>> we are live from australia.

annabelle: we are counting down to the major market opens. shery: the top stories is our. investors get back raise the budget deficit as it changes growth targets. fourth consecutive decline in orderly revenue amid weak demand . we start you off with breaking news.

we are getting the goods trade surplus widening. the account surplus widened to $4.81 billion. we are expecting some gains. customs data remained wide. the trade surplus widening. annabelle: numbers that could be quite supportive. essentially we have preliminary earnings to see the fourth straight revenue drop.

yesterday a session is just getting going. reasons for that are the pull back. lower yields builds into a softer dollar. we see that big bounce in the golden dragon index. shery: we sell u.s. stocks and bonds graining ground. the s&p 500 with a technical

rebound. we are not seeing much change in the early. we're watching treasury futures at the moment, treasuries rising. continue to watch those numbers that will come out on thursday. tight conditions could be the obama of another rate hike.

each >> this is a busy week in australia. we have bloomberg in attendance. the asia briefing is taking place in melbourne. the chinese ambassador to australia. talk about the potential easing, we are seeing that occurring later on this year.

not only that, we are busy. the broader investing sentiment in australia and global strategist will be joining us with a former ambassador to the united states. he will be joining us for conversation >> this reminds the

dallas fed president about tighter conditions that could mean less need for rate hikes. how much have expectations changed since we have the job numbers? >> we're seeing the same thing to take it all that seriously from the same handbook. sent yields to a level they have not in since 2007.

in that context, the market has taken it seriously. we are looking at a 50% chance training towards it won't happen. that's a serious chance in the market is saying we don't think it's going to happen. one thing is what comes out from thursday's cpi numbers in headline and core inflation and again, how federal reserve officials pass those reports because there have been times where it looks like it's cooling

to hang on and look at services or something else. >> i want to talk about china, the golden week holiday. could we see a rebound? >> there has been a lot of pessimism about china, there are challenges with ongoing real estate sector concerns. one of the case that investors are looking for to find a way, most of this year at of covid restrictions had cited that

there has not been anything nibbling around the edges when it comes to what the authorities are doing to stimulate the economy. talk of a big boost in spending is the sort of thing that could turn china around and do a lot to certain sentiment around. >> we were not expecting the game changer when it comes to the potential of what it could mean. could this be the game changer he was talking about?

>> we're talking about a trillion yuan new stimulus through the issue of sovereign debt, essentially to feed into infrastructure projects which is the tried-and-true cocktail. this should be according to water conservation services. they need to stimulate some growth because again, they are weighing on consumer spending. as we head into the fourth quarter, we looking at ways for the chinese government to meet that growth target of around 5%.

gdp numbers are trending to the downside. what does this mean? the budget deficit is a good message to the market. since 2015, local governments are seeing financing strained with the pandemic.

the central government is looking at some alleviating pressure with governments who have not been able to get much revenue because of property. it's a vicious cycle to see how much of a bazooka they want to do for stimulus. >> the combined death toll is approaching 2000: the assault and active sheer evil. >> when congress returns, i am asking for urgent action. united states has strengthened

our deterrence and we stand ready to move additional assets as needed. >> we are joined by bruce einhorn. >> he is calling on congress to fund our critical partners. important to use the plural the government shutdown. the short-term extension seems

president biden is saying there should be a two ukraine in terms of specifics,, antimissile system is protecting civilians, clearly not enough when it comes to the dental as you mentioned that includes over 1000 israelis killed, most of them civilians are booting -- according to the government in gaza. according to idf, the dead include two members of the ruling council in gaza with other top officials in the line of fire in the days ahead. according to the um, there are

180,000 people in gaza who have been displaced. paul: anthony blanket is on his way to israel, one of the objectives of his visit. we saw biden, the highest-ranking members of the cabinet showing support. the secretary of state will be going to israel is a big question, there is an uncertain number of hostages held in gaza, hamas has threatened to start killing hostages in the

government of pot are -- qatar is trying to mediate the crisis, we will seek >> coming up we speak to global bankers and decision-makers. we're discussing the global banking outlook financial crisis of rising rates. this is bloomberg. >> used to be a time when it was about 11.

shery: the biggest u.s. banks start posting results this week i made a challenging earnings backdrop and concerns about rising yields. ahead of those earnings, mackenzie release a banking report amid rising rates with the sectors best performance since the 2008 global financial crisis. great to have you with us. you are actually calling this the great banking transition. tell us about the key factors. how long do you expect it to last? >> it has been an eventful last

few months. with double-digit returns on equity. on the flipside we are seeing in armless volatility. all of this is rising rates and what is happening in terms of distribution. which for the last few years, the outlook remains modest.

this remains around 0.9 compared to 0.8. this is leading to big divergence across markets. >> do you expect the banks to be out of the woods customer >> one of the things that is going to change taking is the rise of technology and ai all banks are going online, the last 10 years was about going mobile. ai might help banks reimagine experience and thanks, big or small will be able to thrive.

>> if you look at the use of ai, is customer experience. technology is evolving and that side is quite prevalent.

the third part is automation. to employ that will be effective. and simplifies the access. >> what is demand like? >> one of the things to keep in mind is, 70% are happening on

balance sheets outside of the banking system. you can see the demand is something the banks are able to meet. heavy businesses rely on transactions. >> thank you so much. we have from timor to come, this we have from timor to come, this is bloomberg area i sold that. and you can manage it all in one place. i built this. and it was easy,

with a partner that puts you first. godaddy. shery: we're taking you to a

live event speaking to our very own in the asia society event. he said the chinese economy is temporary. we are expecting a push towards china. the first high-level conversation happenedannabelle:e

key themes where watching in the session, one of them is earnings season. we have the third quarter preliminary numbers in the next few minutes and the expectation is a fourth straight revenue drop. we are watching for any signals at least when you take a look at check prices we are starting to see some signals of a comeback. those third quarter preliminary numbers are due in a few minutes from now. let's change on for a scoop from bloomberg which china could be

considering raising its budget deficit, this will be new stimulus to try and help. they are weighing issuing one showing dollars of debt. certainly one to watch given the anemic growth. the fiscal gap is much bigger. let's change on. the scoop is something that really boosted chinese stocks. it's best to lift a benchmark.

>> i'm here and let's discuss. thank you for taking time out. we had some lackluster. it's great to have you here. i'm not as pessimistic.

this remains robust. we have strong corporate balance sheets. what we saw is we saw the mark confidence we have will improve again. things like the australian dollar, household balance sheets

are under some pressure. we have strong employment markets and from a consumer perspective, that is important. what australia leads the world in mortgage. >> it is a fairly prudent outlook. quite a substantial selloff until the unrest over the weekend. the narrative around higher rates, the less conference had

similar sentiments, i think the supply and demand, wage pressure continues to come through. it will be harder. >> we are seeing an ipo drought. only one float with more than $100 million this year.

i think it's uncertainty around policy. maybe we don't go back to the 2021 environment that rapidly but we see it pickup and ipo activity. >> clearly it's down. if you pick the targets i think

it's relatively strong. we will see what happens on the weekend. it's been interesting. we will see how it holds out. we don't anticipate any

substantial change. i think dual mandates have a purpose. >> thank you for joining us. shery: expecting sam stone to report profit and sales any time now. a tepid electronics market. let's get more. what are you expecting to see in terms of the numbers?

>> these are preliminary results. >> obviously, this is important and reflected quite positively in the stock, the fourth quarterly decline in a row. >> what are you trying to watch out for? >> given they will not provide

segmented numbers, it's difficult for us to know how the business these doing but of course, we're going to watch profit because it is going to give us some insight, what the crunch is looking like so we have to get into the nitty-gritty. >> is this why analysts love the stock? >> samsung, there's always going

to be demand for the component. other companies are being big buyers of the component. they are selling it to other phone makers and tablet makers and in some cases give themselves an advantage as a way to create devices as a breeding ground but on the other hand they give their customers new technologies first or early.

perhaps even earlier. not only a sign of nationalism for korea and korean culture. >> there was a big rally. not much good samsung benefit? quicksand need to figure out where it can go next. for years it was the phone, smart speakers. we are moving. >> we are getting the latest numbers right now.

>> the estimate was for 3.5 trillion one. when it comes to sales numbers, the estimate was higher. we are watching the operating profit that has beat expectations. how much could you clean in terms of the business seem slightly redder about what was as expected. >> i am not too concerned about the revenue number. there is nothing to get too worked up about. this is not a dramatic miss ward which would be nice for the

company. certainly we need storage, displays. when you get into the nitty-gritty you see what is performing well. >> mark herrmann with the latest reaction meeting expectations. samsung will be holding the earnings conference call, today we don't get divisional breakdowns or earnings calls, but that is now scheduled for october. this is bloomberg. ♪

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its ipo at $46 per share. let's bring in vonnie quinn. another ipo pricing. >> it's noticeable.

we had that forearm and instacart area there are a few things going on. it's gotten more fragile, we have the prospect of a shutdown for the government. this could lead to broader market volatility. it does not mean performance going forward will continue in that direction. instacart about 10% lower. the range was $49 per share.

that would give the company a market value based on the sec filings. executives, directors and employees would be $9.33 billion. it's about 21 million shares. if you are looking tomorrow, it's under birk. paul: it is been a mixed performance. it is a mixed performance, staff

that wants to cater to the public. companies in the pipeline are looking at birkenstock and some of those companies, consider a weight loss drug maker, game change solar. an active where brand. birkenstock is a consumer facing company the biggest one we had recently a couple of years, that was a pretty big deal. it is profitable, a bottom-line

story. it is a topline story, it has risen 29%, they will certainly be looking at the ipo which is going to happen tomorrow at the new york stock exchange. paul: connie quinn following the ipo. we have plenty more to come. this is bloomberg. ♪

♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™. paul: one of sam bateman friedsam associates has taken the stand alleging that he committed crimes. this report was filed. >> it's a criminal moment in a critical trial.

his former girlfriend ran a hedge fund that siphon hundreds of millions of dollars had taken the stand today played guilty to criminal charges and is cooperating with prosecutors. she is further outlining the extent. this is only the second week of a six week trial and other testimonies could include anthony scarab mode she and sam bateman friedsam on brother. shery: here is a recap of results.

sales dropped 13%, reflecting a slump we continue to see when it comes to memory chips. we got sales numbers which will be 50 billion u.s. dollars. operating profits in line with estimates, the estimate was for reporting five chilean yuan maybe, the broader narrative was looking for a turnaround in the industry which seems so far we are not seeing that, that has been the case with sk hynek micro technology where an industry downturn has pressured these demands for personal computers. of course, samsung will be one stock we are following at the open.

broader asian markets. take a look we're talking about five sessions of gains, the nikkei pointing to 4/10 of one saint gain bonds rising in the new york session. coming up in the next hour, more from sydney. speaking to the bank's head of equity strategy. former australian ambassador to the u.s. will join us. the market opens her next. this is bloomberg. ♪

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when giving warnings about inflation and growth to the geopolitics. >> as i conflict between israel and hamas rages on, we also see the changing narrative and tone coming from fed officials. this week, potentially a tighter market which might mean that we mean -- need less rate hikes. we will continue to watch those treasury yields. >> we did see strong demand at the front end of the curve and an option overnight. we have the open now for japan, korea and australia, one hour into the session. and also training for cash treasuries. one of the key headlines of the morning has been married we speak a town hall in chicago saying that the neutral interest

rate could be higher now than before the pandemic. the rates are not likely to stay at the current levels with rising bond yields which could be a substitute for a rate hike. we have seen that pullback across the curve coming through and that is about changing expectations about where the fit goes from here and an expectation where we might not see a hike at the next meeting in november. we are also seeing the bank of japan because we have local media saying that it is considering raising its fiscal 2023 price outlook to the near 3%, up from 2.5% announced back in july. and something else we are keeping an eye on of course, we are continue to monitor that japanese yen off the 150 market, but we are still seeing and touching that various point. the nikkei there is climbing a little bit as we get into the session. let's change on, we have reliance from korea trade data.

and that's muttering at 1.7% year on year. this is the export numbers for october coming through, this is a real bellwether of the global economy. we are also of course watching their input -- import numbers as well, up 8.4% on the year. that is really playing into that, into their demand for chips, and we are watching reaction to samsung earnings that came out in the last half hour or so. we are seeing that stock climbing as we get the trade underway. but we did see a fourth straight quarterly sales drop, and the sector wide slump in chips is concerning, and that has been weighing on what is the world biggest baker of memory chips. what samsung you can see it climbing as we get trading underway. sales also down around 13% for the three months in mid-september.

let's change on because we got brent crude coming online and at the start of the day we are seeing it trading flat. we are not seeing any movement coming through for wti. we do have the australian session well underway, and what is leaving again so far are material stocks after we had a bloomberg scoop out saying that china could be weighing the issue of further debt and and it will try to meet its 5% growth target for this year. >> thank you, we have ahead of equity strategy at citigroup, thank you for taking time to join us here. i wanted to talk about the calls i made last week, that it's time to buy global equities and not long after, just a matter of hours later, we saw war break out in the middle east. does this cause you to revisit that? >> absolutely. they have been so many reasons

for equity markets to worry this year, starting with recession risk, higher rates, higher inflation, and of course, geopolitics. and the tragic events out of the middle east are a reminder that these risks are clearly out there and continue to be there. but we have been arguing over the summer is that putting geopolitical risks aside, the macro economic risks or the balance of the risks has improved. i don't want to sound overly bullish because the data still looks bad, but it looks less bad than we thought it would look. the economies proved more resilient to all of these risks, then we have expected them to be before. after the recent correction in the market, there might be something that is much more optimistic. the geopolitics in the war are in escalation of this positive

outlook. but the market awaits estimates of the balance of the risk. to have seen the possibility of rates being on hold, that was a very optimistic use for the market. >> i'm going to ask you to pick rates right now, we did hear from mary daly saying that the neutral rate could be as high as 3%. where do you see it? >> there are two things about rates. but it pick markets that are important for me. one is that rates could be peaking, which is good for the market, that's why some parts of the equity market during the war could be oversold. and it's still going to be high, turning that rate towards the market and -- over the past decade. there will be winners and losers out of it. but on balance it is an

optimistic view, i think, that the rates could be peaking. >> does that mean that you are keeping overweight -- you're overweight on emerging markets? since then, we have had a $1.8 trillion selloff in electric, and is seeking to the lowest since the 80's is the s&p. >> absolutely. mystics difficult, and this is part of our thesis. we have been overweight for the u.s. into the summer. the strikes relative to the rest of the world was due to fears that the next thing was that high rates would break significantly for the economy and break the economy hard. and this balance of risks has inhibited growth. and we argued that it is time to move to more cyclical markets. this relative call, the

downgrade of the u.s., seeking quality in europe and emerging markets has been a flood. but what we argue going forward after the recent correction that we have been seeing, probably you should be buying into the more underweight valuation markets. >> you're not downgrading energy, you've downgraded them to underway. but you have this middle east conflict going on. what do you think? collects out of all the changes that we have done, recently, this underweight might be most at risk if the conflict escalates or continues, because will be fined is that geopolitical risks are usually the first -- the usually the first way they play out is through energy prices. i would mention that this call could be at risk. >> we have had rising yields

really starting to hurt. do you feel like those big names were overvalued anyway, and is there much more upside here? >> absolutely, but that is about the balance of risks from higher rates and risks of recession. last year, that was a huge rebalancing year for growth sectors like tech. this year, especially, with the banking sector crisis in the u.s., we started to worry about fundamentals and recession risks. of course, tech has proven more resilient against the latest selloff. we have bought back into it. as of a week ago. >> the headed equity strategy at citibank, -- citigroup, thank you for joining us. and we are keeping an eye on samsung after their results. >> samsung electronics seeing

the best day in more than a month, despite the fact that they reported -- recorded the fourth straight quarterly sales decline. they cite a larger sector slump that is weighing on the world's biggest chipmaker. let's get more from our age at asia stocks reported. the stock has really significantly versus the kospi this year, why do we see strength despite the fact that there was another quarterly sales decline? >> good morning sherry, even though they posted another sales decline, the operating profit for the third quarter presents an increase from the previous two quarters. even though samsung does not give the breakdown for each individual division, analysts estimate that samsung posted a loss in semiconductor divisions that was likely smaller than the previous two quarters. that probably means that the worst for the semiconductor division may be behind them.

and with the memory chip price turnaround, samsung's semiconductor division might see improvement going forward. another piece of positive news that might be moving the market is that the samsung -- samsung said it will develop high-bandwidth memory chips called hbm four by 2025 to respond to demand from the ai-related companies. what investors have been watching is ai-related news and this latest opponent from samsung is focusing on developing the next generation of chips to respond to ai may have been positive this morning. >> what are the key areas that investors are watching? >> what investors are watching and they will ask during the conference call later this month is that the samsung response to

the ongoing ai boom, the shares of the company have been losing so far this month before this morning compared with its key rivals because there was a perception that the company was falling behind its key rifle sk hynix, responding to demand from companies like nvidia, and rumors that samsung was failing to clinch a final deal was pressuring the stock a lot, lately. i think the key area that investors have been focusing on is the samsung response to the ai trend and the company's own outlook on the chip industry. >> and not to mention sk hynix got positive news this week of being allowed to expand chipmaking inside china. what are analysts saying in terms of the long-term risks that the china-u.s. tensions because these companies?

>> livers news over the weekend which was very positive for -- positive for investors. news that samsung will likely get a waiver from the u.s. to get shipping permits to produce chips in china, but the waiver was indefinite, and they would not to seek approval every year to improve -- import key equipment to produce more in china -- chips in china. this cleared up uncertainties that were hanging over, and they will be able to build their long-term plans for the operations in china. however, it still remains to be seen whether companies will heavily invest in chip operations in china because of lingering risk between the u.s. and china. >> are reported with the latest

on u.s. china results, and we see a boost when it comes to the korean won against the u.s. dollar. we have seen significant weakness for the dollar already, falling for a sixth consecutive session when it comes to the bloomberg dollar index in the asian session. this is the longest losing streak since july, not surprising since we are getting more commentary coming from fed officials that are taken as being more dovish. on the other of the trade we see that strength for the japanese yen as well, trading below that 1.49 level. we have already -- 149 level. we have already seen significant strength given haven flows and we have seen geopolitical tensions between israel and hamas. you are looking at the aussie dollar holding steady at that 64 -- .64 level, already rebounding after we saw that fall on the risk of sentiment. where member, when it comes to the ossian kiwi dollar, it's also a reaction to what happens

in china. and bloomberg reports that we might see that potential stimulus coming from beijing which could help the economy and might be sitting well with investors. what else are we watching? >> i'm looking at the same story this morning, because when you take a look at what is moving, the index that is moving the most is material stocks terrific related to that bloomberg discussion on china weighing new stimulus and a high deficit about that 3% mark it has been holding onto to meet its growth target. in the session you are already seeing those materials names gaming. let's change on and look at what we see in japan and korea as we get underway, because we see more mixed here, but that is the story that we are seeing those materials or industrial stocks gaining in korea in particular at the start of the day. let's change on because one more sector is in focus and these are likely names in asia, japan and korea, we see a little bit next, but heading to the upside.

we are seeing lvmh putting up its sales figures telling us there is more evidence that the demand for luxury goods is starting to wane a little bit because lvmh sales growth softened in the third quarter and they have been raining in their spending on big-ticket items like cognac, expensive handbags and analysts are disappointed by the limited guidance which came through from the companies broadly -- came through broadly in the session today. >> up next, we talked geopolitics with the u.s. ambassador right here at the u.s.-australia-new zealand conference. this is bloomberg. ♪ it's easy to get lost in investment research.

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>> when congress returns, we are going to ask them to take urgent action to our critical partners. we have enhanced our forced posture in the region to strengthen our deterrence and we stand ready to move additional assets as needed. >> president biden speaking at the white house to provide israel with full support. wyden says it to israel will include ammunition and settlers to work clannish -- missiles to replenish the iron dome. secretary blinken is traveling to israel in a show support. the u.s. is encouraging cover to facilitate talks with hamas about the return of american hostages seized during the attacks.

the combined death toll approaches 2000. let's discuss the geopolitical landscape. previously, he served as the ambassador from australia to the united states and the former treasurer as well. i want to start with the situation in israel. if this escalates, this brings in hezbollah, other forces, what position does is put the u.s. in, because it is already in a situation where it's already reluctant with ukraine, and now there's a situation in the middle east. >> it's a difficult situation for the united states. physically given that there is a highly contested vote to become speaker of the house. and it's not as if you're going to get a lot of focus from the house in this environment. president biden was firm in his support for israel, the danger is that there is a rapid polarization even beyond what we

already had in the middle east. and obviously the swift response of president erdogan and put in in russia and a number of authors to support palestinians and for others like the europeans and the americans and australians supporting israel means that polarization is taking us to the right. >> how do you see the impact of this more on oil price inflation and global growth? >> is going to have an impact. oil prices are a big factor when it comes to upward pressure on inflation. and there is no doubt in my mind that we are going to have a long stretch of extreme instability in the middle east over the next few months. the question for one is asking is how do we pull back? israel is totally justified going into gaza. but gaza could turn out to be one of the most tragic

humanitarian disasters of all time. there is no easy solution here. the standing point is how do we stop it getting worse, and there is a lot of way to go with feeling that -- with that. >> is what is happening with israel and gaza reflective of the broader tensions geopolitically around the world? have things changed after ukraine where you have more autocratic governments like russia, iran, north korea, even china showing more solidarity with each other and having all of these defense partnerships? >> i can't help but think that the world has become more polarized over the last two years. there is no doubt. however, the destructive force has empowered some authoritarian leaders and had a profound impact on the psyche of the citizens of many democracies. the world has changed since covid.

now, in order to hold onto power, authoritarian leaders have acted far more aggressively. when your own country is in the mix and your own country is suffering financial pressures and social pressures, it's often the case that the leader will look to externalizing, having an enemy, and focus on that external enemy to unite the nation. it's interesting. israel quickly came behind netanyahu, totally understandable, but the divisions over the last few months have drifted off immediately as israel seeks to defend its people and borders. and that's going to have a contagion impactor at the region and other parts of the world. >> how important is it during this time that democracy stays and you strengthen your cooperation and walk the tightrope when it comes to trade with the likes of china?

it's still the case. the world is becoming more protectionist. i think it is very alarming. all of the protection -- protectionist policies that donald trump put in place, joe biden has kept and enhanced. australia has become a rich nation with trade through -- between other companies. and protection is in the form of iteris" us, putting pressure on inflation. if the world is serious about dealing with inflation, then you have to start to break down trade barriers, not increase them. and australia is one of the few voices in the world that continues to argue for free trade is essential that we continue to push for it, and we will continue to trade with china. china is the second biggest economy in the world, and this idea of isolationism or trying to contain china, in washington

dc, where i have to live happier, his bond. we need to continue to trade and lift the prosperity of our world. prosperity is the greatest threat to political instability. because prosperity delivers political stability and prosperity for everyday people. >> he mentioned some of the dysfunction in the united states, i wonder if we could tap into your experience as an australian ambassador on some of that. particularly with the 22 a for election. former president trump, should he become the candidate, often turned his back on some of the traditional allies. do think that the deal on the nuclear subdomains could be a risk for australia? >> i think the arrangement will be equally strong hundred donald trump. of course, australia, when i was ambassador, we were the only country in the world that was

excluded from the united states tariffs and quotas. that wasn't on accident. it was a recognition by donald trump that australia is a steadfast ally and friend. of course, the inflation reduction act relies heavily on the supply of critical minerals from free-trade nations. australia is one of america's only free-trade agreement allies. and therefore america needs us and we want to supply. we are part of the american supply chain. ourselves and canada are essential for america's climate change policies and for its national defense. and because of that, i have no doubt no matter what the outcome of the election and it will be between joe biden and donald trump, no matter what the

outcome, the partnership will remain strong. >> former ambassador to the united states, thank you so much for your time. more to come on daybreak asia, this is bloomberg. ♪ ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

>> and how european futures are running in the asian section, stocks at their best since november, track -- leisure shares serving -- searching among sectors, but we have positivity coming from potential stimulus from beijing, not to mention treasury yields and global bond yields just broadly easing. 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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that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works. >> is the markets indicate that bond yields have tightened,

meaning indicators have tightened, that indicates that economic conditions at titan. if that's true, the fed does not need to do as much. that's why i said depending on whether it unravels or the momentum changes, that could lead to another rate hike. >> we are on track for soft landing. inflation has come down quite a bit, the labor market has remained strong, maybe we can get inflation all the way back down and avoid a deep recession. that is what i would call a soft landing. so for -- far it is looking more favorable. >> i think our policy rate is at a sufficiently restrictive position to get inflation down 2%. i don't think that we need to increase rates anymore. >> some fed officials speaking there, their comments boosting speculation that the central bank is heading towards another pause in rate hikes.

let's discuss the state of the u.s. economy with an economist at citigroup. veronica, thank you so much for joining us. we have a bit of commentary that you heard, the fed commentary that rising yields have done some of the job. do you suspect that rates have, jobs are done, this is it, the question is how long we stay? >> it has been surprisingly devilish commentary from fed officials, -- dovish commentary from fed officials, especially over the last two weeks or so, it was related to the september meeting, higher for longer. they raised the 2024 dots, and part of that message was 12 of 19 fed officials who were penciling in another rate hike for the share. it is a bit strange. when you get that higher for longer move than officials market back. but it absolutely has had some dovish commentary, and this chance, we would not

underestimate the chance of another hike where we could have stronger inflation data. we are either done or close. >> it feels like every time we get a good bit of data, like payroll numbers, it does give the fed latitude to potentially tighten and markets don't react very well. do you think good news will actually mean good news? >> it has been a really resilient data. data that honestly does not look like a soft landing but looks like no landing. i think that fed officials are still cautious of that. this is not a labor market which is loosening too much, it will come down to inflation data and at some point they will be done, 69 months from now, it looks like we have had a soft landing, that would be great. i think that chance is still pretty low. >> we did not necessarily see the strikes being reflected that much in the latest payroll numbers, but we did see, overall, more than 7 million workdays in the u.s. lost

because of labor disputes. what are the implications of this for the broader u.s. economy, and when does it start to matter for the fed? >> all of the labor actions that we have had with the united auto workers strike and the actors and writers, we had a strike of health-care workers, one of the largest in history, it is anecdotal evidence that the labor market is also be tight and strong, and the labor demands are large. one of the more concerning potential aspects for the fed is that some of these negotiations include cost-of-living adjustments, and that is anecdotal evidence now that we can see in the data over the next couple of years where wage growth is still running too strong to be consistent with 2% inflation. >> how much is citibank weighing in oil prices and the impact on inflation given the latest of elements throughout the middle

east? >> that is a restaurant headline inflation. we have had a couple months now of oil prices moving higher, and gas prices moving higher with it. you can absolutely see that pass through to elements of core inflation, airfares that could be rising. it is important for consumers and expectations of inflation, a price that consumers are facing frequently, and that is still an upside risk. >> where do you place risks from political dysfunction, because we have this problem with electing a new speaker which has applications for the shutdown, they will be a debt ceiling and the risks are piling up. the immediate concern of electing a speaker of the house, we will know this week, then we can hope they avoid a shutout.

we heard about the negotiations over the summer and the latest risk of a shutdown where there is appetite to avoid the worst case scenario, in republicans, you know, we did not get a shutdown. we did not get some hope -- we did get some hope there, but we are not seeing anything new in terms of fiscal plans especially in the election year. >> out how many people are thinking about overseas risks, including the economic slump that we see in china, and when does that start mattering? >> it's always so big that they are watching, we are watching jim political tensions or growth, but it really does still come down to domestic data, domestic labor markets, domestic inflation first and foremost. and how that impacts new activity, and potentially a slowdown in china is helpful for goods disinflation, and hopefully we have good oil

prices rising again, they are focused on domestic conditions. >> thank you so much for joining us. let's get over to bell for a look at markets. bell. >> still a story of a fed moving markets in the session and one of the main factors you are seeing here is that retreat coming through in the bond space for yields and we did have the san francisco president mary daly saying that those moves run higher for bond yields. and it could have done the fed's work for it. that rate hike could be off the table for now. that place out that drop in yields that we are seeing in the korean won because it is leading gains in the asian fx space. something else that could be helping that is that we did actually see the current account surplus widening in korea over the course of august, which could be another supportive factor for the currency. and you have the big boost in the equity space because korea

is leading the asian benchmark higher this morning half an hour into the session. and also for tokyo. that is down to the samsung numbers we had out earlier, samsung up more than 3%, at its best david -- since september 1. what drove that, if you change on now, when samsung reported those numbers we saw a 13% sales drop for the third quarter, it's largely in line with what analysts have been expected, and the company flagging that it does want to benefit from the ai related spending boom in tech, and off that you are seeing a lot of chipmakers or chip-like stocks rising in korea. and laser tech here up more than 5% at this stage. let's look at what sectors are performing the best because you can see that i.t. is among them with those gainers. but material stocks are leading the bench this morning after we had a spook out saying that

china could raise its deficit about that 23% target and issue around 137 billion u.s. dollars of extra debt. a lot of that would go into infrastructure spending and you see that reaction coming through with materials not >> we will see if that could change when it comes from the chinese, and market sentiment. you can watch more on these conversations we are having on bloomberg tv, tv is your function. you can dive into any of the securities or bloomberg functions. plus, become part of the conversation by sending us instant messages. this is bloomberg subscribers only, check it out and tv . this is bloomberg. ♪

>> big gains across asia, particularly when it comes to the kospi gaining 2%. one of the heaviest weight in stocks, samsung advancing more than 3% on another reported quarterly sales slump, but operating profit and better than expected. we are seeing gains in samsung electronics and optimism over anything to do with ai. an action of supplies. take a look at the nikkei, getting .5% after already having seen the best day since january.

we see a bit of strength of the japanese yen holding below that 1.40 9 -- 149 level given that the u.s. dollar continues to weaken on its longest losing streak since july. accuracy a bit of activity from fosse kiwi stocks were aussie stocks are being led higher by material and qb's -- tech stocks, and qb are down 2%. and we will look at how the yuan starts trading because beijing is considering raising its but -- budget deficit for 2023 as the government prepares to unleash a new round of stimulus. let's look at the potential market impact cap and, in any other market, one would think that this sort of stimulus measure would actually tell us much higher. but there seems to be some sort of fatigue when it comes to these potential stimulus coming from china. what can we expect today?

>> i think that fatigue and anxiousness is a great way to describe what is happening here. this is a step in the right direction for sure. i think that markets will be optimistic, at least in the short-term if this happens. we have been waiting for some sort of stimulus package. this is, you know, an admission of sorts that top government officials are saying that the worlds have been brought on by property and inflationary pressures, all of these worries about the economy and we can macro spending, even the golden week holiday, that is weighing on the economy with the growth target at risk. people up and saying that already, whether that translates into a broad rebound, across equities, that is going to be a tricky one. there are a lot of things weighing us down. this is one package towards

stimulus, that's great. but traders are going to be expecting more, they're going to say that there is a lot of loss on one side, they need to make sure that the rebound and benefits on the other cite out way it. -- other side outweigh it. >> it was underwhelming on consumer spending and travel, for golden week, so what is the potential for a rebound? >> the golden week holiday was interesting. there was a lot of optimism that this was going to be the year, the revenge when china was would come back, and the numbers looked really strong, but as the week went on, increasingly, observers were saying with a second, the spending numbers are not what they -- we thought they were going to be. we think that makes sense when it looks at the big effect -- picture and there is worry about the macroeconomy.

this spending by individuals is sorta going to be the thing that kick starts his recovery. it has to be bigger. things like broadband stimulus are probably a step in the right direction. what we will see a lot more very steady support and real ways for this market to turn around. >> catherine not, who leads our coverage for bloomberg is equities and appealing to asia stocks as increased volatility in the middle east crisis volatility. why are defensive stocks the best place to be amid market uncertainty? >> for investors in asia, they are contented with not only -- contending not only with rising volatility from israel and

hamas, but we see the economic downturn in china and property woes added to the uncertainty that investors are facing in the region. at this volatile time, people are saying that defensive stocks that provide a stable cash flow of the best place to be when it comes to looking for safe havens. if you look at the stock performance in the stock index of hike and stocks, they are outperforming the growth index and their peers. that is boosting the investment case for them right now. >> what if you want to chase yields, where do you go? >> some investors, i spoke with some of the highest yielding markets in the region, asia, singapore and taiwan. we can look at insurers, banks and some people are also sing not all high-heeled stocks are attractive because some sectors with high leverage and i

uncertainty are some of the sectors that people should avoid. people really have to be selected there. -- selective there. >> john chang there. you can get a run-up of the stories that you need to know to get your day going on today's edition of daybreak. brixon brought -- subscribe is go to dayb their terminals and it's available on mobile on the bloomberg anywhere affect you can customize your settings so you only get news on the industries and assets that you care about. this is bloomberg. ♪

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>> the top corporate stories we are following, exxon mobil in talks to pay more than $250 per share for pioneer natural resources. at that price, the deal could value pioneer at least $50 billion. sources tell bloomberg that a deal could be announced as soon as wednesday, but a final agreement has not been reached. the move would cement composition as the permian basin's dominant oil producer by far. the cornish chairman will step down next year as part of a board room cleanout. he will retire before the and -- annual meeting in may 2024.

his fellow directors will retire after the happy results in february. qantas is looking to bring in fresh faces to repair its battered reputation. the results of an independent review on major governance issues will be released in the second quarter of 2024. lvmh shares in the u.s. down after it was reported that sales in the third quarter grew slower than expected. organic revenue and its fashion and leather goods rose 9%, short of the wall street expectation of more than 11%. sales on wines and spirits fell 14%, much worse than estimates. asia sales, excluding japan, drew 11%, while short of estimates, a sign that china might be losing steam. shares of pepsico have rallied as they raise their earnings forecast following better-than-expected quarterly results. the company says that consumers have so far absorb higher prices on snacks and beverages.

the cfo says that the company has been immune to the effects of appetite suppressing drugs like is epic. >> i think the adoption will likely be pretty slow on this. and the result is as consumers migrate their eating habits, we will migrate with them. i don't think snacking is going away. they will want all forms of snacking, and we will be right there with them. >> he sees early next year as the best case scenario for a new cio, with the previous 17 down after just two years. the pension plan -- fund has failed to meet its annual target. they spoke to bloomberg about the investment strategy moving forward. >> we offered in a public sector and by my, and we have processes

we need to follow. we need a headhunter to help us again. we will have a subcommittee for our 13 member board involved in choosing the next cio, even though the cao -- cio reports the ceo. the best case scenario would be after the first of the year to get a new person in the sea. >> their candidates. >> their candidates reaching out now. >> some of the investment strategy that they employed was interesting. private equity, local sports teams, sacramento kings. how much of that continues based on what was put in place? >> private equity has already -- always been part of our dna. it was not long ago that we did a 10 year look back on our private equity returns and access to the markets and what we found is we can do better. the asset allocation approved by the board in november of 2021 actually removes the private equity allocation from a percent to 13%. what you can expect to see in

november is the team coming forward with a recommendation to include it -- an additional four-5% allocation to private equity and another similar investment in private credit. the entire team is really rallying around and asset allocation delivering a 6.8% return. >> i want to go back to the search that is taking place. one of the big challenges for public pension funds is that there is a lot of political scrutiny on the person and low pay continued -- compared to a private asset management job. i'm curious as to what your sales pitch is to prospective candidates on why it is worth making the move to america's biggest pension fund. >> you have to be someone who is really aligned to the mission, we have this really important part of our work and our job that pays these benefits to 2 million public sector workers. frankly, not everyone is motivated to do that, whether

that is a lower pay in varmint or the public scrutiny of city in the ceo or cio c. it takes a special accommodation of skill set, behaviors, alignment of interests, and that fire in the belly that you want to add purpose to your life. and in the past, we have not had difficulty adding candidates to be interested in that environment. but, you know, the time is early and we have had a number of candidates already reach out asking about the timing of the process and the contact to become a candidate. >> the calpers ceo marcy frost there. looking at currencies after we solve the u.s. dollar weakening in the new york session, still down for a fifth consecutive session, the longest losing streak since the like on the other side of the trade. we have the japanese yen holding that 1.40 9 -- 149 level, and we have seen those haven demand flows as we continue to see to political tensions and the conflict between israel and

hamas. we see the korean won being propelled higher towards a 13 .39 level. -- 1339 level after we saw a boost for samsung electronics. their operating profit came in slightly than expected despite its on the quarterly sales decline for the company. the aussie and kiwi dollars hold steady at the moment, a lot to do with, of course, the chinese economy and what we are respecting to see in terms of stimulus measures i. take a look at treasury yields and how they are doing, because we are down downtown, what difference it makes from what we saw last week, when the 10 year yield the highest levels in 2007. and really, to do with more commentary from fed officials when it comes to the potential trajectory of where the fed goes from here. a lot are being perceived as dovish. one of -- that is one of the key

things at the conference you are at, because it is a significant global issue. i's that's right, this narrative from the fed, the dovish narrative drawing commentary from some of our guests at the conference here organized by citigroup. eric daily saying well maybe the neutral rate is around 3% but the big macro factor that you cannot ignore right now is that terrible violence that we are seeing in the middle east. that will bring a lot of uncertainty to a broader environment. but that is it from daybreak asia, market coverage continues as we look ahead to the start of the trade in hong kong, shanghai, and shenzhen. bloomberg markets up next. this is bloomberg. ♪

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