shery: you are watching daybreak asia coming to you live from newark, sydney and hong kong. annabelle: counting down to the market opens in tokyo and seoul. haidi: a story has just come online. asian stocks are ways to open lower and the dollar is changed. investors bracing freight pivotal week in the markets. chinese officials downplaying covid risks as restrictions ease, comparing the omicron mortality rate to the common flu. the u.s. is sending a delegation to china even as it seeks support from allies for its curbs on chinese tech. shery: downside pressure on u.s. stocks last week, the dow seeing its worst week since -- since september. we had those ppi numbers hotter than expected on friday. we have the fomc decision this weekend ahead of that, we have

the tuesday cpi numbers and markets watching that closely, given every cpi day we have seen a move on the s&p 500 on average of 3% in either direction. those numbers have rocked markets all throughout the year. we are watching the 10 year yield holding. wti prices rebounding and mediation session above 71 u.s. dollars after we saw the worst week since april. not only did we have low liquidity but those key oil pipelines also resuming some of those suspensions relating to the supply concerns ring relieved. that this is all about central banks, whether the giant -- whether china, the philippines, colombia -- the list goes on. annabelle: what a list it is to capture but that's the tone coming into the market open for australia.

there are moves in bond yields reflecting what you mentioned in treasuries. recession risks still on the horizon, given we are seeing more moves on the longer end of the curves in the aussie dollar trading fairly flat. take a look at what's happening in the volatility space. we are seeing volatility for stocks looking muted. it's hard for traders to have a lot of conviction when there's so much uncertainty coming into this week. still we see it pot -- spiking for bonds, traders trying to see what kind of moves after the rate decisions. shery: -- haidi: it is going to be a pivotal trading week. garfield reynolds is here trying to process the moves might see, is that a fools errand? typically in this month we see volatility anyway. garfield: it has been a volatile

year. it is very centered and fx and the bond space. stocks, perhaps surprisingly calm her, perhaps that's also -- surprisingly calm her. there is a since people have put cash on the sidelines in the rate hikes, you are getting paid something called interest when you put your money into cash. that might be another reason people the money on the sidelines. but it is an enormously volatile week. we still got the market very strongly expecting the fed will not only slow to 50 basis points , given powell said it may be appropriate to do that as early as december. so he gave himself some wiggle room to go 75. but markets are confident the fed will go 50 and will then not go much further.

possibly slow to 25 as soon as the first meeting of the new year. that doesn't necessarily jell with the message the fed has been sending and a president with what went on with the rba. diet -- they hikes to 25 basis points, which was as expected. they did its best to leave itself open. no preset path. that was taken as being a quite hawkish statement even though it was very much in line with what you would have thought they were going to do based on where the data was. that signals the main potential going in to this week is for a hawkish surprise from the fed because the markets default position at the moment is to expect a slower fed going forward, rapid shift from a very

aggressive tightening policy to no further tightening and then easing money into next year. so far, that has not been a path fed officials have been comfortable with. shery: especially with financial conditions easing dramatically. i have to wonder how much traders are pricing in the china reopening when it comes to be more optimistic about the markets? garfield: investors have seized on china's pivot. that is an actual real pivot that has occurred in policy away from covid zero and it is extra neri. if you had said to me or anybody a month ago china will soon be describing omicron as no worse than the flu, they would have said you are joking. that's a radical shift from the sort of rhetoric being deployed

in order to justify covid zero policies. investors have been clamoring for an end to covid zero, saying it's both ineffective on the health front and very effective in retarding the chinese economy's capacity to grow. the relief that has followed that set off a strong rally, one that might well have legs when you consider chinese equities have lagged behind the rest of the world for most of the last two years. there's a lot of scope for them to rise considerably if they simply pay catch up -- play catch up with the rest of the world. shery: let's talk about how top chinese officials continue to downplay the risks of covid-19. cities across the country dismantled many restrictions. stephen engle is following the developments. our field was telling us how he was surprised in the markets

were surprised about this new narrative coming from beijing the they seem to be firmly sticking to that. stephen: i agree with what garfield just said. these officials, they keep rolling out new officials each day as well as new commentaries and goals on the front pages of the state run newspapers, including commentary, a full page on the people's daily talking down the dangers of covid-19, which is astonishing, given the rhetoric just a month ago that this was the most pressing danger to people's health and deemphasizing the economy. now, the shift is going to we need economic growth and you are right. the top medical advisor to the government is essentially the latest. he says the mortality rate from omicron is in line with the seasonal flu at 0.1% and saying the infection rarely reaches the

lungs. there were about 10,000 plus plus new local covid cases detected saturday, which would be eight when he percent drop from friday. good news but it has cast a lot of doubts on the veracity of that data because those kiosks that do the mass pcr testings, as they dismantle and no longer require pcr tests, that nationwide number may not be the true picture because they are simply not testing as much anymore. we have to look at the lunar new year holiday that runs for seven days in late january as people travel typically. they usually spend more than ever in the year. we will have to see if the consumer comes back, whether the infections go on because some projections say we could see

more than 2 million deaths in china in this current winter way. haidi: we continue to see this incremental scrapping of a lot of the infrastructure over the past couple of years. we are going a line crossing the bloomberg saying the map used to track people's travel history being dismantled. this is part of the shift to a progress parity. we don't know how it's going to be achieved. will we have a better idea of the strategy this week? stephen: i think they are trying to move -- to remove the barriers to the consumer. the pcr test, to going to shopping malls, that's a good step, reducing the requirement for the app to get into places to show you are no longer infected and, of course, property, they want people to start buying and borrowing again

as a main pillar of the chinese economy. that is why this central economic work conference and other financial conferences that will be held this week should give us some clues as to how far the government will go to a, encourage the consumer to come back post covid zero, if i can even say that terminology, as well as will there be lifelines thrown to the property sector? will consumers get better conditions for new mortgages and the like? bloomberg intelligence essentially saying the recent unwinding of healthspring market restrictions and equity sales might only be short-term at best for the sector unless regulators follow through with concrete steps to ensure completion of private developers presold properties, sales of distressed developers like k wg and a slew

of these distressed property makers could continue to dwindle after an average of 73% down year-over-year since march. there's lots of uncertainty. will there be hesitancy by the consumer including into property going forward or is that growth projected at about 5% going to be backloaded at the end of the year when we get through this winter wave? haidi: our chief north asia correspondent, stephen engle. so many unknowns but it will be a q. week for that economy. let's get to su keenan who has the first word headlines. su: the u.s. will send a delegation to china following up on president biden's meeting with xi jinping last month at the g20 summit in indonesia. the state department says the visit is to continue responsibly managing the competition and explore potential areas of

cooperation. they will prepare for antony blinken's trip to china early next year. to pakistan and the army there is accusing afghan forces of artillery and mortar fire across the border, killing six people and wounding 17 others. pakistan says it responded in a measured way to but it alleges was an unprovoked attack. it follows a series of deadly attacks and has raised tensions with afghanistan's taliban administration. hong kong court has sentenced jimmy lied to for years and nine months in prison for fraud. this as the city cracked on dissidents. he was also fined more than 250 thousand dollars and banned from working in company management for eight eight years. he's already serving 20 months for his role in unauthorized assemblies during the 2019 antigovernment protests. masses orion spacecraft has

splashed down in the pacific ocean off the coast of mexico. it's a successful end to eight when he five-day test flight that sent the unproved vehicle around the moon and back to earth. the flight helps pave way for nasa to return humans to the moon later in the decade. the next mission aims to fly astronauts around the moon in 2000 when he four. -- in 2024. 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'm su keenan. this is bloomberg. shery: still ahead, we will explore the space business with a japanese firm hoping to commercialize what it calls artificial shooting stars. up next, a look at the week ahead with sarah hunter. here why she is expecting his debt down from the fed and boe. this is bloomberg. ♪

>> i think there is a growing coming together that we probably are going to make more progress on inflation that many people inspect -- that many people expected, but it's because the fed is going to do what is necessary but there is likely to

be some adverse aspect of that. shery: former treasury secretary larry summers on the fed's fight against installation. some of the biggest banks holding meetings on policy. on tuesday, the fed is expected to raise rates by 50 basis points, marking a downshift from four straight hikes of 75 basis points. the ecb expected to ease its recent eighth to half-point aided by a less aggressive fed. investors expect another half-point increase from the bank of england as well. other mate -- other economies also starting on banks interest rates. haidi: our next guest, it looks as though the peak rate will be below 5%. it's interesting when you look

at the long-term divergence and what market participants are expecting. it's the passing of rate cuts by the time we get to the second have any expectation the move off the peak is going to be faster. do you think there is mispricing going on there? sarah: it is an interesting question, how long do they hold it for? that's the key question and it's all about the pricing behavior and we pay close attention to that. it should be the core inflation month on month, that's the one tells you how that pricing pressure is moving near real-time. they will need to see that slowing down. markets are expecting that's comfortably above where it needs to be. that will have to slow down quite a lot quite quickly in q1 or q2 and then to be coming back down by the second half of the year. if anything, it is a longer hold. but i expect to be talking about

rate cuts this time next year if not already seeing them in action. haidi: and is that coupled with a full china reopening? is there hope china's economy plays that cyclical force next year? there's so much we don't know about how the opening is carried out. sarah: absolutely. if they do manage to reopen and get the economy going again and lift their growth rate, may touching five, that is going to be a countercyclical growth story. it's interesting they were in the doldrums when the rest of the world was booming. if they were booming, we would have a much bigger inflation problem. there reopening and moving away from zero covid should help relieve some of the price pressures because it should help bring some of the supply chain disruptions down. they are still pretty elevated

compared to pre-covid so we will have to see how that dynamic plays through. it's something we will know in the second half of the year. there is a lot to know between january 1 any end of april that will dictate how do much of next year looks. shery: we are hearing from goldman sachs that china will not end covid zero until at least april. what's the base case on how you factor in this booming chinese demand we are expecting? sarah: it is certainly a challenge but we have to be clear on what do we mean by exit zero covid? there's a long way -- you have a couple of cases and put entire cities into lockdown into absolute free movement. we no longer test and those other shifts we've seen, i think it's going to be a gradual process. i don't think anyone expects them to snap their fingers and it changes overnight.

in terms of how it flows into the chinese economy and the rest of the world, so much of what was in the doldrums right now is domestically oriented activity, consumer-based and services. that's a stimulus to the rest of the world. it is in direct. having said that, if there reopening the manufacturing sector, that supply chain disruption to normalize, that's a positive for the asian countries locked into that supply chain. we have to wait and see how it plays through but being cautious on what the reopening looks like , it is good news in that they are not a drag anymore and it will spillover but i don't think it's going to be the stimulus level that we saw a ripple through the economy and was a driving force. shery: how concerning is the fact we are seeing trade flows starting to ease and slow down? we are getting korea's trade

numbers in a few minutes as well and in japan this week. sarah: and those ones are the bellwether. they are timely and a good predictor of what's going on through the global trade cycle. inevitably, it is going to slow and we see reports in some of the more swing a parts and semi conductors that have moved, going into oversupply next year. we should expect more of that. trade always swings. we know part of the story happening right now is a continued pivot from spending away on goods toward services. it is clearly a challenging environment for trade right now. the only exception i can see is around cars but that's because the supply chain's have been disrupted for so long. they're still a backlog of orders but we will see a downturn. it is inevitable even where the cycle is right now.

haidi: is the likelihood of a soft landing in australia getting better? give me positivity across pricing? sarah: it is going to help because there's a lot of domestic headwinds. i'm encouraged by two channels -- one it will mean we get services exports recovering, not just tourists but students as well. also china is a major source for students. if they are able to come here, that's a real positive for australia. it could have a nice help for the rba if we see those movements return. haidi: you can get a round up to get your days going. terminal subscribers can find that at dayb .

you can always customize those settings so you get the news on the industries and assets that matter to you. this is bloomberg. ♪

shery: here's a quick check of the latest business flash headlines. twitter will relaunch it's twitter bluescope and service on monday for eight dollars per month. the company says apple's ios users will get access for $11 per month to subscriber only features, including the blue checkmark. the relaunch of twitter blue was suspended in november amid a wave of profile impersonations. a misalignment of databases has caused the details of some customers to be released publicly. the names, phones and addresses of customers who requested to be unlisted became available online

and via directory assistance. the newspaper reports 130,000 customers were affected. amgen is set to be in talks to buy horizon therapeutics and what would be its biggest acquisition after snow feed dropped out of the running. sources say the deal may be announced in the coming days. so no fee said it was pulling out of an offer because price expectations did not meet its criteria for value creation. coming up, the latest on the potential fraud case over the collapse of ftx as the alameda former ceo hires a crypto cop for a lawyer. details just ahead. this is bloomberg. ♪

haidi: as markets look ahead to

the fed and decisions are on the peak rate, competition among dealers has intensified. let's draw that connection with david ingles. i don't know what these expectations are this week. seems like a quiet. david: that manic 24 hours wednesday and thursday -- i'm talking about the world cup, by the way. essentially, what we are seeing -- i will make this simple. you look at the average states of maturity and what you are seeing is jp morgan, for example, you are seeing the average days near record lows ahead of the fed decision and ahead of the cycle. that's important because it implies many market funds are placing liquidity and remaining liquid is one of the key priorities.

the next chart shows why. next chart shows where we are as far as the fed fund interests are concerned and where markets think they might be. perhaps this is another iteration of that pivot trade because if markets see the end of the tightening cycle which may well be the first quarter of next year, remaining liquid is key when you have a look at that. in a lot of ways, you are starting to see markets remain in position and strategically positioned in case the market turns and the short term bills are one of the things that might reverse and tread higher if the fed turns. so we are watching this closely ahead of a not so busy week across these markets. shery: we will be pretty bored this week. markets also watching china's

exit from covid zero, rapidly abandoning mass testing and centralized quarantine. little time putting in place mitigation measures for an explosion of virus cases. stephen engle has more from hong kong. stephen: hong kong has served as a blueprint for china's opening up from covid. it's also a huge cautionary tale. when the omicron variant swept through this modern city of 7.5 million, the cities sophisticated health care system was simply overwhelmed. at one point, hong kong had the world's highest death rate due to covid. there simply was not enough space to put all the patients are bodies. some of the sick were put outside on gurneys as body bags stacked up in some wards to the infected living. words were lemon day -- were inundated.

nearly 11,000 covid does happen between february and april of this year. china has a under vaccinated elderly population but on a much, much larger scale and china does not have the more sophisticated mrna vaccinations available. >> we have to r.i.m. her china has been protecting the public for so long, there's been no herd immunity in china. so this is going to start and this process is not going to be smooth. it will be quite difficult. stephen: with a sudden dismantling of restrictions, including mandatory pcr testing, china is bracing for a surgeon infections and deaths. more than 2 million for thales by one estimate. criticism of covid zero is rapidly being replaced by concern the rapid policy shift away from the all-out eradication of the virus is happening too fast and china is

ill prepared, like hong kong was in march for a health crisis of unseen portions. -- unseen proportions. haidi: we can expect more volatility in chinese assets heading into 2020 three. annabelle is here with a closer look. so much uncertainty in terms of what we could see leading to sharp moves. annabelle: it's not just about the covid outlook. there's any sort of surprises we could get around the property sector come a regulators could make any sort of sharp moves and regulation. a lot of catalyst for market moves ahead and a bigger fluctuation than any time since the 2008 financial meltdown on the mainland. investors saying this is not going to be a smooth ride. you can see that reflected in yuan volatility which hit a record in the onshore market. this trend is going to be

continuing, even with flexibility around china's covid zero policy. as we see a spike in cases, it brings the odds of mobility restrictions coming back in place and that could curb the upside risk or outlook for growth. it is casting a shadow over the outlook for stock markets. a lot of investors have been turning more bullish but there is a note of caution as well. morgan stanley says the path ahead is rocky and blackrock is saying china is on a path to lower growth even if activity is restarting. so this chart taking a look at what we see -- the chinese internet fund etf, a proxy for chinese tech stocks versus this when blue which is tracking the nasdaq and you can see it is a lot more volatile. shery: we could see more

volatility in the crypto space as we continue to watch the house services panel committee and those hearings on sam bankman-fried. tapping a former crypto cop into ftx is collapse. let's bring in joanna singer. what do we know about the new lawyer? joanna: we know she's quite experienced and a former official at the securities and exchange commission. she helped handle the case against ripple, which is still ongoing. she has also done some cases against robinhood, against tesla ceo elon musk, so she has done a lot of high-profile cases and is now one of the lawyers working on caroline ellison's case. caroline appears to be looking for someone with a lot of experience with those big cases

and with crypto. haidi: what does this tell us about the saga and what are you watching out for once we get to that house hearing and testimony from sam bankman-fried? joanna: sam bankman-fried hired an attorney who helped defend ghislaine maxwell, the convicted sex trafficker and did a number of other high-profile cases as well. people are deafly getting as high-profile lawyers. in terms of what we are watching for, it will be interesting with the and senate to see what sam bankman-fried is going to say. is he going to try to stay quiet? is he going to speak as freely as he has the last few weeks? what are the people in those panels going to be looking for? are they going to zero in on certain things? it is a technical issue so we will have to see what they are looking at and what he's going to say. haidi: he hasn't been charged

with any crimes. there's a lot of conversation and a lot of opinions about how this all played out. what, in terms of the various bodies looking into this, what evidence are they looking for to build a case? joanna: they would be looking for anything stretching back from when alameda started, when ftx started, where those flows of money were, what the interaction was between the different organizations and anything like where funds would have gone in terms of personal mixing. there are a lot of avenues people have talked about that could be explored, so it will be interesting to see what the legislators focus on. shery: how much of all of this has been priced into crypto markets? bitcoin is still off 17,000 at this point.

joanna: a lot of it has been priced in but there could be more dominoes to fall because there could be some entities trying to see what they can get out of ftx. even some of these other bankruptcies or implosion's in recent months, sometimes does take a while for all of that to sort out and we have seen a number of people saying it could go through the first quarter of next year, for instance. we had standard chartered saying that coin will goad down to 5000. there could be more coming as all of this works its way out. haidi: bloomberg's cross asset team manager joining us with all things crypto as we get into a q. week with that house hearing. let's get to su keenan who has our first word headlines. su: we start with the policy chief of japan's ruling democratic party who has met with the taiwanese president in taipei.

it's the first visit from a top member of japan's ruling party in 19 years and comes as tokyo prepares to boost military spending. they discussed taiwan's participation in the trade deal and enhancing partnerships on chips. chinese officials are further downplaying the risk of covid-19 as restrictions ease. china's top medical advisor told state media the omicron variant that the rate is as low as that of the common flu. he said most bull recover within seven to 10 days. the advisors comments follow the government's latest line on the -- on the virus as china moves toward exiting its covid zero policy. thailand has reached its target of welcoming 10 million foreign visitors this year. a drastic contrast with less than half a million overseas visitors in 2021. authorities expect foreign tourist revenue to be more than

$14 billion this year. recovery may be faster depending on how soon china reopens borders. thailand is targeting $43 billion in foreign tourist receipts next year. france and morocco are set to face off the semifinals of footballs world cup. the french beat england after hat -- after hurricane missed a penalty shot that would have brought scores level. morocco became the first african or arab team to reach the semi's, beating portugal to set up the match against france. french president emmanuel macron is heading to qatar to watch the game. 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'm su keenan. this is bloomberg. shery: coming up, we will explore the space as this in the plan to commercialize shooting

stars, next. this is bloomberg. ♪

haidi: watching the numbers for november two out, produces under -- producer prices thing a 42 year high in september. we will be getting a read on the

plumbing area machine tool orders. a decline from the previous month. plus we keep an eye on semi shares, the u.s. directly asked japan to cooperate on its chip export curbs against china. shery: our next guest runs a start up aim to commercialize artificial shooting stars. the company developed satellites that would launch marble size particles to enter the atmosphere. star pellets allow the shooting stars to last longer. the company launched two satellite tests in 2019 and aims to lunch the next one in 2000 when he four. what does now is the founder and ceo. good to have you with us. this idea is hassan aiding and sounds romantic to be able to generate shooting stars, but you have had some challenges in the last few years. your timeline has been delayed. tell us where you are right now.

lena: thank you so much. our shooting star is planning to have 2024 -- we plan to have our first commercialized shooting star in 2020. however one part of our satellite, there is something wrong, so we can't deliver our shooting star yet. so we are re-creating and building our new satellite. the next challenge is 2024. shery: when will this eventually be available for individuals to purchase? lena: individuals, maybe 2024. however, after our first

potential client could be tourism government or the tourism industry. shery: are there possibilities beyond entertainment? lena: thank you so much. of course, it is entertainment for people's curiosity and interest in the space industry and science. at the same time, i would like to contribute to the science. so our shooting star can be used to measure upper atmosphere data. the messes here. if we can no about the messes fear, we can know about the mechanisms of climate change.

that is why we are doing our shooting stars. haidi: you are still looking for potential partners, be it in the u.s. or japan. i know spacex was one of the partners you are looking at collaborating with. can you give us an update on that? lena: yes. we are collaborating with many international companies for creating satellite and lunching satellite. also, for the sales marketing side, we have partnered with united kingdom partners. haidi: what change do you think japan needs most right now? lena: the japanese space industry is increasing, developing and developing.

it is a very good opportunity for us and of course the japanese government is focused on the space industry, so it has become a nice situation for us. haidi: great to have you with us. the founder and ceo of a. tune into bloomberg radio to hear more from today's newsmakers and get analysis from the daybreak team there. we are broadcasting live from our studio in hong kong. listen on bloomberg radio app. this is bloomberg. ♪

haidi: take a look at the numbers we're just getting out of japan at the moment. that number coming in at 9.3%, higher than expectations. really picking up the pace from 9.1% in the previous month. when it comes to the month on month number, we are seeing a stronger-than-expected gain. .6%. the survey called for .5%. sticking to the same pace of growth from .6% in the previous

month of gains. we continue to see the buildup when it comes to the factory prices and whether that's going to translate to wage growth. it will put a tighter squeeze on profit margins. we have seen a few months of that surprisingly strong jump in japan's consumer price. the weakness we have seen in the currency for much of the year, all of that is dropping. import costs weighing on selling prices overseas, so we could see the stronger ppi number, meaning more companies will pass on their costs to consumers. watch for that when it comes to cpi inflation. shery: let's hear from former u.s. treasury secretary, larry summers, that says china's move to abandon its covid zero stans could be the biggest policy shift in decades.

but it could be too soon to make productions on the implications of the change. larry: i think we know two things -- we know a big change in china happened because of an expression of popular will and protests. that is a profound thing for the governance of that superpower with 1.4 billion people. you are quite right. we don't yet know how this is going to work out. is this going to be a successful rejoining of the reality of the rest of the world or is this going to lead to catastrophic, delegitimizing performance of the chinese health care system? we don't know. but either way, there's a big chance china is going to be a quite different country six

months from now than it is today. i think all of us are always watching china carefully but we need to be watching china much more carefully over the next six months, when you are going to be seeing leadership change below the level of xi jinping, of course. at the same time we will be seeing probably the biggest set of policy experiments we have seen in china in decades. haidi: former u.s. treasury secretary, lawrence summers let's get a check of the latest business flash headlines. apollo global management is said to be among companies and talks to buy claims from ftx. the report says investment firm 507 capital has bought multiple claims from hedge fund clients of the collapsed crypto

exchange. reuters is reporting air india may be ordering jets from airbus and boeing. including airbus a350's and boeing 787 and 777. sinopec has signed a framework citing the saudi aramco to build refinery and produce ethylene units. the chinese company says it signed mou with the saudi oil producer to build a petrochemical facility in saudi arabia. the collaborations are aimed at jointly coping with the energy transition. shery: these are some of the stocks we will be watching when trade opens in korea and japan. so conductor stocks in focus. the u.s. directly asked japan to cooperate with chip export curbs

against china. we are looking at these names in japan and south korea. coming up in the next hour, here why -- we will speak about the outlook for property in china and hong kong. the market opens in seoul and tokyo, next. this is bloomberg. ♪

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>> this is daybreak: asia. we are counting down to asia's major market opens ahead of biggest central bank decisions. the fed not to mention the ecb, colombia, mexico, philippines and many more. > it is going to be fast and the furious especially over the 24 hours of wednesday and thursday when the big three come in. the other piece of the puzzle is what happens in china. the central economic work conference. the u-turn in narrative continuing to change when it comes to covid cases. all of this weighing into markets. what are we seeing going into the open? >> a lot of different catalysts that could cause momentum in either direction. volatility in the fix index looking subdued. we have the opening of japan and korea. we're also keeping an eye on

what happened in japanese producers prices data. that number rising 9.3% on the year. more than estimated. we are continuing to see firms inside japan to pass on the price gains to consumers. that is negative for the session today. the nikkei dropping 6/10 of a percent at the start unsurprising even the meeting we had from the wall street session on friday. we did have data dropping in korea. first 10 days of trade for december. a global bellwether for us. exports, a huge slump of 20% on the year. imports contracting down 7.3 percent. the trade deficit coming in at $4.92 billion. that is a negative free sentiment in this section. the kospi dropping 7/10 of a percent.

the korean still trading around the 1300 level but more strength coming into the dollar this morning. in australia one hour into the trading day for the asx 200. one sector is leading the losses and that is utilities. unsurprising given the move we had from this trillion government friday. imposing a cap on domestic energy prices. gas companies tumbling. also keeping an eye on what is happening in the oil market. wti rebounding from the biggest weekly loss since april. a key oil pipeline ring pain shot in north america. the respected -- the expected reopened in china. shery: our next guest is expecting a whole lot of volatility. not surprising given the number of decisions we have going on. drawing us is the head of economics and strategy.

good to have you with us. it seems puzzling when we have investors and the fed not necessarily aligned for what happens next year. could we see a hawkish surprise next week? >> that is a good question and one the answer could depend depending on which aspect we probe. in terms of the rate hike move this time around, it is pretty much flagged. everyone is expecting 50 basis points. there is no real impetus for the fed. however i think the main difference is the assistance of how long the fed pulls its rates up. the difference is not too great. either side of 5%. the fed could get up to five and a half. the major drill would be markets

expecting rate cuts by the second half of next year paired by 2024 they expect even more significant cuts. the two big elements of surprise could be in the 2023 dot plot rate. the 2024, to see how much the fed sees itself receding from restrictive territories. this could be the greatest divergence and greatest source of volatility shery:. the truth is markets have looked for any excuse to rally. when it comes to taking on what the china reopening means, is this a glass half-full or half-empty? >> i think in the sense -- the sense we get is they are happy to see the glass at all. never mind the distortions. to be fair i think it was always in china's plan to open as quickly as possible. it is not in their interest to

hamper their own economic activity. where the differences come in our in coordination and timelines. markets may be expecting something far more imminent whereas this might be slightly more stretched out and more phased in. ranging from its own thresholds for internal lockdowns to inbound visitors. then going on to out donda special as as we get into winter and the lunar new year travel season. defenses may be a bit more cautious than markets are hoping for. haidi: if we get a flurry of reopening do you expect that to have a major inflationary impact? >> that is the other angle to look at. our sense is there will be inflationary spots. i think there will be some migration of inflation.

aggregate demand contraction becomes a big problem for a global recession. china tourism might contribute an offset for the usage of fuel for travel. the other is there may be more migration of inflation from goods to services within the region and in some of the popular destinations for chinese tourists to continue. i think an aggregate basis given even $100, it is going to be somewhat less inflationary than we have seen from the middle of last year. inflation would start to recede. the problems is how sticky it remains. that is the stickiness china could contribute to. haidi: markets like to simplify because we are looking for the peak in inflation could the peak in the covid zero policy in china.

is the problem there will be structural inconsistencies within each of those narrative for next year? not to mention a more geopolitical uncertainty. do we need to be more nuanced about the outlook? >> i think we do and i like the point you made which is simplifying it for markets. we cannot run away from that. the market, we deal with everyday. it has to have a more simplified distilled version of the trade. that is where the sense really is markets will be quick to celebrate any downshift in inflation and in the details. i think the problems, the stickiness might come about during the window and perhaps the biggest question next year for markets is what it would take for the fed. we are quite sure with the fed's communique they want to keep rates higher for longer.

shery: what does that mean for the dollar because many it seems are concluding that we have seen the peak. >> traditionally and i am not supposed to tell you this. i'm supposed to tell you the dollar should peak three to six months before we see peak rates. very consistent with the rate so far. i think that is pretty much the key. i don't expect it to we accelerate much further but i don't think we should fall back on the evidence we have seen previously where the dollar starts to decline in more sustained manner because this time around the sheer lack of alternatives given fragmentation risks any the eurozone a companies ecb tightening. you find the counterweight for the dollar to decline is just not as compelling. we do head into recession risks and for the angle of em currencies, it is hard to

emphasize a stronger sustainable asian currency against the backdrop of recession risks. haidi: head of economics at strategy. we will have you on next year and get a straight answer finally. let's get over to su keenan with the first word headlines. >> the u.s. will send a delegation to china in the coming days following up on president biden's meeting with xi jinping last month in the g 20 summit in and in egypt. the state department says the visit is to continue responsibly managing the competition and to explore potential areas of cooperation. the visit prepares for and secretary of state antony blinken's planned trip to china early next year. to pakistan, the army is accusing afghan forces of artillery and mortar fire across

the water which killed six people and wounded 17 others. pakistan says it responded in measured way to what it alleges is an unprovoked attack. the violence follows a series of deadly incidents along the southwestern borders that have raised tensions with afghanistan's taliban administration. a hong kong court has sentenced former media mogul jim eli to five years and nine months in prison for fraud. this as the city cracks down on dissidents. he was also reportedly find more than 250 thousand dollars and banned from working in company management for eight years. he is serving 20 months for his role in unauthorized assemblies during the 2019 antigovernment protest. nasa's orion spacecraft has splashed down in the pacific ocean off the coast of mexico. it is a successful end to a 25 day test flight that sent the unproved vehicle around the moon

and back to earth. the flight helps pave the way for nasa's program to return humans to the moon later in the decade. the next mission aims to fly astronauts around the moon in 2024. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg. haidi: let's take a look at some of the movers we are watching including those in the chip space. >> taking a look at some of the biggest names in japan this morning, just about 10 minutes into trading for japan and korea. we have local media reporting the u.s. has directly asked japan to cooperate on a chip export ban against china. this is from kyoto in japan. the u.s. commerce secretary called her trade counterpart in japan to discuss it. saying this is perhaps the first ministerial request from the

u.s. on the matter. japan and the netherlands are the world's top suppliers of machinery and know how to make chipmaking equipment so we know from our bloomberg reporting last week dutch officials are considering a similar export prohibition. we are seeing most of the names trading in the red. in other sector we are watching slide this morning is what is happening in the australian energy space. these utility stocks sharply lower given the fact we did not have the strength government on friday putting a cap on energy prices. the question is whether this plan can go ahead. parliament in australia it will be recalled on thursday. there is opposition already from the green party compensate cool companies. shery: we are also watching china's property sector going into the open. we will get the outlook on china and hong kong's real estate

market. china's top health official says covid is about the same as seasonal flu should the latest impact on beijing's pandemic policy to that. -- policy pivot. this is bloomberg. ♪

>> china is the biggest car market on the world. if you look at the size of the chinese market it is actually bigger than if you put the united states and the e.u. together. what happens in china matters for the auto industry and for mercedes-benz. the central government is trying to put stimulus into that and see if they can restart the economy. glass half-full. 23 could get better. shery: that is the ceo of mercedes-benz on what a china reopening could mean for the auto industry. this as top chinese officials continue to downplay risks of covid-19 as cities across the country dismantle many restrictions. beijing now asking covid patients not to call the emergency hotline. our chief north asia correspondent is following the latest development.

who can blame them? for years you have been hearing how deadly covid is and we have this shift in narrative. > this is that they let about the people and the policymakers in china are going to have to sort out. the better part of three years the chinese government has been telling the chinese people they are protecting them from the biggest health crisis and dangers they have perhaps faced in their life and now they are saying don't call the hotline. you're going to be ok because the top medical advisor is essentially saying and he is saying the omicron variant that is sweeping through china is essentially the same thing or just as lethal and dangerous as the seasonal flow with a fertility rate of 0.1%. they are saying there is little evidence omicron is reaching the majority of patients lungs making at leslie. it is again a chorus of

different policymakers, top officials and advisers who are talking down the dangers of covid as the government implements and that is what the people's daily is saying. the local governments across china are swiftly starting to implement the 10 bullet points, the steps to open up the economy and deemphasize the covid restrictions. deemphasizing covid zero. there is going to be some bumpy weeks and months ahead especially as we enter the holiday season in china. the 21st of the 27th is the official chinese lunar new year holiday but it is actually a 40 day period where many people traveled, many people spend money pre-pandemic. we will have to see if this abrupt u-turn from deemphasizing covid zero to emphasizing covid growth, whether the consumer will play their part shared

whether people will have hesitancy after three years of being told that their health is at severe risk. haidi: given the chinese new year is so early, you have to wonder whether that is going to contribute to more cases if people are mobile in january or going into january. the pivot to progrowth is an interesting one because we don't have an idea of how they plan to do that. will we have more details this week? >> just to pick up on what you said about the number of cases, the number of cases dropped on saturday but that is to be expected because they are not testing as much. all of the kiosks have been removed and you don't have to get a easier test to use public transport or public civilities -- public facilities. they are testing fewer times. you have to take that with a grain of salt. as far as economic stimulus, how are they going to have it to boosting the consumer?

you have the central economic or conference that starts on thursday. other meetings where it is a closed-door session. what -- hopefully we will get some blueprint for how they plan to transition the economy to emphasize the consumer. part of the consumer equation is the property market because you have had all those pleasures -- all those pressures on the government. i would guess the central economic work conference is going to focus on how you transition from overregulation if you want to call it that or heavy regulation on the property market to say we are done with that. now we want to stimulate that. what kind of stimulus, what kind of measures will come into place for the consumer to potentially buy those uncompleted properties that sit idle right now? haidi: a policy about-face on so many different levels from china.

stephen engle with the latest. the former u.s. secretary larry summers says the decision to abandon covid zero could be the biggest shift in decades. >> i think we know two things. we know that a big change in china happened because of an expression of popular will and protests. that is a profound thing for the governance of that superpower with 1.4 billion people. you are quite right we don't yet know how this is going to work out. is this going to be a successful rejoining of the reality of the rest of the world or is this going to lead to catastrophic delegitimizing performance of the chinese health care system

and we don't know but either way, there is a big chance china is going to be a quite different country six months from now then it is today. i think all of us are always watching china carefully but we need to be watching china much more carefully over the next six months when you are going to be seeing leadership change. below the level of xi jinping of course. at the same time we are going to be seeing the biggest set of policy experiments we have seen in china in decades. shery: the former u.s. treasury secretary larry summers speaking with david westin. coming up, the two american security pros who staged carlo guns spectacular escape helping with the fugitives help for their legal bill. this is bloomberg.

♪

haidi: let's get you today's big take. this is quite a story. the fallout from the daring escape of japanese justice of the former nissan bonds. bloomberg senior editor joins us. carlos ghosn is free at great cost of the men who helped get him there. it is no wonder this is the stuff of a netflix documentary. a hollywood film is in the making. >> we are not so sure about the hollywood film but it seems a story that is tailor-made for the big screen. it has been almost three years since the dramatic escape. one of the most interesting in at least business news.

now we get a little more detail on how it happened and the fallout as well. and the cost some of the folks, namely michael peter who led the extraction paid for somebody else's freedom. shery: what is next for them? are they expected to see any of these costs given that it seems in your story he feels he was promised that? >> the important thing to remember is there was never any agreement to be actually paid for the extraction. that was a conversation i was going to happen afterwards. at the moment the issue they are raising is to be made whole. what i mean by that is to cover the actual costs of the escape which totaled about $1.3

million. i think about two thirds of that was already covered. the massive legal bills that followed when michael taylor and his son fought extradition to the u.s. and subsequently made their way through the japanese legal system. that bill we are hearing is roughly $3 million. they are asking to be made whole . not necessarily so walk away with a lot of profit per se. haidi: because they feel deeply betrayed by the trump administration and subsequently the biden administration. what were they expecting? >> they were not expecting to be extradited. extraditions to japan from the u.s. are relatively rare. we have only seen about 31 in 18 years. that includes numbers from south korea which is the other country that has an x tradition treaty

with -- extradition treaty with japan. what is interesting is the extradition happened relatively quickly and unexpectedly. there are going to be a lot of questions about why the was. shery: reed stevenson with a fascinating story. coming up next we will talk about whether china's moves to prop up its housing market are working. this is bloomberg. ♪

>> you are watching daybreak

australia. chinese officials are further downplaying the risk of covid-19 as restrictions are eased. the top medical advisor told state media the omicron variant death rate is as low as that of the common flu. he said most people recover within seven to 10 days. i follows the government's latest line on the virus as china moves towards exiting the covid zero policy. the policy chief of japan's democratic party has met with the taiwanese president in taipei. first visit in 19 years. it comes as tokyo prepares to boost military spending. they discussed trade deals and enhancing the partnerships on ships. to thailand, they have reach the

target of targeting 10 million visitors. authorities expect torus revenue of more than $14 billion this year, recovery may be faster depending on how soon china reopens borders. france and morocco are set to face off in the semifinals of the world cup. morocco became the first arab team to reach the semi's. the french president is heading to qatar to watch the game. 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'm su keenan.

this is bloomberg. haidi: let's get you a check of the markets. >> we are looking risk off. it is shaping up to be a pivotal week for markets, the fed, boe and others. the inflation print. rates need to come higher, we are seeing a former dollar. the korean won is trading back to the key level. exports are dropping more than 20% on the first 10 days of december in korea. the trade export picture is a global bellwether for us.

another signal of the deteriorating economic backdrop with recession fears playing out in bond yields, particularly at the longer end of the curve. equities wise, half-hour into the session. you can see these losses, if you take a look at was happening in trading volumes, we are getting a different picture coming through. you can see here, well below that. another signal that investors are unlikely to put big bets that are due, conviction is not showing up well in the vix index, declining around 80%. the other big factor what happens in china given was happening with the coronavirus situation. shery: we are watching that closely. lockdowns, centralized quarantine.

a little time has been put in place in mitigation measures, an explosion of virus cases given the reopening. stephen engle has more from hong kong. >> hong kong has served as a blueprint, it's a huge cautionary tale. when the omicron variant swept through the city of 7.5 million earlier this year, the sophisticated health care system was overwhelmed. at one point, hong kong had the world's highest death rate due to. there certainly was not enough space. some of the sick were put outside as body bags stacked up in some words next to the infected living. morgues were inundated. most of the total covid deaths happen between february and april of this year.

like hong kong, china has an under vaccinated elderly population but on a much larger scale. china does not have the sophisticated mrna vaccinations available. >> we have to remember china has been protecting the public for so long that there has been no herd immunity in china. this is going to start. this process is not going to be smooth, it will be quite difficult. >> with a sudden dismantling of restrictions including mandatory pcr testing, china is bracing for a surgeon infections and deaths. more than 2 million fatalities by one estimate. criticism of covid zero is being replaced by concern that the policy shift away from the eradication of the virus is happening too fast and china is all prepared like hong kong for

a health crisis of unseen proportions. stephen engle, bloomberg news. haidi: bloomberg has learned authorities may further soften their stance at the academic work conference that kicks off on december 15. this comes after the top decision-making body said it will seek a turnaround for the economy for 2023. let's get more. it's hard to do this without staging a comeback for the property sector. looking at how beleaguered the broader seller -- sector has been, we demand for new homes in china, new home prices are down. we are seeing developer below book value even with the recent recovery. if they drop, do think that

makes an impact? >> let's look at was happening in china property markets right now. i think we are seeing the most relaxing policy since the implementation in 2020. currently, the chinese property market is seeing different factors. one of them is china is not doing well at the moment. in q3, gdp growth is climbing back to positive territory. the forecast is around 3% to

3.5% of overall growth, so it's not doing particularly well. we also have the central government trying to control the property market. haidi: we might see a turnaround , but is it really the smaller cities? >> overall in general, there is a tendency for the central government to relax the policy for the whole country as a whole.

of course, there is a different market force. i think it will take a while even if the government relaxes their policy. shery: how much is a while? we are seeing a slow and gradual exit from covid zero. a lot of people are thinking the exit will be bumpy. when can we expect the demand for property to come back? >> depends on what kind of

market we are talking about. even just relaxing the policy for covid or the property market, i think the residential market will be performing quite stable in the next six to 12 months, but if we are talking about the commercial property market, it will take a while. business sentiment is not there yet. shery: on the residential side of things, how and orton is the completion of those developer projects? we have seen distressed developers lead to a lot of public anger. how important is this part of the equation in order to shore up confidence? >> some of the policy support by the central government is trying to support the sector, because we see the last 12 months, the

government is doing something to try and loosen not and smooth the market. supporting developers who are reporting problems. going on, i think some of the larger developers are still agreeing to having some challenge in three to six months. shery: in the longer term, how do you expect the commercial property sector to change when you account for pandemic trends we are seeing, more people staying at home, making

permanent adjustments according to long-term changes. once covid is alleviated in the economy is back, they are trying to expand in china as a whole. i think the market sentiment will be fine. shery: could to have you with us. coming up, we will get the global economic outlook as analysts see inflation slowing down while recession looms, but there may be a wildcard that could rattle expectations. this is bloomberg. ♪

shery: the biggest central banks will wrap up interest rates. there is a wildcard it could rattle expectations.

my our economy is a slowdown? >> the reason is interest rates have been pushed up so high that consumers are going to start spending less, there is downward pressure on demand. at the same time we are seeing prices come off the board. there is a mechanical effect. when you consider all about, it will come back down to where central banks want it. compared to this year's price

gains, shery: what does it mean for housing prices? when it comes to fedex expectations, floating rate mortgages and fixed rates. we will have to be repaid, economies have been robust throughout the hiking cycle. there is a feeling it will hold up, companies will have to make

decisions in terms of staff. central banks are already slowing down the pace. of course, more tightening is expected into next year. most aggressive in decades will probably slow as we go through 2023. shery: what are we expecting through the chinese economy next year? not only because of the reopening but because of the policy divergence? >> this is the big unknown. it's a fast-moving story. china is moving away from covid zero. in truth, we do not know how it's going to play out. there is a public health issue then number one. first and foremost, we have to see how china manages that.

there is a feeling it will put pressure on global inflation because china's consumers, demand for overseas travel for tourism. money flowing into overseas real estate. china itself, domestic will demand more energy and oil. obviously, it would not happen if the economy was humming. public health issue number one. i will probably put something as a floor under the global inflation story. haidi: always great to tie that together, even though there is so much we do not know. the chief asia economics responded. coming up top money managers are

turning more bullish on china. we get a preview of the market opens,. this is bloomberg. ♪

haidi: apollo global management

is set to be among companies in talks in the report says an investment firm has already brought multiple claims. there ndma by jetliners. there is said to include boeing. they took charge of air india, merging it. sinopec has a framework with saudi aramco to build a refinery. the chinese company says it has signed mou's with the oil producer to provide the petrochemical facility.

shery: the world's top fund managers are bullish on chinese stocks for this year, predicting equities will continue to rally. this is coming from a bloomberg survey, and now 60% of respondents recommending chinese shares. >> 30% are saying they are a cell. there is a tone of caution. the keyword right now is bumpy. volatility. things will be difficult. the key thing here is there is momentum behind the market.

that's what people want to get into. when you compare it to a more difficult backdrop for markets in the u.s. and europe, fund managers are saying valuations are low, the market has underperformed. haidi: the my latest -- the latest market sentiment. some stocks are watching, asian semiconductor stocks. we are watching tsmc. foxconn as well. shery: take a look at how markets are trading across asia, the sea of red with the nikkei down. wti and brent are rebounding in

the asian session, this after oil posted the biggest weekly loss since april. we have low liquidity. not to mention, alleviating supply concerns. there is so much anxiety in the markets, not only do we have u.s. stocks falling last week, the dow seeing its first weekly drop since september, but we are heading toward so many central-bank decisions. we are talking about this, the fed, ecb, boe. mexico, the philippines and columbia are expected to hike rates. the pboc is the one central bank we are expecting to buck the trend and probably keep the one-year year rate on hold. we have plenty of data out of china, the november activity numbers are not expected to look that great. haidi: there is a few key data points. the domestic activity indicators

are expecting the slowing us the board, especially when it comes to more weakness. looking ahead, we are focusing on the economic work conference to give us an indication of what policy will be the gdp and budget numbers, take a look at u.s. futures numbers, a pivotal week with the 24 hours on wednesday and thursday of those three central-bank decisions. that is it for daybreak: asia. market coverage continues. this is bloomberg. ♪ \

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