haidi: a very good morning and

welcome to "bloomberg daybreak: australia." >> we are counting down to asia's major market opens. shery: the top stories. media reports signal covid related deaths may be rising in beijing despite china not reporting any virus fatality for two weeks. haidi: bloomberg sources say sam bankman-fried plans to drop his fight against extradition to the u.s. shery: the yen jumps on reports the japanese prime minister may consider flexibility in the 2% inflation target. u.s. stocks under pressure on friday. we are talking about the longest streak of weekly losses for the s&p 500 since september. hawkish fed comments not helping the markets especially after the fmoc and chair powell's comments. a mixed picture for the treasury

space but do your yield down almost 20 basis -- but the two year yield down almost 20 basis points. we also have losses for oil. the recession fears being felt although on the weekly side of things we have seen another week of gains for oil prices. this week we will be watching earnings from the likes of nike, fedex which will give us more sentiment when it comes to consumers. we will also be watching the inflation numbers coming from the fed not to mention consumer spending and incomes as well. >> asian markets looking to take their cues from what happened in the wall street session so we are setting up for a week of trading. kiwi stocks already online. not a lot of cues to moving the needle. china's lpr is on tuesday.

japan has been the most interesting mover. what we are seeing and at the yen, it is a little stronger. what is driving that is traders having their first chance to react to the local media reporting from the weekend. the prime minister could be looking to revise a tenure agreement with the boj around the flexibility of its inflation goal. if the reports are confirmed it would be an contrast to what we heard in june when he said he expected the boj to stick with the cpi target. let's switch and look at what we are expecting for the coming month. a lot of analysts looking to put out their projections into the coming year. the selloff in the asian benchmark minus japan down 20% over the last 12 months. that could change as we get into the new year. analysts seeing gains of 10% over the coming 12 months.

but a lot of potential headwinds to that including whether the bumpy reopening in china with rising covid cases and deaths and also continuing to see the recession risks building. shery: markets and economists watching what is happening in china as some positive sentiment and encouraging moves could be seen when it comes to the exit from covid zero but it will be important at a time that we continue to hear the hawkish frederick coming from different fed officials whether it is john williams or mary daly. they want to see this clear evidence of easing price pressures and there is a big difference to what markets are pricing in that the fed will do. they only see a 50 basis point rate hike when it comes to 2023 but we have seen the medium forecasts coming from the fomc seeing rates ending next year at 5.1%. haidi: to be sure, you take a look at the wild run for the

u.s. stock market and we have sapped confidence. it has been a brutal year even if you look at the rebound charted since october. we are starting to see nearing the end of the cycle. traders are trading on these concerns that the tightening policy will smother growth going into next year. we are down for the s&p 500 about 20%. you look at the rate sensitive growth stocks. it does look like not just the economic recession but the prophet recession is driving not a great deal of conviction into the new year. shery: there was a lot of conviction when it came from china exiting covid zero and consumers trying to price that in. we are seeing a bumpy ride when it comes to the exit but we are hearing from media reports that the number of covid positive

dead arriving to funeral homes is rising. for more, let's bring in managing editor for asia, emma o'brien. it is difficult to get clarity when it comes to the number of deaths when it comes to a country like china but at this point, what do we know? >> it appears the covid data, the counting around cases and deaths seems to have fallen apart in china. we know they have basically given up on counting asymptomatic infections which was the bulk of the infections and it appears there is something going on with deaths as well. there are wide-ranging reports in a raft of media of crematorium's working very hard in the capital beijing. financial times journalist went to one aging crematorium and was told by a worker that there were at least 30 covid victims and

yet china has not reported if it telling you from the virus for two weeks and there has not been a fit polity recorded in beijing this month at all. haidi: when it comes to the key takeaways from the economic conference, it was a market shift from the previous -- encouraging a bit more confidence in the private sector as well. >> it is quite understandable given the battering we have seen china's economy take from lockdowns and covid zero over the last year. it seems a switch has been flipped in the chinese government and they are intent on normalization but some say they are moving too fast given what we are seeing on the ground with covid.

xi once referred to it within a week you have some officials calling it nothing more than a cold and it being really downplayed to. that explains why you have nobody on the streets in major cities like beijing and shanghai and why it might be difficult at least at the moment to realize some of those ambitions when it comes to consumption. haidi: our managing editor for asia global business, emma o'brien. sam bankman-fried, bloomberg has learned is planning to drop his fight against extradition to the u.s. where he faces a range of criminal charges. let's get the details from our banking regulator reporter who is in the bahamas for us. extradition was the next major development that we were waiting on. >> we were expecting to hear in

february from spf and his team that they would fight extradition at that time but reports this weekend from sources who have spoken to him have said they are hoping to fast-track a pitch in the reverse. they are hoping to perhaps not fight extradition during a hearing tomorrow that is actually meant to be an appeal to the bail hearing we heard last week. it seems to be a turn of events according to the sources familiar. we have not successfully been able to hear from his legal team as to why the change in strategy. some speculate that it has to do with the conditions at the prison where he has been held since last week. others say it is something more complicated having to do with the jurisdictional fight between the u.s. and the bahamas. we hope to learn more about what exactly that is after tomorrow's hearing. shery: u.s. prosecutors have

charged him with several crimes. what can he expect when he arrives here? >> if his pitch to be extradited to the u.s. is successful, sources say we can expect him to be grilled about activity and relationship to the charges in the u.s. but he won't be able to avoid having to answer for the companies transactions with other companies including alameda research or its relationships with a number of lenders or its withdrawals to customers in the bahamas. he will have to answer questions about those matters as well even if he is extradited. in the first instance he will have a round of questions regarding the charges from the u.s. and we can also expect whether the bahamas bring charges quickly or not for him to answer to charges from here as well. shery: let's get over to vonnie quinn.

>> european union member states are set to discuss a gas price cap one third lower than the original proposal. monday's meeting is an attempt to break a deadlock over the controversial issue. they suggested lowering the ceiling to 188 euros per megawatt hour compared to the 275 euros proposed by the european commission last month. north korea fired at least two suspected medium-range ballistic missiles on sunday which followed pyongyang's test of a new rocket engine. south korea called the launches a violation of u.n. resolutions. this year kim has fired off 65 missiles, the most in his decade of power. he will not resign saying it would not solve the country's political crisis. she still insists on bringing --

she has asked congress to approve the constitutional reform needed to hold the early vote. she says it is what 83% of the peruvian population wants. pakistan's former prime minister plans to dissolve two regional legislatures in a move to return to power. his objective is to push the government to early elections as he has majority in two of the four provincial assemblies. malaysian prime minister is holding a confidence vote later on monday to show he commands a majority in parliament. given the backing of nearly two thirds of the countries to 22 lawmakers, super majority that no malaysian leader has obtained sense 2000 eight. leaders and his coalition have signed a pact to ensure his administration completes a full five-year term. 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.

shery: the world cup in qatar has ended in dramatic fashion with argentina eating france and a penalty shootout. argentina has taken the trophy home for the first time in 36 years. patrick gillespie joins us live. it has become a common site in new york to see grown argentine man -- men crying. i cannot imagine what the scene must be in buenos aires. >> it is a full-blown party here. a lot of men women and children are crying. people are still going crazy in the streets. this is one of the most euphoric moments i have ever seen in my time here. a special day for argentines who

are going through a lot with the economy. haidi: a rare moment of pure euphoria amid triple digit inflation and long-standing political polarization. is this a short-term period of enjoyment for the country? it is very meaningful. >> the world cup victory [indiscernible] means more than in other parts of the world. this celebration will go on until at least the end of the year. argentina has inflation near 100%. a presidential election next year that will bring a lot of uncertainty to the economy. there is long-standing political polarization in argentina. today there is a feeling of

unity for argentines. you don't see the usual political divide. but this will fade and the economy and politics will recover going into the new year. shery: it is such an achievement for lionel messi. >> you could make a good argument that messi is if not the greatest player in world history, certainly in argentine . na. his predecessor passed away last year. they came through and won the world cup here he this is a historic moment, a bittersweet day. it has cemented his legacy in argentine history. haidi: patrick gillespie, what a

historic moment we are seeing. still ahead, the only company in the world to have fda approval to test a permanent brain implants. we speak to its cofounder and how the company plans to bring its ambitious implant sensors to the market. this is bloomberg. ♪

>> we have clear signs -- >> we are going to go until the job is done. >> we will have to do what is necessary to bring inflation down. >> we will have ongoing increases to about 5% and hold there for some time in order to get inflation back down to 2%. and that is what we are about doing right now. haidi: fed officials reiterating the need for higher rates. shery: on monday eu

administrators will discuss the asked price cap as the european economy continues to take a heavy toll from gas shortage and energy prices. wednesday, the january 6 committee is expected to release it's final report of the attack on the capital from right-wing protesters. policymakers expecting new conclusions or evidence from interviews that the committee has not shared yet. on tuesday bloomberg economist spec the pboc to lower the prime rate by 10 basis points and the boj will release its latest policy decision ahead of japan's inflation data due on friday. haidi: we are also waiting for ratings reports. prolonged weakness in china and rising promotions from excess inventory. also looking out for numbers out of fedex. investors are keeping an eye on any gains at the company is making based on the cost

reduction initiative it rolled out in september. that is a pretty busy week ahead just before the christmas break. as we head into the end of the year it has been a beautiful -- a butte -- a brutal 12 months for u.s. stocks. strata just are seeing a different story when it comes to asia. let's bring in garfield reynolds. let's start with the outlook for the u.s. hawkish pivot is a hawkish downshift. not the perfect scenario for markets. it has dried adjust talking about a profit recession going into next year. >> the difficulty has been stocks showed some resilience in the wake of the soft november cpi print and the way that and some of the other data cemented the idea that the fed would be going from 75 basis point hikes

down to a 50 basis point hike in december. they delivered that but at the same time they meet a clear they plan to keep going and to stay higher for longer. that hurt sentiment as did some signs that other parts of the data complex are weakening and recessions are becoming more likely. this growing realization that just because there might be a recession does not mean policymakers will take their foot off the brakes. so to speak. it is especially concerning when you look at the way it has been a brutal year for stocks and it is one of the worst decembers at the moment way it is going with the s&p 500 down more than 5%. that is a combination we only saw in 2002, strong declines in december to cap off a bad year for stocks. they were already cutting rates because the recession was so severe. if there is a recession now,

will the fed cut rakes -- rates? it seems unlikely. shery: evan that challenges the u.s. market faces right now, are we seeing any opportunities out side the u.s. especially given what is happening with the china reopening? >> that has been one of the things equity investors have been looking for not just in china but in asia in asia in general because china has been a huge burden for asian equities over the last year and a half when, if you remember back, when we were first coming out of covid, at the end of 2020 there was a strong expectation that china would lead the way because it was first in and it seemed to have it under control with covid zero. that did not work out. now that china is joining the rest of the world in reopening there are strong hopes it will help equities outperform.

there are a number of other factors weighing on china but there is optimism that the government is, just as it has moved from covid zero because the price was too high, that is helping to build the narrative that they will move in other directions that are also going to help the economy because china's economy is in trouble and it needs all the help it can get especially from the authorities. that is underpinning optimism for china as for asia which if the u.s. slows down and we do get a weaker dollar, that will help asia and it is not europe which is probably already in a recession and faces a war still on its doorstep, some very difficult geopolitical outlooks there. geopolitics here is not simple here either but it is not as straightforwardly gloomy as it is in europe. haidi: in the meantime, hope

springs are turned no when it comes -- hope springs eternal that we will finally see a pivot from the boj. >> we had a reporter over the weekend from kyoto news citing government sources saying the prime minister is planning to consider moving away or giving some flexibility to the 2% price goal when he discusses things with corroded his successor as boj governor in april. that is a baby step towards a change in the policy regime that helped turn the yen into the worst-performing currency this year. we have had the first chance for

traders to get their teeth into this report. we saw gains as much as 0.6% early on for the yen. the big question is does this get confirmed? that is being -- that it is being considered? and if it doesn't you could see a stronger move because you can say the days of expecting the yen two 140 or 150 again could be passed us if you have a different approach brewing in japan at the same time you have also got the potential that the fed and others are going to at least slow the pace of rate hikes and possibly move towards stopping and cutting. interest rates elsewhere are going to stop rising so fast and interest rates in japan could come up off the floor. at would give a lot of support to the yen. shery: garfield reynolds with

the breakdown of what to watch in the coming week. you do have the boj decision and cpi numbers as well. you can get a roundup up of all of these stories that you need to know to get your day going in today's edition of daybreak. terminal subscribers go to dayb . you can customize your settings. this is bloomberg. ♪

shery: we are seeing some upside , the greenback had little change last week.

haidi: john williams is reinforcing the fed's policy direction a thing tight labor

market will keep price pressures overweighted. >> my colleagues expect this to get to five percent next year, that gets us into the hopefully sufficiently restrictive stance of policy that will bring inflation back to 2%. we are getting closer to that point, we obviously have to watch the data. inflation data has surprised us and i feel we are going to get to a better place. >> you said that the fed funds rate has to get above the inflation rate to bring down inflation. how far above inflation does it have to get? >> that is the question. we talk about this in terms of sufficiently restricted, it is about getting them high enough and keeping it high for enough time to see clear signs that inflation is moving back down on the way to 2%.

my view is to think about real interest rates, look at the median dots if you well and the economic projections we put out, you see the offense -- fed funds rate is around 1.5% and i think that is a reasonable view. we need to watch of the data and see. that is what i am thinking right now. >> there are many top economists and fed officials who are saying that it is looking more and more like you will have to go higher, even from where you are now, heading towards 7%. could you see that happening? what circumstances? what would be happening for you to go ahead like that? >> that is not my baseline. i do not think we will have to go that high. things could happen differently from what we expect and we have two -- around inflation, how

strong is the economy underwent higher interest rates, do we have these imbalances between supply and demand? inflation is 6% or less. we have clear signs the demand exceeds supply in our economy and the labor market. the question of how high we have to get to is depending on inflation and the supply and demand imbalance. we do not have to get that high, we have some favorable developments underway. things we have been talking about for a long time, supply chains are getting better around the world. we are saying that in a lot of different data and we are saying the goods and import prices come down, a reversal of the pandemic era things that pushed up inflation. we have a few factors that brings inflation down next year. the real issue is how we get it all the way to 2%. >> the forecaster unemployment is a big jump, you see a much weaker, almost four percentage points from where you are

looking. you are looking for gep to be much weaker than months ago, down to 0.5%. is this the kind of forecast that is consistent with a soft landing? is it consistent with something? >> the economy is continuing to grow, the median dog is not half a percent for this year and next year. it is an economy where the unemployment rate is rising somewhat as you have mentioned. the meeting will be 4.6% at the end of next year. i do not see this as a recession based on the data. it is an economy that is growing modestly and i think it is an economy that is seeing the imbalance issues between supply and demand. shery: that is john williams with kathleen hays. let us stick with the outlook for central banks and bring in annabelle.

bank of america is seeing a your dilemmas for policymakers ahead? -- a year of dilemmas for policymakers ahead? annabelle: the mandate was clear and they knew that the work that was in front of them. marcus took it easy because we did see the selloff in risk assets and we did not see any systemic shocks and recovering over the last couple of months. coming into next year, the bank of america said is this is when the hard work will be beginning here. that is because inflation is going to be quite sticky on the way down. there are a lot of issues for central banks are there, bring out the terminal chart, one of the bank of america is watching. this is the asian outlook, lot of them are coming down below

the key 50 territory as they are around the world. policymakers are going to be deciding or needing to decide when they do shift their focus from where they are looking in terms of sticking inflation to rising employment and unemployment and in some cases they need to address financial stability risks in the system as well as in the property market. this is quite interesting h aidi. some strategists say that they were so has passed and able fall swiftly and we will see central banks be forced to cut moving into a recession environment. there are a lot of opportunities in this market. investors are being rewarded for saying it is falling.

>> media reports say that the number of covid positive dead in beijing and surging, there are concerns that china is hiding data during the worst wave yet. they cremated 30 covid victims while reuters says funeral homes in the capitol are overwhelmed. china has not reported a single covid fatality in two weeks. china's top leaders focus on boosting the economy, ending at business friendly policies. officials, the central market conference agreed to prioritize expanding domestic demand. they said they'll implement policy favorable to private enterprises. support the property market. bankman-fried is said to trump's fight to be extradited to the united states. he one-off i extradition in a

court appearance next week. he is locked up in a jail after he was denied bail. he is accused of a range of crimes including wire fraud. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. shery: elon musk is seeking a new round of investors, the fundraising follows from oil including more cost-cutting and the suspension of journalists' accounts. let us start with the financing end of things. >> we know from an investor involved in the initial round of the buyout of twitter that the family office of musk is now reaching out for more investors and asking them to pay the same amount as the first run investors. $54 -- $54.20 a share.

he is confident in the longer-term prospects and the initial buyout loaded up twitter with $13 billion in costly debt which he has been slashing jobs and taking over and it is unclear if this new round of investors is designed to help reduce the amount of debt. the turmoil twitter is weighing heavily on tesla stock. look at the last five sessions, tesla had the worst week last week since the early days of the pandemic. the bigger picture, 57% down your to date and the slide has been accelerated by concern for tesla and we know from the sec filing that the recent pressure on the stock had to do with musk himself selling a lot of tesla shares. 3.5 plus billion dollars. the money raised from the share sale may be again to pay down

some of the debt that is weighing on twitter. haidi: there was a big backlash on this story but it seems my elon musk appears to have her first one of the journalist's accounts he has suspended? >> we know the washington post has been reinstated but yes, there were a number of journalists suspended this weekend and late last week because they were allegedly giving out information on elon musk's jet. let us listen to what he had to say. >> you are are a citizen that you are a citizen. -- you are a citizen. you dox and you get suspended. >> a space he put out a pole and he has allowed some of the journalists back on. when you know that there are two

as of early this week, one from business insider and fox news who remain frozen. those who are linked to publicly available info about the status of his jet, he up to bloomberg and all of this -- pop up the bloomberg and you see this will cause his personal wealth to drop because of the decline in tesla stock. it is on musk himself. the suspension of journalists has been roundly criticized in the u.s. and europe. see what happens to the rest of the journalists. many have been reinstated or in the process of being reinstated. shery: the latest on twitter and elon musk. there is plenty more to come. we leave you with live pictures

of buenos aires, this is after the win from argentina against france and one of the electric final matches, argentina leading out of that friends equalized the goals and i went into penalties and it was quite something. argentina's first won in 36 years and the first south american country to win the world cup in five tournaments. this is bloomberg. ♪

haidi: an astringent company has created a brain computer device to help people communicate through their thoughts. elon musk's neural link is its competitor. it is affiliated with the profound -- one of the cofounders is affiliated with the bloomberg 50 list. tell us about the technology and what they funding is being used for and what you expect from the next round of these piles? -- trials?

efficacy? >> we are excited. sync on is developing a brain machine, it allows people with paralysis to control external equipment such as a computer by thinking about it and using their minds. we have completed a number of tiles in australia -- trials. we will go to the u.s. auto than a pivotal trial and allow us to complete the safety and efficacy trials for this technology and help us get this to the people who need it. haidi: how significant is it to have backers like jeff bezos and bill gates? >> it is amazing for the industry as a whole and for us it provides some confidence and some hope for people with paralysis that there is a solution. we have a solution and it is coming.

by joining us we will be able to do through the next phase quickly and insightfully and we will have the technology for them as soon as we can. i think it is amazing that it acknowledges that this is a global condition and the team will be doing it. shery: tell us about the timeline to apply the technology and what you see in terms of regulations in the industry as well? >> there are strict regulations. we are doing everything we can to show and demonstrate that it is safe and functional. as i mentioned, we are doing a trial in the u.s., this trial will go for another couple of years and this will extend to a pivotal trial which is a larger problem with more people to gather more data and evidence it is safe for commercial sale. we are hoping that within five

years we will be able to have the technology that can be supplied to those who needed or wanted. shery: tell us about the technology because this is interesting in the fact it is quite non-invasive the way that you actually put this into people and help them with mobility. >> we see safety as the primary driver in this technology out of the way we are approaching this problem is to have a device that goes in through the jugular vein, we are using vascular access, taking advantage of the blood vessels who exist all around your head and using these as a way to position the device into the area of the brain that is responsible for movement. by doing this and are quite different to all of the technologies out there, we do not need to do invasive surgery. we are not moving the skull, we are not putting electrodes into the brain tissue itself.

we are doing this in a safe and simple way in a way that has a huge number of vascular or blood vessel positions around the globe that will help as we translate this into a commercial product. haidi: or are the bar applications when you get to the pivotal trials for insurance coverage and profitability. do you see this changing the standard of care across many conditions or as an alternative? >> i think it is both. for people with paralysis, there is not other options, this will be the state of care for allowing people to use their minds to control external equipment. there is also technology that is being proved at the moment for people with epilepsy or parkinson's disease where electrical stimulation is used

to suppress the tremors or the seizure. we can access all of those positions with blood vessels. that is not our primary goal at the moment but by using the blood vessels as a way to get inside of the skull and interface through the brain, it provides a solution that is safe to treat a myriad of other conditions. haidi: can you give a comparison to your technology with neuro-link? >> that technology like a lot of the other brain computer interfaces that is being researched at the moment require an invasive surgery, require removal of the skull and electrodes going into the brain. we do not have to do that and that is one of the reasons why the fda has given us as the only company so far with the green light to go ahead and go ahead with it for a human pilot with a permanently implanted device and other trials do not have that because the safety risk of the

invasive procedure is not desirable. that is why we have come up with another solution. shery: good to have you with us, that is the inventor. in the next hour we are talking geopolitics, rahm emanuel points us to flesh out tokyo -- joins us to flesh out tokyo's arms capabilities. this is bloomberg. ♪

haidi: australia's sovereign wealth fund is positioning for inflation protection. live from melbourne, amy, what are we hearing in terms of their inflation outlook and how they are hedging for it? >> they expect inflation to be sticking around for a while and i will mean that there are higher interest rates for some time to come. the ceo of the future fund told me in an interview that they are looking to 2023 to be another year of volatility and extreme challenges in the market. in a report they are releasing today the traditional 60-40 investment portfolio is under

threat and it is time for investors around the world to start rethinking their strategies given the pressures of globalization, inflation remaining, disruptions to supply chains and climate change being a factor in that as well. shery: give us more insight on how that is changing the portfolio. how are they hedging? >> may have told us that for the first time they are investing in gold, that started happening in 2020, it only makes up a few percentage points of the portfolio but still, an interesting revelation to nick and this year they have started investing more broadly into commodities. -- there and they have started investing more broadly into commodities. that is to complement stakes in

various other airports around the world as it seeks those assets that may cushion the portfolio. they are looking at a more venture capital and credit opportunities. they see some further opportunities in the energy transition and in technologies. the are the sort of opportunities we are looking at in the coming months and years. haidi: do they see a risk of stagflation? >> they see a risk but they are not actually predict doing that just yet. nothing like what we saw in the 1970's at this stage. the conditions are very different to what we saw, all of those decades ago but they have raised that as a prospect depending on how things play out over the next year or so. that warning overall from the paper today is the 60-40

portfolio mix it needs to be called into question. investors should not just be assuming that things are going to be returning to normal but rather they will be needing to be active and dynamic in their portfolio mixes to write out the next period of uncertainty. shery: a quick check of the latest business flash headlines, tesla finalizing plans to build electric vehicle assembly plants in northeastern mexico and finalizing the factory as early as next week. the plan is to be located in monterey city, the capital of a state, talks with the company involved the state government and mexico's foreign relations ministry. until well delayed construction of his land german chip plant in a blow to semiconductor sectors.

the cost has jumped to 20 billion euros, much has changed since first announcing plans for the implant earlier this year. haidi: coming up, we talk about the market outlook for 2023 with guests and the u.s. ambassador to japan talks about tokyo's new national security policy. that is it for daybreak australia, daybreak asia is next. this is bloomberg. ♪

shery: