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paul: good morning and welcome to "daybreak: australia." i am paul allen in sydney. annabelle: i am annabelle droulers in hong kong. we are counting down to asia's major market opens. shery: good evening from bloomberg's world headquarters in new york, i am shery ahn. the top stories this hour. the treasuies rout intensifies and stocks struggle is hawkish ed messaging raises beds and another fed hik. >> also ahead, jp morgan ceo jp diamond -- jamie dimon lays out his risks in our exquisite interview. >> there factors that would drive it higher than where it is today? a 10 year bond at four .7? yes. shery: it is decision date for the rba, with economists expecting a hold with the first brit from their new governor michelle bullock. take a look at how u.s. futures are commandline, muted after

star struggled for direction during the u.s. session. we saw the s&p 500 clawing back most of the lessons of the day just to finish unchanged. the nasdaq 100 actually outperformed in the new york session despite the fact we have treasury yields at multiyear highs, the 10-year yield touching the four points available for the first time since 2000 level. the 30-year yield is at the highest since 2000 temperament we also have positive data. factory output was contracting, but at the least amount in a year for the month of september. not to mention we also had to factor in the fact that we did avert a u.s. government shutdown. but that also means that perhaps the fed narrative of higher-for-longer will have to continue. and the fact that we have some fed officials coming out today with hawkish comments, even including the potential for multiple rate hikes, it didn't bode well for the treasury markets. digging of that oil prices. they continue under pressure

below the $90 a barrel level. concerns about a slowdown in the economy and higher rates factoring into the oil price. paul. paul: jp morgan ceo jamie dimon is warning clients and investors to prepare for a worst-case scenario of interest rates of 7%. he spoke to asterisk lucidly on the sidelines of the jp morgan leadership forum in london. jamie: can they go to 7%? yes. are there factors that would drive it higher than where it is today, 4.6% on the 10 year bond? yes. it's supply and demand pushing it higher, yes. i am just saying, be prepared for it. and then the worst case is stagflation. higher rates because you have a booming economy and there is a lot of competition for capital, is not the same thing as stagflation. >> what are the ripple effects

of the stress of that, 7% rates on business, on your growth? jamie: i am not worried about jp morgan. we are prepared. we can handle 7%. we can handle 2% again. emily: 8%? jamie: we can handle that too. risk management is not the same as guessing the future. we look at a range of potential outcomes and say, we can handle this and we could handle the in between. if you bet your company on one outcome -- all companies do that, every company has different exposures, input prices and output prices. for some, interest doesn't matter. your business is different. but i think we don't know the effect of these things on the economy. so we may have a soft landing or a mild recession or a hard recession. obviously, there are potential buyers outcomes. the worst economically is stagflation where you have low growth, high interest rates and if that happens, you will see a lot of people struggling.

emily: regulators have proposed new capital rules that banks have said will make it tougher for americans to get mortgages. what businesses will have the biggest impact? jamie: when you get to the specifics, it matters the ultimate rules about mortgages and business loans. in general -- i can tell you what i don't like about it, for example, it punishes diversification. diversification is of the true thanks for a bank that protects it. i don't understand why they would do that. we are going to be responding, hopefully it will be modified and thoughtfully done for international purposes. and mostly, america has got the best financial system the world has ever seen, and that includes hedge funds and private equity and private capital. but private equity and hedge funds dancing in the streets, this time they are being quite public about the. this will push a lot of stuff out of the banking system. . that is what regulators want, so it. is that good for america? i don't know.

shery: jp morgan ceo jamie dimon speaking exclusively to bloombergs emily chang on the sidelines of the textiles leadership forum in london. joining us is lisa erickson, senior vice president and head of public markets group at u.s.-backed wealth management. great to have you with us. we just heard from jamie dimon talking about 7% and 8% rates. our u.s. equity markets prepared for that? is that why you are neutral on the whole asset class? lisa: to your point, if we continue to have rates move up, that certainly is a headwind. underlying economic trends would suggest potentially that rates would go down, but regardless of that, we have seen this relentless march upward in treasury yields. it is on the back of continuing to get some decent economic numbers, including the numbers like we got from institute for supply management to where there continues to be expectations. with those technical numbers, we get further rises.

so it is something we are watching carefully and it is part of the reason we are neutral on the u.s. equity market as opposed to being more bullish on the fact that there have been some economic surprises. shery: people have pointed to the healthy u.s. consumer in order to stay bullish on the u.s. equity space. but how much of a buffer the uc u.s. consumers having at this point -- how much of a buffer do you see the u.s. consumers having at this point when rates are rising? lisa: there is an absolute level story in the rate of change. certainly we have all been monitoring the rate of change and knowing that it has been decreasing over time in the consumer as well as other economic indicators, but particularly on the consumer, if you look at the level of were most of those indicators sit, they are still relatively high. so we see a reason why the consumer has been so resilient. the question is just how long

they can continue to hold out. this is another one of these things, and we think the net outcome is, again, best expressed as a neutral or staying at whatever your typical bond term weight is. paul: how long will the consumer holdout to the economy to pinto recession? i am just wondering which camp you are in, team soft landing or team recession? lisa: our u.s. banks economics team is in the team soft landing. but we have to acknowledge that the line between a soft landing and actually moving into recession is pretty close to call. so the odds close to 50-50. with that, we are comfortable with some of that risk-on exposure, but where the consumer has been very resilient and companies have been able to also be expectations for the most part year to date in their

earnings, we could today to have these headwinds of higher rates. the longer that goes on, again, that is going to wear down that buffer over time. paul: we have seen a pretty shar rversal in the oil price just over the past 24 hours to what degree do you see that easg pressure on both the consumer and the growth outlook? lisa: certainly, energy prices have been a concern because where they can be volatile and abend flow, they can also influence inflation expectations. and we have been obviously concerned about the rise in the energy complex. and certainly the saudi arabian cuts and the russian cuts, they have continued impetus to maintain some of those restrictions. so again, it would not be surprising if both prices can stay high, just by trust, again, by -- just buttressed, by

the expectations. shery: you wouldn't expect them to outperform. lisa: absolutely. today was a reversal in the pattern we have seen from prior year. what is going on is that will you have continued march upward in yields today, you are seeing that return to the tried and true formula. knowing that while tech stocks can be impacted further out by rate increases, there is more of that steady stream concept and ongoing earnings being supported by secular trends of excitement, machine learning, any-anywhere connectivity. paul: all right lisa erickson, senior vice president and head of public markets group at u.s. bank wealth management, thank you for joining us. let's go to belle a look at what is happening in markets.

annabelle: taking a look at some pretty interesting moves in the early part of trade this morning. . it is still that reaction to the global bond selloff and also that higher-for-longer fed rates narrative that has still been playing out. we are watching big moves, or in the fx space. we will be tracking the japanese yen very closely throughout the morning. you can see there, extremely close to the 150 level. traders have been testing that for a couple of weeks now. the euro-dollar also in focus because there is that doubt creeping through, can europe withstand another rate hike from the ecb? given that weakness, it is splitting into the narrative. some are saying there may be even parity with the dollar possible by the end of the year. gold is an asset class that does not like a rate raising environment. it is trading lower. you can see the selloff in sydney.

when hours' time from now. -- new zealand is online already in trading downward. but it is that move coming through in treasuries playing out across the data space. yields are rising across the curve. the aussie 10 is trading at a level we haven't seen since 2011. that makes it all that much more interesting ahead of the rba meeting later this morning. paul: yeah, that's right, a big day in australia. the central bank making its first recall under new governor michelle bullock. most economists expect the cash rate to stay on hold at 4.1%. let's bring in swati pandey. is there anything else likely to change? swati: it is unlikely. we are expecting a hawkish hold. michelle bullock is seen as slightly more bullish than phil lowe and that is because of her background in

financial stability and financial systems and she probably can see that a lot of the house. already hurting and she might probably play that up a bit. apart from inflation, which surprised on the upside, the monthly inflation indicator, there isn't a lot out there about calls for a rate hike at this point in time. economists are still expecting one more interest rate increase to 4.35%, but today it is likely to be a hawkish hold. shery: we know that central banks usually have certain mandates, but at the same time, the rba has gone through so many changes. how are michelle bullock's priorities different from her predecessor's? swati: her first priority is obviously the fight against inflation. inflation has come off from its peak, but it still remains high. and the monthly inflation

indicator pointed to 5.25%, which was an exclamation from the high 4's that we saw the previous month. her second big priority is to implement the recommendations of the rba review and that includes setting up the new monetary policy board, cutting the number of board meetings to 8, from 11. doing regular press conferences. there is a lot that michelle bullock will have to do. and that is her key priority in the new job. paul: we need to talk about house prices advancing again, getting close to the peak again. how much of a concert this for the rba? swati: housing prices have surprised everybody. for sydney, over the past year, it has gone up more than 7% which is huge. a lot of it is driven by supply-side factors. the rba is aware that there isn't a lot that he can do their

, and the government has repeatedly said that they will work towards boosting supply and doing more in social housing. so the rba will be very -- will be easing policy, because that is what investors are starting to talk about. the tightening cycle has happened, when will cuts begin? and if the rba remains one of the central banks that keeps interest rates higher-for-longer, housing will be a big reason for that. paul: our economics reporter swati pandey ahead of the rba decision. we on the reserve bank of western coming up when hsbc's australia economist joins us. first, some real bankman-fried is finally about to go on trial. we have the latest on the case against him and his likely

defense up next,. this is bloomberg. ♪

shery: take a look at how cryptocurrencies are trading at the moment, we are seeing pressure for bitcoin in the -- for the first time in four sessions, still talking about levels we haven't seen in six weeks.

we had smaller peers like ethereum, litecoin and solano trading higher before turning negative. a lot of volatility. not surprising given we are expected to see the trial of sam bankman-fried almost a year after the collapse of his crypto exchange ftx. the founder is about to face trial in new york. the 31-year-old has pleaded to all seven counts of fraud and conspiracy. bloomberg legal reporter ava is at the courthouse for us. however he expecting this trial to unfold? ava: it opens tomorrow. what we are expecting straight up is the selection of the jury then we will get into the more substantive part of the case. saluting here from the persecution and the defendants and their opening statements and then he moved to the witnesses. paul: so, what is sam bankman-fried accused all?

ava: he is accused of misappropriating billions of dollars at his cryptocurrency exchange, ftx. it was ordered to get preference of the road before it collapsed and filed for bankruptcy last year. customers were left billions of dollars out of pocket. he is accused of luck to customers and investors about the relationship between ftx and affiliated hedge fund in the research. traditionally defense teams keep their strategies pretty closely guarded, but we have had a couple of hints about the kind of case sam bankman-fried,, mainly that he was in the presence of attorneys all the time, he didn't have unlawful intent and he was acting in good faith and he was not aware of the extent of alameda's liabilities to ftx, that he didn't have a really good picture of what was going on there. shery: there is grace to be quite a show that everybody will be watching closely. any ideas of who the star witnesses will be?

ava: there are three witnesses we are looking forward to hearing from, they were some of bankman-fried's closest associates. two men that he cofounded ftx with, and another woman by the name of caroline ellison who was the head of alameda research, she also dated sam bankman-fried on-and-off for a while. she will give real insight. we don't know when they will beat up, at what point in the trial, but we will definitely be keeping an eye on their evidence. paul: bloomberg's legal reporter ava benny morris and reporting from the manhattan courthouse. some other court hearings we are watching in the u.s., new york officials say former president donald trump overvalued his properties to get cheaper financing and writes at the forbes billionaire list. the state presented evidence for its obligations. trump's defense team says that

claims involve only successful and profitable transactions and have no victims. microsoft ceo satya nadella says it i could help its rival google extend its dominance on the search market. he took the stand at the company's antitrust trial and argued that google could pay publishers for exclusive right to content to make its ai-based search better. google has become a dominant force in online search thanks to its search engine deals with the likes of apple. satya nadella revealed in the same hearing that microsoft was willing to search its search -- was willing to drop its bi ng brand in order to secure a deal with the iphone maker. ♪his is bloo

paul: let's take a look at her w-2 is trading. it was a pretty sharp reversal,

down 2%, now b $90 a barrel at a $.57. citigroup's global head of commodities research studies the outlook getting even worse for crude deer. he sees the drug and oil demand in china, europe and the u.s. weighing heavily on prices. let's listen. we don't>> think demand will come in stronger-than-expected act unless for some reason there is a change in every economist's judgment about where economic growth will be next year. but the drug from china and europe and what we expect is a drug from the united states, into the market weighs heavily. when you have 1.4% to one point 7% gdp growth in the world, it is hard to find a number on the physical oil side that can be readily met without havin surplus in the market. >> in your note, you write that higher prices in the near term could make for more downside for

prices next year. walk me through that relationship. higher prices right now, what is the lag between how that translates into future demands? ed: one of the issues is china and its role in the international oil system. it has a role that is almost as important as opec+ and they have been playing this role since the great financial crisis when they discovered the benefits of valuing or when price was low and selling mostly product when the price was high. that is exactly the position they are now in. they accumulated before the pandemic and now, about 500 billion barrels worth of oil. we estimated their inventory of crude and product is about one billion, 400 million. the iaea typical country has a rule of 90 days cover, pretty conservative. so they have overdone it. maybe there is geopolitics in it

as well. now they are selling more product will be weighing less heavily with the high price by buying less high-priced fruit in the ruby taking advantage of what we are seeing in the diesel market and to some extent, the gasoline market, by selling more of that into the market than the otherwise wouldn't. paul: citigroup's ed morse speaking with katie greifeld. shery: take a look at how currencies are trading at the moment, we are seeing strength in the u.s. dollar. th bloomberg dollar index is at the st vel since november of last year, after already enj the best quarter in a wht does that mean for currencies of the other sid that trade? ke a look at the japanese yen, close to the one 50 level. the dollar-yen touched a year-to-date high after the bank of japan said it would conduct addil ying operations. same for the euro, falling to the weakee this year against the u.s. dollar, the

lowestinc december. extending losseson he 16-month high just reached in july when full screen.tening cycle was in we continue to watch curr markets as the u.s. dollar strength continues on the back of treasury yields rising to multi-yar highs. coming u hsbc tells us why tthink that rba still has a tighte bi as weunt down to the first rate decision under governor michelle bullock. more in a moment. this is bloomberg. ♪ loving this pay bump in our allowance. wonder where mom and dad got the extra money? maybe they won the lottery? maybe they inherited a fortune? maybe buried treasure? maybe it fell off a truck? maybe they switched to xfinity mobile on the most reliable 5g network. for a limited time, buy one line of unlimited,

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and keep it off. who loses 138 pounds in nine months? i did! golo's a lifestyle change and you make the change and it stays off. (soft music) shery: jamie dimon says u.s. markets are still healthy and

the consumer is in good shape, but during our exclusive interview, he told us he sees two wide risks ahead. >> the u.s. has been very strong for a while, no surprise, $5 trillion was pumped in fiscally. $3 trillion and $4 trillion in qe. consumers are in good shape, they have more money than pre-covid. it is spending down. home prices down, for 15 years. they are in good shape. the people are talking about deterioration. credit is not deteriorating. credit card all-time highs, not inflation-adjusted, gdp adjusted. corporate credit has been quite good. we have a strong economy. that is the here and now. all the data is distorted because of covid. when you asked the question about a forecast, i don't make forecasts, i look out there and say one are the range of outcomes.

several storm clouds. i said hurricane, i was correcting, somewhat said the storm clouds dissipate. that one may be a hurricane. we don't know what it is. here is what they are, there are two of them that are different than other things. we always have -- i don't worry about the weather. i spend a lot of time guessing about the economy. if it's sunny or rainy i don't worry about that. we run the company to serve clients to think and then. that is what we do. serve governments, to satisfy regulatorsthat's -- regulators. that is all whether. think of the two outcomes as storm clouds. we don't know if they will hit, when they will hit, and what they will do. i'm not predicting that. i will tell you what i worry about. one is the fiscal money being spent, it is so big, the largest ever, america and around the world, we are at high deficits. in qt we have never had that.

in qt, some people think it will be uneventful. i am not so sure. i expect volatile markets. then, you have all the long-term fiscal things that are inflationary. oil prices, certain commodity prices, the green economy, the restructuring of trade. you name it. it is adding to inflation, not subtracting inflation. i don't think inflation will keep going down. it may not. rates may go higher. the biggest storm cloud his geopolitical, it is ukraine, the humanitarian crisis. it is a war not far from here. 500,000 people have been killed, it is nuclear blackmail, it will affect all global relationships and alliances. i just put those two things as i keep a close eye on. how it affects the economy is different. i just tell people to be prepared for higher rates. emily: 7%, are we really going there? >> 5%, it is possible.

when i talked to my board i say yeah, can it to 7%, the answer is yes. are there factors that will drive it higher than where it is today, the 10 year bond now, yes? is supply and demand capitulating, yes. be prepared for it. then the worst case is stagflation. higher rates because you have a booming economy. there is competition for capital. it is not the same a stagflation. emily: what are the ripple effects? seven for sewing -- 7% rates on business and growth. >> i'm not wait about j.p. morgan. we can handle 7%. emily: 8%? >> yes. emily: what is china on the risks? -- where is china on the risks? >> geopolitical, the threat from ukraine, oil, gas, migration, all of our relationships, the

most important being china. obviously ukraine is affecting it. it's hard to see positive outcomes for china until the ukraine war is resolved, hopefully whether ukraine can say they have a victory of some sort. paul: jp morgan chairman and ceo jamie dimon speaking with emily chang. let's take a look at what is going on in the bond space in australia and new zealand. we have yields rising across the world. no exception here. if we take the aussie 10 year 4.59 at the moment. these are levels that we have not seen since 2011. it could move more. we have the reserve bank of australia later on this afternoon. let's get more on that. it will be the first policy meeting under the new government of michelle bullard. joining us in the studio, we have the chief economist for australia and new zealand at hsbc. we've got a new governor, michelle bullocks.

is that going to be all that's new about this meeting today? >> it should be. michelle has been at the rba a long time. she has been the deputy governor , this is continuity. the switch is going to be quite a smooth one. i don't think we will see any surprises today. at the rba will be on hold today that is fairly clear. what would be interesting is to they maintain what they have for a while which is tightening bias. inflation is were is -- where it should be but is it heading there fast enough? n -- if it is not heading there fast enough they will have to do a bit more tightening. australia has not done enough tightening so far. paul: only 400. in terms of inflation, the last monthly cpi print, yesterday's melbourne print was harder than

expected. is that lagging impact we have seen enough? can the rba do enough considering that all of those really expensive mortgages that are on floating rates. >> in large part, they are in the narrow pathways. they had hoped to be in. they are getting the signs of the economy slowing down, they are getting the signs of the high interest rates they have delivered are slowing the consumer down the economy is slowing running below trend. inflation is past its peak. the question is whether it is on the right path. the rba is forecasting that inflation gets back to its target banned by the end of 2025, are we on that pathway? the last cpi indicator told us that maybe we've got a bit more momentum and inflation than the rba had been expecting. the rba is likely to relay that they still have a tightening bias, they are still on the lookout for a possibility to

lift rates further. they will not lift rates today. that will be sometime in the coming months. shery: is that to do with the resilience of the labor market? what are we seeing in terms of productivity growth? >> yes. that is important. that is a big part of the story. we have a labor market that has resilience. the unemployment rate has lifted higher off its trough but at 3.7%, we've had strong employment growth over the past six months. as you point out, at the same time, we've got dismal productivity statistics. it's showing that productivity has fallen outright in a substantial weight since the pandemic -- way since the pandemic. it may be related to the pandemic. but, if you've got a tight labor market and wages growth picking up, and you've got week productivity growth that adds to unit labor costs. it is an upside risk for inflation. paul: we've had some relief

today with a weaker oil price. if you look at these inflation numbers, those last two hot prince we had, how much of -- prints we had how much responsibility can you pack at the higher oil price? >> central banks look through the first round affects of an oil price rise. if oil prices were the only driver of the inflation story you may think the central bank had looked through it, the rba can look to that effect. the question is whether it embeds itself in inflation expectations and weather conditions -- continues to get through the process, it is the second round affects that central banks generally lookout for. in the past i'm not too worried about oil. we start off with inflation that as well above its target, on the monthly indicator last week, it told us we were running at 5.6% which is well above where the rba needs to be 2% to 3% is there target. paul: i want to get back to the

house price question. we have property prices back to with a peaked during the pandemic. how much of a concern is this for the rba? what commentary do expect? >> it is a complicated picture. the primary driver of the pickup of house prices this year has been largely inward migration driving very strong population growth. it's been stronger than pretty much anyone expected. that's why you've seen this rebound in house prices. i would also expect we are not going to get a repeat of the very strong big pickup in inward migration we have seen recently. we'll see a slowdown in population growth next year. in large part because it was a rebound after we close the border, we reopened it. as it slows down that should start to cool the housing market. if that is the key driver of the story, the rba won't be too concerned that we've got quite strong house price growth at the moment. paul: can we avoid a recession?

>> related to that, that is likely. when you've got strong population growth it is hard to get gdp to contract outright. that is. what we will see we will see population growth as a key support for gdp growth, making it less likely that would tip into an outright contraction or recession. paul: paul bloxham, chief economist for hsbc. still to come, we will get the outlook for emerging markets amid a painful year for em stocks and currency. this is bloomberg. ♪

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shery: the slump in emerging markets assets on the back of u.s. rates outlook and china's economic problems but traders are seeing attractive entry points. let's ring in the emerging markets reporter in the new york studio. how bad has it been? didn't we start the you're thinking this was going to be the decade of emerging markets, how far is that call? we are seeing so many different pressure points. >> exactly. at the beginning of the year, there were big names like goldman and pimco making bullish calls on em. over the past quarter we see the emerging markets stocks wiping

out the entire gain this year. also currencies nearly did the same. local and hard currency bonds have fell. all these are due to really painful drivers, including the higher for longer fed policy pushing out the u.s. treasury yields and renewed concern and china's property crisis -- in china's property crisis. paul: what are the opportunities in this environment? >> we have seen pimco is sticking to is bullishness. the head of em debt told us that the slump right now is largely due to the broad-based selloff sentiment, not really any em driven panic. he said there has been significant over performance in local markets. also other investors point to opportunities like relative value trades, that is when you are betting on, for example korean equities versus australia's, or em stocs

china versus europe's. that works in currencies too. you take the u.s. dllr out of the equation and that on one currency's performance over another. shery: our bloomberg markets reporter. we're going to talk about some of that relative value trade, especially when it comes to the currency sign. joining us is head of emerging markets and strategy at credit. always great to have you with us. this is a couple of trades you are liking at this point in em. let's start with the right spot. >> i have been on the others of that outlook that we just discussed. it we have been fairly bearish on em, but at some point, we said there would be a price or an opportunity time. at the moment, i would say that we are still fairly bearish. shery: i am trying to start you

off on a positive note. [laughter] >> i am struggling. yes, there are some trades. we are overweight. the indonesia rupee versus the taiwan dollar, indonesia is one of the brighter spots from the higher growth perspective. the taiwan dollar is a negative carry currency. for example, we have small overweight in the south african grant, because valuations are adjusted there. we're underweight. so there are no outright bonds. we are still underweight in the colombian paso. shery: i will take you to the bearish pause. i am surprised you are underweight. those are some of the currencies that investors love the most this entire year. is that why? or are we overbought and that sector? >> that is exactly right. it's really about, in an

environment that is challenging, we have discussed the challenging environment since may, it is now just finally panning out. when we see stretched out valuations in crowded positioning, the reasons for correction resent themselves. that is how it plays out. there are number of things like an outline. there is an election coming up in mexico. we also have an eletion in the u.s. with a lot of antagonistic rhetoric towards mexico, relating to the overdose crisis, immigration. there could be a number of triggers. ulitely, the main reasons for the bearish forecast ad the postin is overvaluation and that mexico's pesto has been so -- peso has been so favored. paul: i want to talk about the other side of those currency peers. the u.s. dollar, we are seeing speculators adding net long to u.s. positions as illustrated by

the channel in the bloomberg terminal. how long do you see the strong dollar story persisting? >> thank you f this question. in fact, we have maintained the vi that we are in a secular dollar trend, perhaps along a wild upward trending sign function where we're sometimes in periods of weaker dollar sometimes in stronger dollar. if at the moment, the thesis that we still had since may this in place -- is in place, we expected tighter financial conditions as a result of higher for longer, at the same time we have fiscal deficits in the u.s. and increased issuance, the treasury has to maintain a greater cash balance. there is also the idea that we have tighter monetary policy elsewhere in europe, in japan. and at the same time, we have

quantitative tightening that is still underway. there is a number of forces conspiring to support higher yielding dollar. at the same time, we still for see -- foresee a self reinforcing tightening of credit conditions to the extent that even though we have -- even though spreads have been resilient, there is potential for spreads to widen. all of that creates this very frugal environment for the u.s. dollar, for the higher-yielding safe haven dollar. then there is one more thing, since our last discussion, that we have had, what we have seen the data in the u.s. has surprised on the upside in the third quarter. at the same time, the data in china and europe surprised on the downside. we expected growth for the third

quartr it will be 3.5%. for the year as a whole 2.1%. we may still see a shallow recession, which that is our base case. the thesis we are exploring is potentially we could see very significant growth in the u.s. in the medium-term from the industrial policy we are experiencing in the u.s. a lot is going on. for now, certainly risk off. but perhaps we are in the midst of raising u.s. treasury yields because of these other positive tailwinds on the horizon. paul: olg thata phrase higher for longer so subjective. how high and how long? can you put a date on it? >> if you ask me, let's have this theoretical conversation. growth in the u.s. is 2.1% this year. that is what we expect.

but then what if the combination of the inflation reduction act and the chips at, and the info -- act and the infrastructure at could, after a recession, result in growth of the u.s. on a steady basis somewhere between two and three. with all the government spending and investing from abroad, we are also facing supply constraints with labor shortages in the u.s.. we could also see elevated inflation. mathematically, if we take between 2% and 3% growth in the u.s., plus inflation we get yields between five and six. shery: would you feel better about emerging-market assets if china made a comeback, given they have their own stimulus measures going on? >> absolutely. china is a big factor. as we discussed last time, it is not that china's not going to grow, it's not going to be the

same kind of growth. growth between 3% to 4% is more disappointing than what used to be. but the other potential factors, for example one of the things we are exploring, could mexico benefit from growth in the u.s.? could south asia -- southeast asia benefit? shery: reassuring. >> yes. there is on shoring and near shoring, all types of shoring. shery: olga yangol always great to have you, managing director at credit agricole cib. you can get a roundup up of all of these stories to get your day going in today's edition of daybreak. bloomberg's of drivers -- subscribers go to dayb . this is bloomberg. ♪

fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company. shery: you are watching daybreak australia. the top corporate stories we are watching, tesla shares closed higher after the company kept its full-year target for deliveries despite the quarterly decline in more than a year. third quarter shipments missed expectations with factory downtime, resulting in slower production.

tesla delivered 1.3 million cars through the nine months in september. to ship 1.8 million ev's. firkin stock is looking to raise as much as $1.6 billion from its ipo. the company filing says the german footwear maker will sell shares of a range of $49 that will value birkenstock at the top end of the range. investors including the norwegian sovereign wealth fund are interested in buying shares. paul: these are the stocks to watch when trade opens in a few minutes time. we will keep an eye on minors including bhp. and metals as well. this is the goment forecast. tumbling prices foral and lng. we will see commodities, export earnings, slump over thxt two years. we are watching closely, as

usual, the yen, 149.84. we have a chart that shows you how close we are getting to the point where we might seem -- see some adventure. shery: this after four weeks of losses against the u.s. dollar. we see this huge show --so often jgb's. we have seen incredible pressure for the yen to the weakest level this year already since october last year, as the boj is announcing additional bond buying operations, given the rising yields. that is it for daybreak australia. daybreak asia is next. this is bloomberg. ♪

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