>> you are watching "daybreak asia," coming to you live from new york and hong kong. >> we are counting down to the

asian market opening. >> president biden says is talked with president xi jinping have made progress. a cautious opening for asian markets. hopes of a soft landing for the u.s. economy. topping estimates with growth in gaming, advertising and fintech. >> coming out of the china tech earnings. you can see at the outset -- wait'll we see some live pricing. the question will be whether the goldilocks environment that charter rights trading on wednesday, how much further it can extend because there was some key u.s. data, particularly retail sales, giving us clues where the fed will go.

the asx 200, a little bit lower. other futures are looking fairly mixed. china will open in a couple hours. let's open. there are a couple things that could create headwinds. you have the yields moving higher. you're also tracking what is happening with the dollar. the direction for the dollar has had some firmness. the japanese yen, back above the 151 mark. shery: the dollar being pushed higher by treasury yields. a treasury rally we have seen with global bonds almost erasing all of this year's losses. the 10 year yield above the 4.5% level. more goldilocks data in terms of producer prices, prices paid to

producers in the u.s. actually falling unexpectedly by the most since 2020. retail sales slowing down in the month of october but previous months were revised higher. a lot of people think we might be able to maneuver a soft landing. those expectations about the fed perhaps being done easing sent u.s. stocks marginally higher with the s&p 500 closing above the 4500 level. we are seeing a little bit of pressure right now. we also were watching what the implications could be for oil prices and demand in the future which really pressured oil prices in the new york session. still under pressure in the asian session, opening at the $76 u.s. level. all of this on the background right now given that it is all

about the geopolitical relationships at play with apac. haidi: president bynum saying they are making -- president biden saying there is progress. hopes of repairing strained relations. pres. biden: i always found our discussions straightforward and frank and appreciated them. mr. president, we have known each other for a long time. we have not always agreed, which does not surprise everyone but our meetings have been candid, straightforward and useful. >> the china-u.s. relationship, which is the most relationship in the world, for two large countries, turning their back on each other is not an option. it is unrealistic for one side to remodel the other. conflict has unbearable consequences for both sides. haidi: let's bring in our white

house correspondent who joins us in san francisco and our correspondent who joins us in hong kong. there was a real underscoring of commitment to normalize this relationship. relationships are at a 40-year low. how much progress will be see? anne-marie: the tone was set at this meeting. not so much what we will see on the fringes of it, what how president biden and president xi are talking about this meeting. from that perspective, it looks like they are making progress. president biden following the meeting and we will hear from him in about one hour. he took the social media and said they are making real progress. the fact that these individuals met following that 40-year low in relationship, that is

progress and deliverable within itself. one top priority in the by demonstration was to make sure they could get back to normal cadence of dialogue and communication between the militaries. that is something we could potentially be on the lookout for. we could see a breakthrough when it comes to fentanyl. china said it will go after chemical manufacturers china said it will go after manufacturers. . the economy is on his mind. this evening, he will be sitting down with american ceos and trying to assuage their concerns about making sure china is still an investable place. >> it really caught my eye earlier today when president xi jinping was speaking in front of president biden and he started the opening statement about the economic challenges the world faces.

how much is at stake for president xi, as well? steve: xi jinping has a new consolidated base. we saw congeniality between the men. and then an incident happened and relations deteriorated. at the same time xi jinping was surrounding himself with a new team of advisors, including a new economic czar, a new premier. even after consolidating that power, he has had to replace two of his cabinet level ministers. the foreign minister was out in the last couple months and his top general in the pla, out for various reasons. there is relationship building that has to go on for xi jinping with his consolidated power base of loyalists and people he has had to replace.

they are getting to know each other. this meeting in san francisco, there is no low hanging fruit. can you name something where the two sides can completely, 100%, while at the same time assuaging their constituencies, is there any low hanging fruit where they can shake hands and say they agree? they sort of share a consensus on the need to combat climate change, that is for sure, but those other deliverables will be hard-fought, for sure. shery: steve talked about the consolidation of power. what a different picture than what president biden is pricing. that will be tough, not to mention the wars he needs to handle. how important is it for president biden to get something out of these meetings? annabelle: to steve's point, he is 100% right, it is this warm

feeling that went sideways. a u.s. official briefing us before this meeting had talked about the consolidation of power in china and why the biden administration viewed this as a high-stakes meeting because it was a moment to potentially have this frank conversation with someone who has consolidated so much power to move the needle. when it comes to president biden at home, we did a recent poll of swing state voters, this is where elections are won and lost. when you ask voters what they care the most about, china-u.s. tensions and how this should be handled rank 1% of the most important issue. israel-hamas, 3%. the economy continues to be the most important issue for american voters. you will likely see when biden comes out in one hour and discusses the meeting he just had with jean jinping, he will

want to spin it to a domestic audience about how he is putting the american worker first when it comes to china and what the u.s. would call unfair trade practices or how he is pointing american families first when it comes to the sentinel epidemic in the u.s. because this is on full display for the by demonstration. when it comes to an issue like china relations with the u.s., these swing state voters say they prefer the former president, donald trump to handle it, and not joe biden. haidi: the primary goal to reestablish military relations when the u.s. is involved in two wars, i wonder how much pressure there will be to give a little bit in terms of the influence with the conflicts. we have heard beijing try to position itself as a peace broker before. stephen: i spoke a few weeks ago

with nicholas burns, the u.s. ambassador to china about all these points. he said they would like to see beijing at least come out and condemn or -- condemn hamas and the violence, obviously, and maybe take more of a strong stance and use its influence with tehran in helping broker some sort of peach\e agreement -- peace agreement or some sort of settlement in the middle east before it escalates further. that is something washington is working behind the scenes to push beijing leaders in san francisco. again, the military to military dialogue is another episode of that, as well. that has always been fraught in this relationship between china and the united states. military to military dialogue through the last three decades

has always been a significant sticking point. it is another question i put to nicholas burns about whether -- he was sanctioned by the u.s., whether there is a new leadership within the people's liberation army, whether that would open a door for better military to military dialogue. i never thought i would say this , that potentially establishing at least a framework for reestablishing military to military dialogue could, given this environment right now, could be a semi-low hanging fruit. >> stephen engle joining us from hong kong and annmarie hordern in san francisco. the united nations condemns israel's gaza hospital raid in the security council moves a resolution calling forth monetary and pauses in the fighting. more details on that, just ahead. hear why principal asset

management thinks equities might face renewed pressures soon. this is bloomberg. ♪

>> take a look at how regional bonds are trading at the moment. we will be getting australian jobs later on today. we expect to see cooling and what has been a very resilient jobs market in australia. high u.s. treasury yields. we had a big rally in the tuesday session keeping a pretty attractive entry point. we did see a lot of transactions taking place in the asian session midweek, length to the futures market and treasury bonds. we are seeing more stability

across the curve when it comes to australia and new zealand. . our next guest said there is risk of inflation researching. joining us is seema shah. great to have you with us. we saw that being echoed not just by the fed speak, but also pimco's chief investment officer, talking about this idea we are seeing markets get ahead of themselves and inflation will not necessarily be a straight road down, right? seema: yes, exactly. i think that is key. at the moment the market is responding to better-than-expected cpi data and it is a knee-jerk reaction. typically, inflation does not come down in a straight line. there is a lot of stickiness in the numbers. . as long as you have global growth, economic growth above trend there is a risk inflation will research. i think that is what the fed is

waiting for appeared. they have confidence inflation is returning to a level they are confident with but that confident until they have measures that shows it will slow down to the trend. haidi: you said you are neutral across all asset classes, what does that look like building a portfolio over the next three to six months and into next year? seema: over the next couple of months you will see a lot of volatility with equity markets. there is a strong chance you get a continued rally. what markets are focusing on is the idea that the fed is done. they are not thinking about what could be an economic slowdown in 2024. there is volatility with the bond market, as well. there is still a lot of movement. if you are looking over a longer term perspective, within the equity and fixed income space, the broad cross asset positioning is fairly neutral.

a couple of examples. within the equity space, we prefer the u.s. over other markets but with a slight tilt to japan given benefits we can see in 2024. within the em space, there are a lot of opportunities because valuations are so cheap, a more positive economic outlook. there are areas you can play this but you have to be cognizant of the volatility at the moment as the market is adjusting to maybe a change in the economic interest rate cycle. you could be seeing continued volatility to hit market portfolios. haidi: valuations in china are changing. is that a compelling story to you and does what happens ultimately with the chinese economy have as much of an impact across the e.m. complex as it would have five or 10 years ago? seema: i think you have hit the

key question. i am in asia at the summit and that is the key question i am getting from investors. there is some cautious optimism about china for 2024 but the need to see continued evidence of policy stimulus, continued evidence of the geopolitical relationship also improving. within emerging markets, you can look beyond china and say even if china is struggling, there are still opportunities across the whole complex that could continue to perform well. latin america looks good. there are some spots within asia where we see diversification against china. if you have some concerns, you can play it through various others. haidi: talk to me about india. that is one of the prime choices. it is expensive.

it is always expensive, it seems. seema: you are right. again, you look across the global markets, two markets that look expensive, one is the u.s. and the other is india. we think from a fundamental perspective there are some advantages. the key thing for india is the diversifier. economies have moved in different areas. it is about domestic pressures for india rather than the global situation. the exposure is quite minimal. from that perspective, if you have optimism, you want to play it, given it is expensive. if you have concerns, it probably does deserve some exposure appeared -- exposure. haidi: seema shah, great to have you with us. china's xi jinping and president biden of the u.s. meeting in

this really highly anticipated summit we have seen on the sidelines. president biden said earlier on twitter he is making progress. we are seeing him take a break from this face-to-face meeting. they are taking a walk. it is about 25 miles south of san francisco. we will get to the very latest when it comes to the conversation. terminal subscribers, it is available on the app. customize your settings so you get the news that matter to you. this is bloomberg. ♪

>> the united nations security council has approved a resolution calling for humanitarian pauses for the fighting in gaza and the release of all hostages held by hamas. most of the measures were blocked from the beginning of the war. how meaningful is the fact this resolution was passed? does it move the needle with what is happening on the ground? >> it gives a sense that there is a degree of unity on something has to change. there have been four previous efforts. the u.s. and the russia and u.k. abstained is my understanding. the u.n. is a toothless organization in this situation. the israeli operation on the

sharif a hospital, the israeli said they found weapons. military equipment which backs their claim that hamas was using it for operations, which is illegal. criticism for its operation. it reflects this difficult nexus for israel to wipe out hamas. it has to violate a lot of the norms of international warfare and relations. again, hamas has tried to draw israel out to do these kind of things. the initial attack was to get israel to respond. now it is to attack hospitals or what it views as hamas command centers. >> what is the latest when it comes to the humanitarian

situation in gaza? aid trucks are not getting enough fuel. michael: what they received is equivalent to 9% of what they need for a day. obviously that is very low. the europeans are talking about providing extra support. israel, as well. the u.n. is reporting there is only one hospital functioning right now. there was another situation where there was an operation in gaza. displaced people in the south of the strip. the fuel shortages are starting to result in things like data centers and telecommunications expecting to come off-line soon because they are on battery support. it is critical, really, shery, there is no other way to describe it. israel does not want to let too much of this aid in because it

views it as going straight to hamas to support its war effort. the people who are hurt are the civilians. shery: the latest on the israel-hamas were. u.s. senate majority leader chuck schumer said there is consideration to a plan to avert a government shutdown with a vote possible in the coming hours. the democrats said he hopes to have a deal with republicans soon for a vote on the measure. the temporary funding plan passed by the house has support in the senate across party lines. the measure does not include further aid for ukraine or israel. west virginia senator joe manchin said he is considering launching a presidential campaign. his comments marked the strongest signal yet that he could mount an independent run that would likely pull support from president biden's voter base. joe manchin will go on a cross-country tour.

taiwan's opposition parties have agreed to run a joint campaign in january selection. it raises the chances at a more china-friendly government taking power in taipei. determine which of the nominees will head the campaign as presidential candidate. they are seeking to challenge the vice president who has led opinion polls for most of the mere. plenty more to come on "daybreak

>> we do have the conclusion of the meeting between president xi and president biden in san francisco on the sidelines of the apec summit. president xi saying they had

candidate, in-depth conversation that china has no place to replace the u.s. and the two countries should promote a mutual cooperation and need to manage their differences in the u.s. should stop arming taiwan. the u.s. should not have plans to suppress china. a lot of these are long-standing issues we do not expect much progress on but there are some deliverables we are waiting for some sort of confirmation on, including whether we will see the reestablishment of military ties. we are looking ahead to what the business community is expecting, the dinner with xi to take place. shery: with more, michael hart, president of the american chamber of commerce in china, joins us from beijing. great to have you with us. president xi and biden have

finished our meeting and apparently had a candid, in-depth exchange of views the president xi making a clear china has no plans to replace the u.s. and warning the u.s. to stop arming taiwan. he comments that show you the views and the issues that linger in this relationship. what do you want to see out of this visit by president xi jinping to san francisco? michael: good morning. the first thing that i thought was significant was he said the u.s. continues to be important. those of us involved in business know the u.s. and china have one of the largest two-way trades in the world so those of us in the business community are pleased that president xi recognizes u.s. business is important. china had been calling for an increase in exchanges, including government to government. we also wanted to see business-to-business.

business leaders have been visiting china. there is no better message than the top man in china, president xi, going to the u.s.. >> making it clear through chinese state media that china wants the u.s. to end unilateral sanctions. president xi being quoted that it harms chinese interest. we are not expecting, at least at this meeting, for any progress on those topics to be achieved. how much does this hurt sentiment among business leaders that want to do some work in china? what are you seeing among your members? michael: the chamber of commerce in general is not in favor of trade sanctions. these were put in place because of other issues. the sanctions are largely -- largely political.

i have a lot of comfort from that picture because sitting next to president biden were secretaries yellen, lincoln and they have all been to china this year. it feels like the united states leaders are getting a better picture of china because they have been talking to business leaders in the u.s. and visiting china. many of people around the table are meeting not for the first time this year so it feels like it is bringing stability to the relationship. for the past three years they have told us their number one concern about doing business in china is the u.s.-china relationship. when the u.s.-china relationship is not good, it makes it hard to do business because you do not have stability. it is pleased to see the folks sitting around the table who know each other. >> we are getting more of an update in terms of what was achieved at this meeting between the presidents.

it seems like a couple of the top deliverables might have seen some progress. china and the u.s. have agreed to restore military communication. if there was one thing president biden wanted to achieve it is the reestablishment of military cemetery communication between the two countries. regular contract -- regular contact was suspended by beijing after nancy pelosi's visit to taiwan. we are starting to see more progress being made when it comes to the restoration of military communication. also an agreement to set up counter-narcotics communication. xi urging to join the advanced mutual beneficial communication. certainly some progress being made. we talked about the ceo dinner, which is key for the business community.

we are hearing -- will attend the dinner in san francisco. what do you think will be discussed at this dinner? one of the issues has been the clarity and continuity when it comes to business-oriented policies and economic policies in china. michael: on the military to military, that is great news because there was concern that the two militaries had been talking. xi announced some new dialogue. secretary yellen did the same thing. we are starting to see more regular dialogue channels and that is great news. there are a lot of concerns about some sort of accident, for example in the taiwan strait. in terms of xi and the business community, there has been concerned that a number of hurdles have gone up for the business community.

1, china threw up some restrictions around cross-border trade. there seems to be a preference for chinese companies and the government itself primarily from chinese companies. pushing the u.s. and other foreign companies out. advocating to try to get back to the table. earlier this year in august, the chinese government announced 24 points where they were listening to some of our concerns and said they would address some data issues at the end of october. the commerce department of issued something to say they would give more national treatment. business leaders will want to hear from xi. will u.s. business have a fair playing field? are restrictions around data going to make it hard to do business? president xi was to see more investment into china.

>> we are just getting one more line. xi jinping saying china and the u.s. needs to understand each other's bottom lines. that is interesting in how you can interpret it. with the economic slowdown and the property market challenges and internal governance challenges within china, do you think the bottom line or the willingness to work with external partners has changed with china? do your members feel more of a sense of confidence or an upper hand these days? michael: you talked about the economy, which is the one thing i have not mentioned yet. foreign businesses have long been in china because of strong economic growth. as china has gotten larger and -- the chinese economy has slowed. that is another piece of the puzzle. do u.s. businesses feel

comfortable that if they make more investments that the? economy will continue to grow? president xi gets a chance to make his pitch directly to u.s. business leaders. what will he do for the economy? will he stimulated to make it grow and make it attractive to u.s. businesses and will u.s. businesses get a fair shake? is of the questions are members are asking us all the time. >> michael hart, great to chat with you. we see the takeaways from the two leaders meeting, president xi and biden. u.s. officials speaking to the press, saying the meeting has wrapped up. to them, the most important agreement today was on fentanyl. we were expecting a collaborative effort when it comes to cracking down on the supply and trade of fentanyl. in terms of being an election issue from the president, there

is an opioid -- crisis across the country. over 500 accidental overdose deaths from fentanyl alone. we heard from state media in china talking about a cooperation deal being set up. we are hearing from a senior u.s. official that the most important agreement today was on fentanyl. we are also hearing apple's tim cook will be one of the ceos attending the dinner with president xi in san francisco. when it comes to the dinner, a lot of participants will be in the world of tech. we just heard tim cook will be one of the attendees. the wall street session, awaiting numbers out of alibaba. so much of this was seen as a

proxy on the resilience of the chinese consumer. what did that tell us? annabelle: that is what we really want to know. how the chinese consumer is faring. are we seeing more spending coming through? the bar was set pretty low, at least for jd. the numbers coming through from tencent njd, we have seen earnings -- talking about tencent, the last close in the u.s. growth at the top line. this really came through. businesses with higher margins. mini gains inside wechat. results hope to boost the gross margins to 50%. that is a rate the company said in its earnings call said was sustainable. there is room for it to perhaps

move even further. >> results from jd.com. how did they do? annabelle: the bar was set quite low because we have seen analysts slashing their forecasts. quarterly revenue came in at 1.7%, just under $35 billion for the september quarter. net income was up 33% but jd.com has pursued a low cost strategy, they have been slashing prices on products to try to take back market share from rivals like pdd, alibaba. the consumer in china is still fragile, still reluctant to spend. jd.com is starting to pivot the way it has its business strategy in place, offering consumers wider price ranges and product

categories and starting to diversify away from its more traditional focus on bigger ticket items like smartphones. it is about trying to target the more frugal shoppers in the chinese economy. those frugal customers are starting to outweigh the bigger spenders. >> annabelle with the latest on tech earnings in china. we are awaiting the alibaba report. this is a bloomberg. ♪

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>> taking a look at some corporate headlines we are tracking. a third-quarter loss of $540 million. the chinese ev maker deliver just over 40,000 cars in the quarter, in line with forecasts. a fourth-quarter forecast of revenue topping analyst estimates. microsoft has unveiled its first homegrown ai chip and cloud computing processor. the new chip will provide microsoft cloud customers with a new way to develop and run ai programs. microsoft want to take more control of his technology and ramp up offerings in ai computing. a disappointing forecast for cisco.

sales at $12.6 billion. far short of expectations. a slowdown in orders for networking hardware is taking its toll as corporations rein in their text spending. tencent reported better-than-expected earnings in its latest quarter. $21 billion. net income was down a less than expected 9%. the result suggests lower cost spending remains resilient among chinese consumers. shery: we are getting more details on the guest list with president xi jinping attending a dinner with business leaders right now after that summit with president biden. we heard blackstone's stephen schwarzman, qualcomm will be

joining that ceo dinner with the chinese president. we are also watching spacex, discussing an ipo for its starling business. sources say it has been moving to a wholly-owned subsidiary that would be spun off. bloomberg editor joins us with more. tom: we know the date is approaching. it is coming into sharper focus for the folks over at spacex, elon down. he has been talking about an ipo four-star -- ipo for starlink. it is growing. it is set to become a much bigger business within spacex than the launch business.

it has been going from success to success. now what they are thinking about is an ipo as soon as late 2024. this is something elon has been talking about, and all along the timetable has been shifting. a couple years ago he said it is still a couple years away. he talked about 2025. it could still slip into 2025 -- these things are fluid -- market conditions change and people change their minds about the best time to do an ipo. the important take away, starlink, people at spacex are becoming more confident about starlink's prospects. he has talked about achieving key financial milestones. as more and more regions and customers take up starlink, the more confident they become about

financial prospects. >> we are looking ahead to a second attempt at a launch. this is the centerpiece of elon's bigger ambitions in terms of transporting human fleets. tom: with every launch of this rocket, they are learning more about how to get the systems working and increase payloads, recycle key components of these rockets. obviously, elon musk's long-term ambition is trips to mars. in the meantime, it is about getting these satellites launched, which feeds the starlink business we were just talking about. it is making sure that the systems are working. you remember the ill-fated launce in april, where spacex

itself opted to abort the launch because of system malfunctions. there was a long investigation that was launched and just concluded and they just got the go-ahead they have long been waiting for. haidi: global technology executive editor, tom giles. we have much more to come on "daybreak." this is bloomberg. ♪ ning here. retailers are moving inventory quickly and securely. that's because cdw designed and built a solution with cisco security. end to end protection, defends against attacks and makes better decisions in real time. so warehouse and customer data stay protected every step of the way. make amazing happen. cisco and cdw.

>> we have breaking news out of japan. we are getting the export numbers for october, rising 1.6% year on year, beating economists' expectations. october imports also contracting 12.5% year on year, which is sort of in line with economist'' estimates. it leaves a trade deficit which narrowed to 662.5 billion yen. we have seen some export issues with japan on a temporary shutdown of the toyota factory but it seems export number still

beat expectations. we are getting core machine orders month-to-month. a gain of 1.4% for the month of september, again topping expectations and. machine orders year on year a smaller contraction that expected of 2.2%. the numbers from japan arm a little bit brighter than economists had expected. >> a japanese cosmetic company -- battling nationalistic boycotts and a slowdown in the economy. bloomberg reporter joins us now. we saw that play out in such a big way. >> you can see that china slowdown is affecting companies but especially japan because of the wastewater release. and heavy reliance on chinese business.

plunged most in 36 years. that is after they slashed their forecast, citing the slowdown in china and the impact. >> i thought weaker japanese yen would help so how are these firms being impacted differently? winnie: yen is supposed to be supportive. it is the drag of the low demand being bigger than expected. you can see for a company, it has relied on china for a long time in the past decade, the revenue from japan decreased by about half while china has taken over. that made it one of the most

popular brands in china and impacted more than its peers. the domestic prestige brands that did so well because it is less affected by inflation in japan. also compared to that, it is relying more heavily on the mid-priced products. also, as you mentioned, going forward -- >> we will have to leave it there because we are following lines to comes to the summit between president xi jinping and president biden. we are hearing comments from the u.s. side that biden's intent was to stabilize relations on u.s. terms. they think a degree of stability will ensue following this meeting between the two leaders. the u.s. also commenting that biden raised china's less

welcoming business environment and it is very interesting that senior u.s. official who's comments we are getting set president xi wants to stabilize relations with the u.s. and biden told xi jinping china should talk to iran and raise concerns around ukraine and the middle east and some of the next steps in those geopolitical conflicts. the market opens in tokyo are next. this is bloomberg. ♪ run payroll? run payroll, no question. you know how tough payroll can be, right? no. we switched to gusto, and paying my team couldn't be easier. gusto gives me unlimited payroll runs, next day direct deposits, and automatically files my taxes. ooh, taxes! sounds like you know the drill. good one! can i run payroll too? sure, after this. choose payroll without the pain.

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>> this is "daybreak asia." we are counting down to asia's major market openings. we are following the more

positive developments on the u.s.-china relationship. they are said to have high-level military communications and the u.s. side to saying -- saying president xi jinping assured them there is no plans for invasion of taiwan. haidi: parts of the world have been worried about the ongoing frictions. not a huge amount when it comes to deliverables but enough from both leaders to talk about. annabelle: korean trading delay this morning but we have the open of the nikkei. it really is that question of the geopolitical backdrop. between the u.s. and china indicating there has been some level of progress in negotiations between the two sides. things like resuming high-level military communication.

a representative of the u.s. saying president xi wants to stabilize relations and china saying taiwan remains the key sticking point between the two sides. the outlook for the session, monitoring to see if we see any market reaction. so far, the currency looking fairly stable in the session. we are seeing stocks coming online a little bit weaker. the nikkei down .3%. that is against the backdrop of higher treasury yields. a firmer dollar coming through in turn. in japan today, we had the exports number rising 1.6% on the year. the estimate had been for a 1% gain. let's take a look at how the session in australia is faring so far. the eco-point to watch this hour will be the labor market data that is due a half hour from now. it is likely to show a higher

unemployment rate. the question is what that means for the rba. the aussie session is being weighed down by financial stocks so far in the session. oil just online, you can see the drop of 1.5%. we are watching debt trading underway this morning. the korea market is delayed. haidi, it is the college entrance exams and i ensure there are a lot of nervous students taking exams. haidi: my heart goes out to them. getting back to the news at hand, the meeting between president xi and biden. president biden will be hosting a news conference in a few minutes after meeting with president xi jinping. we heard from a senior u.s. official and state media in china, both leaders declaring progress following this

four-hour summit, agreeing to resume military munication. let's bring in jennifer welch. you have been watching this very closely. we had some expected deliverables, a big one reestablishing military communications. another one is cracking down on the fentanyl trade. the thorny issue of taiwan, it is interesting, we said earlier taiwan might be the most contentious issue between the u.s. and china. there was a substantial exchange on taiwan where xi said there were no plans for an invasion. what do you make of the conversation? jennifer: taiwan was expected to be a major topic of conversation, especially as they will hold a presidential election in two months' time. it has been one of the issues of the greatest concern, given the potential for that to evolve

into a crisis along the lines of what we saw last summer when speaker pelosi visited taiwan. even earlier this year. i am interested to hear more about the conversation, both u.s. and china have had different perspectives with the u.s. underscoring no unilateral changes to the status quo and china oftentimes reaffirming that it will not relinquish the right to use force if it felt to be necessary. it is interesting to hear that there was an assurance that they did not plan to invade taiwan anytime soon. that goes against weather usually publicly say his deposition on the issue. >> the fact he had to make it clear shows where the relationship is, in terms of seeking the reassurance. tell us more about what was achieved because we talk about

high-level communications. we know president xi jinping is heading to the ceos dinner in san francisco. president xi talked about the business environment in china right now. jennifer: that is right. in terms of deliverables, what we know so far -- and i ensure more information will come out -- cooperation on fentanyl, an effort to stem the flow of fentanyl, that has been a major issue for the biden administration. resuming military to military communication channels. that is of increasing importance given the proximity military forces are operating. xi jinping heading into this dinner, his main goal is to try to project confidence, reassure them that china remains open for business and welcoming of

foreign investment and leveraging his recent meeting with president biden to try to indicate there is great stability in u.s.-china relations. that is a concern for foreign investors wondering about how stable their investments might be. shery: jennifer welch. let's bring in our guest, olivier d'assier, head of apac at axioma. we are seeing some progress made on u.s.-china tensions. how much does this help sentiment in the markets? olivier: it goes a long way to removing one of the worries that investors have, their relationship had been going downhill since last year. we were not expecting much out of this meeting. they both extended an olive branch, nobody expected them to walk out holding hands.

they are talking, which is more than what we had a few months ago. i think the market will take that as a check mark. less geopolitical risk on the table. economic news elsewhere is also better. inflation gives playing its role of coming down. the economy is showing signs of slowing down. the sentiment that it bottomed out to very bearish levels two weeks ago and last week, it will probably start rising again and hopefully forward, as well. shery: what will it take for investors to be convinced about getting back into chinese assets. bloomberg estimates debt is down 20% from 2021 through the end of june this year. olivier: the chinese economy has some problems. things up and slowing down. you had the first negative

number four foreign direct investment on record. the deglobalization effort, especially in the global technology supply chain, is hurting china. they also have a lot of trade risk with regard to property companies and high-yield property companies that are there. china has some real problems to face. this is why we are seeing the olive branch now because they need help to get their economy going back. shery: we have talked about sentimental synchronization were investors are feeling the same way. given the rally we have seen in u.s. equities and what we are seeing in the bond markets, where do you think we are at right now? olivier: the u.s. was leading everyone down and it will probably lead everyone back up. inflation numbers were good, the economy is playing by the pivot

playbook, starting to see evidence of a soft landing. retail sales were down but that is still better than expected, but at least down. expectations of a fed rate increase for may, it was a june consensus and now it is may. we are getting signs investors are getting ready to push everything back up. volatility in the market is lower than the median average. the goldilocks type of sentiment , or at least environment, is happening now and will probably have a good rest of the year. shery: really, the export numbers across asia -- we got japan's exports gaining ground more than expected for the month of october. this data we see across asia, are we seeing a recovery in terms of economies and trade and

what will this mean for these exporters in these very export-dependent economies? olivier: japan has been one of the best-performing markets this year. the yes is at -- the yen is at 151. it has been missing in action all year. we are still seeing -- boosting export numbers. it is one of the biggest benefactors of this deglobalization trend we are seeing for the supply chain. that will keep japan going. if we are predicting the u.s. to pivot -- currency markets will become more volatile next year. interest rate differential will flip and that might change things. japan was the big winner this year but it might not be the big winner next year. shery: the valuation story,

corporate governance story, how much of that could offset the changes we see in monetary policy? olivier: a little bit but that is more windowdressing. for investors, it is more about earnings, the currency and the macro outlook. the global economy is slowing down. it is slowing down china, europe. whether or not we have no landing, a soft landing or hard landing. right now, the consensus is between soft landing and no landing for the u.s. economy, at least. things could tip the wrong way fast. we are near the bottom and trying to get out. we are trying to slow down the economy and get back to some growth in terms of demand. that will take some time. it is fragile right now. shery: before we let you go, south korea opening an hour

later given the college entrance examinations for the youth. what will this do in the long term? olivier: and little layer of regulatory risk in some of these markets, korea being one of them. regulators will intervene to stop the bleeding, so to speak. that is something investors are used to. it has a very, very active futures market. they have ways around those restrictions to hedge the risk. i do not think this will be a major negative for investors interested in korea. shery: olivier d'assier, always good to have you with us. we are watching the markets across japan and some of the big moves happening. belle, what are you seeing? annabelle: watching nissan this morning. what is driving that is a story that came out of a bloomberg interview yesterday.

the french carmaker essentially wants to start selling a 30% stake in its longtime part in nissan and that should happen soon. it could be as early as the first few months of 2024. selling of this stock is said to be coordinated with nissan. they do not want to alter the market or put too much volatility into the stock price. it is worth 4.3 billion euros. the funds would speed up development of cheap ev's and take on tesla. an alliance between the two turned sour in recent years. haidi: seeing that big move on the news. of course, we are watching when it comes to the geopolitical -- we expect to hear from president

biden, to talk about the outcome of this high level meeting with president xi jinping in china. we know this was a four-hour summit. there were some deliverables when it comes to the crackdown of fentanyl and resuming military communication. more to come on "daybreak asia." this is bloomberg. ♪

haidi: we will be hearing shortly from president biden to get his take on the outcomes of his high level meeting with chinese president xi jinping. we were managing expectations going into this and the rhetoric was this meeting is far better than no meeting. we can only see an improvement, hopefully, from these relations which are at 40-year lows.

there are updates on joint missions on counter narcotics, trying to crack down on the fentanyl trade, which is a key election issue for president biden. potentially working toward restoration of high-level military communications, which has suffered as the relationship deteriorated, since nancy pelosi's visit to taiwan. when it comes to these thorny issues like taiwan, we were not expecting much progress but there was the announcement that no invasion was being considered by china at the moment. shery: a concrete reassurance coming from president xi jinping , according to a senior u.s. official. there are no plans for an invasion of taiwan but we did hear from local media in china saying president xi told the u.s. it should stop arming

taiwan. we can see the divergence of views when it comes to the island, and tensions and frictions that remain on that front. we were watching, perhaps, any change the u.s. restrictions as applied on china. president xi jinping was quoted as saying he wants unilateral sanctions and u.s. measures such as expert controls harmed china's interest. we have been watching carefully when it comes to this meeting and the significance of some of the things that have been said by both sides. we heard about the economic environment around china, the u.s. side sing president biden did in fact raise china's less welcoming business environment. president xi jinping after the meeting headed to a dinner with business leaders from around the world and we will continue to

watch what sort of progress china makes, instilling confidence on business leaders that have not felt confident enough to raise investments in the country. not only because of the geopolitical tensions but because of the economic challenges facing the country. haidi: you have to wonder about the amount of leverage each country had, going into the thick of election season for president biden, he would want to come away with what is domestically perceived as wins, the return of military communications when the u.s. is involved in two wars, that will be a relief so there is no margin for error with communication, particularly with taiwan in the south china sea, and some uncertainties with the in this part of the world. also, a crackdown in the

fentanyl trade. san francisco, the host of apec, is facing this in a real way. we have seen over 500 fentanyl -related accidental overdose deaths in the first nine months of the year in just san francisco. being able to describe some progress on that front -- we know mexico has a big role to play. shery: we are hearing that president biden's press conference has been delayed by about a half-hour. we will bring you the latest as we get them. let's bring in bloomberg analysts jennifer welch and stephen engle. we saw some scenes of more friendliness before the leaders. interesting that they made a point to have a short walk in the estate, perhaps evoking the

pictures we saw from president xi jinping and former president barack obama outside of palm springs. tell us about what was accomplished on that front. we talked about some accomplishments on the diplomatic and economic side of things that what about the relationship between the leaders of the world's two largest economies? stephen: in the last hour, we talked about how we were there in bali a year ago on the sidelines of the g-20 meetings when they last met in person and there was a camaraderie. they are trying to build on that after an extremely difficult year since then in u.s.-china relations, worsened by the spy balloon and the amped up export controls from the united states. a lot of rhetoric over taiwan. a lot of bad blood with the two gentlemen not having video or

phone calls. this is important for the u.s.-china relationship. obviously they have domestic constituencies to contend with but this is their chance to win deliverables. this walk in the park was, from my understanding, broadcast live throughout china by state television cctv. they want to show a camaraderie between the gentleman. xi jinping does not speak english, joe biden does not speak chinese but they are trying to communicate through the gardens of san francisco. they have reached "re progressal -- "real progress," are the words joe biden used. a lot of this was orchestrated before hand. there will be deliverables on fentanyl and military to military resumption of dialogue, two critical issues. there has been talk about taiwan. i found it important that xi

jinping through cctzv state media said there are no such plans to invade taiwan. this is a bottom line issue. this is a redline issue and probably the most sensitive issue between china and the u.s. in their relationship. trying to hammer that point home and before he went to san francisco, state media quoted xi jinping as saying it is important to resume economic exchanges between china and taiwan. again, a tone ahead of that critical election coming up on january 13 in taiwan at a time when the opposition is consolidating and will run a unified election campaign -- beijing does not want to see the other side win. >> jennifer, we had some

reassurances when it comes to taiwan. before we hear from president biden on that, there was not going to ever be too much progress or consensus being reached. what do you make of this conversation? we are being told a significant chunk of time over the four hours was dedicated to this topic. how close can the sides come? jennifer: it would not surprise me that it would be a lengthy topic of conversation. washington and beijing are watching closely. i would imagine the conversation would have had a couple points. first, i would think the u.s. would try to deter china from doing anything to interfere in the election. i am sure china does not want the u.s. to take sides. i would think united states

would urged china not to overreact to election results if it does not see an outcome and its perceived interest. third, i think china would be asking the u.s. to commit to not changing its policy toward taiwan regardless of who wins. in particular what beijing would be asking for is the u.s. to continue its policy of not supporting taiwan independence. that is the democratic progressive party's candidate, who has previously referred to himself as a pragmatic pro-independence worker but has since moved away from that sort of rhetoric. haidi: jennifer welch as well as stephen engle as we continue to digest some of the outcomes from this key meeting at the apec summit between presidents xi and president biden.

we are waiting to hear from president biden himself. this is bloomberg. ♪

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♪ haidi: we have breaking news when it comes to australian jobs numbers. we expected a weakening. we are seeing the jobless rate holding steady at 3.7%. the estimate was 3.7%. we are seeing unemployment jumps added to the economy at 54,000 month on month, more than double the estimates. this data used to be volatile but some regularities -- your regularities have been smoothed out so it is surprising we are seeing so much employment, double estimates. unemployment is rising by 38,000, numbers when it comes to

the month on month numbers, dissipation held at 67, higher than expectations. rising by 17,000 jobs there and we have been looking for signs of a cooling when it comes to the job numbers given that we have seen resilience to do with the operation in the economy creating a tight employment environment. taking a look at if we see much of a reaction on the markets. annabelle: the numbers are not moving very much because the rate sensitive one is holding study. australian dollar is unchanged. it paints a picture of what we are seeing in the market session because we are half an hour to trading for japan, korea is delayed a half-hour given

college entrance exams taking place so it is quiet trading today. still keeping our eyes on dollar strength that has come through. we've seem treasury yields moving a little higher but then fairly flat at this point. it is the focus on the relationship between the u.s. and china, what we are likely to hear toward the end of the hour. in terms of the key progress point we talked about military cooperation around areas like fence and all and travel. we understand xi jinping wants to increase u.s. direct flights, something students, tourists, business people struggled with since the covid pandemic and you can see it in the data because

outbound tourists to the u.s. are at 60% of pre-pandemic norms. shery: that will make a difference for a lot of people and another few things we are watching, the resumption of high-level military communications with china and the u.s. have agreed to. we will take you to live press conference from president biden as it happens. they are setting up as the u.s. is saying they think stability will ensue following the summit. in the markets keeping our eyes on tencent shares in the next hour. adr surged after it reported a profit beat. bloomberg's asia technology editor peter elstrom joins us. what drove the results? peter: tencent had a strong report yesterday and they came

out with earnings that beat estimates because of advertising of the we chat platform. revenue was stronger than expected and profit was strong. we talked about the political activity of china, what that meant for tencent and alibaba, putting a damper on shares. seeing a bit of a comeback where people are picking up spending, advertising is rising nicely. making progress in short videos. they compete against tiktok in china and they said they were up about 50% pushing up average revenue by 20%, the fastest growing company. games is a key driver of growth

and they have been trying to incorporate ai. they use it to maximize performance across more than 100 products. haidi: taking a look at big names, jd in terms of how much they would manage down expectations, what are you expecting from alibaba, a real barometer of consumer strength. peter: good point, we are in the heart of the chinese earnings season so we that a taste of what the commerce market looks like with jd.com and results were strong, and mildly positive indicator. alibaba depends on how they do in e-commerce. but they are in a different position then tencent, the longtime rival. they've been the biggest tech

companies in china for a long time. alibaba is going through a breakup where they are splitting apart their businesses so it will be messier than previous quarters. we will get insight into how the e-commerce business is operating but people want to hear about the breakup and the first candidates for the spinoff are the cloud unit. people want to understand how the structural change is moving as they head into the next months. haidi: asia technology editor peter elstrom there. alibaba will be the big one that we've had good beats from jd and tencent but let's get back to san francisco where we are awaiting for joe biden to attend the conference and give his views and insights on how the meeting went with xi jinping.

you're seeing external shots of san francisco in the city where xi jinping will address business leaders. we are seeing turnout on both sides, pro-china supporters as well as anti-china protesters gathering. we know this is a special national security event so there has been superhigh security and type implementation when it comes to protocols as well as really a lot of police and security forces in terms of preparation for the event. we are waiting to hear from president biden. we know top deliverables from the meeting between the leaders, the first in one year lasted for over four hours. we saw a mutual commitment to crackdown on drugs, a key election issue for president biden as well as the reestablishment of military

communications at a higher level which started to trend down after nancy pelosi's visit to taiwan severed ties to a 40 year low. this was a high-stakes summit, these leaders trying to bring stability and coherence to the bilateral relationship that has come under strain from various aspects. there was extended discussion when it comes to foreign policy. he had xi jinping denying that china was planning a mass invasion of taiwan so the clarification was made by a top u.s. official and they ask the chinese to respect the upcoming election. we will watch for that as preparations are underway for the press conference. we hear from president biden shortly. let's take a look at the market impact with our managing editor. you know markets have been all

about monetary policy and inflation coming down but there were elements discussed today that should have a trading impact. on airlines, travel and leisure stocks, given one deliverable is to put in place more flights to try to get tourist volumes back up between the countries. >> i do believe so but on the bigger level investors are looking at thawing ties between the two countries and it will give the market a boost. if you look at the golden dragon index overnight it was up almost 3% partially boosted by the meeting and we get to see an agreement that came through, fennel, ai and military cooperation and that agreement is not surprising in terms of the details of its to the

investors but before our meeting and the kind of handshaking does project a bit of thawing of the ties which is good for investor sentiment. shery: we're hearing chinese and u.s. officials will hold dialogues about artificial intelligence. could we see an impact on internet and tech hardware stocks? >> i think artificial intelligence has been a key focus for investors. whatever has come out of the agreement has not been a surprise to the market. most has been priced in but i think today's market move will be impacted by jd and tencent. we heard peter talking about how great the earnings have been and that would provide a big boost to the hong kong list of internet stocks.

shery: asia stocks editor as we await the press conference happening in about half an hour or so. we are seeing live pictures outside the location in san francisco where xi jinping will be addressing business leaders. you can see people holding chinese and american flags and we understand protesters are gathering at the moment. this is bloomberg. ♪ an ever-changing landscape comes with challenges. from our vantage point, we see opportunities. as a top-ten real estate manager, we harness the power of a 360° perspective, delivering local insights and global expertise across public and private equity and debt.

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♪ haidi: we are live in san francisco on the sidelines of the apec summit outside the location where xi jinping will address business leaders. we are seeing protesters there. some protesting against china's human rights record and a number of china supporters have shown up as well amidst tight restrictions on security implementation. we are looking ahead to the ceo dinners as the next significant event as part of this week's schedule with u.s. business titans including tim cook and larry fink to attend a dinner later in the day.

a senior white house official said china's president has indicated he is not prepared to invade taiwan must the u.s. and china agreed to restore high-level military communications. unskilled more from our bureau chief. high-level military communications have been reestablished after things took a dive in the wake of nancy pelosi's visit to taiwan last year. how do you assess a conversation on foreign policy the leaders? >> no official reaction from taipei. i'm sure officials are passing through all the comments made overnight but obviously these comments from xi jinping have no plans to invade taiwan at least in the immediate future. they will be welcomed.

it comes after de-escalation comments from the u.s., china and taiwan over the past couple of weeks that have led up to the summit between biden and xi jinping that set the groundwork for the u.s. and china to put themselves in a more stable footing and allow them to, up with this agreement. nothing that was said is particularly new. china has always says he prefers a peaceful route to unification but it does not rule out the option of an invasion if it views the military option as necessary and i'm sure none of that has changed. shery: we have been following taiwan's january election. what is the significance of the opposition parties agreeing to run a joint campaign in terms of dealings with china?

>> on election that have looked like a fairly comfortable victory for the ruling party which views taiwan as a defect sovereign nation and will only engage with china if it accepts taiwan as an equal. part of the reason it looked like they were heading to victory was because of divided opposition. you had three major candidates looking to run on a more amenable platform to china, these are candidates that are willing to accept that taiwan is part of china and they would not be able to communicate directly with beijing but because there were three of them they split the vote on that side of the ticket so the fact that the two biggest parties have come together does very much reshape

the entire election and gives them a more than 50% chance of winning in january and that really would reset taiwan's relations with china and most likely would create room for the sides to restart direct talks. haidi: you're talking about china has economics, tech supply chains in the geopolitics of it all. how big of a change will it be depending on the outcome of the election and where leadership decides to go next when it comes to cross strait relations? >> there has been a big shift not just in taiwan. it is emanating from the united states, you know. de-risking technology supply chains which in practical terms

means moving factories away from china or increasingly shifting new factories to southeast asia, india, central europe and the like. that trend has been ongoing for several years and will continue. i do not think -- the train is already in motion. companies have already made decisions to shift production away from china and not be centralized. china is a less attractive place for low-end manufacturing than 15 or 20 years ago. people's expectations for jobs have changed. much more difficult to make money from manufacturing in china. so while it will be an opposition victory in the upcoming election and will ease tensions i don't ticket will

change the trajectory of the shift in manufacturing in east asia. haidi: bureau chief sampson ls as we await the press conference from president biden to happen anytime now. we know that the summit took place for four hours, a very complex choreographed meeting. multiple sessions, a working lunch between biden and xi jinping. not to mention aides where huddling together having conversations. president biden saying they had some of the most constructive and productive discussions and they value the conversation with xi jinping. we talk about issues surrounding taiwan and the verbal concrete reassurance from xi jinping that they have no plans to invade taiwan and other deliverables when it comes to military communications being reestablished. haidi: yes and we know that was

top for president biden to achieve given the precarious nature of what the u.s. is dealing with. two hot wars, gaza and ukraine. i want to hear more of this from biden when he takes to the podium in the next few minutes to give his insights into the conversation. whether there was discussion as to putting pressure on beijing or leveraging their relationship with iran, russia in terms of what comes next and could be done about these conflicts at the moment. we know reestablishment of military communications is key a time when those wars are going on and increasing tensions. when it comes to taiwan and the south china sea. fentanyl was number one, that was something that was a potential deal that would be made in these talks.

this is a key election issue and something president biden will take home to voters as progress is being made as the opioid crisis plagues the united states including san francisco that has been dealing with an overwhelming amount of fat and injuries and a social political landscape that that contributes to as well. we are waiting to hear from president biden but we had a good summary as to achievements and topics that had been covered in the meeting. the first in over one year and president xi jinping's first trip to the u.s. in over six years. shery: it's interesting that we heard the speech coming from xi jinping addressing president biden at the beginning of his summit, he started by talk about economic challenges of the world is facing right now and we know the economic backdrop in china,

how challenging things i with the property slump so we also heard coming from the u.s. side that president biden did raise china has less welcoming business environment, the u.s. senior officials tell us that president xi jinping wanted to stabilize relations with the u.s. and that joe biden told him that china should talk to iran on geopolitical issues that you just mentioned. we are seeing sort of this needed from both sides when it comes to trying to stabilize relations and ukraine in the middle east on both sides trying to bring something back to their countries to speak to the domestic audience. were aware that xi jinping will

have a, ceos from blackstone, blackrock, tim cook apple. this is a very important time for both economies and leaders to be having these conversations. haidi: this issue of the friendliness of foreign businesses trying to do business in china comes up time and time again but we have seen as a result of u.s. china trade or tensions, the relationship being at a four decade load, -- low, it's difficult for businesses to thrive in china before you get to the fact that china's economy has not been productive for these customer consumer facing businesses.

with had policies that have been quite befuddling for foreign ceos. when this top of mind is rules on it comes to international audit firms. the lack of consistency is a major theme. we spoke with michael hart. we interesting to see what came out of the dinner that has gained as much prominence as the leaders meeting in terms of who is going, who will not be going. it's interesting that the ceo will not be going. perhaps that is strategic because we know of the difficulties in the mainland chinese market and how they've got the market in hand. it will be very interesting to see other attendees that we don't know about what gets discussed as we continue to see

progress between the two sides. it's not just the u.s. and china, that's a big relationship. are going to see xi jinping speaking to other asian nations and leaders because china's positioning within this part of the world diplomatically, and a lot of diplomacy in terms of extending debt financing to emerging nations also is on a shaky footing because of the fiscal buffers that perhaps are not as strong for beijing. shery: so meaningful to have the conversation in san francisco. the u.s. being the rotating post for the aipac group and kicking off the annual summit in 1993. this was a time when we had enthusiasm for globalization. it is a more challenging

environment weather for developing nations versus advanced economies, whether it is these issues plaguing the global south on climate related financing as well, a key topic being discussed during the meetings as well. you talk to divergence when it comes to china and the u.s. and we know those sanctions are in place. nothing is happening what comes to trade tariffs. nothing is happening to export controls so we heard from president xi jinping being quoted by state media that he wants the u.s. to end unilateral sanctions, u.s. measures such as export controls harm chinese interests and this after the fact that they both talked about having candid exchanges of views. we know that if you look at data from bloomberg, foreign holdings

of china's equities and debt have fallen 17% from a december 2021 peak through the end of june. that hesitation, that lack of confidence when it comes to chinese assets and the economy is still present and what can xi jinping do during not only the summit with the u.s. and president biden but in his conversations with business leaders during this dinner it will be crucial for beijing to move forward post-pandemic when we are expecting revenge spending to come back in china and that did not happen. we are seeing mixed data out of china but given the importance of the property sector in china accounting for one fourth of chinese gdp it is a very

important time for president xi jinping who has managed to consolidate power within the country but can he keep his power if the offset of having a strong economy for lacking civil liberties, if that balance is not achieved? haidi: that is the unspoken trade-off. that is what we have seen, civilians quite willing to hand over. you talk about that aspect but that is in exchange for booming economic growth over the past few decades and now that is changing read does that change the amount of popular appeal? we know the consolidation has left him in a strong position but we know he is continuing with domestic endeavors including a campaign that continues. a crackdown this year will ensnare and record number of top

officials. 41 senior officials being announcement comes to these probes according to our analysis. there's a lot going on domestically that may be distracting not to mention the property sector as sherry pointed out, the exposure the property sector has across dozens of other sectors within the chinese economy and the huge correlation to household confidence, spending and consumer wealth. we look for indications of whether the tech consumer earnings following singles' day 's we had the numbers pretty good. jd.com and alibaba as well. the broader trajectory, it is hard to deny that this is a structural slowdown and how president xi jinping can manage that. how the economic czars will manage tt