shery: you are watching "daybreak: asia."

annabelle: we are counting down to asia's major market opens. paul: australia's just come online for trade. traders are looking past a harder than expected u.s. ppi reading to focus on less hawkish fed commentary. the latest meeting minutes, noting the risks of both over and under tightening. israel forms an emergency unity government as officials indicate they are preparing for a massive military assault on gaza. annabelle: we've got the open of the asx 200. you can see a very modest gain coming through for aussie stocks. that is a sixth session hi. it follows the gains we saw in the wall street session overnight. what we are watching today essentially is a that story that's come through in treasuries, lower yields, being

reflected in the aussie three year, the 10 year. the policy greenback, a little bit firmer -- aussie greenback, a little bit firm. traders are taking heed of the dovish views coming through from the fed, expectation around what the fed does next and perhaps we will not see a rate hike later this year. these are all positive factors. we have the u.s. cpi reading following the ppi reading, the u.s. cpi reading, very much in focus. elsewhere in the session today, we will be keeping track of what's happening in china. we had this bloomberg tracker for september just out at the top of this hour here, with a couple of headlines from that. firstly, and the credit market in china, we saw offshore stress easing to its lowest point since november, 2022.

we saw fewer local defaults and also slightly less bad numbers coming through for home sales in china as well, these were supportive factors. offshore debt, likewise, fallen. we are waiting on restructuring from the likes of evergrande and other developers with offshore debt outstanding still. some more positive signals coming through for china's credit market as well. yet another supportive factor for asian equities. shery: still optimism over china being felt across markets. what we are really following in the u.s. the session is the move decisively higher in the afternoon higher with the s&p 500 gaining for a fourth consecutive day. we are seeing u.s. futures extending those gains slightly in the asian session. those ppi numbers, coming in slightly harder than expected, propelled by gasoline and food prices. we will see what happens with the cpi data tomorrow. in the meantime, markets,

very much focused on the positivity of china data, the bets that china will do more also perhaps the fact that we are seeing more commentary from fed officials that are taken as more dovish signals. the treasury markets was a little bit mixed. we saw the 10 year yields down to was the 4.5% level. despite the fact we got fomc meetings from the september meeting, policymakers actually agreed to high rates for some time, so we will see what that does to the fed trajectory going forward. oil, reacting to the middle east risk. a little bit of optimism that perhaps the war will be contained to the region. not to mention that u.s. production of curde soared -- crude sort to a record in the fourth quarter. -- soared to a record in the fourth quarter. paul: fed officials agree policy should remain restrictive for some time while pointing out that risks have become more

balanced. comments are bolstering bets that the fed might be staying on hold until the end of the year. >> the real side of the economy seems to be doing well. -- >> this patient approach, taking the time to assess incoming information, was warranted for a number of reasons. and particular it reflects the fact that we are near or at the peak for this tightening cycle with the risk of inflation remaining persistently high more closely balanced with the risk of slowing activity more than needed to achieve price stability. paul: let's get some more on this from our chief rates correspondent for asia and mlive contributor, barfield reynolds. we had the minutes come out, what we have seen huge movements in feels since that meeting. to what degree has this been overtaken by events? >> it's making for a very muddy picture. we had these comments from fed officials about the recent surge in yields,

tightening conditions in the economy, we might not need to do so much. 10-your yields are back under 4.6%. 10 poisonous boys -- 10 basis points from the last point the fed met. what it throws it back onto is what goes on with the data and what goes on with the war. does the war ultimately end up creating more concerns about too much supply of government bonds, because it unifies, as much as it can be, congress around approving bills to allow more spending on military matters? or, does it cool off

sentiment in general or lead to a spike in oil prices? which could rekindle consumer expectations. the one thing that is coming through strongly as the fed is open to the idea that they are at the peak, which is something that some traders have already been betting whether that proves to be the case and how long they hold that peak is the question going forward. shery: perhaps stronger earnings results. we are seeing the strongest upgrade ahead of results since early 2022. >> yes. and that underscores -- the fed would like to see that as long as it goes along with cooling inflation and a few signs of weakness in the jobs market. what it is aiming to achieve is the nirvana of a sort of -- of a so-called soft landing where they cool down inflation without savaging the economy.

the economy doesn't look like it's been particularly savage that the moment -- savaged at the moment. that throws it back onto the inflation outcomes and also creates a difficult outlook for bonds potentially, in particular if you are going to get a soft landing, then some of the stronger expectations that bond yields are going to come down rapidly next year as the fed pivots toward rate cuts, those look to optimistic. -- too optimistic. unless you do think there is a recession coming. shery: garfield reynolds there with our top market story. let's turn to the conflict in the middle east. israel's prime minister has vowed to wipe hamas off the face of the earth as a new unity government signals a major offensive after attacks by the militant group killed around 1200 israelis. president biden has issued a warning to iran as he outlined further u.s. military support. >> i spoke with prime minister

netanyahu for i don't know how many times, but again this morning, and already we are surging additional military assistance, including ammunition, interceptors to replenish the iron dome, a carrier fleet, sending more fighter jets to the region, and we made it clear -- made it clear to the iranians, be careful. shery: for more, let's bring i political director jodi schneider. what is secretary of state blinken hoping to achieve in his trip to israel? >> i think the main thing that the u.s. administration -- the biden administration once from this visit is to make clear, as president biden has been doing in previous days, that the u.s. stands by israel. that it stands steadfastly by

israel and will support it after this horrific attack and that will make sure that israel has what it needs. what that might be will be a question and how that will be funded will be a question for the coming weeks and months, but for right now, the question -- the real concern for the u.s. is that this message of support and that other states and other nations like iran do not take this as an invitation to see is rael as weak. that is the main reason for the secretary of state's visit to israel. he will be checking in on the number of americans missing. they have been at least 14 american deaths. he will be there also to be a sort of a comforter -- somebody from the administration who will be making clear the u.s. has been devastated and heartbroken by what's happened

to all these people who have died and were being held hostage. -- and who are being held hostage. >> israel has formed an emergency unity government. what is the significance of that? >> it is significant because it is a real war cabinet, as they are calling it, an emergency war cabinet. it is interesting because the prime minister, benjamin netanyahu, is forming this with a chief rival of his, the opposition leader, man -- bennie ganz. there were questions about how they would put this together. but it is truly a war cabinet. it's an emergency cabinet in that they will not take up any legislation that is not related to the war. they will not do anything that

is not war centered. and that will dissolve this emergency kind of coalition here as soon as the war ends. benny g. has been somebody who has been a rival of netanyahu's. he ran against him and had more votes than him in an election but was not able to form a government, and he also has been on the others of netanyahu on that very controversial so-called judicial reform plan of netanyahu's, which would've significantly weakened the powers of the supreme court and led to weekly protests of thousands of israelis. it was something that was seen as something that came between the two of them, who have not had a close relationship in any case, but now they are working together with the current defense minister to really focus solely on war, funding the war strategy, and however long that

takes. paul: bloomberg's political news director, jodi schneider. still ahead, the secretary of agriculture's outlook for japan's economy and why they see government yen interventions having only a limited effect on the we currency. plus, more on market strategies next. this is bloomberg. ♪ it's easy to get lost in investment research. introducing j.p. morgan personal advisors. hey david. connect with an advisor to create your personalized plan. let's find the right investments for your goals okay, great. j.p. morgan wealth management.

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>> i'm not saying that this soft landing is an absolutely sure thing, but i do continue to think it is the most likely path . are there risks to this outcome? of course there are. and global shocks are among them.

paul: let u.s. treasury secretary, janet yellen come on the chances of a soft landing for the u.s. economy. joining us now is the managing director and cohead of global microstrategy at manual life investment management. i just want to get your thoughts on some of the remarks from janet yellen there, talking about uncertainty, volatility, how would you describe your risk appetite right now? >> certainly, there are a lot of crosscurrents at the moment in global macro. in terms of where we are at with the fed, where is the terminal rate, just how much scope does the fed have to ease as the market continues to price in, there remain open questions. if we look at the pivot from the federal reserve around financial conditions, doing a lot of work for the fed, the question is, to what extent do credit conditions

have actually done the work -- to what extent have credit conditions actually done the work? the pickle here is any hint of dovish rhetoric eases financial conditions and sends commodity prices higher, so very counterproductive on that front. in terms of the economic landing, let is an open question as well, the nature of it, is it going to be soft, is it going to be hard? from that perspective, we think gross is set to ease into the end of the year and more meaningfully through 2024. paul: we did see an initial flight to safety on the outbreak of war and the middle east, but since then, as we have seen on this chart, we've got that two-year yield creeping back to almost 5%. the spreads, widening again between the 2's and the 10's -- when do you expect the yield curve to disinvert? >> it already is, isn't it?

has come a long way -- it has come a long way. we do think the backup in yields or the move higher is looking a little bit overstretched in the super short-term. likewise, the rally in the u.s. dollar looks a little overstretched from our perspective as well. a little bit of potential relief for risk sentiment in coming days, if we are right on that view. shery: let's talk a little bit about china, it was really interesting to see some major securities newspapers running front page stories about stay on the investment, buying millions of shares in china's big four banks. is this a move to shore up sentiment? >> our view on china, you need to distinguish between the short-term and the long-term, the tactical and the strategic. from our perspective, if we are right on the technical, the relief rally in u.s. treasuries

and the selloff in the u.s. dollar, that is going to help china as well. in terms of the narrative around china, weakness in the property market has absolutely dominated. sentiment is very depressed. and we tend to think that there is a tactical opportunity for some upside and china risk assets. upside surprises extremely low here pure would worth noting that a lot of the weakness in economic growth is structural in nature and cyclically china is not doing too badly, incremental easing to date is resulting in a stabilization in credit growth and by extension that will see a stabilization in cyclical activity as well, auto sales for instance have been a continued run spot. -- a continued bright spot. property will give the illusion of a basing. that might help in the super short term. i will add a key decision is pending in terms of how beijing plans to resolve the local government debt problem and

perhaps that will coincide with october or november, when we are expecting the event, and feel good messaging will come out of that, but perhaps more concrete proposals of the pencil manage local government debt. shery: when will we see decisive change in mood when it comes the chinese assets? we have seen reports that china will be raising their budget deficit for 2023 via incremental positives for the market, but is this sustainable? >> so, again, we see the tactical opportunity -- so a 1-3 months time horizon, as a potential period where you are able to tilt overweight china risk assets. we have seen the effect of incremental easing bjerga china continues to announce further easing. -- incremental easing. china continues to announce further easing. it does change the game somewhat

in terms of its usual approach to managing downturns. when the market understands the significance of that, i would anticipate it adds further tailwinds to risk assets on the short-term. shery: good to have you back, sue, of mandalaev investment management. 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.

shery: birkenstock shares plunged almost 13% on its debut in new york, one of the worst opening drops ever following a u.s. ipo of more than $1 billion. bloomberg's su keenan has more on this. we are starting to see a little bit of a rebound in the ipo market. what will this mean for the broader industry? >> to answer the question of how bad was this first they drop for

birkenstock, out of more than 300 u.s. ipos in the last century, there have only been 13 that fared worse. this was the worst in the past two years. birkenstock is the german maker of those $130 leather sandals, popular among all ages, and it is an ipo that was the fourth big one in the u.s. market in a month, priced at the midpoint. -- the offering, priced at the midpoint. however, the shares plunged in the first day of trading, closing near the low of the day, as you see, more than 12.5 -- down more than 12.5%. this comes after the biggest month of ipos, softbank backed arm, and grocery delivery startup instacart, which is down almost 17% were among those ipo's. so it is a pretty mixed performance by those three that

have now sharpened the market's focus. the birkenstock ipo has long been in the planning pure wood with its disastrous flop, they can look to the mockup period where they can sell their shares into 2024, that is an event that could add more pressure to the stock. it is important to point out the days when ipo's had a casino effect, everyone angling to get in. those appear to be a thing of the past. nobody wants an almost 13% drop on the first day. that said, the birkenstock brothers behind the brand did ok. $3.2 billion by selling, which set them towards a path -- set them on a path toward this ipo. paul: how could this impact ipos already in the pipeline? >> very, we are likely to at minimum see delays, if not

significant delays. it would be an understatement to say that the companies are reconsidering their strategy. there's a view that birkenstock may have been the last ipo of the year, because it is important to remember that, unlike many of the potential ipo candidates that are waiting to launch, it is a very well established, well known and profitable brand founded nearly 250 years ago, worn by preppies and hippies alike, it became a high-fashion brand and was featured in the "barbie" movie, so again, this was a highly anticipated ipo that did very poorly. back to you. paul: bloomberg's su keenan there watching the birkenstock ipo. some other corporate stories we are watching -- goldman sachs has agreed to sell greensky. the bank did not disclose the

transaction price but says it expects to take a hit the third quarter earnings, about $.19 per share. they had booked a $500 million wipe down in the third quarter as a prepared to sell the unit. the citigroup chair says the lender is currently focusing on its staff on the ground in israel. in an exclusive interview from the imf world bank annual meetings in marrakech, he told us stuff and israel are safe. he also says -- staff in israel are safe. he also says the market is fairly contained so far. >> it has already affected oil prices and commodity prices. but i think we are all going to just have to see how much this expands or not over time. we are on the ground in the region and other places in the world, and so far it is pretty contained to where the conflict has been. and that is certainly what we hope continues. paul: microsoft says it will appeal an irs ruling that it

owes almost $29 billion in taxes. the decision by the u.s. tax department relates as to how microsoft allocated income and expenses among global subsidiaries from 2004 to 2013. the company says it strongly believes it acted in accordance with irs rules and regulations and that its position is supported by case law. plenty more to come here on "daybreak: asia." stay with us. this is bloomberg. ♪

>> this is daybreak asia with a check on markets. half an hour out from open for sydney, sydney half an hour to

the session and half an hour out to the open for seoul and tokyo. we are looking to take cues from wall street because we saw the s&p 500 gaining for a fourth straight session and likewise, asx 200 building into its sixth straight day of gains. what is driving that? more dovish commentary and investors are clinging to that. rates are higher for longer but sticking probably at the level they are at currently. for equities, a weaker dollar coming through and lobar treasury yields off the back of that. let's change on because chinese futures are pointing higher today. we saw moves yesterday, the csi 300 ending the day flat or a little weaker. essentially investors are looking for more details on this plan we saw bloomberg's scoop, that china could issue more fiscal spending underfoot.

the latest survey from bank of america points to why china might need to issue more stimulus. that is because the chinese consumer in this survey appears to be fragile or quite weak. this, taking a look at the respondents to the survey who expect to increase spending over the next six months. for october, only 31% of people plan to spend more over the next six months and that is a decrease from the level in august. a lot of that hinges on the outlook for the property space. let's look at what came through. this was interesting. essentially respondents still seeing lobar property prices over the next six months, an increase from the august rating, 38% now see how surprises -- house prices falling. a lot of the market reaction hinges on the support of beijing is willing to property sector,

which as we know still has many issues yet to be solved. shery: investors have a lot to digest. a lot of economic data to go through, u.s. producer price inflation already. in a few minutes we are expecting ppi numbers for september out of japan as well, in order to get more clarity on those price pressures. in a country mired with deflation for years, wage growth for japanese workers slower than expected in august, reinforcing the doj need to wait for further signs of strength in the labor market before moving towards normalizing policy. let's discuss this with the chief japan group -- economist from tokyo. we do have more clues on capital investment with machine orders coming out. first of all, give us your expectations of what to expect out of japan today.

>> japan 2% on target. most comes from input prices. import prices are declining so we expect japan to cool down going forth. next year we expect japan to be below target. shery: when wage growth was disappointing, what are we expecting from negotiations in the spring? can things get better until then? >> this year shinto spring wage negotiation pushed up japan's base salary by 2% year on year. next year we expect it to be below 2%. that is not enough to push it to 2%. paul: in terms of inflation, we

have seen cpi creeping up. it is firmly above the bank of japan target as well. what are your views on sustainably staying above that target? next target is to percent. -- >> target is 2% but domestic demand is not small -- strong enough to keep inflation above 2%. import prices not rising. we think boj will keep easing to attain 2% on target. we will wait one more year. next year along with the global cyclical recovery, finally japan inflation will raise 2% by domestic demand. we expect boj can end easing in

2025, not 2024. >> the recent tweaks to yield curve control from bank of japan, they are more about supporting market function. what is your reasoning? brexit comes from the u.s.. the u.s. economy was stronger than the boj expected and u.s. long-term yield was higher than boj expected, so the level of u.s. long-term yield, it is difficult for boj to keep long-term yield around 0.5%. they adjusted control and expanded range from 0.5 21%. the range, it is easy to maintain. we can expect boj will continue current level of range until 2025.

shery: 2025 -- until then, is there any hope for the japanese yen? could perhaps the fed cutting rates next year offset the huge rate differentials that we will continue to see? >> yes. fed rate cuts very important. japan has to wait until fed rate cut to stop weakening the yen. until then, we think ministry of finance will keep saying if it is ready. shery: will they need to intervene? >> it depends on the u.s. story. if u.s. yields are higher than 5%, dollar-yen will climb above 150. we expect them to intervene. we expect the current level of u.s. long-term yield is the peak level and next year, along with

cutting rates, we expect u.s. long-term yields to go down. we think weakening and pressure will be used. -- will be eased. paul: takuji aida, thanks for joining us. a big day for japan's retail sector. let's get a preview of the results. catherine, what will be the highlight from fast retailing today? >> i guess fast retailing reporting full-year results and they will be giving the guidance ahead for the new fiscal year until august 2024. all eyes will be on the impact of the economic headwinds that they will have on topline growth. we are talking about an interesting sector, whereby

affordable value for money clothing and how that stacks up with some of the luxury headlines we saw yesterday from lvmh. it will be interesting to see their guidance for topline growth ahead. shery: our previous guest talked about the boj easing until 2025, which means a weaker and weaker japanese yen. what will be the impact on fast retailing in the new fiscal year? >> if you look at the weak yen, it will have an impact on the cost front for fast retailing, particularly when it comes to sourcing come up government. on a brighter note, this is a company that is reliant on the overseas market and when the numbers come back and translate to the weaker yen, it means the overseas operation should see better margins on the back of that.

clearly, we will continue to see the 4x headwind into 2024 if expectations by economists go -- shery: as expected. 2025 could be when the boj moves but catherine, blumer and help -- bloomberg intelligence analyst, with previews for retailers across japan. citigroup's chair said the lender is working to streamline operations and expect a simpler bank in two years. in an exclusive interview at the imf meetings, he told us more about how the ceo is handling the restructuring. >> this is something jane has been thoughtful about and decisive since her first time on the job. we had our investor day soon after she started and laid out the vision for simplifying the bank. it had been on a path like that,

but really, much more simplified , starting out with divestitures of our non-us consumer businesses, which we had all over the world particularly in asia. secondly, in spending a good bit of time transforming our risk and controls and operations and technologies supporting them, and getting that underway. this is what i would describe as the third leg of that stool of change to simplify the company. that follows from the other two. for example, by getting rid of and having the vested all these non-us consumer businesses, we don't need the same significant geographic managerial layers that otherwise were there, so getting rid of those. likewise, bringing in core businesses closer. in two years, i think we believe it will be a simpler bank.

our expenses will go down, revenues will go up as a result of being simpler and i think despite the great investment in what we are doing and the transformation, the costs will come down. >> is there a bit of a bumpy road? you have also put, sold a big chunk of your china unit to hsbc. does that impact your ability to serve clients in the short term? >> not at all. it is a smooth transition we are going through. we have had now coming on nine closings of nine u.s. consumer businesses and those have gone smoothly. we have gotten good premiums for the ones that have closed. in other cases we have had to engage in wind downs and china is one of them. this marks the ability to smoothly sell a chunk of the business, so i would say all of that is going well and our business that remains, our core

institutional business that we have all over the world, that is operating smoothly and this is making it easier. >> the changes and restructuring, do you have a final number of job cuts? >> we don't. jane is decisive about the direction she wants to go but specific about doing it in the right sequence. this is not about hitting a number, it is about making sure we get the roles right to simplify the company, to get the most efficient business we can get out of this. the numbers will come over time but we are not targeting a particular number. paul: citigroup chair john dugan with our colleague francine. plenty more to come on daybreak asia. this is bloomberg. ♪ personal advisors. hey david. connect with an advisor to create your personalized plan. let's find the right investments for your goals okay, great.

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shery: that relief is in focus at the imf meetings in morocco. sources say closely watched talks for thursday are unlikely to produce breakthroughs on how to level the playing field among lenders when governments default. a reporter is in marrakech. >> we are on the ground and marrakech for the ongoing imf meetings. we heard from a number of finance chiefs, in particular

u.s. treasury secretary janet yellen talking about how she is hope will for progress on talks with china. she will meet with the china pboc governor later this week. a number of leaders feel -- fielded questions about how the israel-hamas war can affect their economies, including oil prices, inflation and their volatile currencies. we will pick those attention to how data talks are going with the number of countries in the global south, in particular paying close attention to zambia and their discussions with the imf. we heard about the deal being struck between sri lanka and china on their data talks so we will see whether there is more progress on that front. moving forward, because this is the first imf world bank meeting happening in africa in 50 years, a lot of attention is paid to what african leaders are calling for, in particular reform of

some of these multilateral development institutions. there has been discussion around that. we will see if there is any progress that -- on that front on reforming the institutions. shery: france's central bank chief says china and other nations need to take a fair share in debt restructuring of struggling nations. financing global goals like climate change as well. he says a revision of imf voting shares that would benefit emerging markets, including china, is inevitable but those nations must play by the rules, updating the distribution of quotas expected to be a source of debate in marrakech. paul: a journalist has been reunited with her family in australia after her release from about three years of detention and china. in a post on x, she thanked supporters and talked about

holding her children. there is a sign of diplomatic warming after years of tension between canberra and beijing. let's bring in our sydney bureau chief. how has australia secured her release? >> there has been a diplomatic push from australia from politicians and business leaders in china, trying to secure this release. china says it is an end to judicial proceedings that she was jailed for two years and 11 months and has been released. australia says it is more of a diplomatic victory, head of anthony heading to beijing later in the year. shery: he is headed to washington as well. what does this mean for australia-china relations? >> we had the chinese ambassador to australia saying they are hopeful moving relations beyond stability, stabilization.

we have seen trade tariffs rolling off in recent months. there are wind tariffs to go on that front so i think australia hopes they can secure some kind of agreement to remove the tariffs on australian wine. there is also still one australian who is being held in custody in china, so they will look to secure his release as well with albany's -- albanese heading to china. shery: tune into bloomberg radio to hear more from the big newsmakers and the dirt -- the daybreak team. listen through the app, radio plus or bloombergradio.com. plenty more ahead. stay with us. ♪ ♪ dramatic music ♪ [flight attendant alert] [baby crying] [snoring]

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when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh shery: breaking news out of japan, the producer price inflation data for the month of september. year on year growth of only 2% is easing from the previous month and also coming in below economists' expectations. when it comes to month-to-month, we are falling into deflation. ppi contracting 0.3% for september on a month-to-month basis. we had some gains the previous month because of petroleum and coal products.

but that has not been sustained and ppi year on year's growth of 2% for september. easing from the previous months and missing expectations. core machine orders month on month, contraction of 0.5 percent for august. the expectation was for growth and we are in contractionary territory. this gives us clues about corporal -- corporate capital investment. it had fallen for the most in three years for the month of july in year on your numbers. when we saw the contraction, of double digits, for the month of august there is contraction of 7.7%, which is larger than economists expected. the core machine orders data point is volatile, but suffice it to save that ppi and core machine orders have disappointed x -- expectations, perhaps a sign of a global slowdown and uncertainty over china's economy

as well. let's stay with japan. the government seeking to close the gender pay gap and experts say it's policies need more teeth. data showing women working for top banks earned little more than half the salaries of their male colleagues. let's get more from our japan economy and government editor. why is the gap among top japanese banks still around 45%? >> the headline numbers are stark. japan's gender pay gap is clearly the worst but industry by industry, other sectors are the worst in japan. some of the reasons, there aren't many female managers and japan. the hierarchy within an organization being what they are. another reason in japan, the two trucks starting practice for

regular workers at big banks. one track is occupied by men, paid more, given more responsibility but comes with the risk of being relocated by the company. the other track is occupied by women mostly and paid much less with less responsibility, but comes without the risk of relocation. the upshot is those two things, the lack of female managers and structural problems in current practices, have widened the wage gap. paul: is disclosure going to be enough to change the status quo in japan? >> experts say the gender pay gap closure alone will not be enough. presidents of firms have disclosed percentages of female managers and we haven't seen swift improvement. one expert says the pay gap has to be treated like any business

problem like identifying the status quo, coming up with ways to improve and track progress. disclosure is step one. banks have started to make efforts with targets for female managers and abolishing the two track hiring system. japan doesn't force firms to prove they don't discriminate along gender lines or face significant fines, which is what iceland has done, for example. there is a lack of teeth to what japan is doing. there seems to be a long path left. paul: all right, our japan-korea government economy editor. let's see how we are doing a markets. australia trading just coming up on an hour, broader index higher 0.25%, financials and materials

performing strongly. weakness for energy stocks however. looking to the open and japan, nikkei futures trading in positive territory. s&p also in positive territory and we are counting down to the all-important cpi data out of the united states. still to come, we will speak live with israel's ambassador to china as we reassess beijing's response to the israel-hamas conflict. the china open show, at the times on your screen. this is bloomberg. ♪

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>> this is "daybreak asia."

we are counting down to market -- asia's major market opens. we got hotter than expected ppi numbers. you're bracing for cpi readings as well. -- we are bracing for cpi readings as well. >> we are waiting on some earnings out of japan as well. annabelle is here for a look at the markets. what are we watching? annabelle: those numbers from japan really going to give us a sense of how the japanese consumer is faring. we are counting down to the open for japan, south korea, and the start of trading for cash treasuries so the direction of the 10 year yield also in focus as we get trading underway here because we have seen the pullback primarily at the longer end of the curve. there has been that haven demand coming through from the israel- hamas war and what is playing into it is the dovish fed speak.

we are continuing to hear from fed officials really telling us that yes, perhaps rates will need to stay elevated but we won't perhaps need to see another rate hike in this current cycle. investors are really liking that in the equity space in particular. we saw on the wall street session moves higher for a fourth straight session and today as we get trading underway, the nikkei 225 pushing up .7% as we get online. now, that dovish fed speak did overshadow hotter than expected ppi numbers that came through in the u.s. session but also pointing out we just had producer price data coming in for japan. it came in weaker than expected so gains of 2% on the year, the expectation had been for a jump of 2.4% and also weaker than expected on the month as well. that obviously we closely tracked by the bank of japan. we will expect it or see updated inflation forecasts by the end of this month, but still, it has

really been that focus on the rate differential between the bank of japan and the fed that has really been hitting the japanese currency because here at the 14 nine level, we are testing the 150 mark are looking like we could. some including mizuho same 155 against the greenback is possible -- saying 155 against the greenback as possible. take a look at how korea is starting to trade in the session. at the outset, watching tech stocks in particular because these outperformed on the wall street session. it was that story of lower yields coming through come a weaker dollar. these are supportive for the tech sector. you can see the outperformance of the kosdaq keeping an eye on what is happening with the korean won. fairly steady. we did see the korean won leading gains in the asian fx space. not sure today but we will track how that goes. let's take a look at what is happening in australia because we are one hour underway and we

have got so far the asx 200 into its sixth straight day of gains. energy stocks a particular focus, a little bit under pressure. both a little bit weaker here so it just tells you that investors are really paying attention to the israel-hamas conflict and what that means for energy demand and as yet, we still have not seen that conflict spilling over beyond or further into the middle east. shery, that will demand not picking up as a result just yet. shery: let's turn to our next guest who has a preference for u.s. and japanese stocks given their relatively stronger earnings outlooks. joining us now from singapore is steve rice. good to have you with us. of course, a caveat in your call seems to be you are pretty selective when it comes to equities and you have a preference for bonds or stocks. why? steve: i guess, obviously, the

environment that we are expecting is that the economy is in a period of slowing down. that has taken a lot longer than many including ourselves expected but that seems to be coming through in the consumer data so obviously, we saw consumer credit card data all starting to show a significant slowdown coming through. obviously, a major part of the u.s. economy so from that perspective, you know, we think that on a forward-looking basis, probably the fed is still done. we have the fed minutes overnight. generally reinforcing that view and again mode -- bond yields are in overshoot mode. shery: what do you make of this earnings season and whether that sets a higher bar that might be difficult to beat? steve: i mean, it is very normal

in an earnings season for people to be positively surprised or upgrading their expectations because obviously, corporate leaders generally manage their market expectations ahead of the earnings season and then try to outperform them so that is a typical cycle. clearly, you know, yes, if you get higher earnings, then it does raise the bar i guess going forward. but i think the macro environment is going to be far more important to that. does that weakness come through? what will be really interesting in this earnings is if you look at the retailers, one of the signals we will get from them on a forward-looking basis, not just what has happened in the latest quarter, but are they seeing signs of concern in their business on a more live basis and is that something that they are concerned about? that is something markets will probably react to as well. paul: i know you mentioned you do have a preference for u.s. and japanese stocks at the

moment but if you look to china, it is a big market. it is hard to ignore. it's going. cheap at the moment and we have just heard that one of the state owned investment companies has bought shares in china's big four banks and this happened on wednesday. do you have any sense of optimism or are you looking at opportunities in china at the moment? steve: as you say, china is incredibly cheap and has been for a long time. it's cheaper waiting for a catalyst. is this the catalyst? we saw some sense of them moving toward centrally financed infrastructure spending rather than relying on local governments as well so the signs that the authorities are trying to change things up a little bit and trying to support economic activity, and now come as you mentioned, maybe even the stock market as well. i guess, you know, the sentiment is still pretty, you know, cautious, so i think people have been once bitten, twice shy.

everybody was talking about the reopening story, how that was going to lead to a boom in equities. two months before we saw the downtrend continue so we really need to see the hang seng index break out of that downtrend we have seen since february. for people to get more excited. so yes, very, very cheap. but not yet signs that we are going to see a bottoming of improvement. paul: has the war in the middle east cause you to revisit any of your calls lately? steve: not really. obviously, it's a huge humanitarian issue and we are obviously watching it very closely. i think, you know, the impact on oil markets has been relatively muted so far so from that perspective, you know, that would obviously be one way that this could feed into changing course, leading to higher inflation. may be tighter central-bank policies, but i think from the moment at least, the geopolitical implications are

obviously very significant, but the implications for markets and for the economy and globally is probably not that big of a deal at the moment. paul: all right. that was steve bryce. thank you so much for joining us. annabelle, let's take a look at what is going on in markets. what are you watching right now? annabelle: i was just picking up on what steve was saying about the energy market impact from the war so far being limited. that is playing out because so far in the session today, we are 10 minutes underway for seoul and tokyo in the sector that's really standing out to the downside is the energy one. that is one of the few ones that are declining so far. there is a lot of green on the screen. these are the big energy plays in japan and australia and you can see as i said in negative territory. we have already seen we will really erasing most of its gains following that attack on israel over the weekend and as the supply impact is so far looking

to be quite limited in the war thus far but let's change on because there is another sector we are also tracking this morning and these are bitcoin related names. pretty mixed moves but these are some of the stocks. we have seen bitcoin dipping below the 27,000 mark. traders are citing the conflict or war in the middle east as one of the factors weighing on investor sentiment. there's just a lack of investor interest in bitcoin generally and that could also be prompting some of those moves in bitcoin. paul: thanks. still to come, a cofounder and ceo, anthony baker, talks about fighting climate change through the use of satellites. he joins us from ubs's disruptive tech summit in hong kong. first timothy israeli defense minister vowing to wipe hamas -- the israeli defense minister vowing to wipe hamas off the face of the earth. this is bloomberg. ♪

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>> the real side of the economy seems to be doing well. the nominal side is going in that direction. we are in this position where we kind of watch and see what happens. >> in my view, this transition to a more patient approach, taking the time to holistically assess incoming information was warranted for a number of reasons. in particular, it reflects the fact that we are likely very near and perhaps at the peak for this tightening cycle but the risk of inflation remaining persistently high more closely balanced with the risk of slowing activity more than needed to achieve price stability. shery: fed officials on the

outlook for policy. for more, let's bring in jill. the last few days, fed official rhetoric sounded a bit more dovish despite the fact that the fomc minutes from last month signaled high rates for some time so how should we take all of this information? jill: share. i think that the thing we have to remember about those fomc minutes is that's really sort of predating this big surge in yields we have been seeing and i think that when you are seeing a lot of the fed speak that has been happening in the past few days, that feels a little bit more in response to the yield surge so that is when you are seeing the township a little bit. in the minutes, you saw a fair amount of -- i think it's the majority of policymakers were expecting one more rate hike before the end of the year. i think that language has cooled a little bit. it is a little bit more of a wait and see. i think among some, we actually heard in recent days that, you know, we don't need another rate

hike by the end of the year, so at this point, i think it is just so much more about being data-dependent. you'll kashkari really flagged -- kashkari flank that the other day, saying we need to look at what the data is showing us including the inflation print we are seeing soon. paul: let's talk about that. it is expected to show inflation continuing to come down but after that surprise we saw with ppi, is there a risk it might come in a little bit harder than expected? jill: possibly. there's some loose correlations there, but not incredibly huge ones. that ppi print was certainly a surprise. it was an indexed talking about airfare costs that might actually correlate to some upside surprises for cpi but ultimately, what you will see in cpi is economists are tracking this cooling in the headline gauge and it's really again just core that you have to look out for, that core inflation gauge, to see how that is moderating a bit. energy costs are not going to be

as dramatic a factor in september as they were in august but there's obviously a lot of uncertainties with the israel -hamas conflict that has some potential down the line to create some upside surprises for inflation so we will see what this gauge tells us how the fed reacts to it if we get any kind of feeling there on how fed officials are going to respond going forward. yes, obviously, there's some fairly major external factors that could weigh on these prints in the months to come. shery: bloomberg's economy editor jill there. we have breaking news out of the wall street journal right now. iran likely knew that hamas was planning operations against israel but did not know the price ice -- precise timing or scope that the group mounted last week according to a preliminary and classified assessment by u.s. intelligence agencies that was seen by the

wall street journal. the judgment by the u.s. intelligence immunity, representing an initial effort to determine what role iran might have played in that attack on saturday on israel, but of course, a little bit contradictory to reports we heard earlier today from the new york times that u.s. intelligence showed that iran was actually surprised by hamas's attack on israel. for more on the latest, let's bring in derek wallbank. the involvement of iran, a key factor on whether or not this escalates into a wider conflict. derek: i think the issue of iran, what is new, how involved it may have been, is something that is being hotly debated in a lot of western capitals. i have heard a lot of lawmakers in washingto say it's obvious that iran must have known something. it's obvious that iran has

supported hamas in the past. how could it not? and then asking to take some very specific sanction related measures against iran and you see the sort of reaction already in these places even as you see these caveats in these stories and there's a lot of reporting that is going on to try and figure out what the details are. i mean, it has got to be stressed that the details of this are very uncertain, our late-breaking -- are late-breaking. i think we are all sort of trying to piece together who knew what, how they knew, where they knew, and the intelligence is coming through. in a developing fashion. you see u.s. intelligence being very clear that some of these things are preliminary. even in the journals story

suggesting that things are preliminary, that additional -- that additional insight, additional judgments are going to be necessary to be made in the coming days and weeks, etc.. certainly, i think the issue of a spread is a critical one. there had been a lot of bringing together over the last couple of years of israel and some of its muslim majority neighbors, specifically saudi arabia. that had been the main one where we have seen a particular warming of ties. the question now is as israel moves into a footing where you hear leaders talking about now is a time for war, you hear talk about what sort of retaliations there are going to be even as initial retaliations have started, there is a real question of what this does to

those movements as well as if it real -- israel does go forward with an escalated response, how contagious is that across the region? i know i'm using a lot of conditional words here, but there is an awful lot of unknowns and there's an awful lot of to be determined within this entire question right now. paul: bloomberg's derek wallbank there. still to come, we are going to be speaking with israel's ambassador to china as we assess aging's response to the israel-hamas conflict. he joins us on the china open show. they are on your screen. much more to come. this is bloomberg. ♪

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shery: u.s. crude slightly weaker after a surge following the hamas attacks on israel. let's get more from stephen stapczynski. we have seen u.s. crude production also rising to a record in the third quarter. really upsetting any potential concerns about supply. but at the same time, just before we came on air, we saw news that perhaps iran's involvement in the hamas attacks on israel might have been larger than expected, so what are we expecting in terms of pricing? what will be more important for traders? stephen: iran will be more important. i think, really, it is unclear exactly. there are reports going around, you know, we had the wall street earlier saying that hamas -- the wall street journal earlier

saying that they had been getting help from iran for weeks. new york times said iran was surprised. it could be somewhere in between. it is really unclear. but really, the big thing that matters is the u.s. response. no matter what the reports say, how the u.s. response to this is the most important factor. if the u.s. tightens sanctions on iran or try harder to make sure iran is not exporting oil and crude into the market, suddenly, that is a branch of supply that is off. a lot of iranian crude was making its way to china and if they remove that, china suddenly has to scramble to find a different avenue to buy from so that is something i think the market is watching very closely. you can see it being reflected when headlines come through. crude traders are buying and selling based off of that. so watch u.s. diplomats, watch the u.s. government, and see how sanctions, if any sanctions come up against iran.

shery: what are we expecting in terms of china demand at this point? stephen: chinese oil demand is one of the things that i think the market was really hoping would take off this year. you know, with the removal of the covid restrictions last year, there was this expectation that chinese demand was going to really surge and it has been underwhelming. it has been pretty strong. it has not been as strong. the recovery has not been as big as people were expecting. that is part of a larger chinese economy story and is meant in terms of their increase in gdp as well as their economic activity. they have been recent numbers that have proven that maybe chinese demand is more resilient than people were expecting but still, you know, china has strong oil inventories and is not clear if they are going to

be buying a whole lot more and if prices rise, you know, we dropped a bit over the last few weeks. what will china's appetite be in the market? that is another thing people are closely monitoring. is not 100% clear but you know, while chinese demand is important in this picture, we are in a supply story for oil. supply cuts from saudi arabia or russia or u.s. sanctions on iran, that is what is driving the market at the moment. paul: stephen stapczynski there. the imf says the war could have a global economic impact if oil prices keep rising. the mentors first deputy manager -- managing director told us that could complement -- complicate the longer-term fight against inflation. >> in terms of economic implications, it is a little early because we have to see how this conflict unfolds, whether it draws in other countries. what we know, for instance, is

that if it turns into a wider conflict and that causes oil prices to go up, that does have an effect on the economies. when you look at the numbers, so pros -- suppose oil prices went up by 10% and 12 months later, you see inflation going up by .4 percentage points. global output is lower by .15 percentage points so it can have these kinds of effects but again, it is too early to tell exactly what is going to happen because we are still in the very early stages at this point. >> are there any country to see is particularly vulnerable if it escalates? talking about maybe egypt or others you are monitoring closely for closer than others. >> countries in the region, like you said, are going to be more directly affected than the others but if you look at what happens in terms of the effect on energy prices, that can become very widespread and that is usually one of the big channels through which we see that affecting global numbers. >> in her economic outlook, you

have to make sure inflation is under control. is this a bigsest risk to the -- the biggest risk to the global economies? >> i think central bank have done a good job in terms of raising rates sufficiently to be able to bring inflation down so the question is not so much about whether they need to raise rates more. i think many countries, the question is about staying tight for a long time. it's going to take time. it will not happen overnight, bringing inflation back to target. the job is not done and therefore, we are emphasizing that it is important for central banks to keep their eye on the data, calibrate appropriately, but make sure you are bringing inflation back down to target. shery: the managing director with francine lacqua. take a look at how european futures are trading. we are seeing green on the screen extending gains from the regular session.

we saw health care leading the gains in europe. that offset the luxury group because of lvmh declining following that glamis sales update. we have a little bit more of a risk on session. stocks moved decisively higher in the afternoon session on wall street on more commentary coming from fed officials that were taken as dovish. we have more to calm on daybreak asia. -- to come on daybreak asia. this is bloomberg. ♪

shery: this is "daybreak asia." i am annabelle droulers with a check on markets. we are 30 minutes into the

session for seoul and sydney. half an hour for trading in tokyo underway and when you take a look at how we are faring so far, one key sector is standing out in particular on the nikkei and these are the chip linked names in asia because they are leading the advanced so far. now, the reasons -- i have been discussing the possible reasons for this. some of the ones being cited are once we know already. we have softer dollar. we did see tag outperforming on wall street. possibly a bit of a day two reaction feeding through from the samsung numbers yesterday because samsung still gaining for another session but essentially, we had samsung numbers out yesterday and it did start to tell investors perhaps the worst of the chip slump is now behind us so we did see chip stocks yesterday gaining ground and again, we are seeing them leading that advance. let's take a look at the imap function now because this will put into more's perspective here. at the top, you can see i.t. is

leading the gains come up more than 1%. the broader asia-pacific index gaining .4% so doubled the gains. a lot of it coming from i.t.. broadly, you can see in the session we are seeing lower trading volumes coming through so it tells us investors still want to look ahead to the u.s. cpi numbers that are due out later and we did see ppi coming in hotter than expected and then also energy, really want to note here because it's one of the few sectors in the red this morning and we have seen oil just coming under pressure and really giving up the advanced that it had seen after israel -- after the israel-hamas war broke out over the weekend so state of play broadly higher in the session. lower volume speed watching chip stocks in particular. paul: thanks. debt relief is in focus at the imf world bank meetings in morocco. sources tell us that closely watched talks set for thursday are unlikely to produce any breakthroughs on how to level the playing field among lenders when government default.

jennifer reports from marrakech. jennifer: we are here on the ground for the ongoing imf world bank meetings. on wednesday, we heard from a number of finance chiefs. in particular, hearing from janet yellen talking about how she is helpful for progress on talks with china. she will meet with the china pboc governor later this week to add also a number of leaders here fielding questions about how the israel-hamas war potentially can affect their own economies, potentially affecting oil prices, inflation, and their volatile currencies. coming up, we will pay close attention to how the debt talks are going with a number of countries in the global south. we are paying close attention to zambia and their discussions with the imf. on wednesday, we heard about a deal being struck between sri lanka and china on their debt talks so we will see whether or not there's any more progress on

that front. just moving forward, because this is the first imf world bank meetings that is happening in africa in 50 years, a lot of attention is being paid to what african leaders are calling for. in particular, reform of some of these multilateral development institutions. there's been a lot of discussion around that. we will see whether or not there's any sort of progress on that front on reforming any of these institutions. jennifer, bloomberg news, marrakech. paul: the french central bank chief says china and other nations need to take a fair share in debt restructuring of struggling nations and the finance global goals like climate change. francoise says a revision of imf voting shares that would benefit emerging markets including china is inevitable but those nations must play by the rules. updating the distribution of quotas is expected to be a source of major debate in marrakech. shery: -- lessened after local

defaults fell to the lowest this year according to bloomberg's china credit tracker, using declines in home sales are helping, too. even as a broader property debt crisis continues for more. let's bring in kevin kingsburg. despite the ongoing issues in china's property sector, what explains this eased credit stress especially in the offshore market? >> in september, we saw the high-yield market actually rise half a percent. there was a third game this year -- again this year. one key factor to note is the high-yield index which used to be developer dominated, up to me percent of the market, was high-yield with developers made 2021 and that is down to 18% now. in contrast, banks and financial services make up 20% of the high-yield index.

developers have become less of a factor. this has become an impact on the high-yield index. paul: if we look at onshore, what is there to make of the falling bond defaults we are seeing there? >> we had one bond according to bloomberg calculations that missed a payment in september, 200 million you want bond, the lowest -- yuan bond, the lowest. it could be seasonal. we have had lots of defaults in recent years so bloomberg's counts -- only bonds have been defaulted for the first time so we could see bonds that had been missing payments no longer counted in the new numbers each month. the week companies have defaulted. we can see that number stay at a lower level. shery: we have the broader

macroeconomic trends across china to keep an eye on especially given that after golden week, the home sales numbers were not that great either. how will those trends affect the credit market near term? jennifer: -- >> we need to continue to have this economic growth perhaps resurfaced. we will see what the numbers look like on monday with three q gdp with the september fixed income, fixed investment, retail sales. we will get a better sense next week as to where this economy is moving into the fall and we have a key government planning meeting later this month where we might also see some additional stimulus measures. paul: kevin kingsbury there. china's sovereign wealth fund -- for the first time since 2015 in a move apparently aimed at boosting the stocks. for more details, we are joined by bloomberg's asia stocks reporter, jenny yu in hong kong. how are investors to digest this

news? on the one hand, it is encouraging that the state funds buying up these stocks but on the other hand, this may be discouraging that it feels like it has to. jeanny: what you are saying is exactly right. on the one hand, is the first time since 2015 that the chinese sovereign funds, they are officially buying those in the open market. although the amount is a little bit more, 65 median u.s. dollars. it's kind of like symbolic. at least in the short term especially among the traders, they would see this as, you know, a step up determination by the central government to really show off market confidence and tries to prop up the market which has been one of the worst performing stock markets globally this year. but then having said that, you

know, the market confidence over china is not determined by beijing but has high relevance to the global flow of dynamics. the confidence over the chinese economy, we have seen all the data to have seen signs of easing, signs of recovery since august, but you know, to confirm that they cannot -- the economy can see a bottom out. it still takes time. i feel like investors, we talked to, they are still a little bit cautious even though the central government has signaled that they don't want the stock market to fall any further. shery: and more caution because it seems that even chinese consumers are cautious about their own economy. bank of america now saying they are not out of the woods yet. jeanny: yes, exactly.

consumption is one of the key areas china has been, you know, rolling out all the measures trying to boost. versus the property crisis, consumption is less of a problem. we need signs to see the consumption sentiment other than restaurants to see a real pickup. and also for the property sales in china, september and october is usually the peak season for chinese households to buy a house. so far, we have seen all the contract sales having quite sluggish and so all the sentiment over china still takes time to verify whether we are -- where we are seeing the end of the turn also. we still need time. shery: -- joining us from hong kong. coming up next, we will be taking you to this year's ubs disruptive tech summit in hong

kong. satellite view ceo anthony baker joins us to discuss limit check and there -- climate check and their plans to launch thermometers in the sky. this is bloomberg. ♪

shery: most markets across asia in the green right now with the

kospi gaining ground for a second session. we also have the nikkei being led higher by information technology and industrial shares. we have energy weighing on the index. not surprising given that oil prices now are continuing to decline in the asian session with wti headed towards $83 a barrel. perhaps a falling commodity prices weighing on the asx 200 and kiwi stocks as well, paul. paul: the annual ubs disruptive tech summit begins in hong kong later on thursday, bringing together top tech startups from around the world. our next guest is one of the speakers and runs a british climate tech company. the satellite which has been dumped the world's thermometer aims to help fight climate change. joining us now from hong kong is the cofounder and the ceo, anthony baker. thank you for joining us. just want to start by asking you to explain how your technology works.

>> thank you, thank you for inviting me this morning. we have launched the highest resolution thermal camera in the world so we can assess the temperature of any structure on the earth so effectively, we can work out where in the world we are wasting energy. we are the world's thermometer. paul: so can you tell me about who some of your customers are and how about using this data in a real-world sense? anthony: the assets are really important. you and your mapping organizations, your mapping data you can see on your phone, for example, we can turn those nighttime images into daytime images and secondly, we can have a sense of what is going on inside structures.

so if you have a factory, we can tell you whether it is working or not, how many shifts they might be running, etc., so we have the economic eye of the world as well. so this is important for many aspects. if you have declaring that zero, you have the scope three emissions which are your omissions and supply chain. you might not have independent verifiable data that you can check. you can see the activity of overseas factories, etc. from there, carbon emissions and performance in that respect. paul: can you give us any examples of customers who have taken this data and used it to change the way they operate? anthony: yes. we signed our first customers in japan actually. we have not made an announcement on that yet. satellite was launched in june

and we are starting commercial service in november. as for the type of customers that are interested in everything from the municipality government, construction industry, people that are declaring that zero, so all the big major companies, we can help them validate that they are actually hitting the targets. shery: what will you be doing with the funding raised so far? anthony: we have raised 30 million pounds sterling and we have launched the first satellite, the second satellite, and we are about to scale with further funding up to eight satellites so that we can revisit any point many times in a day. with that data, you get a sense of a pattern of life. if you are looking at day and night, you can see whether you left the air conditioning on or the heating on or how many

shifts people are working. that pattern of life data is much more informative than a still image you might have. shery: those plans to scale up, what is a timeline right now and what are the biggest challenges that you foresee? anthony: right now, we are getting ready for the start of commercial service of the first satellite so that is the first of november. then we are launching further satellites, one year. and more beyond that. we are having to stand around the world. we open an office in the u.s. and looking at overseas. there is a big demand for data. it is normal startup scaling with limited funds and great ambitions. paul: that space is becoming much more accessible thanks to spacex's success with reusable

rockets. i wonder if you have any budding competitors in this space? anthony: currently not because we have gone for the highest resolution imagery so a lot of the value is in mankind influence and structures you have built around the world whereas other systems are looking at equally worthy aspirations, maybe agriculture, etc. we have gone for humankind's impact on the earth and how that can help with looking at supply chains, economic activity, and climate challenges. shery: anthony baker, great to have you with us. thank you. you can watch part of this conversation on tv and you can watch us and dive into any of the securities or bloomberg functions that we talk about and become part of the conversation by sending us instant messages during our shows.

this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

paul: you are watching "daybreak asia." here are some of the top

corporate stories we are watching. the lender is currently focusing on its staff on the ground in israel. in an exclusive interview from the imf, world bank annual meetings in marrakech, we have been told the staff in israel are safe and he says the market impact of the violence is fairly contained so far. >> it has already affected oil prices and commodity prices. i think we all just going to have to see how much this expands or not over time. we are in the ground in the region and other places in the world so far, it is pretty contained to where the conflict has been. that is certainly what we hope continues. paul: microsoft says it will appeal a ruling that it owes $29 billion in taxes. the decision by the u.s. tax department relates to how microsoft allocated income and expenses among global

subsidiaries from 2004 to 2013. the company says it strongly believes it acted in accordance with irs rules and regulations and that its position is supported by case law. goldman sachs has agreed to sell its installment lending unit, green sky, to a group led by 6th street partners. the group did not disclose the price but said it expects to take a hit to third quarter earnings of $.19 per share. goldman -- a write-down in the second quarter as it prepared to sell the unit. shery. shery: stand with goldman sachs, the bank suing malaysia in a u.k. court as disagreement festers over a settlement tied to its role in the 1mdb investment fund scandal. for more, let's bring in averill hall. how bad have things gotten that you have this unusual step of a firm suing a country? avril: indeed, highly unusual

step and it seems like things are coming to a head. it is also potentially a sign of goldman's executives increasing frustration with malaysia's demands to redo their 2020 pact, and this is of course over the settlement and goldman's role in the 1mdb scandal where we saw billions being looted from malicious state coffers and also how a huge chunk of that went to top officials and their associates and this was via bribes and kickbacks. it was helping 1mdb raise billions of dollars through bond sales. goldman had agreed with malaysia to fork out billions for its role in this was in exchange for dropping criminal charges. this was a very complicated settlement. it's worth noting that the deal was sealed with a previous government. the current prime minister has raised issue about the quantum of the settlement as well as

some of the clauses within it so it looks like there is an escalation here in terms of how bad things have gotten. paul: how is malaysia likely to respond to this? avril: we have not heard anything so far as far as what malaysia is likely to say in relation to this latest development and move by goldman sachs. the malaysian prime minister has previously said that they want goldman sachs to come back to the negotiating table. they seem pretty determined to get goldman sachs to cough up more money in settlement. the asset recovery committee in malaysia has also been turning up the heat on goldman sachs. it looks like we will have to wait and see just exactly what malaysia says in response to this but certainly an escalation of the situation. shery: the latest on goldman sachs and malaysia and the 1mdb

scandal. take a look at how futures are trading at the moment. we are seeing a little bit of upside for futures extending gains that we saw in the new york session. we have the s&p 500 moving decisively higher in the afternoon session for a fourth day of gains. we had harder than expected ppi numbers and we are headed towards cpi numbers on thursday. the expectation for headline consumer inflation to moderate but at the same time, we had more comments from fed officials that were taken as dovish and you can see taiex futures pointing higher and ftse a 50 futures in china have close 1.5% higher as well. this as we continue to watch the offshore yuan trading at the seven to nine level. a big question -- 729 level. a big question is when we could see that stimulus coming from china as they are considering whether to raise their budget deficit of 2023 as well -- for 2023 as well, paul. paul: let's take a look at how

we are going in the bond space for australia and new zealand at the moment and we are seeing euros declining in both countries pretty much across the curve right now. the aussie 10-year lower by about three basis points at the moment. taking a look at new zealand, also a little bit weaker. it is a general election in new zealand on the weekend and all polls indicate we might have a change in government which would suggest a change in fiscal policy also but that is it from "daybreak asia." our markets coverage does continue as we look ahead to the start of trade. bloomberg markets china open, next. this is bloomberg. ♪

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