>> you are watching daybreak:

asia. coming to you live from new york, sydney and hong kong. >> australia has just come online. the 12 stories this hour. we are speaking live and exclusively. a heavy police presence in beijing. and filing for bankruptcy, becoming the latest crypto firm after ftx's downfall. >> we have the open of the asx 200 and at the start of trade, we are looking good. you can see that slight move higher.

to put it in context, we have that drive a 1.5% against the greenback. really down to what is happening in china. and where beijing will go with its cover zero policies. let's take a look at how that played out as well as the uss an overnight, given that we have seen those mixed moves. given the work of protests, we have those for the offshore yuan. those moves higher after the list chinese stocks. perhaps investors are starting to position the -- that beijing could make a faster pivot away from covid zero than expected. >> we had solid results here. potentially helping to lift

those chinese adrs. look at the asian open after the s&p 500. all major indices lost about 1.5%. there was broad risk of sentiment. of course, we had plenty of hawkish fed speak. whether it was talk about potentially tightening continuing into 2024 or elevated risks of inflation continuing, investors are trying to figure out the path forward for the fed , the 10-year yield holding at the 370 level. we had a little bit of upside. given that opec-plus was talking about leaving production cuts on the table for their meeting this week. we are not saying that at the asian open. there at that 76 u.s. dollar level. we continue to see that risk off and concerns about double

economic growth as well. >> we got an alert on the bloomberg terminal. the plot continues to thicken. they have filed for bankruptcy protection. now they are suing us. sam bankman-fried on shares of robinhood that the ftx founder had allegedly pledged collateral earlier this month. this story continuing to unfold as we go to air today. chinese authorities have deployed a heavy police presence to prevent a repeat of the weekend's protest over anti-covert measures. let's get to beijing now. we expected a reaction, we got one.

to what degree does the approach to a protest reflect the approach to covid as a whole? it is a heavy hand when it comes to addressing the symptoms but what about the underlying causes? >> we have seen a bit of a pullback when it comes to how covid zero is being prosecuted. the way local authorities got people to go out and get tested every couple of days was on this health bid that everybody in the city has. they essentially stop people from getting into any public venues. if they did not get tested every three days or so. that window is gone. we are relaxing and testing but on other fronts as you mentioned, heavy police presence, lots of cops on the street, discouraging people from going out to protest.

there are reports that the police were checking people's phones who showed up looking for telegram and other apps used to communicate. i think it is a carrot and stick approach. >> what is the sentiment on the ground? we are talking about frustration and anger. is that ruins below the heavy police presence? is this a more network organized protest? will this just fade? >> i think the protest will probably waiting a bit in the coming days. for a number of reasons with the cops, the pullback on how the covid policies are. the weather in beijing is very cold. and shanghai there was a lot of rain. you are probably more likely to see people out on the streets over the weekend. i don't think the underlying

frustration about covid zero has changed the economic impact, the impact on businesses, the jobs of people, the ability to income, that will continue. on the margins, i think the gas territories are trying to tweak and adjust to make it less abusive and abrasive. whether the results of the process already go, i think we have to wait. >> that was the senior executive there, joining us on the latest covid-19 protests on the ground. the next guest has china ending its covid restrictions that could threaten the entire covid health systems. the reason protest joining us. drew thompson. good to have you with us. john was telling us about the underlying frustration and anger, dissatisfaction still being there. we have police presence and a

crackdown on those demonstrations. how that we manifested? it is not like that will go away. >> absolutely. as john said, the underlying cause is the frustration, the loss of income, the loss of personal freedoms people have, being locked into their houses. in the general outrage at a couple of incidents in september. there was a bus crash where 20 people were killed. and the fires in an apartment building in her row she really brought home for middle-class, urban chinese people that these calamities can happen to them because of the way covid is being controlled. that is not expected to change. the frustrations are there. the question is how much risk are china's middle-class people in urban areas willing to accept to go out and protest?

the police presence -- the ability to surveilled them and identify them using cameras in their electronics is quiet hi. the chances of getting into trouble for this are probably an effective deterrent for some as well. >> you are saying at least for the communist party that these protests are less of a risk than the health care system itself collapsing. my question to you would be why hasn't beijing prepared better? they had three years. they could've actually set up a system to function. >> if you go back and look 20 years ago, when china was suffering from sars, there was the beginning of an effort to improve china's health care system. essentially that process has

failed. he had failed over multiple rounds of reforms. the current health insurance coverage is inadequate for most people. coverage rates are high but the actual reimbursement, the burden on individuals paying for health care is quiet hi. those are issues for the population. the problem is they have not expanded health care access as much as they needed to. instead focusing resources on these containment centers, these massive locations where they can isolate people. if they were to allow covid to spread, people would flood the hospital system and overwhelm it fairly quickly. the chinese government has to provide public goods to its people. that is a core public legitimacy issue for any government. particularly the chinese government.

in 1949 when the communist party came into power, life expectancy was 35 years. today it is over 77 years. the government can't afford to give up those games that have been made for the chinese people themselves. if the health care system were to collapse, that would be in -- an even greater indictment on the party, the government, it would harm the legitimacy or studies protests. even though they are widespread, geographically distributed, involving workers and middle-class people, students, they are not coordinated. they are sympathetic but there isn't leadership calling on people to call out in a protest. that does not make as much of a threat to the party as the collapse of public services that would be highly visible and it would really stoke discontent with the government if people are unable to access health care services. collectibility is a menu of optf

chinese policymakers. what is the worst approach? relax restrictions even more? or just continue with this hard-core approach of lockdowns? >> i don't envy the chinese government, it is a difficult place to govern. on the one hand, the central government can create policy but it is really up to local level officials to influence effectively and use their judgment and to be able to implement policies effectively. the problem is their key performance indicators tend to be absolute and quantitative. a local government official is measured on how many covid cases they have. not the personal satisfaction of constituents. that is a shortcoming of the chinese government model they are really experiencing this week. they are going to experience it in the future and cracking down and putting up barriers and cing up the right place and

people's arms police is not a good solution either. i best solution is to come up with a conversation of investments and public health care and insurance programs that actually they a greater burden on health care costs so that people can go to hospitals for purposeful treatment, not just fear which i think is a trend in chinese society. people tend to go to the hospital and they are not feeling well rather than waiting at home for it to be more needed. i think you need to educate the public, deal with the hospital systems inadequacies for real and then a form of social distancing. having lived in singapore throughout covid, it was really an effective approach or it is flatten the curve that china needs to approach rather than the absolute lockdowns they are currently employing. >> all right, drew thompson.

thank you for joining us. let's get to vonnie quinn for a check of the first word headlines. >> thank you. the president says she would be surprised if she -- or, suggest the central bank's recent wrap up will continue. and doubling down on raising rates, warning that high inflation is dampening spending and production and that the strong labor market will likely support higher wages. >> by reducing people's real income and pushing up costs for firms, high inflation is dampening spending and production. high uncertainty. tied to financial conditions and we global demand are also weighing on economic growth which is expected to continue weakening for the remainder of this year, the fourth quarter and the beginning of next year, the first quarter of 2023. >> opec and its allies are expected to consider deeper

supply cuts. saudi arabia and his partner surprised traders when they announced a 2 billion barrel a day cut back. prices have fallen, raising this year's gains. additional reductions could be an option. russia and the u.s. have put off a new round of talks about a key nuclear arms agreement. a state department spokesperson says moscow postponed the meeting. russia's foreign ministry says the commission handling the new star will meet later, giving a reason for the delay. the talks would have been the first such discussions since russia invaded ukraine. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> still ahead, our exclusive conversation with tom barcus as the central bank must not declare victory prematurely in the battles to tame inflation but first, why uncertainty over china's pandemic policies will keep stringing supply chains,

making inflation, tougher. this is bloomberg. ♪ why do so many businesses use stamps.com? they save time by printing discounted stamps and shipping labels right from their computers get a 4-week trial plus postage and a digital scale go to stamps.com/tv and get started today

>> they are counting the first 250 basis points as if that was a tightening of monetary policy but that is just getting up to the long-run neutral level of the policy rate. we have bones -- only reason for this restrictive territory and we will have to move farther to keep inflation under control. >> this should help the balance between demand and supply over the next few years. it withe next few years. it will take some time. >> fed officials on the central bank's rate hike path.

christopher, our markets getting a bit of a reality check on the bed question mark have we found a flaw yet? >> i think it is a reality check. i think markets have been trying to get in through to next year and not just see when the rate of increases starts to fall. i think we are mostly at a 50% hike over the next fed meeting but how long -- windows will level off and maybe when the first easing will appear, almost every time the fed comes out with a hawkish statement, the market tries to interpret it in a more dovish fashion. i think this latest round of statements you have seen is a bucket of cold water trying to say we are continuing to hike. we may slow the pace of hikes but does that -- that does not

mean we are close to loosening. we may hold firm at some higher level all the way through next year is what the expectations are trying to be. >> what are your thoughts around recession and stagflation risk? does the fed keep on tightening until the fed recession has moved in? >> they need to keep tightening until things start to weaken and they don't want a recession but they really only have a couple of very blunt instruments to try to bring inflation back under control. our best guess is that we will be in a. of stagflation for several months through may be most of next year where inflation will be falling but at a slower rate. maybe finishing the year at around 3.5% but that is not where the fed target is. you might get some signs that they will begin using late next year in early 2024 but we think

the battle to get inflation back down again will be hard for even though the fed is in charge right now. >> we still don't have an eu price cap on russian oil. what are your projections on how that will filter through the economy? >> it is important to remember that we are close to a price cap. they have managed to get the g7 and much of the you -- you on board. it is unclear how it will work, whether or not it will work. i think they are still haggling over some sort of mid 60's price range and then i think the real question is where does it shift the supply of oil? europe will be finding the suppliers for oil that it needs. russia will be finding new buyers, mainly in asia, china and india.

i think that shift will likely keep a floor under oil prices for quiet sometime. in addition to what you just have been reporting about a likely new objection -- abduction -- reduction in opec supply. it is that time when we are talking about the u.s. government running out of money. will this have repercussions toward government bond space russian mark >> it would not be christmas if we did not have potential for a government shutdown, just before legislators had to go home. we are in the lame-duck session of congress. there is a very short time to get stuff done. i know the hope is for markets that senator mcconnell will be able to push through a full appropriations measure set by both houses so that there is no

shutdown for next year. the republicans have tended to use that as leverage over democratic administrations in past times. but their majority is very thin right now. it is not here when they will want to try to force the issue going or wood. >> with all of the risks we just discussed, i am afraid to ask but will we see a santa claus rally? >> it is hard to know what we will see between now and the end of the year. we think we are going to want a much lower economy. we are not sure if the recession will be long or deep and once markets are able to see through the top of the fed tightening cycle, right around 5%, may be first quarter, maybe second, that will do a lot to alleviate those worst-case fears, inflation being back to where we were in the 70's. putting a floor on pes for the equity market. investors can start focusing on

how much earnings will slow down. they will slow down but we don't think it will be a holland going into next year. >> always good to have you with us. the chief global strategist with all of the global risks we are watching out for. and a reminder, we speak exclusively to thomas is later this hour. this is bloomberg. ♪

quest plenty of volatility in the crypto space. checking those crypto assets. maybe a little bit of a rebound in the asian session. >> very mild if that. we are seeing those crypto tokens are moving to the downside this morning as we are trying to assess this continuing fallout from the ftx collapse. blocked by the latest in these, declaring bankruptcy to concurrent reports.

one in bermuda and one in new jersey but it is essentially trying to understand that with the transaction and the latest coming from the financial times, saying that block by will be suing sam bankman-fried as they placed for collateral earlier this month. we are seeing just a little bit of optimism coming back into bitcoin. it is higher this session. bitcoin could be setting up for a run down to $10,000 per token. he says basically investing in bitcoin right now is simply too dangerous. >> always a reliably wild ride. let's get a quick check of the latest business flash headlines. they are planning a special dividend this year of about $4 billion in exchange. the him to boost market confidence and reward shareholders.

another investor will use this to boost their stake in the company. u.s. listed shares have surged in new york after results that beat analyst estimates, adjusted earnings per apr with 1.20 when revenue jumped earlier. the chinese e-commerce platform has been benefiting from china's strict covert policies as more people are stuck at home. the e-commerce platform has selected for an ipo and hong kong as soon as next year. sources tell bloomberg the company is working with credit suisse and the international capital. coming up, we will speak with thomas barkan for his outlook on the

>> i am kathleen hays in new york. joining us exclusively now is thomas barkan, president and ceo

of the federal reserve bank of richmond. great to have you here. a lot going on for the fed and the economy and the markets. >> thank you for having me. >> i want to start here. they showed a majority of fed officials were ready to calibrate rate hikes and this was based on the fact that there has been so many and you have to take legs into account. are you in this camp? >> yes. as i think about it, we started the year with inflation high and rates very low. it made sense to take the foot off the gas and move as quickly as you possibly could that breaking anything but now our foot on -- foot is off the gas. our real rates are positive across the curve. when you're driving with your foot on the brake, maybe you pump the brakes.

maybe there is a little more caution. >> argued in the camp of various officials who are thinking that the rate they get too restrictive with will end up higher than you thought it would be? >> certainly than i thought it would be a couple of months ago. inflation has been more stubborn than i would like. i'll start with the idea of a rate path, i started with the idea of getting control of our inflation. as long as it stays elevated, it just takes -- makes the case to me that we need to do more. >> let me put this in context today. you also need to get restrictive, more restrictive that is. why would you commit to getting less restrictive now if you are not even sure how high it is going to go? getting less restrictive by slowing down the pace of rate

hikes. >> you know that monetary policy works with a lag. famously these are long and variable. that means you need to be aware of them but you can actually count on them. the way i think about is it is helpful to be somewhat more cautious as you are in restrictive territory because you know what you're doing will affect things somewhere in the future. that is different than slowing down. -- different than not moving. i think it is the better risk management approach to move a little slower as you collect the data. >> but they work both ways. they work in terms of how quickly or how slowly rate hikes make their way through the economy. you are not going to know for a while if you needed to stay warm -- more aggressive. you might have to start raising

them in larger increments again. >> i look harder at forward-looking bill bates. it brings them to account for where your rates are and where inflation expectations seem to be. right now, inflation expectations seem to have stayed stable. we have taken rates up to 4%. if inflation stays high, we will keep doing what we need to do on rates and i will just be looking for those forward-looking rate expectations. i never predict where we need to go in advance.

in terms of why you want to go a bit more aggressively, we know you're trying to bring down inflation by slowing down the economy, slowing down final demand. we look at the atlanta gdp tracker. it is up to 4.5% for the latest quarter. is that one of the reasons why you still think you need to be restrictive? is that one of the reasons you might argue for keeping a slightly faster pace? >> we have seen monetary policy work in places like imports, in places like housing. it has not slowed consumer spending as much as much as you would expect. that has to do with excess savings accumulated during the pandemic. it also doesn't seem to have slowed business investment as much as you would expect. i think it might have something to do with elevated earnings.

it might have to do with people's perspective. there is probably still more on the demand side. on the pricing side, i am taking price. >> it seems like a lot of the applause for the inflation has to do with the core cpe deflator, it has stalled out. it is not continuing to come down. what does that tell you about the course of inflation and the restrictiveness that will be needed? >> we have to welcome -- we had a welcome cpi last month. but i think your point. if you took food, gas and shelter out of cpi, you had inflation being negative.

if you can have a series of steady supply shocks, this is the kind of thing that could keep inflation high. we have seen how that can drive supply shocks. you definitely look at supply shocks.

it is much broader than that. you have to look at all the risks and those include supply shocks. that also includes what is happening on the the labor front. you can talk about rail in the u.s.. in the business i am in, you want to think about all of those. >> you have said in the past month that the rate that is restrictive that the fed gets to 55% or more. do you still see that? >> i don't think i have said that. i tried hard not to focus on an individual number. as we see inflation come in, we don't react. we don't see any particular number that we focus on.

conditions have been using and perceiving that they see a somewhat less hawkish fed. is that an issue for the fed as you try to drive policy question mark you want to see tighter conditions. how do you deal with that? >> i try not to focus too much on equity markets and bond rates. i am looking at forward-looking real rates. this is what the government bond rate is versus the markets while where the tips indices. and with the last cpi, we saw the inflation expectations come

down significantly. i think some of the longer bonds came down significantly. this could be in the 1.5 to 2% range. that could be a really good restrictive and real rate to me. without causing much of a recession? price you always hope that but the challenge when you're dealing with controlling inflation with long and variable lags is that if you get caught up in the dimensions of the landing, i think you missed the point.

i am just focused on that. of course you like to do that with as little damage as possible. >> the main point is that you want to try to control inflation. but you're not worried about this landing. why not just wait until you see more evidence until you're at the point where it starts to work? >> you don't want to damage you have to do. but the focus is on inflation. it is not trying to warrant some kind of slowdown. >> in terms of other issues on the table there, what do you make of the balance sheet process, starting to bring down more, is it going to add to the restrictiveness?

is that why you would ease off on the rate hikes? i think there is some restrictive element but i hope we can normalize the balance sheet in the background and not spend too much time worried about that. what are you looking for and how do you think it will work with your view of the economy and where it is heading? >> we will see what we get when we get there. we also have a consumer spending report. we have pce coming this week. we have a jones report.

what i have seen is a labor market that is still quiet tight. particularly tight in the skilled trades. that does not seem to be easing much. we have seen a bunch of announcements for the tech companies. i think the skilled trades are white tight. i expect to see a continuation of solid job growth. we will see. >> this is in the reason why fed policy may have to get to restrictive, maybe even risk going above restrictive and stay there for a while. i guess that is the question because the market then, as soon as you start pausing, the next thing is it is time to cut rates. do you expect rates to go up and stay there high for a while or do you think it is possible you will say we can start looking

the other direction? >> this was a richmond fed economist and he made a very good point in a bunch of the work he did. the fed cannot really operate well with stop go policy. the mistake is to let your foot off the brake too soon and the message i have learned from his work and that of others is that you have to take inflation, get it under control and you have to make sure that you have it under control before you do any talk of listening. >> does that mean you can see the rate going up, staying high through 2023 even into 2024? i know you don't like to predict exact dates but could you envision the kind of scenario question mark >> sure. it depends on what we are seeing on the inflation side. >> that is what we are all doing, watching what is going on.

there is been fed president, we give you so much -- we thank you so much for coming in today and taking a big chunk of your evening. >> we are getting the japan jobless rate coming in at 2.6%. that is the same level for the month of october as it was for the month of september. when it comes to the job to applicant ratio, it is 1.35, in line with estimates and really coming down from where we going, slightly higher from the previous month of september. we should the sector in japan. labor-intensive businesses coming back. restaurant tourism giving the loosening of covered restrictions. the jobless rate staying steady at 2.6% in japan. take a look at the japanese yen holding at that 138 level. very close to 139. we are seeing the broader markets with a little bit of upside for kiwi stocks at the moment and rebounding from the previous session. it is a mixed picture when it

comes to the asx 200. down .2%. this as the aussie dollar has underperformed against g10 peers. china risking being a big factor there. the u.s. futures study at the moment. south korea's president make order striking truck drivers back to work after negotiations with their union. a breakdown an update just ahead. this is bloomberg's. ♪

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>> this is daybreak asia. i am vonnie quinn with first word headlines. chinese authorities will prevent a repeat of the weekend's protests there were anti-covid measures. crowds stayed largely away with clear signs of a clamp down on the streets of beijing, shanghai and other centers. pedestrians regularly stopped for identity checks. hong kong will asked china to determine whether overseas lawyers can be part of national security trials. it follows an unsuccessful government attempt to bar u.k. lawyer from defending prominent local dissident jimmy lie. the 75-year-old goes on trial and faces a possible life sentence if he is convicted of colluding with foreign forces. the largest volcano on earth has erected for the first time in

nearly four decades. local officials issued asphalt advisories and open emergency shelters. the volcano began erupting late sunday, blanketing the sky with ash. global news, 24 hours a day on air and on bloomberg take. powered by 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> ordering striking truck drivers back to work after negotiations broke down. let's bring in our correspondent. can the president do this? with the workers comply? >> when it comes to the special order that you are asking, issues such as special orders, they will definitely follow the order. if they don't, physically it

will be the first time for the government to force a union to return to work. particularly under the law, they will definitely follow. >> what is the impact of the striking industries in the supply chain russian mark >> the impacts are becoming really serious across the industry. we are seeing local media reports saying that we think they are going to deliver their products. we all know we are accelerating

the country but -- >> just getting some breaking news across the bloomberg at the moment. it is retail sales out of japan for the month of october. they are coming in weaker than expected following the slightly hotter than expected jobless rates. the market was expecting 1% growth on the. just 4.3%. the expectation was for 5.1%. substantially weaker sales there. consumers in japan seemingly starting to feel the pinch. 1374, one of the few currencies performing strongly against the greenback at the moment. 4% year on year. a lot shorter than the

expectation of 5.1% and a slowdown from what we saw in september. we do have plenty more to come on daybreak asia. stay with us. this is bloomberg. ♪

>> a bit of a mixed picture in the crypto space. although this after block the

file for bankruptcy. we have reports that they are suing over fears that the fbi's founder pledged collateral earlier this month. we heard that the ftx group is resuming cash payments of salaries and benefits, this as we continue to see the pressure on the ftx token. >> let's get a quick check of the latest business flash headlines. court papers show the block by sold about $239 million in the run-up to the bankruptcy filing. the company advisors has they intend to reorganize be a chapter 11 rather than saw themselves off. the report is also that they are suing ftx founder over the robinhood shares he said to have pledged as collateral. the fight seems to be brewing between twitter and apple after elon musk accused the iphone maker of threatening to keep

social network off the app store. apple has cut advertising on twitter which he acquired this month for $44. apple has been one of twitter's top advertisers and users say they continue to see ads on their feeds. bloomberg has learned apple faces a production shortfall of about 6 million iphone pros this year after factory protests and china. the estimate depends on how fast foxconn can get people back on the assembly lines. they have struggled with worker unrest for weeks as covid infection spread. >> given those had that is that you have mentioned, the nikkei reported that sony will supply apple with its latest image sensor for the next series of iphones. we are also watching other asian apple suppliers given what you mentioned with the turmoil in here. we are also watching those crypto related shares. we talked about the drama over

block by returning. these are korean stocks you should be keeping your eye on. this is potentially to the drug. they are really having an impact on market sentiment. coming up in the next hour, we will talk to them about what to expect in the markets. this is bloomberg. ♪

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>> this is "bloomberg daybreak: asia," we count down to asia's major market opens with follow two major narratives. china's protest betty liu but we continue to watch the covid cases -- not to mention plenty of hawkish fed speak. >> they are getting really check from a number of fed speak are saying there is plenty of more tightening to come yet, and a reality check on the streets of major chinese cities. police out in force to prevent a repeat of the protest we saw this weekend. >> twin headwinds facing investors was going on in china and will be heard from the fed. we have the open of japan and south korea ahead of us. we did see that 10-year yield cause little change. one of the things investors are watching close at the start of trade is the reaction to fed

officials. more joining this course stressing the need for further rate hikes of the months ahead. that led to a move higher for the dollar this morning looking like this against the yen as we continue to see the move into safe haven assets. japanese stocks are in the red at the start of trade. we have some eco-data weighing into the picture, jobless rate sticking it to .6%, a sign of -- 2.6 percent, as sign of tightening the labor market. with the korean index, a significant drop, tech heavy, some of it happening in china that is a story today. we get more details on how much companies are being affected, apple saying they could be cutting 6 million units on the worker protests. the korean won, trading with a

general tone of risk aversion, it being weighed down by this happening domestically in korea. we have strikes there. the government may return -- issue a return to work order when they have a cabinet meeting an hour from now. let's go to australia, the asx 200 one hour into the trading session, it is declining being led by energy. between headlines of hawkish fed speak sparking fears of recession, while the biggest energy consumer, china, sticking with covid zero, making the play for the bti -- wti crude. >> we did talk to them about his monetary policy, that's listen to what he told cully kathleen hays. >> very supportive of a path

that is slower, longer, potentially higher than what we -- then where we were. >> more on exclusive conversation later, the next guest saying inflation is way higher than the central bank targets and the thesis, is an asset menswear -- manager. it seems that most fed officials when it came to commentary today agree with you. what of the data points you're watching that makes you think the markets are getting ahead of themselves? >> simply if you look at inflation, as i argue earlier inflation rates even though we see some recent moderation in the u.s. and other parts of europe, it is still very strong-willed inflation. -- strong with inflation. the inflation rate is higher than central bank targets. even though there are talks about rate hikes or other central rate hikes slowing down,

my reaction is so what we are looking at more rate hikes. the terminal rate a be even higher, that is what the central bank needs for inflation and long-term economic stability. >> i guess the markets are looking past that. what if the rate hikes are slowing, is there the expectation slowing is followed by rate cuts? what are you seeing in the global economic space that potentially we could see a downturn that could lead to the fed to react? >> there are two issues here. one, slowing rate hikes going forward, the big uncertainty, how slow, how much longer the rate hike process will continue until it piques. until the central bank cuts rates, everyone still guessing. secondly, the more important issue, the recessionary risks, the whole world is facing. even though the central banks

may slow down the rate hikes we are very likely to see developed markets especially going into recession next year. the transitional period between high inflation picking, coming down to lower inflation, triggering rate cuts. that period, we are looking at the risk of stagflation. that is of the market has a thick about how to position. stagflation is typical to position in of inflation -- investment. >> a very challenging time to be a central banker, so much uncertainty. do you feel the chance of a policy mistake is very very high? >> i was say there is a rare chance. i would not say -- fair chance i would not say it is very high. they are moving fast to keep inflation under control before it is out of control. i think is fair to assume the central blinks -- banks will be

successful and will be approaching a peak of rate hikes in the next few months. policy risk, probably more so in china than the rest of the world, china covid policy is key when you look at the investment by mid and sentiment. there is a chance that the chinese government will stick with the covid zero policy longer than we expect. the impact on the economy and global markets could be worse than what we expect. >> tell us a little bit about your investing strategy. i know you're thinking it is time to rotate into bonds. guest: it depends on the involvement of the -- currently we are positive on european investment grade bonds. the federation is good, according to investment managers, it is not bad the default rates in the corporate sector are priced in.

that view can change of the recessionary risk mounts quickly. then we will go back to bonds, there will be the shelter that everyone goes into when you get inflation down the road. >> we saw adrs jumping today on china, perhaps the expectation that the protesting covid zero strategy would lead to more easing coming from policymakers. why is important to markets? at the same time we are hearing the narrative it does not matter how many rrr cuts the pboc does. if you do not get rid of covid zero there is no upside to the economy that is sustainable. guest: that is true this zero covid policy is the number one drag on the economy. the number two is the property market. over the past few weeks we've seen policy announcement and actions by the beijing authorities to manage and

address the property market problem. i think that is likely to stabilize the property market. the biggest uncertainty is the covid policy. beijing announced it would address covid policy in the future did not say when. the market is guessing when. now we see protests and surging covid cases and china, that creates uncertainty and suspicion about when beijing will exit from covid policy even by the middle of next year. we still think there is a fair chance china will relax further the zero covid policy if not completely exit yet by the middle of next year if not earlier. the process that we see, it is a pressure on the government to move on. >> just quickly when you're looking a potential political turmoil in the country, do you worry about that in your investments in china that this could lead to something worse, a massive violent crackdown?

if we have guest: evidence or projections that the protests and arrests, -- i would worry, but there is no evidence the protests we see in china, although they are on the headlines of the days i still think is noise. >> senior asia pacific investment strategist, asset and judgment. -- management. making interesting points about the investment environment in china. what are you watching? >> taking a look at the apple supplies, companies indicating how much of an impact they are having from the worker protests. apple according to sources could be risking production of 6 million iphone pro units. we are looking at declines for apple supplies in japan, and taking a look at the situation

for the biggest names in korea. lg taking 75% of its revenue easy the decline at trade. crypto link companies with some mixed moves this morning, we are continuing to chart this fallout from the ftx. blockfi declaring bankruptcy filing chapter 11 proceedings in -- and bermuda. another big trader is, in japan, trading down 5%, that is with the report of a second death to a drug linked to alzheimer's that they are developing with biogen. i would say the drug is not associated with a increase death risk.

shery: now to vonnie quinn with the first word headlines. >> her comments suggest that the central banks recent wrap up in -- ramp up in interest rates will continue. they double down on raising rates saying high inflation is dampening spending and and production come the strong labor market likely support higher wages. >> by reducing people's real income and pushing up costs for firms, high inflation is dampening spending and production. high uncertainty, tighter financial conditions, weakening global demand are also waiting on economic growth -- weighing on economic growth that is continuing to weaken for the remainder of the fourth quarter and the beginning of next year first quarter of 23. >> opec and its allies are expected to consider deeper supply cuts when they meet this weekend.

last month a surprise to traders when they announced a 2 million barrel a day cut back, prices have fallen erasing this year's gains, delegates from the group sang additional reductions could be an option. russia and the u.s. have put off a new round of talks about a key nuclear arms agreement. state department spokesperson says the moscow postponed the meeting. they will meet at a later date, they gave no reason for the delay. the talks would be in the first discussion sense russia invaded ukraine. china is ending one of its major fundraising bands on -- bans on property developers to ease the downturn. listed realtors will be able to sell local share starting monday. it will also include resuming private placement for raising funds for private uses. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by

more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is newburgh. >> still to come, more fallout from the collapse of ftx with blockfi filing for bankruptcy. we dig into the group -- root causes for the contagion. chinese police out in force in major cities to deter further protest against the government strict covid policies. we are live to beijing next. this is bloomberg. ♪

>> we have some live pictures of beijing this tuesday morning. looking pretty quiet compared to the events of the weekend.

chinese authorities have deployed a heavy police presence in the capital to -- and other major capitals as well to prevent the protest we saw this weekend. people losing patience with anti-covid measures, let's get over to beijing with our greater china editor. we were expecting a cracked we got one of sorts. has this problem gone away? the simmering discontent does still there, right? >> yes, we had a much more muted outing last night. not as any protesters in fact almost none. instead a very heavy well staffed police presence on the streets of beijing and shanghai last night. the weather conditions last night were not as welcoming as they were over the weekend. colder and rainy and shanghai come at your question i do not think the underlying frustration

is gone. obviously has been three years of covid zero. there is a lot of t with the testing and the lockdowns. -- fatigue with the testing lockdowns. that is not gone away, people are finding it hard to make a having. businesses are closing that remains intact. what the government has been doing, they have been rolling back some of the measures they have executed. testing, for example beijing has loosened that, made it a less of a burden on people. it does look like the government is ruling out a current at and stick approach -- a carrot and stick approach. shery: sam bankman-fried we have seen sam bankman-fried protest across --shery: we have seen protest across china, will that make a difference in if the demonstrations will go away? guest: there are protests in

china, what makes these protest rare and unusual is that they have been so widespread. beijing, shanghai, wuhan, other parts of china they have been taking place for the same reasons. the covid restrictions that have been imposed nationwide. there has been some organization over telegram and other chat apps across china. we have had reports, that the police are stopping people and checking their phones. looking for apps on their phones, if protesters were using them. there was an attempt by the chinese authorities to make sure there is not some organization, organizing happening to pull these protesters together. so far they are more desperate groups of individuals that they are a collective. i think that if there are signs these protesters are organizing don't make the situation much more serious. shery: greater china senior

editor executive, we are getting the case number number, 8721 for november 20 8, 1 of the biggest cities in china. now reporting 8721 new local covid cases adding to the 4300 and beijing, to the 178 in shanghai for november 28. let's talk about the other big story. it is where the fed is headed, global central bank tightening, richmond president saying he favors slowing the pace of interest rate hikes and recognition of past -- aggressive moves. you spoke with him a while ago, tell us what were the key takeaways on a day heavy with fed speak? guest: i would say on a day heavy with fed speak where some individuals see more hawkish, i

would say he did a good job of right -- staying right in the middle, he thinks it is prudent there are more rate hikes and because monetary policy works with a lag. you cannot see the full effect of what you're doing until you get past the point where you are down the road to know if you have done enough or too much. that is more the worry fed officials have right now, he also opens the door to more restrictive policy, but not giving us an exact rate, the focus on inflation expectations and the focus on inflation higher than he expected were certainly in his remarks. let's listen. >> inflation has been more stubborn than i like. i do not start with the idea of a rate path. i start with the idea of getting control over inflation. as long inflation stays elevated to make the case to me that we need to do more. >> let me put this in context of today. you see the fed meeting to slow

down, and you need to get more -- needing to slow down, and need to get more restrictive, why would you commit to being less restrictive if you are not sure how high it would go? getting less restrictive than slowing down the rate of pace hikes? >> monetary policy works with legs -- lags. the way i think about it, it is helpful to be somewhat more cautious as you are in restrictive territory. you know what you are doing will affect thing somewhere out in the future. that is different than slowing down. that is different than not moving. i think it is a better risk management approach move a little slower as you collect the data now that we have our foot on the brake. >> lag works both ways come in terms of how quickly or how slowly rate hikes make their way through the economy.

if you slow down the pace of rate hikes now, get a little less aggressive you are not going to know for a while if maybe you needed to stay more aggressive, you needed to raise rates more aggressively. you might have to start raising them in larger increments again. >> i look hard at forward-looking real rates. that is a good indicator if you are restricting the economy or not. it brings into account where the rates are and where inflation expectation seems to be. right now inflation expectation seems to of been stable, we have taken rates up almost a 4%. if inflation stays hike we will keep doing what we need to do on rates. i will be watching those forward-looking installation -- inflation expectations and see how high we will take it. guest: to sum this up, he is watching everything. he is watching how quickly

inflation will come down. he is keeping the door open to going to more aggressive, higher, more restrictive rate in the end if that is what is needed. you can come to the conclusion that fed officials right now are very uncertain about where the economy is going to go in terms of how and quickly inflation comes down. his key gauges not moving right now. how fast the economy will grow, that is something i asked him right now, the atlanta gdp trackers up to 4.5% for the latest quarter. that is not an economy slowing down due to the faster rate hikes. as we get to the fed meeting we will see what their statements in december dots show how restrictive they have to get in the end. paul: economics and policy editor kathleen hays, which check in on japan, the shares weaker by 6.5%, after patients

died from a brain hemorrhage, after having a stroke, receiving an anti-alzheimer's drug. a six if i drilled woman died after taking the drug -- a 65-year-old woman died after taking the drug and and anticlotting drug. the case written up in science magazine, eisai down, and shares of biogen after reports of the second death linked to the treatment. we have plenty more to come. this is bloomberg. ♪

paul: this is "bloomberg daybreak: asia," let's get a check of the latest business flash headlines, corp. acres

show that blockfi soul his own crypto parents -- currency in the run-up to its own bankruptcy filing, they plan to be organized by chapter 11 rather than sell itself off. they are serving ftx founder sam bankman-fried robin -- of robinhood shares he pledged as collateral. apple faces a production shortfall of 6 million iphone pros this year after protest at factory in china, estimate depends on how fast foxconn can get people. back on assembly lines. they have struggled with worker unrest for weeks after covid infect -- spreading covid infections. >> he accuse the iphone maker of keeping the network.

apple has been one of twitter's top advertisers and users say they continue to see the ads on the feeds. still to come we look at the chances of more opec-plus opec -- output cuts. the latest unfaltering crude markets next. this is bloomberg. ♪

>> this is daybreak asia i am vonnie quinn with the first word headlines, chinese authorities have deployed a heavy police

presence in the capital and other major cities to prevent protest over anti-covid measures. crowds largely stayed away with clear signs of clampdown, shopping malls close early and pedestrians regularly stop for identity checks. u.k. prime minister says the golden era of british relations with china says -- are over. he says china cannot sibley be ignored especially on issues -- especially on issues like global economic stability. >> let's be clear the so-called golden era is over along with the naïve idea that trade would automatically lead to social and political reform. nor should we rely on simplistic cold war rhetoric. we recognize china proposes a systemic challenge to our values and interests. a challenge that grows more cute

as it moves towards even greater authoritarianism. vonnie: singapore's government is facing even more scrutiny after the collapse of ftx empire, after the state owned investor temasek wrote down his $275 million ftx stake. they wrote that they did due diligence. first time in nearly four decades, local officials issued as advisories and open shelters, blanketed the sky with ash, they have issued evacuation orders and air travel remains unaffected. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn this is bloomberg. shery: we are watching oil prices in the asian session, opec-plus may considered deeper

production cuts. we saw a little bit of a bounce back in the new york session but that is not holding. guest: there is a view that opec-plus when he meets on sunday will cut, the 2 million barrels they cut a month ago surprisingly market at the time and catching the rebuke of president biden. analysts and traders surveyed by bloomberg believes there could be deeper cuts because of the faltering well market. that is why we saw a brief rebound in the new york session after prices fell to the lowest for the year so far. down to the $74 level. we are seeing the decline continue in the asian session. we see a traveler -- similar trajectory for brent crude. if you drop into bloomberg, you can see all the gains for oil this year have been given back. that is with a number of crosswinds laying on the

macroeconomic effects. as you see oil had spiked earlier in the year. now we are at a loss for the year going into the asian session. opec has a difficult task of weighing impacts of sanctions on russian oil that will kick in on early december and they say could slump 15% early next year in terms of their output with the potential of stricter lockdowns in china clouding the outlook for debate -- demand. among the outlook for continued rate hikes from the fed, another question weighing on oil, creating a bearish affecting near-term. paul: these approaches in china, meanwhile the concerns about covid weighing on the commodity complex as a whole. right? guest: analysts are saying that it the increase of cases to record numbers in the concerns about stricter lockdowns that could have a dramatic negative

impact on demand, all of that affecting commodities from agricultural the metals. he says he expects the renewed lockdowns to hurt market confidence into the year and. copper took a big hit and as much as 2%, before rebounding, so i took a hit. -- soy took a hit. we to market also taking hits. -- wheat market also taking hits. while there is a concern that china is such a big consumer of commodities if anything you will see some buyers delay their purchases with the expectations of the renewed lockdowns. paul: richmond fed has -- president says he favors slowing the pace of interest rate hikes in recognition of past aggressive moves. >> inflation has been more

stubborn than i like. i do not start the idea with a rate path. i start with the idea of getting control over inflation. as long inflation stays elevated and makes the case to me that we need to do more. >> let me put this in context of today. you see, the fed needing to slow down, but you also need to get more restrictive. so why would you commit to getting lesser strict of now if you're not even sure how high it is going to go? i mean getting less restrictive by slowing down the pace of rate hikes. guest: we know monetary policy works with a lag, these are famously long and variable. need to be aware them but you cannot count on them. the way i think of them, it is helpful to be somewhat more cautious as you are in restrictive territory. you know what you are doing will affect things somewhere out in

the future. that is different than not moving. i think it is a better risk management approach to move a little slower as you collect the data now that we have our foot on the brake. >> lag works both ways. in terms of how quickly or how slowly rate hikes make their way to the economy. if you slow down the pace of rate hikes now, get a little less aggressive, you are not in no for a while if maybe you needed to stay more aggressive. if you needed to raise rates more aggressively. you might have to start raising them in larger increments again. guest: i look hard at forward-looking real rates. attic that is a good indicator if you are restricting the economy -- i think it is a good indicator if your restrict the in economy or not. it takes a look at where rates are and where inflation is expected to be, and inflation seems to be stable and we've

taken rates up to almost 4%. if inflation stays high we will keep taking -- doing we need to do on rates. i will just be watching those forward-looking inflation expect asians to see how high we need to take it -- expectations to see how high we need to take it. >> we will do a we need to do to get there. >> with the door be open to that that is something you need to do? is everything on the table including 75 basis point rate hikes at needed? guest: of course we will do a we need to do if we get there. >> ok, in terms of why you want to go more aggressively, we know that you are trying to bring down inflation by slowing down the economy. slowing down final demand. we look at the atlanta fed to gdp tracker is up to 4.5% for the latest quarter. is that one of the reasons why

you still think you need to be restrictive? one of the reasons that my argue for keeping a slightly faster pace? guest: we have definitely seen monetary policy work as you might expect in places like imports and housing. it is not slowed consumer spending as much as you would expect. that has to savings -- excess ss accumulated during the pandemic. it does not slow down investment as much as -- that's a do with elevated earnings. something do with people's perspective that this will be a relatively short slow if we are to have one. there is probably still more on the demand-side. demand leads into pricing. on the pricing side i'm still talking people are taking price. taking price at a level that makes me know you comfortable that inflation will settle without more activity from us. shery: richmond fed with our

global economics policy editor kathleen hays. next we talked to alex who is been digging into the ftx collapse. more on the findings next. this is bloomberg. ♪

paul: blockfi is elitist big

crypto firm to file for bankruptcy -- is the latest big crypto firm to file for bankruptcy following the ftx collapse. >> it was not unexpected we can start with what we know about blockfi. it is a crypto lender and financial services firm, before the crypto winter got going it was valued at $3 billion. overnight the bankruptcy filings in new jersey and currently in bermuda. around all of this is understand the tangle and connections between firms in the cryptocurrency industry. the problems with blockfi started in may, it was heavily exposed to the fallout from three arrows capital. from that ftx was offering a lifeline with a revolving credit facility. the issuance of ftx, -- means

blockfi has been able to -- has not been able to withdraw that. it has been adding to broader contagion in the industry. tokens are generally down this morning in market trading, really following on those losses we had in prior sessions either down 5%, bitcoin looking at -- more stable. it is mostly negative in the session. let's get more on the outlook for what is happening in the crypto space. this is alex, ceo of a blockchain analytics platform. your company monitors the bullets looking at millions of transactions on chain. based on the flows, activity, the markets where would you say we are at in the contagion? beginning, midpoint, the end? guest: yes i think blockchain's

are unique because they offer transparency when you look at the transactions taking place. if you look at alameda and ftx specifically they had really close titus -- ties you see on chain all the way back to 2019. we saw lars -- large transfers of ftt going between alameda and ftx back in june. i'm saying we are getting close to the end of contagion. as you can tell from the blockfi news there is still news to come. >> based on the monitoring you look at with crypto firms what would you say is the next domino to furl -- fall? genesis is one we are watching closely. guest: genesis if we type back to alameda and ftx we saw a lot

of transactions between genesis and alameda and with regards to the ftt token. hundreds of millions of dollars of transactions. if we are looking ahead it is hard to say where we are going. it is important to look at the on chain record and look at the transactions that have been taking place. our analyst have been digging into this looking specifically at the connection between alameda and ftx. i think the ftt token is where you solve most of the collusion going on -- saw most of the collusion going on. where there is not a clear separation between the two entities, where alameda is collateral rising -- collateral lysing ftt. and looks like deposits at ftx. you have a scheme, that is not

how you want to run and exchange. when people posit funds into an exchange they affect the funds to be used for their own trading. what happened is a looks like alameda was able to access these funds through collateralization of ftt. the fallout you will see the next weeks and months of what this means specifically. yet to dig into not just the on chain transaction but what happens of chain that is difficult for us to see. there is a lot of room for transparency with on chain data. being able to dig into the data and understand what has taken place and how these different entities are related to each other. >> elaborate on that point, hindsight is 2020. when you're looking at the transactions and those connections now, are there any red flags the market should be aware of going into the future that potentially will let you know where the problem points are? guest: i think you are right. many people were actually

monitoring what was happening with ftx in real time. the reusing of the platforms out there -- they were using other platforms out there, the able to monitor what comes out the exchange is very important as wells figuring out how solvent the exchanges. there is a movement in the last few weeks were exchanges are verifying their own reserves with proof of reserves attempts. next is proof of liability, and then ultimately proof of solvency which people ultimately carry about. it is important to not only analyze historically, but to also look at what is happening real-time. you have more transparency would blockchain said -- than traditional finance. you can monitor what is happening on the distribute ledger themselves. hindsight is 20 20 that is true. many people were able to

withdraw funds from aft x before others were able to act -- ftx before people were able to react. paul: this seems to keep happening in the crypto space, this is not the last collapse or gross e-filing -- bankruptcy filing we're likely to see. he says investing in digital assets is too dangerous is the only answer regulation? >> i think there are two different ways to approach this. they can go hand-in-hand. one is regulation we have to see that when it comes to centralized exchanges. the other path is more transparency. this is where i think the industry does have a chance to self regulate to some extent. putting up proof of reserves, liabilities, and solvency is extremely important. this is a fundamental issue is centralized exchanges. it is important to remember that

decentralized finance in many ways is an answer to mala palms we see with ftx. when you use -- too many of the problems we see with ftx. you can swap while having the custody of your own funds. you have auditablity with decentralized finance, you can know that there is no bad debt in the system. i think regulation is part of the answer has to be focused on centralized exchanges. you have to increase transparency. this is something the industry can drive ford itself, but finance has -- forward in the industry, finance has been driving forward. it is the future and this is where think the industry will have in the next few years. shery: in terms of decentralized exchanges, how scalable is it?

what kind of reputation and damage are you seeing, as an industry, even with regulation how long does the reputation of crypto take to recover? guest: the reputation aspect is real. it will take time to rebuild the trust. if you talk about decentralized exchanges there are still a lot of technological info structural challenges -- infrastructural challenges we have to fix. scalability is one. people are using multiple block changes, used to be etherium was the only game in town when it came to smart contracts. it makes other trails for scalability and speed can be favorable compared to etherium. in many cases giving up some of the security and decentralization. yet the layer 2 solutions on top of a theory that will be very important on scaling

ethereal. we have to acknowledge that the crypto industry is very young, decentralized exchanges -- centralize exchanges of all the been around for a few years. i think it is something will be able to solve. it does take time to solve this. reputational aspect, returning to that, i do think this is where the industry really have to come together and work together. i do think that working productively with regulators is the answer. i am optimistic we are able to some extent self regulate. i think transparency is the main thing we have to solve when it comes to these centralized exchanges. shery: good to have you with us, and bloomberg's annabelle, go to cryp for the latest news.

we are reporting new covid cases for this monday, we continue to see disruptions all across china given covid, they are suspending operations at a wuhan plant because of covid. we have had protest because of covid restrictions as well. paul: i want to quickly check in on shares in japan, off 9.25% come we brought to the store that a second patient in the trial of the alzheimer's drug has died. a combination of drugs taken is not just the alzheimer's drug, and anticlotting drugs the patient dying of a brain hemorrhage following a stroke. we have it off 9.2%, biogen fell the most two months in the u.s.. plenty more to come "bloomberg daybreak: asia." this is bloomberg. ♪

paul: china investors will be taking stock of the current calm when it's open and just 30 minutes time. there with us out of singapore today, david dcaa rebound in chinese risk assets today -- do you see a rebound in chinese

risk assets today? david: good morning it is looking like things are slightly better than yesterday. the reason i say that close -- towards the close of cash markets, you did have a rise in most benchmarks. i think a lot of things will be tracking, things like volumes for example to give us an idea of how strong this move up. financials and if we get a rebound, it is one of the hardest hit sectors yesterday. commodities overnight on shore had a decent pop. it is an early indication of stability, we would get updates five minutes from now when they resume trade. we did bounce of the 50 day moving average, that i guess in some way underscores how strongly support is. shery: superquick, some good news for developers. david: superquick. there will be allowed to start

raising money in a good markets. they can use that to purchase property assets we will see what reaction is in 30 minutes. shery: david with what to watch and the chinese market opens in some of the stocks having to do with the china reopening as we continue to get those covid cases and protests and unrest related to apple suppliers as well because of the production shortfall. potentially the key manufacturing hub, oil producers, opec and its allies considering deeper supply curves. all of that coming up at the china markets open. this is bloomberg. ♪

david: