saying perhaps easing could be on the way for the pboc. check the latest business flash headlines. they received a cease and desist order from u.s. regulators, studying unsound practices in technology and risk management. the office of the comptroller flagged noncompliance with security standards and the order requires the union bank to improve risk governance and assessments, internal controls, and staffing deficiencies. regulators will examine the safety of millions more toccata -- airbags that is -- takata -- millions more takata airbags. additional evaluation is needed. the inflator's can explode in a crash and explode metal shards. we have plenty more ahead. this is bloomberg. ♪ let's get a quick check of the -- this is bloomberg. ♪ rishaad: busy week for central banks with at least 10 more answers due over the next few days. they intend to state their decision on wednesday. officials expected also to hint where they will start tapering asset purchases before a full on announcement in november. >> if the economy evolved broadly as ant

with the pboc announcing more liquidity support and the 300 billion lending, we do expect the credit growth to be improving in november. we may still have some near-term setbacks and also, the housing market has been contractionary, wholesale has been contracting in august and a deepening contraction in september but i do look forward to some improvement toward the year end. >> i was wondering if you could help us understand something that seems contradictory but i'm sure it makes sense. the governor is looking to put in a little bit more fiscal support but they are looking to cool the housing markets. what would be the effect of those two things? >> housing has been the biggest driver to growth across the covid recovery. which investments would get support from the more proactive fiscal policy has been rather mild at two and 3%. in most recent months, it has been contracting. i don't think the more proactive fiscal policy with offset the drag from the housing market. at the same time, i think the loosening of the housing market has actually already started on the margins. the credit

the pboc coming in with another net injection of 15.5 billion u.s. dollars in the pboc

pboc liquidity injection, 90 billion. rishaad: it's any kind of insurance policy in case we see a selloff, as many anticipated. that's one central bank, let's look at the other one. it is the federal reserve. is this conversation that will be going whether they will be reducing the asset purchase program. november, december, let's have a look at what we have in terms of the pie chart. november is 67% of respondents saying that is when they will be announcing that they will actually start to reduce their bond. we are looking at about $15 billion a month and reduction. so that would take us probably autumn of next year before we see that go through in the net-net zero. david: when you look at evergrande in the pboc, just to recap, they are negotiating that two-point payment due tomorrow. pboc coming up 90 billion as was talked about. and when it comes to the prime rate unchanged year for one in five. it's all boosting the sentiment for today. let's bring in mliv team to talk us through this. 60 minutes ago we were talking a

the pboc is there should there be a liquidity crisis. evergrande up more than 30% early in the morning. that is a little bit of a short squeeze. traders are telling me there is a kind of bet some kind of resolution will come in the next 30 days. we have the interest payments due today. we might get news later tonight. more europe hours. my also get it tomorrow. that is when the settlement day would be. people not necessarily expecting a payment, even if we don't, there will be a grace period where we expect negotiations with bondholders. david: we are just getting virtually good news on the company these last 48 hours or so. not focused on the negatives. where might negative news come from at this point in time, given we have talked about the worst case scenarios? >> pulling back to the evergrande stock chart, or bond chart, you see there is a lot of negatives being priced in. you look at the market moves, the situation is being resolved, but we are still very much pricing in a restructuring of the debt. 30% recovery and the stock is rea

shery: you mentioned the pboc, this chart shows the pboc toolkit.ing them to use, in order to help the economy? >> i think we are at the inflection point of further policy easing. with the pboc, number one is liquidity injection. they will likely cut the ratio by 50 basis points. followed by more lending quota for both the manufacturing sector, complemented by the ministry of finance. all in all, that means september will likely mark the trough of china's finance growth. we will see more rebound in the growth from fourth quarter onwards. shery: speaking of what the pboc potentially can do to help with the situation, over at evergrande, we have been seeing global investors really weighing in on the argument, everybody is watching as to what the rest of the story will play out like. listen to what a chief investment china just had to say. >> over the next 2-3 months, growth is something you have to watch out for and china. the government is conscious about the impact. we have seen the pboc losing monetary policy. i would expect the next few months, we

the quarterly meeting for the pboc was late last week.tatement yesterday from that quarterly meeting, and there was some positive sentiment portrayed by the central bank on the property market that is obviously under regulatory scrutiny and being under severe pressure, as we saw with some developers having similar trouble, not to the extent of evergrande, but they have basically said the pboc vowed to assure a healthy property market and said they would aim to protect homebuyer'' lawful rights. haidi: stephen engle with the latest. coming up, the biggest gateway to asia, grappling with record backlogs, further crippling global supply chains. we hear from an executive director, ahead. this is bloomberg. ♪ haidi: the port of l.a. is grappling with record backlogs. it is the busiest such facility in north america and a gateway to asia. one person told bloomberg he is focused on improving efficiency, but they need more federal funding. >> all throughout the supply chain, asia factory output is at record highs, and yet, we are still behind in

it seemed like the pboc wanted a weaker yuan, you see the yield on the 10-year 3.86%.xt for evergrande and will china step in to try to manage a debt restructure. morgan stanley certainly thinks so if you look at the morning call of the day. this could come in the coming week and would be coming with policy easing, if it's delayed according to morgan stanley, one percentage point impact on china's gdp in the fourth quarter and that would lead to the need for more stimulus in 2022. manus. manus: low rates forever, juliette, thank you very much. let's pivot to france and the government there. gather going to present the 2022 budget later this morning, the last that president macron did before election in seven months time, we have been following the geopolitical story today, caroline what are the highlights of the french budget, does he have room for a little bit of a giveaway, good morning. caroline: good morning, back to square one for president emanuel macron, it is the end of whatever was in place since the beginning of the pandemic. for this 2022 budget, the goal is

pboc in play as well with the decision over liquidity injections.t relief around ever grand, even if it's only temporary. gains across the asian session of 5/10 of 1%. japan is closed for the holiday. in terms of the futures, building on the optimism we saw yesterday. too tense of a percent. oil is in focus as well. goldman sachs egging you could see $90 a barrel if there's a cold winter this year. the bloomberg dollar index closing in on a new record high. let's get the market reaction with juliette saly in singapore. what's out for you? juliet: $17 billion injection from the previous he bringing, to asian markets that have been rattled over the last couple of weeks. hong kong resuming trade after yesterday's holiday, jumping in italy by as much as 2.5%. a lot more money going back into those property stocks. korea has been on holiday this week. foreign investment dumped out of this market. we are looking at the risk barometer as well. the aussie yen rebounded somewhat yesterday as we started to see traders assess that some of these risks with the

the pboc injected the quiddity for an eighth straight day.na is surging from 17% after lisa they had a brutal beating in the past couple of days. quite that sense of euphoria seems to have evaporated to some extent. we have the new leadership election tomorrow and country center to coronavirus measures when they expire there this week. 55% of people in yvonne: china's power crunch is spreading from industry to everyday residence. gdp growth could take a hit. let's bring in our bloomberg intelligence analyst. she is saying it could become the new normal. how serious is this crunch? >> i was saying it could be one of the worst power crunch in a decade in china. there were over 17 provinces including those major gdp engines. they are all announcing the emergency power cuts right now. it is pretty serious in the case we talk about. 66% of china's gdp. what has been happening is the power shortage started in may and it is getting more serious in september, which is quite surprising. we were expecting power demand to come down as the weather turns

the pboc is showing markets that it is there is a backstop if needed.arkets correspondent, bracing for an exciting day with all these evergrande headlines oil prices continue to rise because of shrinking supply. eight an effort to ease prices, china announcing it is ready to start selling oil roms strategic reserves. bloomberg's su keenan joins us. su: we know that the timing of tapping the reserves is september 24 or imminently. the announcement was made last week. it is an historic opening of the strategic reserve to bring down prices. the initial auction will be seven port form billion barrels of crude, according to the agency responsible for this. the option is going to involve -- yes, the move is designed to lower oil prices. let's look at a three-day chart of brent crude. the announcement did indeed weekly and immediately jelled prices lower, down to $74, but they quickly recovered, heading for $77. that may indicate that this is liquidity absorbed by the market. the unprecedented move is designed to ease the pressure of rising raw material prices

david: we will see what happens with that on the back of pboc injection here. the fifth straight trading day. i will be joining you at the desk in just a moment. last 30 minutes of trade as we approach the session here. we are looking at a currency market with the dollar really on offer overnight, coming back with this massive move up in yields, not just in the u.s., pre-much seeing that across the region here. aussie 10-year up. all this being said, evergrande shares yesterday, massive pop, double digits. we are seeing a reverse of that today. yvonne: right. you look at the assets now, and you are seeing more fallout once again, and pv is certainly the paying spot today. we are down close to 20% on the tv unit. some sources were telling us workers were not getting paid. suppliers as well also struggling. that just goes to show this cash crunch is far from over. the market at this point seems to have moved away from the whole being scared of big credit events to things that could be fence around evergrande, so we are still seeing that pressure with evergrande i

is it the pboc or the fed? reporter: the pboc is a very cautious central bank when it comes to making sure that their own money markets are functioning. that is their primary job is to make sure that they don't make this any worse by letting the money market spots become irrational or volatile. they know how to calm things down and you can be sure they will be watching that position. they will make sure there is -- plenty of money in the markets. that doesn't mean that traders will get panicky and push out longer-term yields. the pboc, that is their job. in terms of what the fed does, that will not impact ever grand too much. certainly, they could add to the nervousness in markets if they don't make a clear message in terms of tapering. they should send out a clear guidance on tapering and set of pushing it further into the distance. they're expecting a tapering but it's better to give them what they want then make them read guess when the tapering might happen. rishaad: let's have a look at the first word news

we have seen the pboc providing more funding for banks to support sme's. a mixture of data out of china causing concern. what do you need to see to change your view fundamentally on chinese equities? >> currently, neutral chinese equities. strategically, we are overweight significantly in the allocation of global investors to the chinese equity market. in the near term, for us to be more positive, overweight chinese equities, we have to be comfortable we have seen peak red glittery in terms of regulatory clampdown focus. maybe we are getting towards it, it is not entirely clear. our neutral tactical overweight -- tactical view on chinese equities is considering the fact that while the market has come off of a lot, the earlier year peak, everything else being equal might be better valuation looking better. but because we want to price in greater equity risk premium and earnings growth reduction, we are keeping our neutral real. it is a nontrivial decision, given a wide range of factors playing out. we want to feel comfortable peak regulatory is behind us. n

the pboc will cut to rrr by about 50 basis points.ng out the board, on the monetary and fiscal policy accommodated outside of the u.s. momentum starting to shift toward non-us equities, drag on u.s. stocks from risks. goldman recommends staying overweight on europe and japan in the next three month, with more bullish positioning for japan in particular. haidi: softbank putting a big bet on latin america's tech industry. adding billions for investments as a gains population among foreign venture capitalists. softbank international's ceo marcelo cluare spoke with caroline hyde. >> what has surprised us the most is it is as good as any part of the world. the business models deployed in china, india, and the u.s. are booming in latin america. it gives us a competitive edge that we have seen the art of the possible markets, and now we see the high quality entrepreneurs launching these great companies. so far, we have deployed -- as of last quarter, $3.5 billion in capital. returns have been exceptional. 105% iri on a growth basis. so it ma

you have seen the pboc stepping into liquidity for a third straight day.ou seen that injections of about 40 billion u.s. dollars in that timeframe. this chart shows what has been going on. very gradual, you get a few pickups around some seasonal demand for liquidity in china, and then it is very strong liquidity injection over the last three days in the people's bank of china. many say you will need to see a triple reverb cut from the pboc to support the economy. goldman sachs saying don't worry too much about the plight of ever grand. the property sector, it is more about the drag from economic growth. let's check in on the markets as they stand. across asia, some modest gains, about .6%. japan is leading the pack with the nikkei gaining 2% after the national holiday. futures in the u.s. holding onto gains just about after wall street closed at the highest level since july. what's happening in the other yield space, you're currently at 1.44. let's get back to the ever grand story than. at least three ever grand dollar bondholders say they are set -- or ye

we have seen, of course, the pboc injecting liquidity.have seen issuance of those residential mortgage-backed assets coming up again, so there were these moves we have seen here and there from authorities, particularly going to the holidays. yvonne: the principal global investors annual asia summit concludes today. thank you so much for joining us. do you see any value in evergrande bonds right now? >> that is a really tough one. i think have to refocus on how this story plays out, to be honest with you. i think it is important to step back and look at evergrande in the context of a china reset that has been happening and the elements of that reset, but the evergrande story is wrapped up in the residential sector, and as we know, the residential sector in china is very significant to the economy. the real question we have to ask is how much of a vested interest is the chinese government have in making sure there is an orderly wind down of the evergrande story? if it is going to be orderly, i think there is some value to be had, but if you

the language has been ratcheting from the pboc. basically sounds like you are done. is it that? >> if this is a ban on all transactions meaning i cannot trade it on exchanges and everything else, then yes, this has got me worried. that means a ban apart from the ownership. if it just means i cannot transact in the real economy and i can't buy stuff using bitcoin, we are still figuring out exactly what it is they mean. the direction of trouble from the pboc is clear, they don't like cryptocurrencies and they will put the screws on. i think the market is coming to terms with that. you effectively cannot count on china. alix: great point, counting on china leads us to ever grand because we missed the dollar payment and we don't know if those investors will get paid on interest payments. china is a great lead into that story because what do you do if you are a foreign investor. is it a buying opportunity or will they backstop homebuyers and not foreign investors. guy: i think we are starting to understand what the capital structure looks like. normally, you would think retail would

only last week, we had the pboc tipping some extra liquidity into the system.p to the end of the quarter, but it is also assigned the pboc wants to make sure the financial system has enough money in it. we know that the authorities have been preaching the top line for many years now, pushing back against excess and the system, so it will be tricky to see how they navigate reinforcing their own message on discipline and rolling back and offering not a bailout, but certainly offering some kind of a restructuring. what i will say is that bank of america were out there putting their forecast on the basis that authorities have been slow to come in with support. they will make a broader move to support the economy before the year is up. francine: bloomberg lacqua correction. it is not moody's that said that, it is s&p. thank you for catching that. let's get straight to the bloomberg first word news with laura wright. laura: canadian prime minister justin trudeau is poised to win a third term according to a broadcaster. the two networks say they are projecting the gov

you had this injection of liquidity from the pboc. a calming balm. the evergrande payment, we are waiting for details and uncertainty remains. a less bad session is an asia. the shanghai compass it currently in the green. the ftse 100 gaining 0.9%. france, you looking at gains of 62 points. span, the ibex gaining 0.7%. energy companies in the u.k., stocks taking customers into the energy suite. france, you have the budget as well. top of the list for sectors yesterday were travel and leisure followed by technology and basic resources. you are looking at energy. a result of higher prices not only in gas, but oil as well. 0.8% in terms of the gains you are seeing for the auto sector. let's move along, see how things are shaping up across the region. solid gains we are seeing in the u.k.. italy, strong gains there. looking ahead to the fomc decision for the investor thought process this morning. francine: european equity markets in the green right now. looking ahead to a fed policy decision later today. for all the market action, we are joined by mark c

for now the pboc stance, that is keeping the u.n. in a very tight range indeed.year end hsbc, the forecast the yen will hit 660 by the end of the year. shery. shery: "daybreak: asia" is next. this is bloomberg. baaam. internet that doesn't miss a beat. that's cute, but my internet streams to my ride. adorable, but does yours block malware? nope. -it crushes it. pshh, mine's so fast, no one can catch me. big whoop! mine gives me a 4k streaming box. -for free! that's because you all have the same internet. xfinity xfi. so powerful, it keeps one-upping itself. can your internet do that? (announcer) if you've struggled to lose weight, you might think you were born with a slow metabolism, but what you may have is insulin resistance. fat becomes trapped inside your body and it becomes very difficult to lose weight. now there's golo. golo works to reverse the effects of insulin resistance, increase metabolic efficiency, and targets stubborn belly fat. join over two million people who have found a smarter way to lose weight and get healthier. go to golo.com and change yo

we did see the pboc react a couple times this month.r 90 billion net addition to liquidity. we need something more. the channel that is likely to come would be credit provision from the government bond space, from funding for fixed asset investment outside of property. there are a lot of areas they can try to boost. at this point when you look beyond the evergrande the full issue, there is still quite a lot that needs to be done to restore economic growth. haidi: we are getting more news when it comes to chinese estates. this is one of the biggest are tj backers of china -- our strategic backers of china estates. saying they may sell all of the remaining evergrande shares. they sold close to 110 million shares at a nine and a half billion dollar hong kong dollar loss. it seems they are cutting their losses. does this have broader implications for emerging markets? how does and ian m dash and em portfolio look if you are balancing from trying to get away from the exposure in china? >> it is a clear risk. the way china economy is most con

but again, a little bit of good news, also pboc injecting more liquidity as we head toward the end of the quarter and the liquidity crunch here because ex-asker bated by evergrande -- ex-asker baited by evergrande. and saying they would help protect home buyers' lawful rights. haidi: stephanic there will with the latest on the ever -- evergrande. >> the leader of germany's central left social democrats is calling on potential partners to join him in a new government as soon as possible. olaf scholz appeared to appeal to the greens and the pro-business democrats to back a three-way coalition. the can tate for chancellor angela merkel's christian democrat-head bloc arman latchet will try to fornlgt -- armin laschet will try to form a majority. a pivotal trade meeting between the u.s. and the e.u. this week will be narrower in scope than originally planned. the content of a joint statement outlining the results are still up in the air. sources tell us that disagreements among e.u. countries and or behind the changes we also hear that france would not agree to the draft conclusions for a

juliette: what kind of policy action would we see for the pboc? that is earlier, the slowdown in china really does lead to a policy recalibration. >> i agree with that assessment, i think the pboc as already signaled that they are on a course to loosening policy. i would expect to see more. as you mentioned, we are seeing regulation being tightened in certain sectors and we are seeing weaker pmi signals, i would expect that to trigger easier economic and accommodative policy. rishaad: what are you most convinced about looking ahead and how does that impact your investment philosophy? >> i am most convinced that we are on the path of economic recovery. the economic cycle is still on an upswing. this is eight midcycle slow down caused for -- a midcycle slow down caused for large part by uncertainties. we are seeing an economic upswing, and that will continue. we are seeing some of the markets react like what we are seeing in japan as well. juliette: we have the rba tomorrow as we continue to see cases skyrocket in australia it really, getting things

lisa: any reaction to the pboc actions in the last couple of months?o: to some extent, the pboc has its own can indic this its own coming occasion channels to china but at the same time, but they are keeping a fairly steady course. more recently, there is a view that perhaps they have been quiet in terms of where the economy is headed and things are slowing down more than jonathan: ever grand is down by export 1%. any kind of potential social unrest in china is viewed as an existential risk to the chinese comet's party. when they address a situation like this one, is no surprise that they are looking to make sure those buildings that have not been built get built before those bondholders get paid. lisa: they understand what kind of social unrest there could be by. they have a tolerance of a four handle gdp growth. what does that look like and what are the ramifications for the rest of the world? everyone relies on chinese growth as the marginal indicator of expansion. jonathan: they move further and further away from the growth target of yesteryear. ka

to treasury for china is overseeing cap on human strength as divergence widens amid speculation the pbocill need measures to prevent pretextual -- potential contagion risks. >> evergrande facing another bond interest payment. a separate one do last week to discuss the impact, let's begin bloomberg opinion columnist john authers p as heidi was talking about, we are seeing this $260 million note from jumbo fortune's. according to sources, how significant are the next deadlines echo -- >> [indiscernible] >> -- exactly how far it is we have got consensus on the market that the government plainly does not want a lehman incident on its watch. it is going to do something to create an orderly workout of all of this outstanding debt at evergrande. this sounds like the moment when the government will have to show its hand. we will need to see exactly how far it is prepared to introduce itself into the process, how much it is prepared to lean on other players, particularly state owned enterprises to help out in the process of dealing with what appears to be a -- >> what is interesting, but perhaps

do you anticipate seeing some support coming from the pboc?> yes, and we saw some news on evergrande last night. the chinese government is in a tough situation compared to where his been in the last 10 years where it is trying to balance economic growth, emissions, as well as social prosperity. i think you will see over the next few years and expansion of the state owned enterprises, because the government will come into support property, financials, and you are right that the pboc will intervene to support the real economy if not the market. paul: we have been seeing a lot of dollar strength, but no corresponding weakness in the offshore yuan. do you see any pressure coming from the r&d? >> that has made it difficult for china meaning their exports are less competitive than three months ago and a lot of economic growth in china when the last quarter was still driven by exports. the fact that the yuan is what it is [indiscernible] shery: the power crunch, will that lead to more from policymakers? >> i think between economic growth and emission

what do you think the pboc and authorities are concerned about?into the economic thinking and adjustment that we are going to look at in 2022? robin: yes. from the global perspective, if china's growth slows more than expected, things like car sales, it's going to have an over effect to the rest of the world. having said that, if you look at the other side, chinese investment in manufacturing is gradually picking up, given the policy healing on the way. we talked about 550 billion government bond issuance. meanwhile, export resiliently into the recovery. look at japan's exports into china. we may see chinese demand improving, probably when the fiscal year starts to take effect. manus: thank you so much for being with us. have you been to limit close? that's part of the ownership of the entire street. they've delivered 1.9 4 billion euros. they were looking at 11.9 for the year. this is about europe reopening, u.k. opened, asia grappling with rolling lockdowns on the asia-pacific side. the online side looks good. delta of 36%. will you ever go back

i believe the pboc has to come in and inject stimulus, a rrr cut might go a long way but it will takee than that. let's be clear, our colleagues at j.p. morgan pointed out that the property sector is a huge generator of tax revenue for beijing and provincial governments. so letting this slide, they would be shooting themselves in the foot in many cases. kailey: about 41% of assets is in the property sector. let's talk about beyond china. where is the most direct effect in emerging markets? damian: i'm getting blue in the face. we can look at this as a proxy for risk, it blew out in china, the philippines and malaysia are most correlated to china from an economic perspective. you saw their prices blue out also in brazil and south africa. what's interesting is as you point out, the bank of china spread still remains close to the wide spirit they have not come back. -- wide. they have not come back. tom: what is the linkage between you on bonds and -- yuan bonds and -- damian: we laugh because vietnam is not an investable account to me point. but asia is. and there is contagion to that r

the pboc saying all crypto transactions are illegal. financial institutions are not allowed and when you look at the long-term trend for bitcoin, we continue to see it as ascending. when it comes to the weekend news, one that stuck out was the cfo of huawei freight after reaching the deferred prosecution agreement to resolve criminal charges connected with american sanctions on iran. very consequential given that this issue has been a thorn in the site for u.s.-china relations for the past three years. it seems the u.s. now taking that first step in smoothing things over with beijing. haidi: an extraordinary element. we have been following this story for so long and you see on the screen that carefully calibrated, celebratory home come -- homecoming as she landed on chinese soil. take a listen to some of her remarks when she landed. >> after more than 1000 days of suffering, i finally returned to my home country. the long wait in a foreign country was very torturous. but when i step down the boarding steps and had my seat -- had my feet

you are right, we are starting to see supporting policy from the pboc.t is just a little bit and kind of late at this point. it is a reversal of the direction and not enough to support the expansion that we would need to see. the areas that have probably the biggest power crunch worries or have also missed some of their environmental targets as well, these provinces are something like 50% of gdp growth, and if we get a harsh winter on top of what we are seeing already, this has the potential to knock on to industrial production and industrial companies within china, manufacturing companies to produce for the world contributing to the shortage we are already seeing from shipping and margin pressures from energy. i am more worried about the supply chain here that i am about the domestic china market in that respect. shery: when it comes to the regulatory crackdown we have seen in china, could we start to see valuations become compelling? we heard from janus henderson is the good news the selloff is so big and tech perhaps that is an entry point. >> it is h

the pboc injected $30.9 billion of short-term cash to soothe market nerves.ning us now is maria from state street bank. thank you and good morning. thank you for joining us this friday morning. how acute are the problems around ever grand? how much focus do you and your team have on this company and the potential for systemic risk within china's financial sector? maria: good morning. i have to say we are quite concerned about china. i wouldn't say it's just evergrande. it's quite a few factors at the same time. for the stock market specifically, a big concern of the biggest part of the market. there, i have to say authorities working against investors. that's a big concern. big tech companies seen as cash cows or governments, prosperity, objectives, and that kind of direction of travel. in terms of effort -- evergrande, we see substantial underperformance. i suspect companies probably would not be allowed to go bust, but investors are not enjoying the ride. but yeah, regulation is a really big risk in china. investors are watching very carefully to see if the

those invited include stephen schwarzman and pboc governor and top chinese regulators.-u.s. financial roundtable was first convened in 2018. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: still ahead, key data from china will give us a check of the economy opening in just under two hours. an economist will tell us why she is worried about consumers and the property sector later in the show. next, president xi rejects the chance of a face-to-face meeting with joe biden and high-level officials from beijing. details ahead. this is bloomberg. ♪ >> we have to move more to an environment of equal opportunity hopefully to create greater productivity through equal opportunity, but also to reduce that wealth gap. >> i think in china the creation of wealth is wealth for the middle class. >> moving towards regulation, trying to create a level playing field. so in some ways, these measures by china makes it safer for investors, including foreign investors. >> trying to assess china's common prosp

. >> how will this affect the pboc?we had the second quarter report from the pboc which give us an indication over where they are heading. there are continuing to look for ways to support the economy. and i think most people read the document -- most people think there will probably be a reserve rate or a requirement cut rather's than an interest rate. i think the signal from the pboc is that they are willing to -- the economy but not broad scale stimulus yet. >> chinese stocks trading. the u.s. fell after regulators in beijing some in the gaming companies again, including tencent. state street says china's discounts on equity valuations given the uncertainties around the ongoing crackdown. with us is laura hano. they could for your time. what do you see as being adequate discounting given what we don't know about the runway of the regulatory impact and what else lies in store across various sectors. is the risk premium adjusted adequately or is it too soon to tell. >> our forecast is that china's growth rate will be ar

i think what will be interesting to watch today, though, is the pboc daily open market operation.re's little liquidity in the market after that two-day holiday in china. and that will be very closely watched for a hint of how beijing plans to deal with this debt crisis. if we do see a large net injection, that suggests that the -- that beijing wants to reduce any chance of systemic stress after evergrande as you said roiled the market. the same time, we do see a withdrawal of funds, it could mean it's prepared to tolerate some market volatility as this develop developer moves closer to default. keep in mind there has been no comment on a state resolution from beijing. it is treating this case as an isolated case. but yeah. look, one thing that is worrying investors and why we could see some pressure on those china stocks is that there might be a miscalculation in china in terms of a tightening. and what this means for the world's second largest economy, for a potential slowdown there. having said that, the consensus seems to be that this is not a lehman moment. we just heard that

pboc's deputy government -- governor says it will close loopholes and include all types of financialtions, services, and products into its credential supervision framework. he also told the board in beijing the authorities will boost market exchange supervision. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: let's head back to joshua crabb. hope you can hear us right now. first, we are talking about the japanese markets. they rallied during the first few months of prime minister suga's premiership, but given all the latest challenges in japan, how vulnerable are japanese stocks to political risk, especially as we head to the general election? guest: from our perspective it is not a huge part of how we look at our investment. i think politics comes and goes, and so does the impact. we come back to looking at where the valuations sit. we think of it -- we think the japanese market is offering reasonable values. lots of companies have strong ip ba

the idea is that it is a proper tool that the pboc has gotten used to.ey will grow that facility and use it. >> why this more targeted approach? >> we know the thing with china's economy is that activity is slowing down. they are hitting that 6% target. the authorities will be pleased. they are trying to keep things nudging in that direction. they are not about adding stimulus or supercharging activity. we saw those bloomberg trade numbers this week. on the ground, we know the consumer story is so so. the other reason is general discipline. the authorities are very strong in preaching the financial risk. they don't want to go back to this. it is all about prudence in their own words. they are trying to take a more targeted approach. >> coming up next, more on china's textile off. all this as beijing looks to temporarily slow down new online game approvals. look at these japanese movers. we are seeing the a side. all this as they are having a very slow roll out of the new house imus disease drug by biogen. we are also seeing the fbi rally more than 4%. th

they have the pboc adding liquidity, and i think that is something that has captured our attention. the impact on the banking system in china seems to be relatively small and widespread, and i do think there is revenue implication that could have. jonathan: do you share that confidence? >> i am not that concerned about ever grand, per se. corporations have been rising over the last year show, and high yield spreads of the widening, so that is a bit of a concern, and that does reflect china shift in its growth model, away from the highly leveraged, speculative type of growth to, they are trying to achieve something that is more socially acceptable and more sustainable in growth rate. that isn't just due to leverage. when it comes to the market, the dollar bonds from ever grand really comprise a small amount of it. i think the question is, how well does china pull off the transition in his growth model? china has been a big driver of global growth for a long time, and if we are shipping to a more mature model, what does that mean in terms of global growth? we are pretty optimistic abo

just before the break you were telling us about the pboc approach is very different than the westernld, perhaps smaller and more frequent action. if this is the approach of chinese authorities, how do you view the likely response we have seen when it comes to evergrande ? alberto: if you think about what the fed and ecb have been doing, it is a one-size-fits-all liquidity. lowering interest rates. it is good for stimulus, a sugar russ and a big anesthetic to the economy but it does not solve the micro structural issues, and create more inequality, which as we know from the jackson hole papers is part of the cause of secular stagnation. very wealthy companies and people tend to hoard wealth. what china is doing is more micro and specific to the problems the economy faces. the problems are not the same as western economies. loss of productivity overhangs the private and public sector. they are trying to deflate bubbles aggressively. the evergrande restructuring coming is a positive. once you take out the bad apple from the system, the economy can move on, investors can move on. we have

the pboc coming in with another net injection of 15.5 billion u.s. dollars in the pboc reassuring that they would strive for the healthy development of the property sector and australia down by 1.4% in the asian session. iron ore is a big factor. you look at the commodities space. the price up in terms of oil but it is a different picture when it comes to iron ore and that has been reflected in the equities space within australia. south korea is down by 1%. mainland china is fairly mixed. the picture is essentially flat. the u.s. closed mixed as well and divergence between what is happening in the nasdaq, the russell, and smaller caps are stronger, again, on the back of this shift from growth to value so that is probably the picture as you see futures looking out for the european session and the u.s. as well as things stand. francine: they have separately announced plans to step down. the seven announcements, after revelations of stock trading during the pandemic. it removes two of the hawkish officials at a time when the fed is grappling with taperi

that also signals that there are pboc credit drivers that will be different for other markets.he most restricted market from those that other controls. on the flipside, we have markets throughout asia that are embracing the sector, recognizing perhaps the diversity in the value ecosystem, that are recognizing the potential role for these assets within worth management -- within wealth management. the drivers may be in mainland china, they looking feel very different in other markets. rishaad: we have brought up some interesting ideas. that one could have something so ephemeral as, what is money, ultimately? but this is not new, what they have been asking. they have sort of codified it. at the same time, they are not against the principle underlying blockchain. they want to encourage that. that is a tough one, isn't it? urszula: absolutely. the work being created that draws in participants from global participants, that story of blockchain innovation within its own networks really speaks to the technology as a whole. so you are quite right, they are consistent with the message y

the pboc bands currency transactions, but the markets seemed unfazed.th our guest.

on the back of the equities selloff, it spread into the asian session paid the pboc injected additionalquidity. red on the screen for mainland markets and continued concern about the property sector reflected in the stocks in hong kong. the msci asia pacific, as you can see, down more than 1%. it is worth pointing out the futures here in europe and the u.s. pointing to the upside. joining us now is barclays head of european equity strategy. thank you for joining us this morning. was the selloff last night, do you think, concerns about these higher yields and inflation risks, do you think they are overdone? is this a rational rotation that we are seeing? >> good morning. what you are seeing is always markets. you had pretty much everything you could hope for as an investor. very strong growth. very supportive policy. and on top of that, very different interest rates. we are simply transitioning to an environment where growth is strong and policy support is being reduced. less policy support i guess from central banks. it is something the markets have to get used to. we don't think excess

probably, like you say, the injections by the pboc to keep the banking system the good.- liquid. and i think that's how it goes. tom: your line on bondholders being way down the list seems to be severe with many of the china watchers out there. and we have had this move by banks in europe to try to calm the markets, reassure they don't have extreme exposure. take a listen. we heard from the ceo of ubs talking about the situation of evergrande yesterday. let's listen. >> direct effect and direct exposure, immaterial, not some thing to worry about. the policy change over time, i think can actually work to our strength. tom: esther, should we be relaxed about the exposure european banks have for the evergrande business? esther: well, there will be some houses who love doing that. but, you know, i think for the market, as a whole in europe and the u.s., i don't think the systemic risk comes from this. there will be pockets of holders, but i don't think -- and is not a great credit. i think what investors should really be asking is what sort of, you know, if you like disclosu

we obviously got action from the pboc injecting 120 million yuan. this is a story with evergrande that has sparked results paid are we going to see more precise direct action? jonathan: year end we talked about this earlier, a 600 69 million pounds of interest -- pounds of interest due. tom: bloomberg's bond people have been leaning on this. the bar chart today fills out a couple of years. anyone with experience with that chart says it's not that i happen. scott looking for chinese authorities to come in. george published moments ago and he says add to china to the list of worries and i love what he says about the marginal growth component that china is to global growth, he says the turbochargers over. jonathan: another brick in a wall of worry. up 22 on the s&p. about a half of 1% on the s&p 500. into the bond market yields higher by a single basis point foreign-exchange not much going on. euro-dollar positive by about a 10th of 1%. 71 .55 on wti. kailey: a nice rebound in the commodity complex. a lot of it comes down to supply and demand. that app

what is underlying that is the view that the regulation is going to be -- that the pboc is going to ease with economic momentum decelerating. when we unpack that come up those views are somewhat problematic in that we do not think we are at the end of this regulatory shutdown. at the end of the day, china's economic system is one about the credit, not the press the credit. credit growth continues to flow on the back of continued tightening, watch out for property tightening as well, that could be epic. >> what we are singing credit markets, is not likely to spill over to the equity market? >> so far, so contained. china's high yield is dragging asia credit along for the ride. we are seeing limited spillover into border equity market, emerging-market credits as well. while that remains a key to watch, if we do see a more broadening whole of economy crackdown, that would be a shock given where expectations arrive. >> the market giving you a juicy yield there. he mentioned a long-term plan china, structural bond flow, whether that is sovereigns, part of the credit market, that seems to be i

while the yuan has stayed relatively resilient against this backdrop, with the pboc likely to step in to curb its impact, asian currencies probably speak and have been on the downturn this month as the dollar has climbed with u.s. yields, and inflation spikes do remain with us for longer. that could keep up the pressure on asian forex. the thai baht down nearly 4%. the euro fell below 1.16 for the first time since july of last year and traders are piling options to hedge against potential downside risk going further. at bvh, they predict the yen will hit below 125. we have seen shorts built up to a record, which some say could provide room for a recovery in the currency. in japan, vaccinations ramp-up, and they predict some surprises to the upside. shery: that's now get over to vonnie quinn with the first word headlines. bonnie -- vonnie: after winning over his party, the japanese -- the former japanese prime minister must win over voters in november. he is promising to deliver major stimulus by year-end and indicated support for raising public sector wages. the u.s. fda have authoriz

different crosswinds through the chinese economy and the equity space, whether it is support by the pbocr this announcement of xi jinping for this stock exchange in beijing. the economic data shows fragility. and that record tory crackdown. how is that feeding into your view of chinese equities? eleanor: we tend not to invest in a geography as much as individual companies. we have been seeing more opportunities in the small mid-cap chinese companies at the moment because they are less under the radar. less faced by regulation at the moment. those activities are more attractive to the regulators, the government at the moment in terms of how they serve equality for everybody in china. we invest on a stockpicking basis, and the regulatory parts of china keep us further away from china. tom: i do not expect you to name individual stocks, but give us a sense of the sect or's you are looking at in china -- sectors you are looking at in china? eleanor: one of the success stories we are not invested in but will be more important to us is the health care sector, and notably the way in which china

has really caused anxiety throughout broader markets, not to mention that today, we also have the pboch their loan plan rates for september. the expectation is for a hold. we have not seen any moves for months already. so we are going to be watching what happens on that chinese market front as evergrande has just missed that interest payment due monday. we continue to watch these developments about evergrande given that of course we do have the pboc coming back with open market operations after the holiday break. perhaps one opportunity for them to signal is they are going to do anything about this bill crisis. haidi: certainly, we are watching -- this developing crisis. haidi: certainly. we will be getting more from the united nations general assembly underway including china's man's to stop building power plants abroad and their intention to support developing nations transition to green energy as well. lots more to come. this is bloomberg. ♪ >> this is a moment when the world has to decide whether it wants to grow up or not. to make a crucial change or not. pres. biden: the united s

tom: we converge around 5% on the back of some support by the pboc and maybe the finance ministry injing as well to make sure you get to that level you have outlined. what is read across to equities in asia and europe? stÉphane: for equities, we have recently increased our location to asian equities and we are overweight asian equities. if we look at distribution on a global basis, what we have is basically a situation where our main scenario is a scenario of reasonable growth on one side and inflation that is favorable for equities. then we have two risk scenarios, we have a second scenario that is basically the risk scenario we had yesterday in the market, is a scenario in which the growth collapse and inflation is very low, not very good for equities that very good for government bonds. we attribute 40% to that scenario. last but least, there is a scenario of stag-flation, with low growth, and we only attribute 10% probability. manus: your base is high growth and low inflation. we will talk more about that with the fed in a moment. a number of people have joined us saying we don't