: sure. i don't think it really matters for how we put money to work because we think you should be looking longer-term than the next 12 months anyhow.

we look 3-5 years ahead but we know the fed is not thinking quite that far ahead although we did get some recent numbers in the middle of november that kind of indicates softening inflation here and if you really, and i hate to get all math nerdy on you but if you look at how the cpi is constructed, it uses lagging housing data and housing has fallen off a cliff here and we are expecting it to be negative here because of the high rates of mortgages. looking at that, i think the fed might have at least some fuel to at least lower it to 50 basis points this time from its 75 basis points. kathleen: sure. how do you expect the bond market to react to all of this? markets are forward-looking.

i got that. you want to move to where you think they are going. the fed has also made it clear that once inflation stabilizes it will slow down hikes but it may be a long time before the fed cuts rates. what does that mean for bond yields and that has a lot to do with what equities are doing? kim: absolutely. when i first got into the equity gain, i kind of poo poo'd what happened in the bond market. the bond market told us since some time since the end of october when the 10 year was well above 4%, i think it topped out at 4.2, it has fallen precipitously to about 3.8 which is a huge move and it did so in a couple of days when data was

released showing a softening inflationary environment. i think the bond market is a little bit smarter about what the fed needs to do and what it is going to do so it has been telling us that the fed probably will not be able to get its rates up to 5% nor will it need to. haidi: a brutal year for retail stocks. do you think black friday will change that? kim: i think -- i think businesses, and this is public and private companies, are much smarter this year than they have been in years past and are parceling out the savings, the things that get you in the door. and then they have a good if not great selection. i am looking forward to a good retail year this year although i think retailers understand it is not, we will buy it at any price. not anymore. they have a good selection of a

well priced items for shoppers this year. haidi: kim forrest, always great to chat with you. founder and cio of lot -- founder and cio of bokeh capital partners. you can always play around with the settings on daybreak go. this is bloomberg. ♪

haidi: a quick check of the flash headlines. the financial times reporting chinese authorities are helping foxconn work its assembly lines. recruiting new workers for the iphone maker. foxconn suffered a worker exodus last month amidst a covid-19 outbreak. the bank of japan is considering

joining forces -- japan postbank is considering joining forces with jip. bloomberg earlier reported the jip consortium was in talks with about 20 potential co-investors. still ahead on "bloomberg daybreak: australia," the clock is ticking for malaysia's parties to come together. the king is expecting a decision early monday. we will be live from kuala lumpur with an update next. this is bloomberg. ♪

♪ >> there is more work to be done.

i expect this will require additional increases to the federal funds rate followed by a. of holding rates at a restrictive level for some time. i have resolved to bring inflation down. kathleen: with stick with outlook for rate hikes now. how are investors interpreting all of this? annabelle: it has been pretty interesting. we have seen investors sort of shrugging it off. they say any expectation of traders might have for an easing of this fed rate hike could be a little bit premature. that is because they say the fed and investors out there will

have to see more evidence that inflation is easing before we start to see any kinds of cooling in terms of the pace and size of the rate hikes. the question is how far the fed will pit it. -- pivot. they say we will see it at 4.75%. standard chartered says the fed will not only reduce the size of its rate hikes but also extend the length of the rate hiking cycle to ensure that inflation is moving down a little bit more substantially toward its target. the five-year yield gives a

longer option. they say we have seen the peak back in october. haidi: what about emerging markets? >> basically the return of the high-yield party to emerging markets. investors are now buying those bonds at the fastest pace we have seen. we are seeing yields really pulling back as well. there is data out there showing that people would not mind taking a vantage of the debt in pakistan, ukraine. they are leading this high-yield rally. club the market saying that this is down to the prospect of slower said rate hikes.

-- fed rate hikes. haidi: she says trade barriers against china and other countries could cost the global economy $1.4 trillion. she said nations need to avoid divisions as they face multiple crises. >> in a difficult time for the world economy, this part performs better. but we must overcome fragmentation. that is a big threat to the world today. we must work together. because we are in a world that is going from one shock to another.

pandemic, war, inflation. if we add on top of that the fragmentation in the world economy, it will be like throwing gasoline on a fire. no one benefits from it. >> how concerned are you about the prolonged isolation of china's economy? we have seen it in the property sector. we have seen job losses. are these headwinds insurmountable if this goes on too long? >> they are significant. what i am hoping to see is some reversal in policies toward china and globally. the world is going to lose 1.5% of gdp just because of divisions

that might split us into two trading blocs. just imagine what we can do with this kind of money. for asia, the losses much more significant. asia is so integrated. it could be 3% or more. >> let's talk about inflation. you told us in singapore that there have been false odds on inflation easing before. other particular counties in the world where you are worried that they might do that too soon? >> i am not worried about the united states. the u.s. economy is the most important in that regard. the fed will stay the course for as long as it takes to bring inflation down. in europe, the situation is more difficult. the impact of the war in ukraine is significant.

half of the european union could be in recession next year. that will put pressure on the european central bank conditions. i was relieved to hear my predecessor saying we are not going to do that. but the politicians in europe may be more vocal in trying to get relief before it is time to do so. >> was there anything else you wanted to say? >> the very best message i have heard was that this war must end. the single most damaging factor for the world economy is the war. if we want to return to growth, the sooner the war in's, the better.

vonnie: china's first covid related death in a most six months has sparked concern that beijing could you return of heightened restrictions. a man died in beijing after his condition worsened. officials in shanghai reported a fatality. concern has been growing about security interests in the region. he said they had only discussed what they could do for business. >> china has never expressed

interest for a military base. vonnie: turkey has carried out airstrikes against kurdish military groups. the raids were to eliminate what they called terrorist threats. they come after a deadly bombing in istanbul. this could shore up support for the president ahead of elections next year. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. haidi: asia political leaders have until 2:00 p.m. on monday to choose a prime minister. a malaysian opposition leader says he has the numbers to form a government but he may have to

forge a deal with a longtime nemesis. what is the latest? what are we expecting? >> it does look like malaysia is set for its first ever hung parliament. the opposition leader is trying to tensions hopes of becoming the latest prime minister. doing a lot of dealmaking and potentially having to do a deal with the ruling coalition which was ousted from power in 2018. his party has 82 of the222 seats needed to form a government. both parties need to form an alliance. they need 112 to get a majority.

the dealmaking will have to be with the former ruling coalition. it looks like they could lose this election. there is dealmaking happening in the states. as they try to form this majority. about 73% of registered voters came out on saturday. a lot of uncertainty here. the longest-running prime minister was trying to become feminist are again. he lost his seat. i will in his political career. kathleen: when it comes to voters, what is their dominant

concern? >> it has all been about the economy. the cost of living in malaysia is rising sharply like it is across the rest of the world. we have seen some strong economic growth. you have a lot of people struggling to put food on the table. you have inflationary pressures rising. you can see the uncertainty in the political environment reflected in the stock market. kathleen: we will be hearing more from her throughout the shows today.

up next, we discuss the climate deals. this is bloomberg. ♪

haidi: the weeklong summit has landed a deal to help poor

countries. great to have you with us. this is a hard-won victory. a deal that was three decades in the making. there were other ambitions that did not make it across the line. give us your thoughts about where this takes us. >> some are calling this the biggest climate victory since the paris accord in 2015. this is mostly because of the new funding agreement on loss and damages. that is a substantial victory for developing countries and emerging markets which will face the physical risks of climate change. it is also really a sign of solidarity that countries around the world are coming together to try to mitigate and adapt to climate change. there are still many unknowns. we don't know where the money is

going to come from. what the trigger points will be for some of these payments. and if it will be enough. there were some important events heading into cop27. the inflation reduction act, largely the biggest piece of climate legislation coming out of the united states. australia had a landmark climate deal. in the election of presidentlula in brazil could affect the fate of the amazon rain forest. haidi: when it comes to this funding agreement, you said the devil is in the details. do you think it will make a meaningful impact? >> i am a little skeptical. a lot of the finer points of this deal still need to be worked out.

there is no clear expectation on a phase down of coal or any other fossil fuels. some see the loopholes. what we are most focused on is trying to estimate what the policy response is going to be to this climate agreement in different parts of the world. some sort of response to the physical risks of climate change and how they translate into opportunities for us across asset classes. kathleen: it seems that one of the sticking points is getting funding for low income countries. what about the war in ukraine and how it is made people feel the push and the pool away from transitioning from fossil fuels? at a time when it is so scarce where you cannot do that without leaving people vulnerable to being cold in the winter.

>> this conflict has revealed challenges within energy transition. fossil fuels are pervasive in our lives. energy security has come to the top of the agenda as almost as important as the energy transition. the european union has had to shift tactics. with that will come expected investments in infrastructure. you have to recognize the important goal that transition fuels will play in our economies and start to change their stance on different energy technologies, including nuclear. what we are most focused on is how does this change our expectations about the pace of the energy transition?

how does it change the relative opportunities within the energy technology space >> it is a fundamental time for investors. kathleen: what specifically do you see as investment opportunities? >> we have remained quite excited for 2020 three and beyond in the clean energy space. we believe there is an opportunity to find investments in these technologies. whether it is renewable energy or better g -- battery storage or etc.. i will go back to my point that as fundamental, active investors, what we are most excited about is the opportunity amounts to this volatility to discover and price opportunities. we often talk about the risk of

climate change. it is creating disruptions across industries. kathleen: many thanks to you. looking at cop27 and the investment opportunities. the leaders of world cup have claimed it will be carbon neutral. but some say this is greenwashing. >> fifa announced that qatar would host the world cup. they promised to make it a carbon neutral tournament. but environmentalists are claiming that this is greenwashing. the event will put millions of megatons of carbon dioxide into the atmosphere.

>> there is no way that it events like that can be carbon neutral. the fit should do better. they should do that for the next world cup. >> the first step is to measure your omissions. we think this is great. >> there are a couple of big challenges. the first one is travel. the second part is construction. >> they are locked in on day one. >> qatar has invested billions of dollars in infrastructure for the tournament.

including building seven new stadiums. it could admit -- amid 3.6 megatons of carbon dioxide. >> the construction of the stadiums are the most problematic element. we think the total footprint could be 5 million tons. the sticking point is always the flights. >> balancing carbon emissions is key. the supreme committee says there is already a minimum of 1.5

million credits from the global carbon council. further details will be forthcoming. greenwashing issues are not being -- keeping vance from routing for their teams. >> this is the most enormous opportunity to tackle climate crisis.

haidi: that is much welcomed news when it comes to australian commerce. exporters have bore the brunt of the deteriorating relationship between australia and china. we are talking about alternative markets. we know australia has been trying to diversify its markets. you take a look at these numbers. china is still the top destination for exports from australia. the crux of the issue is there

is no simple replacement for that demographic. kathleen: thank goodness for iron ore. if you're an australian exporter. i love the australian wine. that is a problem not just for china and australia but certainly the rest of the world. that is it for us. we will continue looking at the markets. and the week ahead. ♪

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