♪ >> you are watching daybreak:

asia. >> counting down to the market opens in tokyo. >> australian markets have come online for top stories this hour. fed minutes show most officials back the slowing of rate hikes. asian stocks set to follow u.s. markets higher on the more dovish message. wall street fear gauge falling to the lowest in more than three months. china's central-bank signaling more monetary stimulus on the table as it looks to support an economy under pressure from covid outbreak. >> exciting day for the bank of korea, trying to get that inflation rate down without stirring up credit risk. expected to downshift the size of rate hikes. >> we have the opening of the aussie markets. asx 200 gaining a little ground as we come online.

this is the third straight day of gains for the benchmark it will be an interesting one to watch the energy sector in particular, given we did see the big move in oil in the previous session. you mulling higher than expect -- on russian crude. the big story remains central banks and the fed in focus with more dovish fomc minutes indicating officials more open to moderating the pace of rate hikes. we see that move lower for the 10 year, reflecting what we had in treasuries. there are still other central banks and focus. continuing to monitor what is happening in the two year yield in new zealand. we saw its jumping 20 basis points in the prior session after the jumbo hike. 75 basis points the key rate at a 2008 hi. korea, the next one we heard from kathleen on the salt -- expected to move to a lower pace

of rate hikes. 25 basis points. we saw the yuan snapping its losing streak in two months. china still a big story, given officials possibly mulling a reduction to the rrr requirement that would generally be a supportive factor for the yuan. we can see it a little steady this morning because there are other factors at play. and then rising covid cases and lockdowns continuing to spread. shery: we saw chinese adrs gaining ground in new york. but it was about the fed minutes we saw. markets thinking it is a little dovish, but we will see what happens. some investors are saying nothing matched changed, but we saw the s&p 500 gaining for a second session. gains in u.s. futures and the treasury rally with a 10 year yield around 370. we continue to watch the dollar as well.

another day of losses. given of course we had data signaling weaker than expected jobless claims numbers. not to mention u.s. pmi numbers. we continue to see downside pressure on wti, given we heard from the eu. talks ongoing that the price cap may be higher than expected. really not that much of a trading impact. we had u.s. stockpiles gaining ground. when it comes to trading, it is light given that we are headed towards a thanksgiving holiday. we are watching retail -- retailers as well given black is coming. paul: as annabel mentioned, asian stocks look set to extend wall street gains. investors take from the fed minutes, signaling tap on the brakes. we go to now to garfield reynolds. the consensus seems to be 50

basis points in rate increases going forward for a time. but that is still pretty chunky when you consider the broad sweep of history. our markets getting ahead of themselves? >> markets are constantly pushing the fed. are we there yet? are we done with the pain? one of the things that has to be concerning when you look at this set up his financial conditions have eased up so they are moderately tight now. they are at the sort of level they were back in june, august, september. on each of those locations, the fed came out and stamped down on expectations that it would be easing off rapidly and quite soon and that you would get a more modest hit to risk assets than might be expected.

again, we have that same set up. we even have the most recent fed beating, powell pushed back against the idea that there would be easier conditions, that a slower pace would mean things would get rapidly better. by emphasizing that a slower pace might well mean a higher terminal rate. even with inflation coming down last time to 7.7%, we have a number of officials pointing out that is far too high and they need to see sustained drops, rapid drop for they would be at all comfortable. but they do not need to become more restrictive. the general consensus for the fed is that they are at levels now where they are mildly restrictive. they are expecting that if you're going to bring inflation

down from a generational high, you've got to be more than modestly restrict. i do not think more than modestly restrictive policy is what the markets are busy pricing in. shery: do we have more certainty about where the pboc is headed to given we are seeing signals from the state council? the central bank tends to act. after we get those signals. >> the difficulty with pboc is that even when the signals about what it's intentions are end up being clear, exactly how that has an impact on both chinese monetary policy and the chinese economy. because they have so many different levers to push and pull and they could sometimes end up being contradictory. the general point is that china,

arguably, needs easier policy both because of short term fundamentals and also long-term fundamentals. china is an economy going through a transformation from rapid growth, expanding population and modernization, industrialization, to a far more mature profile. and it has to deal with some of the hangups from the rapid boom. in that situation, you would expect things in general to be easier. apart from anything else, one thing the pboc likes to do is avoid setting up a one-way bid for anybody in markets, politics or economics. we can expect at least a few detours on the way. shery: garfield reynolds with expectations on the fed and the pboc as well. there is a another central bank

we may see moving towards aggressive tightening. the bank of korea is expecting to move toward a more measured pace. the recent meltdown trumping the need for a bigger rate hike to fight inflation. kathleen hays joins us from seoul. in the u.s., we are talking about the fed downshifting, but it looks like pb ok could beat the fed. kathleen: 15 of 17 economists talked to by bloomberg think they are going to revert back to 25 basis point hikes instead of 50 like they did in october. they also did a 50 basis point hike in july. in october, the yuan was week, the second weakest all year after japan. and now it has had a nice rebound. that also did have to seem a lot to do with the fed signaling it may not be raising as aggressively as it had. additionally, there's so much

going on. the main thing is the credit market meltdown. bond selloffs started in korea in august but it was when property developer who built legoland 70 miles east of soul defaulted on one of his debt payments that alarmed investors who invest in this kind of project financing. that kicked off this credit market meltdown and you can look at a very telling chart that shows three-month commercial paper yield jumping from 3% to 5.5%. there's a lot of businesses and homeowners in korea who rely on adjustable-rate debt. these are things that are of big concern about where the economy is heading. you've also got exports. there's a lot of reasons to pull back the pace. the inflation rate up a little on the latest. 7% year-over-year, well above the target. seemingly stalling out?

right now presumably what the bank of korea wants to not do is something that would inflame credit market nervousness volatility. that is one of the biggest reasons of all today to stick with a 25 basis point hike. you are still fighting inflation, but giving the markets more breathing space. paul: let's talk about the minister of the fed's last meeting. we've got a signal from powell, are there implications from that of the this dish pbok decision? kathleen: it has implications for central banks around the world. the fed's aggressive rate hikes have been pushing so hard on all kinds of emerging markets and develop economies as well. yes, maybe they are going to sit down at the table today and make a decision at the bank of korea to say, isn't this nice? i love this chart because it shows the relationship between

the bank of korea and the fed hikes. back in july of 2021 when the bank of korea started raising rates, the fed. inflation was going to be transitory. they got a head start on that score and have not had to raise much. even it -- even with weak currency. there is a sense that maybe this allows them one more thing to say slowdown ahead of the fed, maybe stop raising rates. i do not think people think the bank of korea is ready to stop raising rates. the fed is signaling the terminal rate is going to be higher. we could slow down the pace, but we are going to continue to get to a more restrictive ending. shery: kathleen hays on the ground in seoul. june -- you can tune to your bloomberg for coverage, commentary and analysis. for now, vonnie quinn with

headlines. vonnie: talks between eu nations to cap the price of russian oil hit a snag. sources tell bloomberg governments are divided on how to design the plan. the executive arm proposed $65 a barrel, which some rejected as too generous. talks could reconvene thursday if a deal is not reached. u.s. senators have asked the justice department to seek accountability from ftx executives. elizabeth warren and sheldon whitehouse urged officials to focus on the harm done to customers and prosecute those responsible. lawmakers in the house and senate have opened their own probes into ftx. malaysia remains in political gridlock five days after elections with a split in the form a ruling coalition that the king has called on to join unity government. chief is facing calls to resign for allegedly misrepresenting their stance to the monarch. lawmakers have asked for more time to decide whether to back

opposition leader or the former prime minister. 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. shery: ahead, we look at the hit to supply chains from china's tightening covid curbs. oliver wyman shares. this is bloomberg. ♪

paul: we've got the u.s. dollar extending declines against boats of its -- most of its peers after the fed minister proposed rate hikes. sean keller, currency strategists at westbank, thanks for joining us. we have your chart on the bloomberg terminal that indicates the decline of the u.s. dollar, callistus the --

slipping below the 200 a moving average. you feel the dollar has peaked? how much downside is there to go? >> we think it has peaked in terms of the cycles. late september, early october when it had a real surge of energy. we think it is back from there substantially. it is still within the range but i do not think it is necessarily broken at key levels. the price actually is striking. to have a substantial dollar pullback. when the fed is still on track for market pricing over 5%. if you look around the world, that is still attractive. maybe it is a combination of feeding yield support and concern over recession ahead. so. look. it will probably stabilize over the next couple of weeks but i definitely think it has peaked and will certainly be lower next year.

paul: it is important to keep proportion. we are talking about 50 basis points like it is small. these are still quite large, especially when you compare it to australia. the bank of korea expected to downshift today. the u.s. dollar looking attractive compared to other currency pairings. >> we heard from the bank of canada saying they are close to the end of their tightening. they have already shifted down a bit. looking next year, the ecb will hike back to 50. the markets are not pricing a high terminal at all. japan, we all know the story. it does still have the yield appeal. part of it too is whether the improved equity sentiment reduces a bit of safe haven demand as well. shery: tell us about the japanese yen. you broke below 140 and you were going neutral for the week. >> that's right.

looking for consolidation. obviously it has pulled back a great deal. bloomberg analysis suggesting intervention was about eight yen. it is all about the fed versus the boj who are on hold. unless we get some really dovish surprise from the u.s. in the next few weeks, there will be people looking to buy dips on dollar-yen. wouldn't be surprised to see it back to 143 in the next couple of weeks. maybe a little higher. all eyes on the fed and the economic data. shery: i was trying to look for information on the aussie dollar but couldn't see any catalyst, at least not soon. is there anything interesting when it comes to the aussie -- given what is happening with covid zero? >> that can be tricky.

the aussie is very frequently used as a proxy for what is happening in china. it is often easier to trade. not facing a massive central bank on the others. we do see spec short positions on the aussie and futures markets that reflect concern over china for sure. china has very large trade surpluses. that provides insurance. no doubt, covid zero is hurting both the chinese and australian dollar. the new zealand dollar. we had a big move yesterday. paul: they considered 100 basis points. adrian hall this morning tell us the committee is trying to deliberately engineer a recession. with that in mind, do you want to revisit your call on the kiwi dollar? >> it has tremendous yield support now. 5.5% in terms of ocr. i think it has been trading very

well. it has improved on crosses for a couple of weeks leading into the meeting. there was a fair bit priced in, in terms of the rbnz. nevertheless, an up surprise. mostly the correlations are still that if we are talking about where is the next 5%, it will be the u.s. side that drives it. it is still more about the fed, we think. in terms of yield support, very strong. where we had been looking to buy dips, but certainly it is hard to fight the trend. paul: sean callow, westpac. thank you for joining us. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. this is also available on mobile in the bloomberg anywhere app. this is bloomberg. ♪

♪ shery: imf since china must do more to shore up property crisis and addressed covid zero policies to ever downside risk. to growth. deputy managing director discussed with bloomberg. >> we have growth for china this year at 3.2% and are expecting recovery to 4.4% next year. but 3.2% growth is very low, relative to historical averages for china. there are two factors behind it. one is on the covid front. the zero covid policy combined with covid outbreak spirit leading to -- outbreaks week -- leading to the restrictions on mobility which is having an impact on consumption. the second is the property crisis that is ongoing in china

that is affecting investment in the real estate sector and property developers. that is -- that is another factor that is weighing on china's growth. the third factor is external. we are in a global environment where global demand is slowing. which then has a negative effect -- impact on exports. >> fair to say there are downside risks to china? >> indeed. as we see in many other countries, there are downside risks. >> how concerned are you about financial stability in china given what just mentioned? the crisis in the property space and now the government is asking banks to show their lucrative -- liquidity. after they announced several mentioned -- several measures. they announced a 16 point plan of dealing with it. it helps with the liquidity problem that several property developers are facing. we think it is important to complete the houses that were

paid for. that is how you are going to give households confidence to invest in housing and get a house they paid for. there are some structural issues that need to be fixed. i has them now, we are seeing weaknesses in the property sector. we have seen property sales we can. this has risks for the financial sector but we see that is a bigger downside. >> how much china's slowdown impact the rest the world and how is it a friend this time around compared to the slowdown highly sensitive to what is happening in china in terms of growth and construction. that is one direction true commodity prices, and we see that happening. for the region, china is very connected with southeast asia,

east asian countries, japan. again, any slowing of demand in china but also any supply chain disruption has effects for the rest of the world. these are some of the important channels through which it has spillovers to other countries. in terms of what is happening now for china, the drivers are different. it is the covid pandemic continues to shut down and locked down because of policies the government has adopted. the zero covid policy worked well at the beginning of the pandemic now we have a different strain. we need to adapt. the second is the property sector which has to be -- corrections have to happen. it needs to get done in an orderly manner. paul: imf's deputy managing director detect open off.

let's take a quick look at how we are doing in the markets. we are up and running in sydney. better to the tune of .2%. bear in mind, like volumes at the moment, a major holiday coming up. pretty quiet the head the thanksgiving holiday. futures trading modestly positive after we had some fed minutes that signal they downshift in the science of rate hikes coming. we will check oil markets and the moment with the eu split on its price cap to russian crude. this is bloomberg. ♪

♪ vonnie: federal reserve officials concluded this month they should's -- soon moderate

pace of rate increases to moderate over tightening. the meeting minutes signal officials leading toward downshifting to 50 basis point hike in december. policymakers said their assessments of the risk of recession have grown to almost 50-50. china signaled more monetary policy stimulus on the table including 28 -- a state council says tools will be used in a timely and appropriate manner to maintain ample liquidity. china's economy is under pressure from a deepening crisis and covid outbreak spirit credit growth in october dropped to the lowest since 2019. officials in the city that is home to apple's main iphone plant imposed restrictions on movement. it comes after violent protests broke out at the foxconn factory. hundreds of mortals -- workers jostling with security after tough restrictions. according to a witness, the protests started over unpaid wages.

a barrage of russian missile strikes against ukrainian facilities prompted the country's grid operator to hold three nuclear power plants. that has led to emergency blackouts amid subzero temperatures. weeks of attacks have caused $2 billion of damage to the grid. 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. annabelle: half an hour out from the open now for japan and korea. so far, the indication is we are going to see japan come online flat. singapore futures contract just got underway. in terms of what else, we have 30 minutes in the session for australia and we are seeing it move to its third straight day of gains. positive tailwinds coming through from the u.s. session and fomc minutes which were largely interpreted as being more dovish. given it does appear that

officials are open to moderating the pace of rate increases in the months ahead and they are concerned about this rapid pace of tightening and its effect on the economy. the other major factor is trained. given their is that indication from officials that we could see more monetary support for the economy including a possible rrr cut. we also had the move we saw in chinese stocks listed in the u.s. that jumped. one other factor is covid, given we are seeing more restrictions in place in beijing. and also the largest iphone city in the country, the biggest maker of iphones, putting more movement restrictions in place. we will be watching apple supplies at the start. another sector we are focusing on, what's happening in the energy sector, given the move we had in oil markets.

shery: let's get more on oil markets because we are fact rating and what is happening with russian price caps and u.s. stockpile buildup we saw. today, the italian joins us. let's start with eu talks on price caps. they finished without agreement. >> it looks like european countries can't agree on the level of price cap. countries like poland and baltic nations think that $65 a barrel is too high. too generous for russia. countries like greece and malta do not want to go below $70 a barrel. the whole idea was to impose a level at which russia won't be able to get sufficient revenue from crude exports. at the same time, european countries want to make sure flows will continue. even if we get this price level

between $65 and $70, it will be far above russia's cost of production. flows will continue because russia is something crude at a significant discount. paul: if this price cap gets implemented, how is it going to affect crude prices? >> it depends on the price level but it looks like for now, flows will continue. for now, demand is much bigger story than supply. if -- continue and demand remains weak, probably prices will continue to go down. china demand is one million barrels a day lower compared to a year ago. european demand is weak saying. demand in the u.s. is also not as high as many expected to be. it also depends what opec-plus is going to do. many analysts thought that

probably these $2 million -- 2 million barrels a day would be bullish to crude prices but it did not materialize because demand is weak saying and basically opec-plus needs to cut faster than demand falls. shery: is all of that what is happening in the gas markets as well? we saw prices spiking. >> gas is different. but there is also volatility. for now, european gas storage is 95% full which basically means europe is fine. the question is how it is going to secure gas supplies for next winter. if weather is colder than expected, going back to your question why we see volatility today, because weather forecast indicates temperature will be below average in the coming weeks. again, the biggest question is about next winter. when china reopens, it will need more gas and we will cease read between tgf, which is european,

asian lng will widen and if i am a gas producer, why should i sell to countries that will pay less? 2023 will be a key year for gas prices. paul: natalia, thank you. goldman sachs sticking with its bullish oil price target for 2023 at $115 a errol despite current uncertainty. bobblehead of commodities jeff curry told us china's reopening will be the game changer. >> this is not a tactical trading be you. two years ago in october of 2020, we called her a commodities super cycle and we stand by that. a commodity super cycle is not a number, it is spike after spike. this is going to go on and on until we have adequate investment to grow supply.

you need to grow hydrocarbons until you have enough green energy to meet global demand. right now, 81 percent of global energy still comes from hydrocarbons. you can't go to zero and expect the other 20% to carry. it has to be a transition. to do the green investment, you need metals. copper, cobalt, silver, you need those minerals to invest in the green cap backs to solve long-run decarbonization. this is not a near-term tactical deal. we just came off of one of the spikes that was well underway before the events in russia and we will probably see another spike in 2023 as china begins to reopen. in terms of solving this problem, it requires large-scale capital investment to the tune of trillions of dollars. we are not even close. by the way, 1.i want to say is

that this cycle is no different from the ones we saw in the 1970's. it is the same kind of commodity super cycle. what preceded the 1970's? the 1950's. what preceded the 2000s? the dotcom boom. that is what we call revenge of the old economy. new economy takes all the capital, starves the investment to grow the supply base, with each shifts you into the super cycle environment. paul: goldman sachs jeff curry speaking with lisa brahma that you. coming up, why oliver wyman says an end to china covid zero is unlikely until march of next year. this is bloomberg. ♪

♪ ♪ well would you look at that? ♪ ♪ jerry, you've got to see this. seen it. trust me, after 15 walks it gets a little old. i really should be retired by now. wish i'd invested when i had the chance... to the moon!

[golf ball bounces off rover] unbelievable. ugh. [ding] >> you are seeing live pictures of shanghai as we await the daily covid number case count. we had heard from the state council saying policy tools will be used in a timely and appropriate manner, that suggests a rrr cut coming down the pike. the yuan strengthening against the greenback right now. shery: our next guest says

china's ongoing co. the disruptions will not be cost free. global consumers will bear the brunt. ben -- ben simpfendorfer, good to be with us. we heard operations are back in order, but is the expectation that these disruptions and protests continue? >> china's exit from pandemic restrictions will not be cost free. we have seen the impact. china won't be an exception. the country accounts for 36% of consumer exports. as restrictions are eased into next year, you would expect to the impact to ripple out through supply chains. products from automobiles to play stations may well all be affected. companies need to be thinking about resilience. shery: that's funny. i was thinking exactly that. the new economy forum in

singapore, i continued hearing that same expression. when i hear resilience, i hear redundancy and cost pressures. what does this mean in the long run? >> resilience is about looking for alternative sources of production. whether it is near shoring were french shoring. i think it is reducing exposure to china. it is not a quick process. it could take years but china will remain important for many manufacturers. one of the world's largest markets for some leading companies. you have a world where production is more fragmented but china remains central to that story. paul: the world to get used to supply chain issues during the pandemic. if you compared to what is coming now, china grappling with rising of the cases, how would you rate the coming challenge? >> the coming challenge could be just as significant.

china is a huge producer of consumer exports and it does not end there. it is a big swap -- big supply of components to machine and industrial sector there's, areas we have to watch out for. you have seen cases arising in one of the country's largest export centers. i would expect to see at least a repeat of events this year in 2023. there is a small risk it could get worse. paul: let's talk about maybe something more optimistic. other countries experiences to be gauged as they exit covid. growth comes back, but also inflation. is the risk of inflation in china something that is on your radar? >> inflation is not on my radar at the moment. the latest cpi figure came in at 2.1%. five points lower than many other countries and the rest of the world.

the country certainly has significant capacity and a range of goods. inflation is not a major concern. when the economy does come roaring back, and that is a possibility in the second half of next year if restrictions are eased in the first half of next year, inflation will be a small concern. i would not be overly worried. shery: you talk about trying to be optimistic, but what is interesting is i have been surrounded this week i policymakers around the world. i did not hear any optimism. it was doom and gloom. my question to you is as we see demand disruption, domestic demand in china weakening, could that offset supply chain pressures? >> potentially. the first half of the year will be somewhat gloomy as we exit restrictions.

supply chain will remain there. if you are looking for a more optimistic tone, i will be wanting to look towards the second half of next year, even into 2024. we will get there, just not quick. shery: what about the properties sector? now that we have chinese policymakers at least trying to actively boost the economy. >> they are. we had two key regulators announce a raft of measures to try and tackle liquidity measures among developers and also make it easier for homeowners to access finance. that is important to providing stability to the property market. sales are still contracting. construction still contracting. figures might begin to get -- begin to improve. the challenges there are long-term imbalances in terms of excess supply. they are not going to be easy challenges to deal with over the next few years but certainly for

the next three months. the properties sector is likely not to be the same drag on growth that was previously. paul: do you think we are seeing the worst? is all of the bad news income or are there more cockroaches? >> we are seeing the worst for the next six months at least. potentially 12. but of course, that is good for markets. long-term imbalances are still there. at some point we are going to have to front up to some of these challenges and restore balance to the sector. paul: how is the health of the chinese consumer? we were hearing from the direct of the institute for economic research in china who is suggesting cash handouts for consumers to the tune of 700 u.s. dollars per capita. that is the cost of 6.1 percent of gdp in 2021. is this necessary? do you feel the consumer would

need that support? >> consumer sentiment has weakened over the last few months. the story is not unfamiliar. we have seen that play out under the impact of the pandemic. consumers need to find some support. cash handouts can provide a measure of support but i wouldn't want to exaggerate the importance. we have seen cash handouts in hong kong get the economy has kicked -- has continued to retract. ultimately trying to find a way through the pandemic and end restrictions to open up fully will perhaps provide the greatest boost to demand. shery: ben simpfendorfer from oliver wyman. china covid restrictions. amazon planning to spend more than $1 billion a year for films in theaters. that is next. this is bloomberg. ♪ if your business kept on employees

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shery: breaking news out of brazil. the fallout from the election victory of lula da silva. brazil's court rejected bolsonaro's election challenge. the party was fined 23 million after the challenge was

rejected. the labour party continued to raise questions about the runoff election that gave da silva a tight victory on october 30. although this has been rejected, the expectation by analysts watching is that the allegations are still energizing bolsonaro supporters. we continue to see supporters blocking highways. in the meantime when it comes to the courts, brazil's court rejecting bolsonaro's election challenge. paul: but stock about amazon, planning to spend more than $1 billion a year to produce movies which would be released in theaters. let's bring in chris palmeri. how much money is this relative to what other films spend? -- other film studios? >> sizable. they are talking about 12 to 15 movies a year. this is comparable to what paramount pictures, universal and other big studios spend. it is a big vote of confidence

from one of the largest on time -- largest online retailers. shery: what does this tell us about the broader streaming industry? it has been an evolution. this issue of when movies go online and for how long was a debate forever. the pandemic threw everything out the window. people were afraid to go to theaters, companies were putting movies online directly. we are seeing a movement back. traditional studios are trying to put movies in theaters for maybe a month exclusively. we are seeing an evolution of amazon's movie business. they got started selling books and they were trying to find more artsy affairs. they would go to a film festival and purchase movies there. recently they spent $9 billion to buy mgm, picking up all of

these movie franchises. there was wonder what was going to happen. can you imagine james bond not playing in theaters? now there is a signal from amazon that indeed they are committed. >> is this going to have implications for other streaming services? might it prompted them to release their films in theaters as well? >> many of them are owned by big studios like disney and paramount. that is certainly moving in this direction. netflix is doing an experiment weekend in the u.s. they have the knives out sequel. it is in theaters for just one week. they have done a great job playing it down, saying it is just promotion. netflix is obviously the biggest player. they are not fully on board with this proposal. shery: chris palmeri.

here's a quick check of the headlines. shell quarterly revenue fell 10% as it battled a slumping global smartphone market. the beijing-based company logged sales of $9.9 billion. slightly above estimates, but sales of mobile devices fell 11% , leading declines across business divisions. credit suisse warning it will report a loss of up to $1.6 billion for the fourth her, potentially the worst exit is since the financial crisis. clients pulled as much as $80 million from the bank in the first few weeks of the order. credit suisse expects losses in both wealth management and invest banking. former australian central bankers stepping down to focus on his health. felicity cutie has been appointed the acting cfo. -- was involved in a serious cycling accident in august.

the company says he will transition to ffi's board. indian billionaire courting sovereign wealth funds to raise roughly 5 billion dollars in equities. sources say he is looking to raise funds across his sprawling empire to reduce leverage and has reached out to firms. the board of the flagship -- enterprises will meet friday to discuss plans. paul: these are the stocks we are watching when trade opens shortly. asian apple supplies may move after china's iphone city looks to restrict resident movement. keeping an eye on samsung. alpine and -- energy stocks will be in focus as well after news broke that the european union was discussing a softer price cap on

russian oil. we will be watching oil, sk innovation. coming up, jp morgan asset management sees better opportunities in credit and equities present. there chief market strategist joins us shortly. we are counting down to the bank of korea pot rate decision. we will be joined by bank of america later on. don't miss our interview with by finance's ceo as fts continues to rockribbed though. 5:00 p.m. sydney. market opens up next. this is bloomberg. ♪

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shery: counting down to major market opens as we await market reaction to renewed covid restrictions across china. beijing now reporting 1611 new cases wednesday. shanghai reporting 67 new local covid cases. of course we are watching the bank of korea rate decision. paul: that's right. we are spreading that decision later on this hour. pbok downshifting while the fed was talking about downshifting. korea looks like it is actually doing it. >> 25 basis points. that is the expectation. we have the open here japan and south korea and the start of trading for catch treasuries. watching that move in the 10 year yield at the open. we did see that drop in the session down to how markets are interpreting fomc minutes. possibly more dovish that it does seem policymakers are open

to moderating the pace of rate hikes in the months ahead. there could be concerned about continued policy tightening. that did weigh into what we were seeing on the dollar. softness creeping back in. it is trading like this against the yen. jp morgan saying we could see more strength in the japanese yen in the late stages of next year as we continue to see yields pullback. in terms of the state of play, jaman -- japan markets playing catch-up. we are keeping an eye on the korean session, given we had the be ok decision do later. it does come at a time when we have seen weakness creeping back into the green economy. consumer confidence deteriorating. inflation expectations moderating. the korean yuan looking like big

strength continuing to come back into that currency. meanwhile, continuing to see moves to the upside as we get underway. let's take a look at what is happening in australia on our into the trading session. we are higher for a third straight day for this index. we are seeing yields tracking moves. what is interesting is the energy complex. you can see it is declining. the biggest laggard so far today. really down to what we are seeing in wti. brent crude one hour away from trading but concern over what the eu could be putting on russia. possibly a larger than expected price gap. paul: thanks for we are joint -- thanks. we are joined by tai hui. we want to look ahead to shanghai and hong kong opening.

both indexes moderate declines, kind of going sideways. rising covid cases. the state council seeming to indicate a triple are cut is on the way. have we reached a bottom? >> near term, you're going to see back and forth with regards to covid lock down in china. longer-term over the course of next six to 12 months, i do think there will be gradual relaxation of policy and i expect growth. from that perspective, given the valuation of chinese equities right now, it is attractively priced i think in 2023, china could be a market that could outperform the global equity market. paul: we were getting common from moody's earlier in the week which sees credit conditions getting worse in china. how do you balance risk in that space? >> sector selection and active

management is key. we think there are sectors that are going to get a lot of policy support. whether that is renewable, electric or semiconductors. those will be the areas where liquidity or credit availability the will be available. consumer spending is crucial. also -- we get this growth momentum returning, i expect the banks and financial institutions could well be more ready to provide credit once again. despite the fact that central banks have done a lot of work getting past six to nine months on easing policy, some of which has not been fully passed on. from that perspective, the financial sector needs to play its role in order to fully transmit those monetary easing. shery: we are waiting the bok rate decision. the expectation is for a slowdown on the pace of rate hikes.

we are seeing the korean yuan leading gains in asian currencies, of more than 1% how does this bode for korean equities? we know they are heavily dependent on tech. semiconductors have not been doing well. where do you see that market going? >> the interest rate policy in korea is more important for the real economy rather than the stock it is a tech sector is absolutely crucial for korea. from that perspective, we have already seen slowdown in demand not just for korea, but for many markets. taiwan and china. that is relating to a weaker demand from u.s. and european consumers. that is going to be the key driver of equities in the next six to nine months. the good news is a lot of these slowdowns are already factored in the price. the market as a whole is very

much again trading at the bottom of a 10-15 year range. the question is, what will be the catalyst for that to rebound? that to be will be a stronger demand from the u.s. and europe. that will come later on in 2023. shery: where is the dollar in that scenario? and the weaker currencies on the others as we have seen with a strengthening dollar and a weakening dollar giving a boost to these developing nation currencies. how does that factor into the equities space? >> it is premature to call for a bear market. typically you do get some degree of risk erosion when the economy slows, or even turns to recession. dollar strength isn't quite over yet. it is true the u.s. dollar is incredibly overvalued. the end of the fed hiking cycle and into 2023 when u.s. economic data starts to bottom out, that will be the time to start to bet

against the u.s. dollar. shery: i know we are going across geographies, but i am curious about japanese equities when you have the yen past the 140 level. >> for the japanese market, it is very much about the cap x cycle globally. traditionally, a weaker yen should be positive for japanese equities but unfortunately we have not seen that take place. to me, the weakness in corporate spending the u.s. and europe is very closely linked to corporate earnings in japan. that is now the key factor to watch out for. shery: always good to have you with us to go all around asia. tai hui. let's get the vonnie quinn with headlines. vonnie: u.s. senators asked the justice department to seek accountability from fds -- stx

executives. elizabeth warren urged doj officials to focus on the harm done to customers and prosecute those responsible. lawmakers in the house and senate, including warren, have opened probes into ftx. malaysia remains in political gridlock five days after elections with a split in the former ruling coalition the king has called on to join a unity government. the chief is facing calls to resign for allegedly misrepresenting the block's chance to the monarch. lawmakers have asked for more time to decide whether to back the opposition leader or the former prime minister. talks between european union nations to cap the price of russian oil hit a snag. governments are divided over how to design the plan. the executive arm proposed a level of $65 a barrel, which some rejected as too generous. talks could reconvene later thursday if a deal is not reached. 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. paul: thank you. let's get the annabel for what is moving on markets. as vonnie mentioned, a bit of wrangling going on in the eu about how to handle russian price caps on oil. we've got wti at $77 for what sort of impacts are we seeing in asia? annabelle: q4 it is interesting because amidst all the positivity we are seeing, just 10 minutes into the session, the 16 that had been in the red, although they are modestly high, is energy. we are seeing the biggest energy names in asia falling at the open. that is down as well to what vonnie was saying about possible russian price caps on crude and other factors including u.s. stockpiles. that is an indication that demand is waning. you at what is happening in

china, given we are seeing more restrictions because of rising covid cases. let's take a look at apple supplies in asia. these are moving range bound this morning but we do have china's so-called iphone city implementing covid restrictions, mobility restrictions because of the number of infections. it will be locked down for the next five days. one stock to keep an eye is she new g. it is the japanese pharma company, jumping at the open because it's covid pill has won emergency approval. it will be the third therapeutic available to treat coronavirus and it does have key advantages. it is easier to take and also can be used for people with mild to moderate symptoms without risk factors. shery: ahead, kathleen oh of b

of a securities joins us as we await the korea decision. the latest from china's iphone city where mobility controls are enforced after recent unrest. this is bloomberg. ♪

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to keep in the family or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? shery: breaking news, we are hearing from bill ackman saying his company has a large short position versus the hong kong dollar. this, he says, the peg no longer make sense and it is only a matter of time before it breaks. the band for the hong kong dollar is 785. right now sitting at the middle

ground, but given the fed rate hikes recently we have seen its strengthen and push towards the upper edge of that band. a few years ago, bill ackman had a bet on the hong kong dollar that it actually had to believe hong kong would allow currency to appreciate. now saying he is having a large short position against the hong kong dollar through the ownership of put options that the peg no longer makes sense. paul: thanks. a big day in korea. the bank of korea expected to return to its measured pace of policy typing with the recent credit market meltdown trumping the need for a bigger rate hike to fight inflation. policy a letter -- editor kathleen hays joins us. it looks like bock is going to beat the fed. kathleen: beat them, starting

july, 2021. anyway. you know what i mean. right as the pandemic was getting underway. when they got off the dime, one of the first major central banks that had to start rate -- hiking rates when they thought inflation was transitory. let's see where we are. they at -- at the last meeting, they did one where the you want was so weak. it had a nice rebound. also july. now they are expecting economists see them doing 25 again and it has a lot to do with what is happening in the credit. that's credit markets. the fed has moved to do their 75 point rate hikes over the summer. one of the things that hit the korean bond market. and then the big credit market meltdown after the property developer that built legoland korea, a lovely park, 70 miles east of soul -- seoul.

the property owner default it on its debt and kicked off what became the credit market avalanche. you can see commercial paper went from 3% to 5.5% in a matter of weeks. that is the kind of thing that has left policy and consumers rattled. this is probably not the time to do with 50 basis point rate unless you have to. exports have weakened. many signals from housing getting weaker. a lot of reasons to slowdown. not to stop because you've got inflation rate still at 5.7% year-over-year. a bit of a move up in the latest reading. the bank of korea is probably going to send a signal that they are pulling back a little bit and they can afford to do it with a strong yuan. but they are also going to

signal that it is not over yet. that is my expectation. shery: feels like a similar narrative to what we heard from the fed in november. what are the implications for bok? kathleen: seems to me if the fed is more and more signaling and they have been since that meeting, various fed officials certainly, that they are ready to take a look at keeping the rate hikes going but moving it back to 50 basis point. still significant. the president of the phillies fed said it recently. the move is in tandem. there is a day virgins between where the key rates are, but you can see the fed's rate is well above the bank of korea's. they have been able, maybe because they started before the fed, have been able to keep their rate not as aggressive as their inflation rate is much better behaved.

it is an interesting coincidence , isn't it? that as bok is getting ready to make this decision about downshifting, we get fed minutes saying the fed is seriously considering that as well. shery: kathleen hays from seoul. we will bring you live that rate decision as it comes through. you can also turn to your bloomberg for more. tliv for expert analysis. we are talking about this downshifting when it comes to bok, but not necessarily loosening soon. one central bank is going the other way, potentially. china signaling more monetary policy stimulus including a cut to the reserve requirement ratio is on the table as it looks to boost lending and economy. senior executive editor john you joins us now. the question is not about

boosting stimulus but whether or not people on the ground, businesses will actually take -- actually borrow more money and spend. how much of a difference will this actually make? >> good question. the thing china has lacked is credit impulse. people wanting to take loans. businesses wanting to take loans. covid has had a big impact on demand for money. as have properties. the government here is saying they will cut the rrr. it is up in the air how much good that will do. there is also talk about this being more of a technical move because there are a number of medium-term loans at -- that the central bank extended to commercial banks and are coming new. instead of potentially rolling over those loans, pboc could potentially provide the same liquidity at a lower interest rate. what impact this move would have on the economy we will have to

wait and see but it is probably not going to overshadow covid. paul: we are getting a bit of at the moment. no more a cutting its gdp growth forecast for china for 2023 down to 4% from 4.3%. also cutting its gdp outlook for 2022 down to 2.8% from 2.9%. we need to talk as well about what is going on in zhengzhou, also known as iphone city. we are seeing almost 1000 covid cases reported yesterday. some rather violent scenes outside that plant. it is a very difficult balance to achieve, isn't it? >> the story goes back to october when the initial outbreak in zhengzhou started. we saw the foxconn plant, which

makes the majority of iphones, go into a closed loop lockdown so workers could not leave. they stayed on campus and work. about 200,000 people. they began to leave the campus. you will remember these scenes of walking down the freeway. to get the workers back, the fed offered a special onus. there were violent clashes last night because some of those who came back for the bonus are saying they are not adding paid the bonus when they thought they would. we had a statement from foxconn staying -- saying that by wednesday night, operations at the plant had returned to normal. they are also working with the local government to prevent any additional violence. we will have -- how that goes will have a massive impact on apple's ability to supply iphones. as you mentioned committee zhengzhou city officials have placed many districts of the city on pseudo-lockdown, asking people not to leave unless they

absolutely have to. shery: that doesn't make sense when you are trying to grow the economy. how can you do both lockdown zero covid strategy at the same time is growing? i guess my question is, what happens to growth targets for china? we talked about -- downgrading to 2.8%. bloomberg also expects 3.3%. how are policymakers going to explain this? >> we are not going to hit the 5% target the government set for 2022. what xi jinping has said is that we are willing to sacrifice some economic growth to make sure we keep covid under control. obviously, the impact and disruption that policy has caused is visible. the question here has been, how much longer can they keep it up? we have these opening steps

taken to reopen the economy earlier this month. that was before we saw this latest surge in infection numbers. today we may get the highest number of infections ever in china. it was 28,000 plus yesterday. 29,000 would be the record. it is adding additional pressure as we see cases around the country and local authorities locking down. paul: plenty more to come on daybreak asia. this is bloomberg. ♪ at fidelity, your dedicated advisor

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♪ shery: crypto assets made steady gains as u.s. lawmakers call for

accountability and the fallout from ftx. authorities in the u.s. and bahamas investigate the turmoil. bell is tracking the latest. annabelle: we have basically a letter coming from two of a, elizabeth warren and sheldon whitehouse. they're calling for accountability from the justice department, for it to not pull any punches in its investigation of exactly what went wrong in the collapse of ftx. ftx customers facing potentially steep losses. we had this first day hearings tuesday indicating that potentially a lot of the assets in this collapse are either stolen or missing. authorities in the u.s. and the bahamas continuing to investigate the turmoil. they have written a letter and basically they are saying that as the situation unfolds, they are going to get more details into a ackley what went wrong. they are urging the justice

department to basically center the flesh and blood victims, the everyday person that has lost a lot in this collapse. we know that lawmakers in both the house and senate, including warren, have opened their own investigations into the collapse. a number of those key committees are going to be holding hearings at the start of december. what is interesting is that sam bankman-fried is still acting bau. he said in a tweet he is planning to speak at a conference hosted by the new york times. whether or not he sticks that commitment, we will have to wait and see. paul: 20 of interesting stories. do not miss our interview with the binance ceo as the ftx

collapse continues to rock crypto markets. for more on the ever evolving digital landscape, check out our daily podcast hosted by stacy marie ishmael. stories from the most interesting people transforming the world though. this is bloomberg. ♪

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and go live your life. head to golo.com now to join the over 2 million people who have found the right way to lose weight and get healthier with golo. shery: we are awaiting japan pmi numbers at the moment as we

continue to see the japanese yen holding around the 140 level after breaking past the important level earlier in the week as it comes back from all the date. we are yet to get the pmi numbers, and i was personally watching manufacturing numbers, because in the october number was very close to contraction territory at around 50.7. give it to be sought u.s. business activity numbers pretty weak, i was expecting to see some -- some reaction in japanese markets as well. we are not getting pmi numbers, so let us know what is happening in the markets instead. annabelle: wait for that one, but basically we are half an hour into the trading session for japan and korea, and so far we are looking fairly risk on in the session. this is how traders are interpreting fomc minutes the

came out in the prayer session, a little more dovish, and traders liking this assessment that they have that the fed could be open to automating the pace of rate hikes in the months ahead. at that is what impact we are watching as we get rating underway. the other you're watching is what is happening in china, given that we see more movement restrictions coming in place including in the city that samples were is the home to the biggest factory assembling iphones and zhengzhou as well. that is one of the possible headwinds feeding into the energy sector. it has been one of the ones declining the most, opened earlier .2 of 1% to the downside, although it now looking flat. there are other factors at play including possible russian oil price caps. paul: let's talk more about that. we are watching brent crude as a traders ss a higher-than-expected price cap on russian oil.

let's get more from our energy coordinator. what if prices fall as much as they did? >> it has been discussed for months and has been very surprised. traders were surprised at just how low the cap was. talks are that it is between $65 and $70, which is not far off from the price crude is currently creating. they just assumed it would have no impact on flows from ocean crude, which is been the market. shery: we are hearing from goldman sachs saying the higher russia oil cap lowers the risk of retaliation as well. we do not have a decision, but are we likely to see an agreement anytime soon? >> i suspect we will see an agreement tomorrow.

this is how the european union intends to work. they ultimately come to a compromise, and i expect the compromise will be one of those two numbers between 65 and 70. many countries most directly affected by the war such as poland and baltic states will be pushing for other sanctions and moving on and trying to get as much as they can to punish russia for its actions in ukraine. while the more shipping dependent countries such as greece will be arguing that we need to have the oil price cap as high as possible. paul: how likely is this cap going to be to affect global supply especially when it comes from russia? >> i do not think it will have a major impact on the russia's supply. as we know, many of the non-g7 countries are not signing up for this price cap. china and india, among the

biggest buyers of russian crude, are likely to keep on buying russian crude. at the end of the question is about insurance. i think we should still keep seeing russia supplies unabated. a bigger question for the market is the december 5 imports of russia seaborne crude into europe, whether that will effectively take place, which is far more of a concern to traders. on the physical side. shery: good to have you with us, bloomberg's asia energy editor. let's hear more from goldman sachs sticking with its bullish oil price target for 2023 of $ 115 per barrel. our guest tells us trying to's reopening will be a game changer. >> this is not a tactical

trading view. two years ago in october 2020 we called for a commodity super cycle, and we still stand by that view. a commodity super cycle is not an upward trend in cycles, it is spike after spike after spy, and this will go on and on until we have adequate it investment to grow supply. you need to grow hydrocarbons, and until you have enough of green energy to be able to meet global demand. right now, 81% of global energy still comes from hydrocarbons. you cannot grow 20 -- go to zero and expect arista carrier. to do the green it investment need the metals, lithium, copper, cobalt, silver, all of those minerals to interesting green to solve the long run decarbonization problem, so this is not a near term tactical

view. we just came off the back of one of the spikes well underway before the events of the restaurant, and we will probably see in spike in 23 as china begins to reopen. in terms of solving this problem it requires large-scale capital investment to the tunes of trillions of dollars, and we are not even close. we have not scratched the surface. 1.i would you say, this cycle is no different than the ones we saw in the 1970's and do thousands, the same kind of -- 2000's, the same kind of commodity super cycle. what preceded the 1970's, the nifty 50. what preceded the 2000's? the thing -- fang boom. -- paul: that is the goldman sachs

global head of commodities speaking with lisa abramowicz. let's get to vonnie quinn. vonnie: fed officials concluded earlier this month that they should moderate the pace of interest rate increases to begin risks of over tightening. the november meeting may signal officials leading toward downshifting. policymakers also sent their assessment of the risk of a u.s. recession is going to 50. china has had the or monetary policy areas to misses on the table, including a cut the reserve requirement ratio. the state council says tools will be used in a timely and appropriate manner to maintain apple out liquidity. the economy as a departure for -- from a deepening poverty crisis at a price. credit growth trump to its lowest since 2019. officials of the city home to apple's main iphone plan have imposed restrictions due to rising covid cases. videos show hundreds of workers

jostling with security personnel early wednesday after almost one month of tough restrictions. according to a witness the protest started of her unpaid wages and fears of spreading infection. a barrage of russian missiles strikes against ukrainian energy plants as led to emergency blackouts amid below zero temperatures. weeks of attacks has caused $2 billion worth of damage. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: we are on bok watch and we will be reviewing the chinese market open. -- previewing the chinese market open. stay with us. this is bloomberg. ♪

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paul: hong kong markets coming online in a lender -- in a little under one hour's time. david ingles joins us from singapore. start us out with the top lips on your radar. >> i had a script prepared, and we saw the tweet from bill ackman. the hong kong-dollar and how you

make money off of it. the peg, we spoke with the hon k. that is one of the other two i will be talking about. new local covid cases, we are very close to the record, which was just below 29,000. we could get that if not already at any point. academic, it really underscores the underlying situation that it is going to be a very slow and gradual process to pivot china away from this. they told us almost as much, cctv reporting china is calling for a rrr cut, that the economy needs it. you covered this earlier on them cutting their growth forecast for china this year. it could be a matter of days, it could come before the weekend

before we get the reduction. big banks currently hold 11.25% into reserves. shery: help is coming for developers to raise money. >> yes, so the extension of this estate back to guarantee scheme and program was extended to upcoming deals, not all. $650 million. a sizable one, we are looking at three developers. china is expanding state backed property bonds to guarantee those bonds to those three, and that tends to be market positive. short-term, long-term we have to see what more china is able to do to backstop that. paul: volumes, you watching this closely. why is that? >> yes, typically, it looks like

we will get an uptick today. that is the context there. we are just about to wrap up what has been a fairly hectic and good month on price for equities, on down days you tend to get lesser volumes then you tend to get on updates, which tells you many things. it gives you conviction if a price moves. on an update that we have today, what's volumes very closely. shery: david ingles joining us from singapore today. usually based in hong kong, but some stocks we're watching ahead of markets opening in the city and mainland china. zhengzhou is said to implement mobility controls due to rising covid cases. we are keeping an eye on the stocks. we are also keeping track of property stocks after the financial times reported state outer banks are offering $31 billion in new credit lines.

some on our radar are these companies. paul: let's get a check of the latest business flash headlines. credit suisse is warning it will report a loss of $1.6 billion for the fourth quarter, potentially the worst since the financial crisis as clients pulled as much as $80 billion from the bank in the first few weeks of the quarter. credit suisse says expect losses in the wealth management division and its investment banking unit. a former australian central banker is stepping down from fortescue to focus on his health. for the city going -- felicity gooding has been appointed a. the company says he will transition. targetable as/-- tiger global as/-- tiger global markdown companies

including strike and instacart. it shed light on what private companies might be worth as many of struggle to access capital. plenty more to come on "bloomberg daybreak: asia" as we await the bank of korea decision. this is bloomberg. ♪

paul: we are counting down to

the bank of korea's rate decision. kathleen hays is in seoul. the consensus for 25 basis points, but what factors is the bank of korea balancing here? kathleen: on the one hand, let's start with the reason why they are raising rates. their inflation rate indian -- in the latest reading, not moving down. that is why they are raising rates at why they will continue to raise rates. 25 basis points is the call instead of 50. they did 50 in october, july, but until then they have been doing 25 basis point hike after another. the big thing aiding the korean economy now is the credit market meltdown, the selloff in the bond market, korean bonds that started in late august and fed rate hikes aggressive, that is what it was largely responding

to. that is one of the big things then that set the stage, laid the groundwork for the real credit market meltdown that happened just in late october. and it has continued after a property developer that built legoland korea, it was followed by an insurer that did not want to do a call on a perpetual bond. it has been ugly. the bank of korea has been in a position to document get in the way of the government. early on it offered to step up and take on lower collateral, etc. the one thing they can do is give the economy a little room to breathe at a time when you have weakening exports. you have concerns the economy is pulling back going into next year. there was a number of reasons a 25 basis point hike would seem

appropriate now, and you have awon -- a won that was the second weakest in asia, room to breathe for the bok, which has 15 of 17 economists saying it will be 25 today, not 50. shery: stick around, let's bring in our next guest, and economist. we have this expectation of indulgent when it comes to bok rate hikes. there is speculation we could see the bok potentially hold. under how much pressure is the korean economy right now? >> thanks, shery. i think the korean economy is facing a slowdown. we think consumption as pete and the third quarter and we expect a gradual slowdown through the first half of next year.

we still think that inflation is an issue. we see core inflation rising to 4.8% in october, and that puts pressure on the bok to continue to. shery: we are getting the bok rate decision, a hike to 3.25% from 3% as economists had expected, 15 of 17 surveyed economists were expecting a downshift. kathleen hays is in front of the bok right now. what are your thoughts about what just happened? kathleen: if i were the bank of korea i would've said this is the appropriate thing to do. there were other reasons why they were weighing 3.25 versus 3.5 as the level that they had to get to. at the last meeting there was

more urgency for 50 even though the bank of korea says they do not base policy on exchange rates when the won was so we. they have to get inflation down. now the won is stronger, now there is more concern about the slowdown in exports, slowdown in china, etc. it is one more reason why it is important to do the 3.25 at a time when the credit markets could you support, and that is not even a big source of support. they are just not being as aggressive as they might've been after this big selloff in all kinds of credit facilities in korea, short-term, long-term, you name it. one of the biggest concerns for the bank of korea is that markets have stabilized, credit market meltdown is not happening now, but you are concerned about what could happen next. this is a prudenterr on the

side of making a mistake you might regret later. paul: i went to bring in our guest at bank of america securities. i went to get your reaction to the move as well. the fed is talking about downshifting rates, the bank of korea is doing it. to what degree was at their hand forced by the circumstances and the credit market? >> i think the bank of korea as risen its concern on the credit market risks recently. in the last meeting some of the members pointed out there is an increased risk on the financial stability side. but for now most of the members are concerned primarily on inflation issues. before they control inflation, they probably would have to use non-policy rate measures to take

care of credit market issues, such as facility lending of short-term and long-term rates and injecting liquidity into the markets without moving the policy rate or turning around direction from the hiking now. once the bok achieves price stability that they went by first quarter of next year, then they probably would like to see more attention to credit markets and then, but i think the credit market itself is not major enough for now for the full economy before the inflation issue is to be taken care of. shery: we have revised growth and cpi forecast as well, bok coming in with 2023 gdp growth seen at 1.7%, the projection earlier in august was for 2.1%. not surprising they are downshifting on rate hikes, also revising. 2023 cpi forecast to 3.6% versus the august forecast of 3.7%.

kathleen, we have the growth downshift, but cpi is not coming down as much or at least expectations were bok. when can we expect price instability especially closer to the bok's target rate? >> looking at the forecasts coming down to three point 6%, i could assume quarterly projection probably puts above 3.5% headline inflation to next year at least. this puts pressure on the bok that they should continue to hike at least in the february meeting from january as well, and that is in line with our terminal rate hike forecast of 3.75%. now i see that the growth number is come down to 1.7%, way below potential growth, so that also puts a risk on the terminal rate hike to 3.5%, but the conflation

level itself is a driver for the hawkish bok. shery: the forecast: at .1%. thank you so much. our very own kathleen hays joining us from seoul. turn to your bloomberg for more on this, go to tliv go to get analysis from bloomberg's expert editors. that is it for "bloomberg daybreak: asia." standby for bloomberg markets china open. this is bloomberg. ♪

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