>> you are watching at daybreak

asia. >> we are counting down to the market opens in tokyo and seoul. >> asian equities raising a gloomy end to the week. china looks at quarantine requirements for overseas requirements as authorities dismantle covid zero. sam bankman-fried released on $250 million bill. -- bail. >> we have the open here. at the start of trade, we are seen in the red. a two day rally. not surprising what happened on wall street. more signs of a resilient economy coming through. another stock is bhp. u.k. judge has set a hearing for

date against the company regarding the waste disaster. the stock drop in at the start of trade. we are keeping an eye on what is happening on the aussie dollar this morning. it has erased its weekly games. let's take up look across the border at asian markets. we are seeing similar moves coming through for the kiwi dollar even though it is stabilizing. new zealand stocks trading to the downside. kiwi japanese stocks pointing to a week are stock. it is absolutely going to be a test of the boj's's policy settings. >> we saw so much volatility and little bit of comb.

today we saw the renewed pressure on u.s. stocks. futures opening muted right now. we had significant downside when it came to the new york session. the s&p 500 falling as much as 3% at one point. we also had some signals that the economy in the united states remains resilient. the third quarter gdp being revised upwards. we got a gloomy economic outlook from chip baker michael and. the 10 year yield holding. we also had downside pressure when it came to oil prices. a little bit of a rebound in the asian session. not surprising that investors are so anxious. we do have more data coming in the u.s. including incomes and

the preferred inflation gauge from the fed. >> there really are these concerns about rate hikes. at the same time, the widely followed 60/40 portfolio could be set for recovery next year. let's bring in our chief correspondent. do you think the science piercing from the bond market support return of 60/40? >> i think the big thing that helps us be more optimistic for a 60/40 portfolio is one of the things that has not done so badly this year, which is that huge drop in the bond market. which means yields are back at the level they are supposed to be to make this portfolio work.

the idea being that if you have robust economic times and so stocks are doing mostly ok, you then also have bonds with an income stream that can get you through the more volatile times. bonds provide stability because they provide fixed income. there was no real fixed income on bounce for the last two or three years, possibly longer, in the week of the massive central bank easing and other distortions. now that you have 10 year yields back about 3.5%, you have short-term yields higher than that, you have the capacity to rely on those income streams as part of your portfolio. that is one factor that offers some hopes. you also have a situation where

at some stage you would think that asset classes diverged. bonds and stocks have been strongly correlated which is not what you want with the portfolio. some stage, either the fed really does pipit -- pivot. or the market is wrong about that and we end up with the recession. then you will have declines in equities but strong gains for bonds. you can get real capital pull -- capital appreciation. i do not know if we can get the same balance we had in 29 -- 2009, but there was a possibility that there is positive returns for that 60/40 portfolio, not just next year but in the years going forward. >> we are seeing the 10 year

yield cap again come under attack. what will we see once we get inflation numbers? >> that will be fascinating because we are in a situation where the rest of the market is looking to very much take a breather, but japan does not celebrate christmas officially. there is less of an impetus to leave things alone when it comes to the japanese market. what the cpi comes in at will be very important. the boj could tighten as soon as next month's meeting. today's cpi data will say a lot about the likelihood of that if it comes in how to than expected, we could see actual market reaction. that would be something. the reaction would be in that

case the potential to test that .5%. if we get weaker than expected inflation which which showed the inflation japan is seen as not sustainable above the target, then you could see further declines in the 10 year yield. perhaps you can say the christmas present for the market its japanese assets that are actually responsive to economic data for the first time in a long time. >> bloomberg has learned that china is planning to cut corn tea requirements for overseas travelers starting in january. let's get the details. what do we know? >> we understand that china is

in the throes of planning a significant cut to their quarantine regime, which is the last restriction left amid this rapid dismantling of covid zero. they are still discussing some of the parameters. they may be zero plus three, where you might need to corn tea at home or monitor your help for three days. it is not a complete reversal at this stage, but pretty close to it. >> does that mean we could soon see a return to volumes of outbound travel. we have talked about the revenge

consumption and what it will look like. this is happening as covid runs rampant across a lot of these cities. >> i do not think we will see the dividends immediately. the least amount of traffic on chinese city streets at the moment. it is not as though people are ready to jump on a plane if they are worried about getting covid or have it. so you will not see this as immediately as covid goes through the population, causing severe disease or death in some cases. down the line, i think we will see the revenge spending. that is where questions will be raised about whether the airline systems have the capacity for

what will be a very big bloom after three years of depressed activity. >> given how high airfares are at the moment already. let's get you to su keenan was in new york. >> ftx co-founder sam bankman-fried has been released on a $250 million bail package after his first u.s. court appearance. a prosecutor calls it one of the largest pretrial bonds in u.s. history. it includes a personal bond secured by his parents house in california. he must stay with them and submit to electronic monitoring. his next court appearance is on january 3. the u.s. senate has passed a 1.7 trillion dollar government funding bill, boosting aid for ukraine. it also changes the way that

presidential elections are counted, to say the vice president has no power to overturn electoral votes. former price president -- former japanese vice finance minister says the bank of japan may surprise markets again by tightening monetary policy next month. boj governor has begun to expedite policy normalization by widening the yield trading bond. here is the latest prediction. >> it is now 32 or something. it will probably appreciate to 120. >> the guggenheim partners chief

investment officer scott minerd has died. he had a heart attack. he became one of the leaders in fixed income during extent that merrill lynch and morgan stanley. he was 63. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. >> still ahead, chainalysis inc. tells us how the ongoing saga with ftx reveals vulnerabilities with cryptocurrency exchanges. this is bloomberg. ♪

>> it is a tough trading environment with the war in the ukraine, inflation in more than 10%. it is a tough environment. businesses and consumers do not like uncertainty at this time of year. >> with global recession looming, our guest says that whether this one year for stocks

alternative to a catastrophic few years will play out this year. let's bring in paul gambles from mbmg group. what are some of them are some of the risk factors that could create the environment for a prolonged downside? >> good morning. the issue is how much damage the tightening policy can do before we get a reversal of that policy. you have to remember, we are in a slow down, probably in an earnings recession right now and we have tiger -- tighter monetary policy. we have had a correction so far this year that is a fairly typical, once every few years

kind of correction. but the fact that we are going into that correction already in a tightening phase and we are not yet seen any signs of our reversal, the key risk is that policy does far too much damage that by the dime it does there, it is a long way back up again and a lot of damage has already been done. that is the key, how sharply we move from the tightening phase two a much more accommodating policy. >> one of the biggest questions is the direction of the dollar. a lot of the weakness is being priced in, when there was volatility and uncertainty, there is still demand. >> that is a great point. the dollar has been in asia and

australia your friend. it has helped mitigate some losses on international assets because of the dollar strength. we are really not clear which way that will play out in 2023. you could get some continued dollar strength but there is a lot of factors that might mitigate towards dollar weakness. if we see are in china -- if we see an reopening in china and a down in the states -- a slow down in the states, then we could be facing a weaker u.s. dollar. we cannot rely on dollar strength in the same way we did in 2022 to help ease some of the returns in portfolios. it is a big?

no. -- it is a big question mark now. >> the japanese currency could strength to 120. >> i am a bit hesitant to go on record and disagree. i actually think it can go beyond 120. that is where we disagree. i agree on the directional view that he has but on a multiyear basis, we are looking for 110, may be stronger than that. but there are so many questions there. we would not be surprised if the boj surprises people again. everybody was surprised by the

move the other day, and you have to now say the boj is not a reliable partner. they can do almost anything. we still see interest rate convergence. i think 120, definitely. >> precious metals have given the fed's moves this past year. what is your outlook for commodities, especially the precious metals? >> precious metals, i think we have to distinguish noise and short-term travel and fundamentals and the long-term direction. with gold, the long-term destination is looking really positive. probably something like 20% or 30% over the next three years at

least. the real key is the direction of travel. when we get curveballs, the kind of throw everything out. when we get the inflation data, the earnings data there is so much volatility. you always have to look at those as potentially being an early christmas present sometimes. if the assets we, that becomes a buying opportunity. they should not be buying that right now. if we see in -- any weakness, they should be taken advantage of that. you have to have a strategy to play the short-term volatility and the short-term deviations from trend. you have to have a long-term strategy for how you will

capture those friends. -- trends. we would be more inclined to say the 60 should be treasuries. >> good to have you with us. coming up next, sam bankman-fried released under $250 million bail package. this is bloomberg. ♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward. and helping you plan for future generations. this is "the planning effect" from fidelity.

>> ftx co-founder sam bankman-fried has been released on the $250 million bill package after making his first u.s. court appearance on fraud charges. he was denied bail in the

bahamas, but he was given bail here in the united states. >> that is right. he appeared in court today for the first time in the united states to face broad allegations. details of his bill package were made public. there are 15 conditions. the most important is he must live with his parents in california under home detention, submit to electronic monitoring. he had to put up a $250 million personal bond. >> what comes next in the case? >> i think all eyes are on what the prosecutors in new york will do next. it was revealed that two of his closest associates pleaded guilty and were cooperating

guest and. everybody is wondering who the prosecution will try to flip next. >> the whole idea here was that every time he would do interviews, sam bankman-fried what butyrate that this was mismanagement. can that defense hold? >> that is often the defense that people get caught up in these cases come up with in court, that i did not knowingly rip people off. i think with the strength of the evidence that the prosecution has and two of his closest associates saying yes, we were involved in a fraudulent scheme and we were moving money around that we should not have come i think it will be hard for that defense to step up in court. >> you can get around up of some

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is one of the fastest growing mobile services, now with over 5 million customers and counting. get in on the savings and switch today. >> take a look at how japan's cpi numbers are coming in. the core inflation number coming

in at 3.7% acceleration for the month. it is an acceleration from the previous month. we are talking about the highest level since 1981. higher cost of food, durable goods, and weaker yen. when it comes to the national headline cpi numbers, that is slightly below estimates, but it is still an acceleration from the previous month. your not only excluded fresh food, but also energy. suffice it to say, it is a very high number and a much higher than the boj's inflation target of 2%. we are watching the court cpi, 3.7%. we could see a bit of deceleration.

for now, november cpi core inflation 3.7% growth. >> that core number highest in 41 years. headline inflation the highest in 31 years. you can see why we saw best surprise move from the bank of japan. -- you can see why we saw that surprise move from the bank of japan. the boj backs away from their ultra dovish policy. >> it is now 135 or something. it will probably slowly appreciate. >> what is going to drive it beyond their, or do you think that is the level we will see that again hold annette?

-- the yen holding at? >> i think it will hold at 120. >> in of the next meeting in january, is it possible there could be another shift in policy in january? >> it is possible, but i do not see any concrete move at this moment. >> what he move on the negative rate, would he widen the band again? >> i do not think he would widen the band. it is very difficult to predict at this moment. >> it is a pretty basic question. is it clear that policy normalization has already begun?

>> yes, i think so. he is expediting the policy normalization. >> with more on what is next for the bank of japan in 2023, kathleen hays joins us now. what a great conversation. was this surprising to you that he specifically said we could see another move from the boj? >> i was a little bit surprised. the boj just had a surprising move, big move in the yen. he seems to think it could happen. this could very well be a live meeting in mid-january. let's remember who he is. he got his name because of how artfully he handled the yen during the asian financial crisis when he was the vice minister for international

affairs. he got this right in may. he said the yen could go to 150. everybody thought it was extreme, but he was right. she says the boj normalization has begun. she says -- he says kuroda probably wanted to do this on purpose. there was no signaling from the boj eight that this move was going to happen. was it because of the unpopularity of the prime minister? his approval ratings are down to about 25. he said no. he thinks kuroda was aware of this displeasure, but there was no actual political pressure. but it was one of the reasons he probably expedited this move. >> pushing the yield to have a

percent this week. could this force kuroda was hand in january? >> it seems it would be about to go from december to january unless there is some huge move in jcp yields. in the last 24 hours, the 10 year was that a .4%. they have already had to buy bonds a couple of times. this is going to be interesting to see. if that were to happen, it would underscore even more that the bank of japan decided they had to move now, they had to get this out of the way or they had to keep things stable while we wait to hear who the new governor and deputy will be. another issue is japan is looking at a record new budget and how are they going to

finance it. well, by recent taxes. he thought that might be what the prime minister ultimately goes for. but if you are going to sell a lot of bunks, somebody will have to buy them. a lot of things on the play, including the january meeting, early february we will know who the deputy governor will be. the last meeting for kuroda in march and he steps down in april. and the new person takes over. it is a very important three months for the ink of japan. -- the bank of japan. >> relayed that justin those inflation numbers out of japan. 41 and 31 your highs. let's see how markets are reacting. >> we just had the opening of

japan futures in singapore. we are positioning for a drop for more than 1%. as for the u.s. data, we sought more signs of resilience, and that tells us the fed will stay aggressive. more rate sensitive sectors are leading the drop. we can see that china is also emerging as another headwind for trading in asia. we are starting to see relaxation around covid zero policies. but we are seen this chart is taking a look at congestion levels for the 15 cities in china. you can see congestion has dropped to merely half of the leveler was in january of 2021.

that is going to have ramifications across asset classes. >> let's delve into that. natalia, right now, we are seeing traffic plummeting. people are not going places because there are so many infections. but as china emerges from covid zero, what will be the impact on oil? >> trying out right now is the biggest wild card for the crude oil market. when china reopens, we might see an increase in covid cases but at the same time more demand for crude oil. citibank expects that when china reopens, it can increase demand for crude oil by about 700 barrels a day year-over-year, and maybe even more, depending

on how quickly it opens. >> what about a broader price forecast for next year? >> if we look at the forecast from the biggest banks, overall prices are quite high. let's start with bank of america. they expect $100 per barrel. potentially they see it can spike to $110 per barrel in the second quarter of 2022. downside risks are somewhat limited, but when it comes to upside risks, they can come from the european union's embargo and russian crude oil. -- and on russian crude oil. and probably pivot. goldman sachs also expect at $98 per barrel.

the key message from them is that the crude and commodities market has been dominated by the u.s. dollar in 2022. unless we have sufficient, we will see's shortages and prices will remain elevated and high. >> let's get some more analysis coming up when it comes to the ftx collapse. chainalysis inc. will be joining us. that is coming up in just a moment. this is bloomberg. ♪ t may qualify for a payroll tax refund of up to $26,000 per employee. all it takes is eight minutes to get started. then work with professionals to assist your business with its forms and submit the application. go to getrefunds.com to learn more.

>> this is daybreak asia. i am su keenan. a monstrous once in a decade winter storm is battering much of the central united states. thousands of flights have been canceled with those going through chicago and denver the most affected. more than 112 million people plan to travel at least 80 kilometers. >> if you all have travel plans, leave now. not a joke. i am sending my staff, if they

had plans to leave tomorrow, i am telling them to leave now. >> bloomberg has learned that china plans to cut quarantine requirements for overseas travelers in january. the requirement to spend time in a quarantine hotel will be scrapped with arrivals. instead subject to three days of monitoring. the chinese premier has searched hong kong's leader to consolidate the cities of role as an international hub. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

i am su keenan. this is bloomberg. >> the collapse of ftx has highlighted some of the vulnerabilities of centralized crypto exchanges. joining us now is chainalysis cofounder and ceo michael gronager. good to have you with us. what do you see in the geer had for these centralized exchanges given the drama unfolding around ftx? making sure the risks do not spill over to the broader financial space. >> when you look at the broader exchange space, there was a clear need for regulation.

they play a key role in broadening the message of crypto. basically, marketing crypto in various ways and enabling customers to trade in crypto. they do not need a centralized exchange for that. but it is something that enables customers to get access to it that way. i would say it is definitely needed and we will probably see some level of rebound. >> will we see more

understanding about these flows in the market and the fact that they do not necessarily have much to do with the underlying technology, which is blockchain. what sort of changes could we see in 2023? >> one of the things that is unique about crypto is around transparency. there is a unique level of transparency possible in the blockchain space. you can see all funds moving everywhere. and that is unprecedented. when we see examples of fraud like ftx, it is an example of when what happens off chain. i do think what is coming over the next year or so is even more transparency and utilizing cryptos features around

transparency. >> but what about the billions of dollars that are still missing from ftx because they have not been recovered. are you working with regulators to try to trace those and what sort of flows are you seeing? >> we are working closely with the bankruptcy trustee of ftx. we work with them in terms of figuring out where are the funds. until they retrace more than a billion dollars of funds, basically means that is the first ranch that can benefit the creditors of ftx. what happens in finance and leveraged trading schemes is that funds can be lost. we have seen prices of different

assets basically half over the last year. i would say we cannot find everything, but we can find a good chunk. >> in the absence of regulation, you talk about [indiscernible] but there exists regulation that should have prevented what happened in the case of ftx. what is actually the missing factor here? >> if you look at regulation, a lot of it was created from a similar event that happened 10 years ago. when the biggest exchange out of japan, [indiscernible] there was some internal fraud and other things going on there. we saw the new york department of financial services create

regulatory frameworks. and actually, those work. if you look at customers in new york, they have not been directly impacted by ftx. customers in japan stand extremely strong when it comes to getting their funds back from ftx. i would say regulation does work. but it is not in place everywhere. it is an important lesson that the recent regulation works is because of enforcement. it will remind everyone in the industry that enforcement can happen and that is why we protect customers. >> what about the effects from the exchanges himself -- and themselves? proof of reserves has not given much comfort to investors out

there. what more needs to come from regulation or from the exchanges? >> one of the problems with proof of reserves is you also have to prove liabilities. liabilities is harder to prove. i think that is where the old school of finance where you do an audit, that works. we have seen that from coinbase where they have a full audit of their books. i think we will see that grow in the industry. that is what we need. >> what about the use cases?

a lot of the focus has been on making financial transactions easier. but what sort of use cases will emerge in 2023? >> the long-term goal for crypto is that this is an operating system a finance that finance never had before. it is a way that you can talk a nice all assets -- tokenize all assets and you can move it freely around the blockchain. there is a lot of working and building to do. >> michael, we appreciate your time. you can tune in to

bloombergradio as well to get in-depth analysis from the daybreak team there. more ahead. this is bloomberg. ♪

>> here is a quick check of the latest headlines.

tiktok's parents as some steppers inappropriately access data of some american users of the app. individuals misuse their authority to gain access. the hp will have to stand trial in the u.k. over a 2015 data collapse in brazil that killed people. claimant's are seeking an estimated $12 million. it would be the largest group litigation in english court civil history. let's take a look at the bank of japan meeting. of course, a lot of this is kind of come to pass in the sense that we had the biggest surprise decision that came out this

week. but for the october meeting, we are hearing that one of boj member suggested there was no need to immediately change monetary policy. we saw the strategic big first step towards more of an unwinding as we get into next year, depending on how you calibrate the policy decision this week. we will be speaking with gama asset management coming up. the market opens our necks. this is bloomberg. ♪ re unexpectedly closed today due to... cdw experts can keep you up and running with an apc smart-ups lithium-ion ups from schneider electric. it offers cloud-enabled remote monitoring and three times the battery life, so you can get the performance and certainty you need to stay open for business.

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>> this is daybreak asia.

we are counting down to asia's major market opens. we could see a potential downside coming from wall street. of course, it was a down day. inflation at a 41 year high. we could even see more moves from the boj. >> before we get to the ongoing uncertainty of what the covid exit looks like, we will see the dropping of quarantine restrictions. >> we are continuing to see covid cases rises. we do have japan and south korea opens upon us. we are watching the 10 year yield closely. really putting a lot of pressure on wall street stocks.

we saw strong economic data in the u.s. which tells us the fed will need to stay aggressive. the picture in japan also being affected by inflation numbers that came out earlier. inflation reaching its highest level since 1991. the core reading, in at the strongest level since 1981. i certainly complicates the boj. higher reading is already coming through in the swaps market. at least one member same no and mediate change to monetary policy as needed. this is the state to play as we head into the session today. let's change to the korean stock market. the kosdaq here are quite close.

the nasdaq deadly declines -- deadly declines. -- david lead declines. we will also be watching what happens in the korean won today. we are seeing the strengthening coming in from the u.s. dollar. more rate sensitive sectors are leaving the declines today. i.t. for instance. real estate, consumer discretionary, these are the stocks that are suffering. while is heading -- crude oil is heading for substantial gain. >> let's delve into what you

said. joining us now is rajeev de mello from gama asset management . good to have you with us. we are seeing traffic volumes plummeting because covert infections are continuing to rise. when can we expect the reopening china story to present to the market? >> when the reopening's happen, it has always been accompanied by a surge in cases, which does scare populations, people tend to stay-at-home. in terms of timing, we will have a difficult december and january. from february on words, we should start seeing activity

recover. the chinese government is probably much better informed which were earlier in this covid cycle. i would expect the economy and markets not to suffer too long before they start recovering on this reopening. >> on the other side of the break call, you are also talking about a more dovish fed really helping ems. what about a potentially hawkish boj? how would that impact your call? >> the hawkish boj which was signaled quite clearly earlier this week, for me it is really quite a pivot, it has an impact on the dollar. i think it is one positive component for emerging markets,

that once we start seeing a dollar that is not so strong, it is positive because financial conditions are now starting to calm down. i take it more as a positive. having central banks tighten is never a great thing, but the dollar effect will dominate itself. >> when it comes to positioning in china, how much of what we see with the reopening could actually see a selloff? does not depend on how straightforward this reopening is? when it comes to things like traffic and consumer sentiment, we are seeing that really take ahead as covid runs rampant in china. >> one factor is that valuations are very low. the starting point is that equities in china and in

emerging markets are generally cheap. we start with the cheap position and then we have this big news which comes, sentiment is poor because right now things are difficult. but we know that these policies together with the more relaxed attitude toward private enterprise and also a more supportive policy toward real estate, are going to address the reasons why china slowed down so much in 2022. it is setting the stage for a stronger economic recovery in 2023. that will be positive for exit markets.

chinese tech wasn't very reasonably priced a month ago and it still is right now. it has more room to go up. this is a huge market and the chinese have been early adopters of a lot of e-commerce. and i think that will continue. i think it is a turnaround for chinese tech as well. we have seen volatility play out, but investors are going to have to take of you -- take a view and enter positions over a period of time. great to have you with us. rajeev de mello from gama asset management. >> one member of the boj saying it is important to show stability in the bond market. this idea that even before we

saw the surprise meeting, the decision i should say, that there has been some concern. one boj members said they need to examine future exit strategies and the market implications that derived from that. a very interesting precursor given that we don't what happened in the december meeting with the first step toward a further turnaround of policy. japanese inflation further accelerating now at the fastest pace since 1981. fueling expectations we could see more moves from the boj. >> we start with the latest on ftx. sam bankman-fried has been released on a 20 $50 million bail package.

a prosecutor call 61 of the largest pre-bonds in u.s. history. it includes a personal bond secured by his parents home in california and the terms require him to stay with them and submit to electronic monitoring. his next court appearance is scheduled for january 3. the former japanese vice finance minister says the bank of japan may surprise markets again by tightening monetary policy as soon as next month. he has told bloomberg that the boj governor has begun to expedite policy normalization with this week's move to widen the yield trading band. -- ban. here is his latest prediction. >> it will probably slowly

appreciate toward 120. i think it will hold there for some time. >> the u.s. senate has passed a $1.7 trillion government funding belt, boosting a for ukraine. it changes the way that presidential elections are counted to say the vice president has no power to overturn electoral votes. the legislation passed 68-29. scott minerd has died. guggenheim says that the bond king died after a heart attack during his regular work out. he became one of the leaders in fixed income during the 1980's and 1990's. he was 63 years old. global news, 24 hours a day, on air and on bloomberg quicktake,

powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. >> yield sensitivity tech stocks took a beating in u.s. trading. what are you seeing? >> tech stocks in the u.s. on track for the worst december since the.com bubble burst. we had stronger data coming out, and that tells investors that the fed will stick with its course of tightening. the chip sector suffered in the prior session. let's take a look at another sector that is faring a little bit differently today. we have crude oil on track for a

substantial gain here. u.s. stockpiles are declining. optimism around china's covid zero pivot. also, traders still waiting for the response to the g7 price cap. we could see further moves higher for crude oil. in the japanese bank space, we are still seeing stocks moving higher for a fifth straight session. back to its highest level since 2018. >> still ahead, why investors may not be out of the woods when it comes to china's tech selloff. we will hear from pantheon macroeconomics. this is bloomberg. ♪

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>> bloomberg has learned that china is planning to cut quarantined requirements for overseas travelers in january. this would be interestingly timed given that chinese new year is early this year. what is the zero plus three plan meeting?

>> if implemented, -- currently, travelers have to spend [indiscernible] [indiscernible]

[indiscernible] >> the latest sign china's covid zero and potential lifting of restrictions. we expect china to present prospects rather than risks. more about their long-term outlook. >> china did not have that massive transfer of money to consumers than they had to say

in america, which really spurred the revenge spending coming out of the pandemic. in china's case, it will not be nearly as strong. i do not see china as creating inflationary risk for the world. i see it the opposite. if you look at where a lot of growth is coming from, a lot of it is going to manufacturing and investment capacity. very likely china will be exporting disinflation via exported manufacturing products to the rest of the world. that will be the more influential trend in terms of global inflation. >> let me build on that question. there are a lot of people that are relatively update on the energy story for 2023. because of the china factor. how much potential upside is there tied to the commodity

complex based on the china reopening? >> i think it will be a primarily commodity focused reopening. that is one of the main two pillars, steel and cement building material. the other big pillar is the property sector, which is currently very weak. the way i see things going next year, the sector will start to recovery, but it will be long. meanwhile, infrastructure will keep growing, but the government will try to rein in a little bit of that. >> pantheon macroeconomics chief there. you can get a round up of the stories you need to know.

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because we the people means all the people, including you. so call now or go online to my aclu.org to become a guardian of liberty. >> let's take a look at trading in europe, with european futures looking like this at the moment. we are seeing a downside to the msci europe there. we saw in the previous session, european stocks dropping as we failed to build on the biggest rally in six weeks. investors weighing the outlook on hawkish bank policies. we did see extension of declines

for most european equities. no sectors ending the day in the green. potentially a little bit more upside as we get into this last trading session before christmas. >> we are seeing market volatility return globally. we continue to see the global bond rout resuming. we are seeing financials gaining ground at the moment after the boj's move and reason the cap. lower rates have hammered the profitability of some of these commercial banks. we have news that perhaps mitsubishi could be buying more share buybacks to boost returns. all of this being felt in the financial space across asia and those japanese lenders a big the

shary today as well. >> let's get a quick check of the latest headlines. elon musk is not planning to sell shares of tesla for two years. she offloaded almost $40 billion this year. musk says he favors a buyback of tesla shares once the company is more confident in the direction of the economy. >> once we are able to properly calibrate the skill of the recession and make sure that tesla is healthy and that we are not put in the company at risk. >> bytedance says some staffers inappropriately access date of the tiktok app. the individuals misuse their authority to gain access. a separate email from lawyer

says this stemmed from an internal probe. the hv will have to stand trial over the dam collapse in brazil that killed people. 400,000 claimants are seeking $12 billion. it would be the largest group litigation in english court civil history. cathay pacific will implement a campaign that limits workers to do nothing more than what is contractually obligated for their jobs. the union has sought changes to permanent salary cuts and rest periods. the u.s. senate finance launching an investigation into whether automakers are using

parts made from forced labor in china. the scrutiny follows a report that found links between chinese companies operating their and the import of parts by u.s. automakers. >> the guggenheim partners chief investment officer scott minerd has died. she died after a heart attack during his regular work out. here is a look back at his life and legacy. ♪ >> scott minerd climb the corporate finance letter to become a founding member at guggenheim partners. he was regarded as one of the most respected voices on the fixed income market. his first job was at price waterhouse, which gave them the opportunity to analyze hundreds

of financial statements, something that benefited him later as cio for guggenheim. he became the global head of fixed income at credit suisse, working for legendary investor bob diamond. despite early success, he decided to move to los angeles with plans to retire, but in 2000, he met members of the guggenheim family and became one of the founders of guggenheim partners. >> it probably affected the way i looked at all investments going forward, which was not to just listen to conventional wisdom, but to take what they were saying and challenge it.

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it is looking risk off. that is unsurprising, given what happened in the wall street session overnight. we had more solid economic data coming out, that paints a picture of a resilient economy in the u.s., but it also tells us the fed will need to stick with tightening. it is those more rate sensitive sectors that are really bearing the brunt of the selling pressure here. industrials, materials, i.t. stocks it is not just about the u.s., but it is also china. more concern coming through on just how many covid cases are being reported. some health care analytics say as many as one million people in china could be contracting the virus per day. even on an official level, we are not seeing that mortality rates biking just yet. let's flip on and look at what is happening in the tech sector. we did see the nasdaq leading the losses in the u.s. session on thursday, dropping as much as 2.5%. it was the chip stocks that really bore the brunt of this. this is further reaction coming

through from micron after it or doubt it's week sales forecast. we are seeing a chip stocks leading the drop here today. they are building into the seventh straight day of losses. you can also add to that what is happening in japan around that inflationary outlook. we did the accelerating. it really does paint an interesting picture for the boj. haidi: it does suggest we could see more of a surprise. that is what we have -- the boj could shock markets again by tightening monetary policy as soon as next month this is of course known as mr. yan. >> it is now 135 or something, right? slowly appreciate towards 120.

>> what is going to drive it beyond there? or will we see the yen holding their for some time? >> i think we will hold now at 120 until sometime. >> ok. in terms of the next meeting, in january, because the boj, because corona has made this move, is it possible that there could be another shift in policy on the table in january >>? >> it is possible, but i don't see any concrete move at this moment. >> if he did, what would he do? would he move on the negative rate? would he widen the y cc bad again? >> maybe he would widen the band.

it is very difficult to predict that at this moment. >> it is a pretty basic question, is it clear that policy normalization has already begun? >> i think so. it is quite a way on that, he has sort of expediting fee normalization. haidi: with more on what's next, our global economics and policy editor, kathleen hays joins us. kathleen, it was pretty surprising that he actually talked about potentially another move from the boj as early as january. how does today's inflation play into that? kathleen: what it does is underscore that it is time for the bank of japan to be on the path, which he agrees, it is on that path now toward gradually or more rapidly moving from extraordinary stimulus to a more

normal policy that would be congruent with having your key inflation gauge. i think we have a terminal chart to show you. 3.7% now here year-over-year for the cpi, inflation, minus fresh food. the headlines up to 3.8% year-over-year. what the boj things is that by the middle of the coming year, the second half, these numbers will probably come down. i think it is very significant that when the three of us, just a couple of days ago, spoke with someone else who has worked with kuroda at the finance ministry years ago in japan and who is respected by kuroda for teaching him the value of the 2% inflation target, he says yeah, it is looking more like inflation could stay on 2% or higher. i think they are probably on the same wavelength. again, this may be very subtly, kuroda does not want to admit

this is anything but a tweak to keep the bond market funding going smoothly. suddenly, there seems to be something going on here now. haidi: they are already pushing the ceiling, could that play a part in forcing kuroda's hand in january? kathleen: they hang things on a scale, presumably, that is something that would. again, the jgb yield got almost up to 0.5, the band has been widened. you can see what the 10 year jgb has doing the last few days. yes, it has settled down. will it start pushing again? that is the question. we just got the minutes from the october meeting from the boj. those minutes indicated that one member saw no reason to immediately change monetary policy.

now, that was the october meeting. this past one was december. obviously, something has shifted. that is something that will lay pretty heavily. if the markets are acting up, maybe there is a little more weight there. i think a lot of people are going to figure, are going to figure, it is a long shot to think they could change the policy so quickly. i think everyone is going to say, that markets are on guard for something to happen. haidi: thank you, kathleen hays. let's get you to su keenan has the first word headlines. su: a monstrous storm is battering the country with snow and frigid temperatures read thousands of flights have been canceled with those going to chicago and denver worst affected. the american automotive association says more than 100 and 12 million people planned to travel at least 80 kilometers at some point through the holiday period.

>> if you have travel plans, leave now. not a joke. my staff had plans to leave late tonight or tomorrow, and i told them, leave now. su: to china, chinese premier league has -- hong kong's leader to consolidate the city's role as an international hub while further integrating with the mainland's development plans. hong kong chief executive, john lee, is on his first official visit to beijing since taking office. he will reportedly need on friday with president xi jinping. and, bloomberg has learned china plans to cut quarantine requirements for overseas travelers in january. under the new rule, the requirement to spend time in a quarantine hotel or isolation facility would be scrap with instead subject to three days of

monitoring. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan, this is bloomberg. shery: we have more to come, this is bloomberg. ♪

haidi: here's a quick -- mitsubishi it says it sees value in further buybacks. that adds to a growing cash pile. ceo caused them a very good investment because they are cheap. his comments underscore the challenges facing japan's biggest banks as they way how to invest amid ultra low interest rates and tepid loan demand at home. sources say goldman sachs is in discussion with investors about selling around $4 billion of subordinated debt held by lenders, backing the buyout of citrix systems. we are told the timing depends on the release of citrix financials. this initially left stock on lender balance sheets. the u.s. senate finance committee is launching an investigation into whether major automakers such as ford, gm, and

tesla, are using part made with forced labor from china's changing region. this scrutiny follows a report from the u.k. howard university. the study found links between companies and the import of parts by u.s. automakers. haidi: things are starting to look better for chinese tech stocks in 2023. headwinds are easing and earnings prospects are improving. let's get some more now from jenny. when you speak with investors about what are they doing with their money when it comes to chinese tech? do they feel like the worst is really behind us? jenny: when we talk to investors, i think the main message we are getting is they are actually willing to take more risk in the chinese technology sector, especially

asian technology investors, they are really -- really cutting the weight and taking more risk for those fund managers, which is really a good sign considering in the middle of this year, we were still debating on whether this sector is investable for many investors. and, i think the major turnaround is boosted by the removal of [indiscernible] in the u.s., and also china giving up the covid zero policy and relaxing its covid restriction and also, the chinese technologies are very proactive in terms of cutting the cost to boost the earnings, even if the revenue growth has been stagnant over the past year. haidi: what are the risks? jenny: one of the biggest risks people are talking about is the common prosperity pledged by the

xi jinping government is still in place. that means some of the investors that are like, ok, they can make money. it is yet to be seen whether they can make a lot of money under the current regulatory environment. and then the second big question is whether the consumption in china that can recover as people had expected, which had a fully reopen. that is another thing to be seen. haidi: of course, those moves towards reopening are significant. our next guest says there are still risks that remain that any kind of recovery or rebuilding -- requires trust. great to have you with us here. when you take a look at what jenny was just talking about, obviously, common prosperity

remains a longer-term narrative for the party. there not talking about in the short-term. that seems like a pragmatic decision, can investors rely on that as an indication that the crackdown and pressure on entrepreneurs and these sorts of businesses is over? >> i don't think we will ever get a clear signal that all regulatory interventions are over. certainly, this central party congress event that have occurred over the last few weeks have underscored that economic growth is at the core of everything they are doing now. that certainly relates to regulatory interventions. we saw a reopening of the education technology sector. we have seen promises to roll back some of these antitrust measures and other large-scale signs that are happening against the large technology giants. i think they are recognizing how badly this undercut investor

confidence in the market and are now working overtime to try to assuage this for 2023. haidi: i am curious your positioning when it comes to china at the moment. what pre-positioning at this point of the covid reopening are you already doing >> benjamin: covid reopening happen much faster than anticipated. we thought it would be more of a tapered route. we are now in a period where we have done away with testing, we have done away with codes that are required to enter buildings. the health care system is now overwhelmed. we expect that there will be mass casualties. we are going to have to wait out this period of almost kind of a band-aid approach or ripping off of the band-aid when it comes to china's reintegration into this post-covid world. the rest of the world went through a year

ago. expect some significant growing pains in q1 2023. hopefully, consumption will stabilize, trade will begin to grow again, and we could see some significant recovery from today's levels. shery: what does china need to do to regain the trust of her and investors? and does not even matter? we have seen that foam all in the growth of china has left -- let capital back in. benjamin: it was a scary moment in q4 of this year when we were hearing those messages of china being on investable. i think the balance today is for chinese regulators to better and more transparently forecast what is coming, explain what they have done, and give confidence and some concreteness to the decisions being taken so that people can predict and protect their portfolios from future regulatory interventions. so much of what happened over the last couple years to

external investors, those that didn't have a really those i or ear to the ground, felt unpredictable. so you have to reestablish that predictability. because china watchers having to touch ground in china for the last three years physically, both political as well as economic, there is such an opacity now in the market in such a disparity between the realities and what people perceive them externally. with the doors opening hopefully in january, that hopefully can be overcome through direct intervention and communication. shery: when it comes to geopolitical tensions, a lot seems to be out of the hands of beijing, whether it is trade sanctions or tech pressures. how will that affect the decoupling process between the u.s. and china? benjamin: decoupling is inevitable. 2023 will only accelerate u.s. china technology conflict. the u.s. will continue to rollout measures to restrict

china's technology growth and ascension, as well as political aspirations worldwide. they will do so both extraterritorial as well as through alliances. so china will have to seek its own alliances, it will have to try to continually find ways to dramatically engage with the americans to tone down some of its rhetoric to be a bit more humble internationally and quietly build itself rather than some of those older decorations around the growth of the technology sector. overall, decoupling is inevitable, it will accelerate. in many ways, it is good for china. i think 2023 will be a very challenging year for the west, particularly the united states. whereas china has the potential, because many of them on the economy were self-imposed, it can improve from today's levels to a much greater degree than the west. shery: good to happy with us, managing partner at msa capital. we have more to come from a this is bloomberg. ♪

shery: the flight attendant union plans to implement any work to rule action that would

limit employees to doing nothing more than required for their jobs let's bring in katrina nicholas. what is an issue and should travelers start worrying about their holiday trips? katrina: they disagree with the airline over a number of things. insufficient rest periods during stopovers, and [indiscernible] and certainly, the airline has been have been crew ranks depleted significantly over the past few years because of covid. employee numbers plunged around 40% at the end of 2019 do to all the covid-related redundancies and resignations. they are targeting adding around 2000 crew by the end of 2023. as of october, they have found about a thousand people. intensive descriptions over the holiday period, as you said, --

that limits employees to doing their jobs and nothing more. i don't think we expect to see [indiscernible] earlier this month so that customers needn't be concerned about disruptive travel. the mac they are one of the airline most leverage to the upside. how quickly could we see an earnings recovery >> katrina: the coming 12 months does look significantly brighter, i would say, for hong kong. the airline will have a news ceo come january 1 and chief customer officer and commercial chief, ronald lam. he will be rebuilding after covid, you mentioned one of the airlines [indiscernible] because of china's restricting approach,

and domestic market to fall back on. he is going to have to be focused on including restocking the pilot ranks and we are also hearing they are likely to be eyeing a large jet order sometime in the future to capitalize on hong kong's new runway. we had some steps just last week for november, it showed that passenger traffic last month was up about 650%. big improvement. suffice to say, it feels like the company has turned the covid corner. the mac thank you, katrina with the look ahead. sherry, this is just one of the aspects, one of the stories we are watching that ties into what is really going to be the big team for next year, how does this covid reopening out of china play out if the quarantine restrictions are loosened, what sort of outbound travel boom

will be see and how does that impact the broader global inflation? it has just been quite a year. if you take a year at age of this ox, we are poised for the worst years since 2008. so much questions, continue to hawkishness through central banks now create a multiyear arc when it comes to volatility and downturn presser for risk assets. shery: we haven't done very well in as either, with the s&p 500 headed for contraction. if you see two years of contraction for the s&p 500, that is very rare. when you do, bad, it could be an average of 24% fall. you said really it is about the growth picture, that inflation picture. will china be able to achieve its growth targets for next year? we will hear and march come up being announced at the annual people's congress. and what really that means for the global economy. while the fed be able to achieve

that soft landing they are hoping to and so many other stories that we have to follow in 2023. it will be really exciting, including, of course, the ongoing saga with the clark of ftx, elon musk and twitter, as well. plenty to come in 2023. anna: -- haidi: in a lot of ways, a year we would rather forget. in a lot of ways, a lot of the same challenges and stories going into next year. that is it for daybreak asia. markets coverage continues with the start of trading in china and hong kong. wishing you a very happy holidays. this is bloomberg. ♪