haidi: a very good morning and welcome to "bloomberg daybreak: australia." >> we are counting down to asia's major market opens. anchor: the top stories this hour. protests against covid control spread in china with some people in shanghai calling on resident x -- president xi to step down. haidi: the on west in china is weighing on risk sentiment. investors shift towards havens. anchor: taiwan is separate more contentious presidential race. this is how we finish on wall street on the friday session. a shortened session because of the holidays. we are still talking about.5% danes for the s&p 500 for the week. not to mention a little more

optimism when it came to the stock markets. this week is all about the u.s. jobs report and more fed speak in turn -- including chairman powell at some point, black friday and we are going into cyber monday. treasuries are resuming their rally with the 10 year yield falling below the 370 level. we are also watching what is happening with wti. falling below $80 a barrel given that we have also heard the biden administration allowing chevron to resume production in venezuela. remember after u.s. sanctions they halted all drilling activities in the last three years. the wti spread is in birding and we could see more inversion going forward given we are expecting more supplies at some point. >> there are concerns around the demand outlook. when you look at asia it comes down to what is happening in

china because we continue to see the covid lockdowns spreading across the country and now the focus is on what has been the reaction to that. we are seeing demonstrations rising. that is the big thing for us today in asia and ahead of that, the mood in equities is looking fairly cautious. china futures looking for a small drop at the open. new zealand already online and australia looking to trade like this. that's look at what is -- let's look at what is happening in the fx. the kiwi and the aussie falling on what is going on in china. and the offshore yuan is also weaker on this. there is a lack of clarity around how beijing will respond to the demonstrations so because of that strategists say we will continue to see the move into the havens. anchor: what a difference a couple of weeks make in terms of sentiment for the chinese

markets. we were at the new economy forum in singapore and we were talking about market optimism. and now we have these protests. we are talking about unheard-of demonstrations against president xi and the communist party. we are seeing this battle unfold not only on the ground but there are people carrying those blank, white sheets signifying that silence speaks louder than words. the battle is ongoing in the online space as well. haidi: to be clear, it is not unusual to see protest here and there in china but of this scale in the very core parts of these capital cities. look at the locations. shanghai, beijing.

these are right in the middle of shanghai and beijing. let's get more on these protests. what is the latest that we know? >> the protests did flare again in shanghai and beijing in particular overnight as well. taking you back to where they started. we started to see push back night especially for residents in beijing not wanting to be taken into quarantine nets which is compulsory if you have covid or close contact with covid. these began to snowball. on saturday a widespread protest in shanghai caused a lot of attention where people were marching down the streets.

there was an incident in the west that seemed to feed a lot of these protests where a building was on fire where people were in alleged lockdown and a number of people died. that classic pushback against what people see as unreasonable covid curbs continued overnight. over the weekend we saw them in many different places in china no. university campuses in the east for example. a lot of different places even in wuhan where the virus started and where covid zero started and was very successful early on. protests there, people pushing over testing sites and sparring with police. anchor: it is not unusual to see small protests but how large-scale and unprecedented

are these especially because we have an active center? >> it is unusual to see localized -- it is not unusual -- what is unusual is the nationwide scale of them and the unity between the different protests against these covid rules and the harsh prosecution of covid zero in china. it is spreading online as well as on the streets and the sensors seem to be doing doubletime trying to keep up with what people are doing online, they have been censoring in shanghai and people holding up blank sheets of paper. even the university students in beijing are getting quite intellectual holding up an equation a veiled reference to

reopening as part of their protest. people are being very creative trying to get around the sensors which are working very hard at the moment. haidi: emma o'brien with the latest. let's get analysis with the lowy institution, senior fellow, richard mcgregor. how unusual is it to see it directed at the party itself and xi itself calling him to step down? richard: what is different about these is they are networked which is what the party fears the most. people joining forces in an organized fashion with a singular objection. some protests especially those in beijing and shanghai have attacked xi personally and the party personally while others have been focused on the lockdown but there is no doubt there is all manner of

frustrations boiling to the surface some directed at the party and some directed at the lockdown itself. it is really unpredictable as to where we will go from here. haidi: how do stabilizing is this? as someone that lived through 1989, it is hard not to think about the extent to which we know the government go to. richard: the coming is party is a lot better at managing protests these days. they do not lock everybody up immediately. you have seen this overnight in beijing and shanghai. they are arresting targeted people. but only if the protests grow that you will see them violently suppressed. the bigger issue is what happens to covid zero? we are going into winter. we have a large scale under vaccinated and vulnerable population in china and that is the rationale for keeping covid zero. do they give a roadmap for opening up? do they allow foreign vaccines in? that will be the focus.

the protests will be against xi and that is not a sideline compared to the main issue which is covid zero. haidi: how did they get it so wrong? how did the social contract goes so awry when it comes to vaccination levels? richard: i think it is a lot like a lot of governments around the world. they think they have a successful policy and it goes wrong, it takes a long time to change. in china, they are high on their own supply. they have been boasting how they got it right. the tables have turned and they are in a corner. they have reassured so many people that we have protected you so people do not feel the need to get a vaccination. many know their vaccinations are not as effective. that is where they are stuck the economy is getting hammered but they cannot easily open up

because there will be a big health cost which is unpredictable but it could mean many people died. anchor: i thought like in an economy like china which is centralized, if they wanted to shift course, they could do it faster than many democracies. why not apply that to covid zero? richard: in the case of covid, the advantage of an authoritarian system means you are flexible and you can change more quickly overnight but the problem with covid is you cannot shift policy without a cost. and that is health. take for example in china's northeast where many young people have left and they don't have a good public health system. many elderly men that have been smoking for 50 years, what happens if the virus spreads there? you have to put into play on the ground measures to protect the vulnerable population and that has not been done.

they may fear opening up in winter and certainly politically they may fear opening up before the national people's congress which bookends the party congress and a cabinet is appointed. it is not one of those things that you can turn on a dime. any other things need to be done. anchor: how much is the projectile -- how much is the fragility of the health care system as a reason for the lack of vaccines? richard: it is a very good question. we know the state capacity is unsurpassed. if they want to have a coercive or persuasive vaccination program, they could do it. but it appears that many local officials worry about doing that. they have not been given targets. they worry about elderly people

getting booster shots en masse and some of them dying. local officials have a terrible conundrum. the government says xmi's people's health. on the other hand they say minimize the impact on economy and they cannot be reconciled. anchor: broadly speaking do you expect to see a tighter grip on society by the communist party after these events? richard: i think that is the only conclusion one can reach. the party would allow protests to grow in an organized fashion across the country because if they have to suppress smaller protests violently now, that is better than having to do it later as happened in 1989 and they are prepared for this sort of security event. they have a massive security apparatus. you are about to see it unrolled in many places. i would be surprised if mass protests continued. haidi: i want to go back to the

idea that the government regime is drunk on its own success. does this mean we will see the leadership reconsidering the assertiveness which has dominated their policymaking? or will there be more of an iron grip? richard: overseas we are seeing a tactical retreat because china has fallen so much in the eyes of so many countries. xi needs some breathing space particularly as they understand in china they have to get through this period. it might take six months to a year. the economy will take a head and there will be a help -- and there will be a health outcome. i think they know what is going on. the leader at the top has to change his mind and so far he has not. the big question is what are his advisors telling him? and we don't know that.

haidi: richard, always great to have you with us. richard mcgregor from lowy institution. vonnie: good morning. i want ruling democratic progressive party has suffered its worst ever showing in local elections. the opposition held onto with 13 seeds while gaining power in taipei setting the stage for a more content has presidential race in 2024 forcing on rising tensions with china. the president quit as head to take responsibility for those historic losses. china's central bank has cut the amount of cash lenders must hold in reserve for the second time. it ramps up reserves for the economy. the people's bank of china reduced the reserve requirement to bite me five basis points. the adjustment taking effect on december 5 will inject $70 million of liquidity. the u.s. is banning the sale of

communications equipment. citing an unacceptable risk to national security. the order also affects surveillance products made by companies such as dowa. it is the latest impact of restrictions. the biden administration has granted chevron a license to resume oil production in venezuela. the reprieve follows the resumption of talks with venezuela's clinical factions with a deal to work together on humanitarian spending plans. no new drilling is authorized but chevron will be able to repair and do maintenance on oil fields. the u.s. halted all drilling activity more than a year ago. 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. anchor: a muted black friday

kicks off the u.s. holiday shopping season despite heavy discounting. we will check what that means for consumer resilience later in the hour. and jason katz from ubs says why tech stocks are no longer the cool kids for investors. we talked market strategy next. this is bloomberg. ♪

haidi: let's take a look at the week ahead. wednesday jay powell speaks to brookings institute and is likely to remind policymakers that they will not have it from the latest tightening. after the bank of korea's downshift towards an pace of targeting. we will be watching for gdp data on thursday. and on wednesday, economists are expecting a 25 basis point hike

from thailand. taiwan's third-quarter gdp on thursday and november pmi numbers coming from china. sheri: our next guest says bonds are backed in the game for investors and he has cautions on big tech. let's bring in jason katz from ubs. good to have you in the new york studio. you talk about bonds and we have seen the space firmly focused on the potential west recession. where do you find the opportunities in this environment? jason: bonds have not served as ballast in a portfolio and in the last few months we have had cash alternatives with the two-year at 4%. we have been able to build the bond portfolios on the corporate side getting close to 5% not to mention the discount.

now is a good time to get the ballast in your portfolio. sheri: is at the same narrative of why you are cautious about big tech? jason: people are creatures of habit. investors in particular. what has brought us to the party as investors in the last decade has been big tech but the issue is that 60% of their earnings come from overseas. perhaps the dollar stabilizes here but it could strengthen and regardless we have weakening consumer business spending and add spending and it is tethered to the tech group. we think will see profits and earnings come from other parts of the markets. don't abandon big tech. it just needs to be underweight. it is no longer cool to sit at the table. haidi: that is the existential question as to who else is out the cool kids table. you look at the assets and asset classes and stocks that have

benefited the most from the flush of cash post-pandemic, where do you see opportunities in terms of valuation? jason: first of all, if you want to play good offense sometimes you have to play a good defense. health in particular looks very attractive. between the aging baby boom population and growing populations and covid trends going lower, and procedures on the rise, we see a bright earnings outlook regardless of what happens with the economy, recession or not. where you want to avoid, certainly i think some of the really defensive trades like utilities. and i think a lot of people have failed to realize the bond characteristics in the event rates get higher but not to mention the fact that you have regulated profits and earnings so we are not keen on that at all. haidi: you don't think the prophet recession is over? do you have strong convictions

going into next year or do you just want to stay flexible? jason: i think next year will be a year of inflections and two halves. the first half will be challenging. a 15% rise off the bottom and -- and the market valuation is full and fair at 17 times earnings. the backdrop is tough with elevated rescission and -- elevated recession. i think the second half you will see a more constructive environment. i would be cautious heading into the first cap but we don't think you should head to the hills. it is where you are pivoting your money. some defensive areas like health care and if you want to be a little more aggressive in tech, there are plenty of opportunities in the backend of technology like cybersecurity so like what palo alto did last week. haidi: central banks are going next year, if there is an

inflection, they will go from the focus on inflation to more focus on growth and perhaps recession fears as well. jason: i deal with high net worth individuals in the u.s. and they have all gone from an obsession of inflation and now they have pivoted to obsessing over a recession. you think about the challenge we have here, the fed would rather build a bridge 100 feet too long then 10 feet too short. with divided government in the u.s., the onus on inflation is squarely on the shoulders of the fed. the pace of the rates matter. it is the terminal rate but above all it is how long they stay there. i do think they may stay around a little too long which would cause the earnings recession that your colleague just referred to. sheri: and we will be watching for the u.s. jobs report this week for more indication on where we go. jason katz, good to have you with us. you can get a roundup of all of the stories you need to know on

this asia monday morning in today's edition of daybreak. terminal subscribers can go to dayb . you only get the news on the industries and assets that you care about. this is bloomberg. ♪

haidi: twitter is hiring. the first line had the words we are recruiting with no further details. his restructuring cut the firm's headcount in have. daughter having more than one billion monthly users -- a twitter having more than one billion monthly users.

saudi aramco base oil is planning to sell 50 million shares or nearly 30% stake of oil. i want to set for a more contentious -- taiwan is it for a contentious political race. this is bloomberg. ♪ millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line.

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vonnie: protests against covid restrictions spread across china as citizens of vented anger against fusion the communist party. some of asked for jinping to step down. demonstrations were recorded across hong kong and other places where covid restrictions are blamed for causing issues. macau issues a new casino licenses, the decision eliminates a major uncertainty facing an industry hit by covid tourists induced drought and a crackdown on highrollers. european union diplomat is capping russian oil prices. a senior diplomat says poland is

demanding additional sanctions and a price below the market level. diplomat had expected a deal but positions remain entrenched. erodagan will meet with egypt's sisi. a president is preferred by ankara. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: taiwan is set for a contentious presidential race after local elections haned historic -- handed historic losses. what can you tell us? >> obviously, this was a

landslide victory for the kmt. these local elections are like the midterm elections of the presidential term, a leader will be stepping down after the second term, these local elections are for city and county level officials. the kmt wiped the dpp clean. typically they are strong in these elections, it is their election to lose but no one was protect the opposition party would do so well. that was in part by the good-looking new individual on the scene. he won the mayor ship in taipei and if anybody knows anything, that is often times a precursor to becoming president. he is only 43 years old and

widely seen as too young to run in 2024. it is a good sign. many became president after first becoming the taipei mayor. that is something that we may have to look at down the road as the younger individual becomes the taipei mayor. deeper issues this election focused on economic issues. the misery index, a combination of jobless rate and rising inflation is the highest since 2013. local domestic issues and rising covid cases and covid deaths and the economy and inflation are of mind. keep in mind as well that the turnout it was one of the lowest on record. it will be a precursor to the bigger issues in the 2024 election that will focus on relations with beijing and of

course security issues. i do not mean to downplay my report here about this is the front page of the taipei times, if you want to come back on camera with me saying that the vote was not likely to affect 2024 results. it is a shot in the arm for the kmt. but you cannot read too much into it for the presidential election. annabelle: while the results have implications for relations between beijing and washington? >> i think those issues become much more to the front when we get closer to the election. we do not know who the candidates will be for president. the chairman and the head of the kmt lost quite badly in the 2016 election. is he their best hope? others who are rising up in the

party may have a better chance to unseat the -- he will step down because of term limits. but can the dpp hold off any challengers? we do not know who will be the candidate. could it be the vice president who has been up to advocate for independents? i think 2024 will be very interesting presidential election. there will be a new president in taiwan. we do not know if the saber rattling from beijing and the nancy pelosi visit and the wargames that circled the island, whether that will play the factor up or will the eventual possibility of an altercation with beijing will be interesting in the presidential election. annabelle: that is steven engle joining us.

looking ahead to 2024. shery: china is stepping up efforts to support the economy in covid lockdowns. let us discuss morning calls and bring in. -- bring in annabelle. annabelle:'s came through on friday. what they have done is cut the reserve ratio requirement for a second time. that is $70 billion of the liquidity into the economy. bloomberg economic saw a note and they said this will be a move that will be helping with the economic outlook in china which has been deteriorating on the covid outbreaks generally. the outlook for a slowing global economy. that is provided that lender's to put the extra capital to work. they say next year will not be enough. they are expecting two more rrr codes in the coming months and also they are expecting for the

officials to lower the one year rate which is the key policy rate by 20 basis points. the reason they are saying that if you change the bloomberg economics is basically taking a look at more high-frequency indicators in china and that does tell us just how much of an impact lockdowns are having. metro traffic in china, you see that is thinking in some of the second-tier cities. haidi: we have had so much enthusiasm for chinese equities, are we seeing some places turn cautious? annabelle: as you say, we are basically hearing a course of wall street strategists earning more positive in the expectation that china would relax at zero covid policies. the lockdowns are spreading and there is unrest. blackrock is one of the ones who are a bit more wary but actually looking at a different are so

uncertain on whether beijing will retaliate to some of the u.s. measures around semiconductors and the other factor they are looking at is this growing importance on ideology we are seeing in china as well. breaking with what has been a consensus over the past few weeks. take a look at the terminal chart, you see the rally in the hong kong listed chinese stocks and they are looking for their best month -- best months. . around 20%. . haidi: profitability is in doubt for many retail chains, grad shares of the global retail outlook, next. this is bloomberg. ♪

shery: i have been so busy because of the black friday sales. shop so much, i shopped until i dropped online and off-line. the fact that there were people like me, it seems like we had heavy discounts, the traffic was modest.

we are talking about in-store traffic taking up 3% compared to 2021. e-commerce spending is up 2%. we are looking forward to cyber monday as well. ! generate around $11 billion in revenue for some of those stores. i was pretty busy with all of the bargains. haidi: i am so glad you are doing your part to get global sales data up. we will likely never return to the full crowds, they may be a thing of the past because of the modern crowds mean that more people are going online. even in australia, we do not celebrate thanksgiving or black friday but black friday and cyber monday sales are over the long weekend which is a long weekend in australia but the discounts have become a

tradition here as well. shery: it is an excuse to shop. it is there one day where i give myself permission. i am bargain-hunting. our next guest says the retail world is bifurcating on multiple levels. joining us is greg portell, lead at kearney. what are you seeing on the ground? there are people who are like me who are happy to spend money and some people say that the numbers were not as great as they could have been? greg: retailers have essentially cannibalized their own black friday events. we have black friday that is a holiday shopping day in name only. these deals are spread out through weeks and months prior to black friday or a traditional black friday. it is not unexpected that things started to wane. is important to look at the overall holiday season which should be strong still.

shery: i shopped till i dropped out of than i realized there were more discounts for cyber monday so i ended up losing a little bit. of the bifurcation you are seeing in the retail world, you are saying that middle brands are dying? greg: the middle retailers, they are stuck in the middle, there is a lot of pressure. the strength at the high end and the discount market, the same is true in the retail environment. there are retailers that are very good at efficiency shopping. those who are more emphasizing experience. if you are going to take the time and go to a store and engage with a sales associate, you are doing it for a reason and those retailers need to have the frontline sales associates that are able to enhance the shopping basket and make the

experience worthwhile versus a lot of your clicking or efficiency shopping but is all about how you get people inside of the funnel and sell them as much as you can as quickly as you can. haidi: we saw this groundswell of support for small businesses who were the most impacted by this. i see a lot more traction on social media for example for small shops, individual makers, local stores? greg: the trend to community focus for consumers has been going on for five or six years. the pandemic certainly amplified that i now as we have seen with the pandemic -- and now as we have seen with the pandemic, small businesses are in the market to create thriving communities. the other element of this is the saturday programs, that has matured and it is a holiday event for many retailers. they challenge that small

business has is they are not equipped as well to deal with supply chain issues and inflation issues as retail overall. we expect a bumpier result for small business saturday. haidi: the trends we are seeing this weekend, how much of it is because of bidding pressures? the influx of inventory of her all of the supply chain issues? what does that tell you about what sort of a holiday season we are signing up for? greg: the consumer will show up for the holiday season. you are hitting it on the head. inventory is a challenge for every retailer, most retailers are sitting on too much inventory but it is a lumpy inventory. we are expecting to see is a stronger, better performing retailer using the consumer that they have and being very targeted in how they discount.

you will see discounts that trickle out over the course of the season. those retailers that are caught unaware are not as good executional eat will be those who are saying that 50% off and there will be mass discounting across the board. you will start to see the strength of the retail market really create the split between those who have invested in the ability to maximize margin and those who are going to suffer through the holiday season. shery: what are we going to see in the holiday season? have we seen a lot of the frontloading of the spending already happen? could we actually see modest traffic lead to a rebound? greg: we are expecting to see high single digits through the course of the holiday season. the biggest challenge with holiday expectations is exactly that, expectations. we have grown to expect consumers to spend and that has always been the case. the overall grades that analysts

plays and retailers come down to whether they were expecting low single digits or low double digits. and will come in relatively strong shape will come in relatively -- it will come in relatively strong. shery: even myself, i was passing through tokyo on a business trip and i went shopping because the japanese yen was so cheap! greg: there are opportunities for arbitrage for people who are able to travel internationally. most of the core consumer spending is in market. there will be opportunities to pick up the trinkets whether they are your favorite stuffed animals, it will be overseas. most consumers are landlocked into the local markets and retail environments. the spending will stay in country. haidi: a big question for next

year will be the return of the chinese consumer. can you give your elbow growth for the domestic data and the outbound travel or if and when covid zero is eased and everything reopens? greg: we cannot project when covid zero will ease. the consumer will rebound overall. there are supply chain issues like the global economy. and the restrictions are part of that. as consumer freedoms start to increase whether it is in china or in the u.s. or globally as well, you will see the consumer bounceback already strongly. i do not have a lot of concern on the longer-term. i think the instability around covert policies around the world particularly in china will be an issue for many global retailers or brands. haidi: as we see the ongoing

protests in china at the moment. coming up on tuesday, we will be speaking with the fed president tom barkin. you can catch that exclusive at these times on your screen. this is bloomberg. ♪

haidi: a vietnamese carmaker has seen its vehicles come to the united states. we have been following the story. how significant is this? >> it is significant for the country as a whole. these cars will bring vietnam's aspirations and pride to the world. it is a big deal for a country in terms of manufacturing it is only associated with clothing or footwear and they are pushing into the high end of things. >> this was a proud moment for the vietnamese car industry and vietnam as a whole.

they have been promising to deliver an electric vehicle to the u.s. market and now they are delivering. customers will get their keys to these cars next month. >> this is the first time that a vietnamese country exported a product with a high technology to a difficult market like the u.s.. >> they are planning to list in the u.s. and they were entering a crowded and competitive. market but has heavyweight backing. it is a subsidiary of a company looking to bring high end manufacturing to the country. have raised $4 billion to fund the u.s. expansion including a factory in north carolina with production beginning in 2024. it is on a ship, and it will have an suv.

both are cheaper than a tesla model y. elon musk has acknowledged the gap in the market for cheaper ev's. >> we do not speak about the future of tesla, we do think that making a much more affordable vehicle would make a lot of sense and we should do so. >> persuading customers to try a vietnamese made car is another task. >> so far the recession has been really good, -- reception has been really good. 17,000 preorders from the u.s.. >> vinfast has 65,000 orders. this ship will not be the last to make its journey across the pacific. >> there are a handful of showrooms in the u.s., they are taking the target to tesla.

it is almost pushing the credibility, it took neo three years to get to 100,000. this is a company to watch closely if they can deliver cars and promises. shery: here is a quick check on the business flash headlines. india's bank is asking to find units to not on board any online emerges as payment adm is backed by softbank and another group. meituan saw sales surge after covid demand. it posted a profit boosted on tax benefits, shares of come under pressure as tencent said it will distribute to its

shareholders. haidi: these are the stocks we are watching. five minutes time in australia, the australian newspaper says that the agent related stocks -- agent related stocks are posting the third weekly loss. we are looking at the likes of orton energy as well. coming up, why the monetary policy lacks potency despite the latest rrr cut. the former policy board member talks with us about the chances of elevated inflation spurring any change from the boj. ♪