Transcripts For BLOOMBERG Bloomberg 20240703

Have just voted in in centerright government. Annabelle i am Annabelle Droulers in hong kong, we are counting down to asias major market opens, in australia have just come online. Shery i am shery ahn in new york. The top stories. Asian stocks set for losses, as the prospect of a ground offensive in gaza is large of a market. The u. S. Warns iran against escalating the war between israel and hamas. Washington and its allies stepping up efforts to prevent a wider conflict. And the baited administration is set to tighten measures to curb chinas access to advanced chip tech, adding design firms to a restriction missed. Adding design firms to a restriction missed. Annabelle asx 200 had just come online. We will see how it starts to trade. Really the focus as you said in the headlines is all around the flight to safety. It started to kick off in the session on friday. The question is whether it is extending into the start of another trading week given the prospect of another ground offensive in gaza. Its a big uncertainty. It could really weigh across a lot of markets. So far in the session today, you arent seeing too much of a bid for these assets. These sensitive ones, trading is actually higher in the session. The aussie dollar is a good barometer of Risk Appetite and it is a little bit higher. Bond yields are fairly steady. The asx 200 is just flat. Lets change and look at the other risk haven assets. Again, it is the story, the japanese yen fairly steady. Gold had a bid in the prior session, but it is weaker as trading gets underway. Bitcoin, something that is sensitive to the israelhamas war, perhaps somehow must militants using bitcoin as a way to evade sanctions. Essentially bitcoin is a bit weaker in the session. New zealand stocks likewise are trading to the downside. It is broadly risk of unbalanced, but still a lot of uncertainties and unknowns as we start another trading week. Shery yeah, we bracing for volatility. Features are still slightly in positive territory early in the agent session after stocks lost ground on the friday session. We were bracing for the continuing conflict in the middle east, and a potential ground incursion in gaza. We had the bigtech selloff as well. We also had treasuries rising across the curve, haven demand being seen in the 10year yield which fell to the 4. 6 level. We are also watching oil continue to rally. The largest weekly gain in a month. But you can see in the agent session, a bit of downside, 0. 2 . Perhaps one positive for the Broader Market was the earnings season being kicked off by big wall street banks. Jp morgan, citi, wells fargo. We had a couple of them really gaining ground on the friday session on solid earnings. We have Goldman Sachs, Morgan Stanley and bank of america this week. It was already a big week for politics where it came to us truly and new zealand. Australia seeing a comprehensive defeat of the voice referendum, and questions about what that means for Prime Minister albanese who made it a key campaign pledge. We know that he really announced this referendum at the height of his popularity. And then we saw at the end of the campaign how he had taken a hit on his support levels across the country. We will see what his government does in order to refocus on pressing concerns of voters, which include elevated prices, high Interest Rates. Perhaps some of those concerns that new zealanders will also ask from their new leader to manage. Haidi yeah. Inflation. Higher Interest Rates. The costofliving crisis. Shery, this was almost as single issue going into the campaign. We saw the vote shift from the labour party which had been in power since the start of Jacinda Arderns error. Its a far cry going into this weekends elections, we saw the ships to the centerright national party. Looks like they will be able to form a government with one or two allies, there still a bit of horsetrading in play. What is fascinating to me is that, the labour partys handling of covid was well thought of. Is this a reflection of this tickler political situation or is this going to be a broader trend that we see with the u. S. And canadian elections that are still to come, where the incumbent governments that herded these economies and these populations through covid, are going to see that backlash as reducing the economic struggles the struggles with inflation and with costofliving . Is this going to become part of the broader Global Political trend as we get into the next few months . Shery and how these administrations deal with geopolitical challenges as well i know of course, the top story right now is, 600,000 people have left gaza city as israels troops gear up for a ground war against hamas. Israels allies are also raising to prevent a conflict from engulfing the middle east. Bloombergs Michael Heath. Joins us with the latest we have been bracing for conflict for some time. What is the latest on the Israeli Offensive . Michael a lot of events have been going on that signal the preparation for the ground attack. Obviously it was reported that israel has called up more than 300,000 reserves. About 600,000 people have moved from gaza city into the south of gaza strip. The northern part is exited to be the ground incursion, that is the built up area where a lot of hamas people and armories are understood to be. So these are all the preparatory steps before israel actually moves into the strip. We have also seen the u. S. And egypt talk about being able to ship in aid supplies through the border with the gaza strip and egypt to assist the civilians who have moved down to the south of the strip. There is obviously a lot of people there. That movement is a prayer lewd to israel then going in. That movement of civilians to the south is a prelude to israel then going in. Haidi President Biden talking about the fact that at this point he doesnt think u. S. Troops are necessary in the israel war. This kind of opens up the question as to bandwidth, right . How much bandwidth is the u. S. Have now potentially of involvement in the second war . Lets not forget what is going on in ukraine. We see secretary of state Anthony Blinken trying to manage the regionalization of this conflict. Michael exactly right. The u. S. Is the superpower at the end of the day. Biden maintains that they can do both, they can support ukraine and support israel. We saw the movement of a second Aircraft Carrier and naval group near israel. This is to reinforce the message the u. S. Is trying to send, particularly to iran, one of the supporters of hamas, and also hezbollah in lebanon which has exchanged fire with israel in the north of israel. But yes, it is it obviously widens that issue in terms of trying to supply weapons to ukraine and to israel. But the u. S. Is a big country, it is a big economy. Biden seems fairly confident that they will be able to do that. Haidi bloombergs Michael Heath there with the latest. We are hearing more details from this interview, comments from President Biden saying he doesnt think it is necessary to have u. S. Troops in combat in this israelhamas war, israel has one of the best fighting forces and he will guarantee that they are provided with everything they need in terms of support. We have the market reaction. A lot of investors to be contending with at the start of a brandnew week. Haven assets. Oil in focus with traders watching development in the release very closely. The prospect of any ground offensive in gaza. But with mliv contributor garfield reynolds. Garf, pull together the pieces of this for us. How are you viewing the Current Situation . Garfield markets are basically saying they have stood the, as that were, their worries about an immediate, broader escalation that would send oil prices skyrocketing, damage, assets, and push investors to take refuge. Havens such as the u. S. Dollar, the swiss franc, gold and treasuries. All those assets have sort of fullback. As you were mentioning. Equities so far, not doing a lot one way or the other. Crude fell initially a little bit, but it has stabilized. It is kind of an as you were on friday. But there is still plenty of nervousness out there about what the rest of today and with the rest of this week might bring. But for now it is fairly calm across markets. Shery we are watching earnings season moving into full gear. We already had three large banks on friday reporting jp morgan, citi, wells fargo combined, best Third Quarter in history. But still lots of warnings about the outlook from here on out. Garfield that is exactly right. That is kind of the concern in general with earnings. Everybody is expecting pretty good results for the Third Quarter. If you look at the way stocks most performed up until the end of that quarter, and you look at the Economic Data that came across pretty strongly, you can see why that would be the case. The concern is, how are things going to be Going Forward . There have been some signs of a little bit of a slowdown in the jobs market. There has been still mostly resilient Economic Data, but concerns about how long that resilience can last. So what is going to come this quarter and the following quarter, that will be on investors minds. If you are going to see equities move sustainably higher from here, then you need to see that as one of the pillars, along with a relatively calm resolution to what is going on in the middle east, and also the sort of goldilocks kind of balance when it comes to the Monetary Policy outlook. The fed may be stepping back from the last rate hike or being patient about when they might put in some more tightening, but not switching rapidly towards considering rate cuts because the economic picture is deteriorating. So that is what you are looking for. And as i said, earnings are a key part of that picture and they are the main ones we would get clarity on in the next few days. Shery our chief rates correspondent for asia and mliv contributor garfield reynolds. Still ahead, air canada is back at precovid strength when it comes to travel to and from japan. We will be speaking with its head of aipac, at the end of this hour. Before that we will preview Economic Data with our guest as she walks us through their predictions, next. This is bloomberg. Welcome to ameriprise. Im sam morrison. My brother max recommended you. So my best friend sophie says youve been a huge help. At ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. Our neighbors, the garcias, love working with you. Because the advice we give is personalized, hey, john reese, jr. Hows your father doing . To help reach your goals with confidence. My sister has told me so much about you. Thats why its more than advice worth listening to. Its advice worth talking about. Ameriprise financial. The front is concentrated now on very carefully monitoring what could be the Economic Impact of the new eruption of tensions in the middle east so far, what we see is relatively contained. Oil prices are going up and down, but there hasnt been a huge spike. Some nervousness in markets, understandably. Imf managing director kristalina georgieva. There are elevated risks from the war between israel and hamas already adding to the fragility in the Global Economic recovery. Joining us now is Alicia Garcia herrero, chief asiapacific economist at natixis. There are different prisms to look through this. For markets, the key concern will be oil, not to mention the broader humanitarian crisis that is unfolding before us. What are you watching very closely at the moment . Alicia the key issue here first is how much this conflict escalates. And i think the first point to watch is iran. We have had over the this sunday, actually, hezbollah attacks on israel. That is already a sign of escalation. This is the thing that oil is reacting to of this. It does sound like even if we were to avoid a humanitarian drama, we still have the issue with iran. Frankly speaking, we are no longer in the scenario of a terrible but still sharp shock to the global economy. We might be moving to something more structured and, unfortunately, more painful for the global economy. Haidi lets see it from where i am here in wellington. We have seen a new zealand vote for change, shifting from the government that took the country throughout of covid and the postpandemic. Do you think this is a reaction to the with that economies have been managed through covid, and in the postcovid era . Because it feels almost like there are limited fiscal louvers to pull to be able to accelerate recovery in a lot of these economies. Alicia indeed. I would say, and to our dismay in a way, there is monetary space, we have set record highs. But the point is inflation would not allow us to use that space, especially if oil prices shift up more structurally because of the conflict. That is one of the problems that we have, that we need to hold the reins on inflation. On the fiscal side, i couldnt agree more, we had before this conflict, a potentially unfolding debt crisis in some countries in the world and in others, thanks to the reserve role of the dollar may be avoiding it, but even the fiscal numbers in the u. S. Or perhaps creeping into a much more difficult situation given the debt service. But this is nothing compared to other parts of the world where they dont have a reserve currency. In that regard, i think that space is limited because we have used it up, either for inflation, or basically to combat the impact of covid for fiscal policy. Shery how restricted are chinese policymakers . We continue to see this slump in the chinese economy. I wonder how broadbased it is when it comes to the slowdown, and whether Monetary Policy can actually do more. We do have rate decisions, and commercial banks also setting their rates this week as well. Alicia well, i think frankly, the space is limited everywhere, including in china. Of course, they have a little bit more monetary space because they havent got all the way to quantitative easing or negative rates, as japan. One could argue that they could do that. But the reality is that their strength, for many years, in terms of basically intermediate between policies, are the banks. The banks need that room. They need a decent interest margin to basically do what the Government Asks them to do, and if you cut rates, that disappears. On the fiscal front, space is very limited. Chinas public debt already is 100 of gdp. That it would do one trillion rnb, one hundred 60 billion or so in infrastructure stimulus. They worry about growth next year. This year is done, they hit their target, but their target was low. Next year is a big issue. On the fiscal space, they might do it, but reluctantly, because they know that it could actually have consequences in terms of potential defaults of local governments, or the local government financial vehicles, et cetera. That is why the room is no longer there, even in china. Haidi always great to chat with you, Alicia Garcia herrero, chief asiapacific economist at natixis there with us. We have much more to come here on daybreak asia. This is bloomberg. Haidi bloomberg has learned that the Biden Administration will tightened measures announced last year to restrict chinas access to advanced semiconductors and chipmaking gear. Furthermore, lets bring in our chief north asia correspondent Stephen Engle. Is this a reaction to what we saw with the price progress that huawei made . Stephen its an interesting development, not to be an expected, though, to tighten some of the loopholes that chinese firms have been able to navigate to get supplies of these advanced chips which are on the restricted list, as well as chipmaking equipment. So this is, according to sources , saying that this new tightening of restrictions could be announced by the u. S. As early as this week. Essentially, and we can bring up some of the bullet points on what we are learning for these sources. Here adding trainees chip design firms to the restricted list which was first announced last year. Overseas manufacturers will need to obtain a u. S. Licenses to fill orders from those chinese companies, and there will also be stronger controls on the sale of advanced chipmaking equipment and graphics chips, according to these sources. It will close loopholes that might have allowed cheney to buyers to use either third countries, or adding supplies to china through overseas subsidiaries or units. Also, more checks will be made on shipments and licenses will be needed to export tech to those intermediary countries. As i said, this is not a big surprise. But we are getting more details that the u. S. , as it continues to widen and broaden these export controls, to keep the most advanced proprietary chips as well as chipmaking equipment but actually out of the hands of the Chinese Military. Haidi there are also interesting developments when it comes to Anthony Blinken. We are seeing more pressure on beijing when it comes to what they can do in the broader context of this conflict . Stephen thats right. There has been a lot of diplomatic efforts. Anthony blinken had about an hour long conversation with chinas top diplomat, foreign minister wang yi, before he headed off to riyadh where he is supposedly trying to garner arab support for israel at this time of war with hamas and the humanitarian crisis that is going on in gaza. Josep borrell, europes top diplomat, he was in china and met personally with wang yi as well. Borrell has been a bit critical as well of china for its lack of statements condemning hamas for that attack in gaza, but also reaffirming that they would like to see more from china. The war in ukraine, essentially criticizing china for not condemning that ongoing war. This is what he had to say. Russia represents a huge threat for our security. And that we are committed to support you facing the russian invasion. And asking china to take into consideration these very tough this very tough position from our side. Considering russia as a Security Threat to the whole european union. Haidi that was over chief north asia correspondent Stephen Engle there with the latest. Coming up, new zealand picking a centerright government to lead the nation through its mounting economic challenges postcovid. We will get a sense of what the new administrations priorities will be, and we are live here in washington in wellington, covering the aftermath of the weekends vote. This is bloomberg. Its an amazing thing when you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. The idea that we have saved five Million Peoples lives, its overwhelming. Its everything. This is daybreak asia, where 30 minutes into the trading session so far for australia, a halfhour out from the opens were sydney, seoul and tokyo. At the start of the day this is investors thinking about what is happening in the middle east, this risk of a Ground Invasion in gaza and the ramifications and what that would mean for a range of different asset classes. Youre saying that play out in the market so far because you can see investors are turning away from some of those more sensitive stocks and more defensive moves. This puts it in focus because the i. T. Index, sub index of the asx 200 is the noticeable laggard as we get the session underway for the asx 200. These are some of the big decliners for tech stocks in particular. Lets change on. In the session friday we started to notice that move to risk assets. So far at the top of this hour we are not seeing big moves as yet but we do have stocks still reacting to that 5 jump in oil prices because you can see here some of these energy linked names in asia asia. These are moving to the upside. The second order effects of course and we continue to monitor those. One is for the Airline Stocks in particular. You can see qantas is one of the noticeable laggards down 8. 1 percent so far as we get underway. It is really about trying to understand where we are at so far in the israel hamas war and the meaning for investors and that move into risk assets. It is really steady so far and there are implications and trading volumes as well down more than 25 of the 21 Day Moving Average at this point so far. Haidi it has been a big weekend here in new zealand. Voters electing a new government the former new zealand ceo christopher luck some luxon will be here and i spoke to christopher english to get his thoughts. Just sensible considered management and there is no doubt he has the skills for that. He will have a reasonable straightforward political environment, probably better than he might have expected. Haidi the countrys Political Parties have begun to jockeying for positions as they prepare for the former Coalition Government lets get more from our Wellington Bureau chief. We spoke to bill english, he has had his encounters with Winston Peters and that is back in the fray as well. Is it likely that new Zealand First that party will be back in play . Currently the national has a one seat majority but the problem is that special and overseas votes still need to be counted and traditionally they have favored the left so it is entirely possible that that slim majority will disappear and that Christopher Luxon will need to involve Winston Peters and governing arrangements. If i had to bet i would say that Winston Peters and new Zealand First will have to be part of the next government. Shery considering all of the likely parties involved in the new government do we know at this point what the priorities could look like . Mattew well one of three of the centerright parties have Common Ground when it comes to things like cutting Government Spending, getting tougher on law and order. Cracking down on welfare beneficiaries, things like that. I think obviously the economy will be pretty front and center for the new administration and it is possible we will get a mini budget before the end of the year. If that was to present a much more dire Economic Outlook which is entirely possible at this stage, you could see flagship policies coming up for discussion such as National Tax Cuts which Winston Peters has already expressed some doubts about. Until we see the final shape of the government window really know which policies are going to be implemented. Haidi do you have an idea of how long i could take and i am also curious, how much of this is dissatisfaction with the labour party in its self . How much of it is broad unhappiness with the incumbent government which faced a lot of commonalities in the economic environment that we see across other Major Economies postcovid . Matthew i think to a large degree the election result does reflect dissatisfaction with labor and some of it is an overhang from going through the pandemic. Certainly Government Spending was a lightning issue in the campaign that went pretty hard. I think you saw that even when senator was still in power last year, labor was really losing traction with voters so to a large degree it is voters walking away from labor and turning to the centerright to try and solve some of these Economic Issues that we now have to contend with in the wake of the pandemic which is a common theme across the world. In terms of timing for the formation of the new government, as i said three weeks before we get the final results i think christopher will want to start talks pretty soon so we can form a government pretty soon after those final results are on the november the third. Haidi Wellington Bureau chief there with the latest on the new zealand election. Across the street australian Prime Minister is facing a struggle to reunite his country after one of his key Campaign Promises to include a voice for Indigenous People in the constitution failed over the weekend. Lets bring in our asia opinion editor. It is a significant loss, a magnitude of this loss as well when you take a look at the numbers. Far worse than even the managing of expectations going into the weekend. It is seen as a loss for the Australian Government and First Nations people that supported this initiative. How did we end up here . Ruth you are right. It is a terrible loss. First nations australians are fellow citizens and just to recognize them in the constitution and give them a voice on issues that are vital to their community. To help them overcome the entrenched disadvantage that Indigenous People face including poor health, Health Outcomes compared to other australians. It is agonizing for them to face this defeat and for the Prime Minister this is a significant loss for him. As he said it was a key promise. It will be really interesting to see how he picks himself up from here and tries to reunite the country after what was an incredibly divisive campaign. Annabelle what shery what has been the International Response . In another way how does this impact australias reputation on the global stage . Ruth it is really difficult for australia to intervene on other Global Human Rights issues when it cannot even pass a referendum on its own First Nations citizens. Countries in asia in particular are looking to australia to be a partner in some of the most significant challenges we are facing such as Climate Change. And they will be wondering can we really trust the nation that cannot even recognize its First Nations people in the constitution to be a good partner to us and help us overcome and face the challenges , with Serious Problems like Climate Change. Haidi we are seeing the reaction to the no vote from a number of indigenous campaigns that have called for silence and reflection before they talk about what comes next. The question is they are, what does come next. What does this mean for the broader reconciliation effort. Factually there are issues when it comes to how indigenous disadvantages have played out economically, socially. What do we do now that the referendum has failed . Ruth one thought is that campaigners will turn now to australian state and territory governments to try to implement a voice to parliament in those legislative forums. They will also be looking to do, as victoria is doing for example, work on its own treaty with its indigenous population. I think there are many ways we can see this issue progress but at the moment the size of the defeat and campaign will take a lot for people to recover from. Annabelle Bloomberg Asia and opinion editor ruth there. Shery here are some of the other top political stories we are following, polands opposition is on track for a majority when in sundays election. According to in a poll the former European Council swapped about a third of the vote together with its partners the group is set to secure 248 seats in the 460 member lower house. Turn out in sundays vote stands at an estimated record of 73 . Polls have closed in ecuador where voters are choosing between a socialist in the air to a banana fortune. Wants greater state of the economy well there rival favors free markets. Soaring crime was a top issue for voters. This was the nations bloodiest president ial election in living memory after one candidate was gunned down during campaigning. Coming up next air canada sees travel demand rebounding to precovid levels in japan, its head of aipac will join us shortly to discuss the Drivers Behind that and the impact of a weaker yen. This is bloomberg. sfx stone wheel crafting the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . Annabelle shery we are counting down to the start of trade in tokyo, these are the stories we are watching. The yen and officials appetite for intervention remains in focus as the currency continues to linger near that 150 per dollar level. Nikkei is reporting that the Communications Ministry will begin talks on allowing new frequency bands for 5g as cell phone data usage increases. Plus both boosting income forecast for the full year. Keep an i on them when stocks start trading later. It will also be watching japanese airlines. The ministry of finance estimating the countrys foreign travel spending jumped over 450 percent in august 2 2. 8 billion compared with the same period last year. For more on the outlook for travel and tourism lets bring in head of aipac at air canada. It is great to have you with us. Are you seeing that strength in your own business at air canada . Kiyo definitely. We have seen Strong Demand and an increase in passenger demand in 2023. Our load factor which means occupancy rate from january to august was about 92 . Which is a lot higher than what we had in 2019 and 2022. In the past when we wrote load factors, we thought 85 was great but it is 92 . As you can see this is very good demand we are seeing. Shery when you are talking about demand are we talking about both to and from japan with japanese tourists, because we have a historical weakness in the japanese yen. I wonder what the implications of that are for travelers that are earning in cheap japanese yen . Kiyo definitely. We have seen a surge in travel demand from north america to japan. Historically, our japan flights were booked by mostly from japan visiting canada. As a way to travel, however the trend has reversed. And out flights are booked by much more north americans this year. Annabelle do you characterize this deal as the postcovid spike in demand . Do you see this as more of a new normal. If not when you expect to see stabilization when it comes to demand . Kiyo i think that the demand will continue. Especially when it comes to inbound travel to japan. Japan is now named the most attractive country to visit by a highly renowned global tour magazine. And i dont think that trend will cease for a while. Of course that currency situation is helping the current travelers to come to japan but i can tell that currency fluctuation in the future and for sure the popularity of japan itself is going to stabilize. What we see is in the past, Cherry Blossom period from march to april was the peak time of travel for inbound japan travelers. However, we have started seeing more of a spread of the demand in all three or four seasons as a person based in japan i understand it very well. We have so much to offer all over japan in all four seasons. Winter, fall, summer and spring. And i also want to mention that current travelers are putting a lot more priorities on experiences, scheduling time to travel, one to travel and who they want to see. Compared to prepandemic time when they put priorities on cost. So they were always looking for discounts and good deals. So they could do either travel time but now when they want to travel they go. And they spend money. So that is what i see after pandemic. Haidi where do you see jvs when it comes to your venture you do already have an existing joint venture with china. Is this going to be a bigger part of your strategy across the region . Kiyo in china . Yes. It is going to be a very strong joint Venture Program for us. But we are always looking for different types of joint venture partnerships in that situation. Haidi before we let you go let me get your views when it comes to some pressure when it comes to oil prices. How well hedged is the airline at the moment . Kiyo so could you repeat the question again . Haidi how well hedged is air canada when it comes to fuel prices . Kiyo oh. We have a good strategy and we always have a great fair program that is dynamically being decided based on supply and demand and they are including all of the environment that we have. Haidi great to have you with us, head of aipac for air canada. Coming up next Christine Lagarde suggests that the ucbs ecbs tightening cycle may not be over yet after delivering its 10th straight rate hike in september. It will get more on her outlook when it comes to Monetary Policy settings ahead, this is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates, exemption certificates or filing returns. AvalarAhhh Ahhh Ahhh ahhh haidi european and Central Bank President Christine Lagarde says officials will raise rates again if needed but they are also gauging the impact when it comes to prior moves. She spoke on a panel at the imf annual meetings in morocco. Lagarde there are multiple previous shocks from the disruption to the supply to mans volatility of Energy Prices to the pent up demand against the restricted supply and all of that happening in a very abrupt and sudden way. So that is number one. Number two. Something which is affected by lag time or time lag, whatever you call it. Im not here talking about Monetary Policy i am here talking about the adjustment of wages to inflation, and there is clearly in all central bankers mind the fear of the second round effect. Is it happening, is it likely to happen . Are we at the peak and are we now going to see declining wage increases returning to real wage precovid . That is another moving part. The third moving part is what i would call the strong we did 450 basis points hike and 50 months 15 months which is an unprecedented increase. This is what i call the strong but lagged policies. We have not seen the end of it yet. We are seeing tightening of financing conditions like has never happened before. We know that there is some more in the pipeline and how it is going to impact our economies, how it will have deflationary impact, disinflationary impact in our region is also to be seen. In the final one, the sort of ball in the air is the Structural Reforms that will come out of all that. And those of you that call the reglobalization, i would call it probably consistent with a good fight against Climate Change. The nearer showing, not the reshowing or fresh showing but reducing the distance. Having a better handle and control over your supply chain in the logistic transportation. That is just one example. I think the labor market is also a case in point where we will be seeing Structural Reforms and with people who are joining the markets now, they have just different aspirations and expectations than what we had. Let alone the two grandmothers at the table here. All of you. That generation, we are not from the same thing. They are all these balls in the air. We are not exactly sure how theyre going to land that certainly we all have to focus on our policies as far as europe and the Central Banks are concerned. As i said before, our mission is to return inflation to 2 mediumterm and we will end it is happening as we speak and we will hang onto that. Be steady long enough and ready to do more if necessary. Haidi ecb president Christine Lagarde. Now to the top stories we are watching south koreas financial watchdog is proposing record fines of two Global Investment banks for engaging in naked shortselling. It is a move considered illegal in the country, the watchdog said the Hong Kongbased units of the banks conducted naked short sales in several securities between 2021. The proposed fines have yet to be finalized and the bank state identities bank identities will be disclosed after future proceedings. Banking facilities have resumed after a disruption on saturday that prevented customers from fulfilling transactions. The outage was caused by a technical issue and quinn X Data Center used by the lenders. The provider says a thorough investigation will take place in the latest disruption follows delays experienced by dbs customers last month in processing transactions on one of its payment services. Take a look at how currencies are trading early in the Asian Session we saw a mixed picture for the dollar already, trading mixed against de10 peers in early asian trading. This after the bloomberg dollar index already surged more than 6 from its july low. We are watching haven currencies as well as the swiss franc, we have seen a surge to the highest in more than a year against the euro and u. S. Dollar advance and for a fourth week. We are really bracing for more volunteer volatility this week. Haidi there is a lot to play out, some of the stocks we are watching as we get into the start of trading in korea and japan in the next few minutes. Asian trip stocks, we heard the news that the Biden Administration tighten those measures that restrict chinas access to advanced Semi Conductors and chipmaking gear. Closing some of the loopholes there and we will watch for a reaction. Out of Asia Airlines they could follow peers, after oil posted its largest weekly gain in a month. Watching japan airlines, korean air as well. But we are headed into the start of trading in seoul and tokyo next. This is bloomberg. Haidi this is daybreak asia we are counting down to asias major market opens. Im here in wellington is the aftermath of the new zealand elections with voters voting for change. Perhaps punishing the incumbent governor for his handling of the economy postcovid. This could be a broader theme we see play out in the u. S. Election and other Major Economies headed for votes and coming months. Shery governments around the world continue to watch ongoing lyrical tensions in the middle east, markets have been bracing for potential ground incursion into gaza. We cannot forget that on the business side of things we are still getting into full gear into earnings season. Annabelle thats right, the big question is we kick off the trading week with what is going to be front and center for investors. So far it does appear that it is that risk of a ground offensive in gaza that is taking the attention mostly as we get trading for another week here in asia. Taking a look at where we are at the start of the day, we have the cash treasuries coming online. You are seeing that yield for actually higher on the 10 year yield but probably in the session as well, it is the question around that flight to safety. And what investors are exactly looking for in this market because you are seeing that move on friday, it is not really extending into the start of the week here but noticeable. We are keeping a track on trading volumes and what we are expecting to see here, perhaps in thin liquidity as we get the week underway. Certainly it is risk off as we get trading with equities because you can see the nikkei they are pushing down more than 1 as we get underway. It is not just what is happening in the middle east because it is those geopolitical tensions between washington and beijing very much and focus. We had a new scoop out this morning, take a look at what is happening with the chips stocks in korea. The Biden Administration is looking to tighten measures that were announced last october. This is about restricting chinas access to advanced Semi Conductor and chipmaking gear. There is quite a lot to get through in the details of this but essentially at a high level this is about the Biden Administration further extending those restrictions that were already in place and that does carry big ramifications for some of the major chip exporting nations in north asia. Korea of course, japan, taiwan. These names are all going to be watched very closely throughout the session. The call stack is under pressure as we get underway. Take a look at what is happening with the korean won, that is a more risk to sensitive currency. You are seeing it here a little weaker against the greenback as we get underway. Take a look. The australian session one hour into the trade for the asx 200, it is tech leading those losses so far as we get underway. As i said, trading volumes are the note because we are looking around 20 lower on the 20 Day Moving Average for the asx 200. Some breaking headlines, this is a developing situation around what is happening in the middle east. Shery President Biden considering a visit to israel in coming days. We are now hearing that President Biden mike might make a stop to israel as geopolitical tensions continue to rise in that war between israel and hamas. He had already seen secretary Antony Blinken headed to israel for a second stop on monday after crisscrossing the middle east. U. S. Has already said it has held talks with iran through back channels warning to ron against x escalating the conflict. Biden is considering visiting israel in coming days. Lets bring in our next guest who says he is watching for fourthquarter stock rally. Head of Asia Research at julius baer, we continue to watch earnings season. It get into full gear, who can forget all the geopolitical tensions and the headlines that we are seeing from the middle east. How big of a threat is this to the rally that you are expecting in the Fourth Quarter . Mark right now we are thinking that the intensity and the breadth of this conflict will be limited to a kind of 1960s cold war. In other words it will not be a hot war spread all over the world, i hope. And i dont think it will. You certainly would not want to be invested in the 1960s despite the cuban missile crisis in the vietnam war and other horrible things. At least for now we are thinking it is a very tragic but concentrated event in that specific country. I am sure that the headlines will remain very unpleasant for some time to come but i also think that markets can go up regardless. Haidi which markets are you specifically thinking of . Mark i am specifically thinking of the s p 500, the benchmark of the world. I am thinking that because we kicked off the earnings season last week and although only 32 companies are reported so far they have exceeded expectations by 10 . And 84 of them beat expectations in both of those are above the longterm average beat rates and it is only early days. There are 500 companies in the s p so 32 is a small percentage but i have a feeling we will get better than expected results simply because the Economic Data that has come out through the Third Quarter has beaten expectations and if you exclude energy the s p 500 companies will probably be reporting about a 5 increase year on year in the Third Quarter and that will be the first positive Earnings Growth year on year in three quarters. Haidi you are perhaps a little more optimistic when it comes to hong kong and china than others. Do you think with 200 some support measures we have seen are starting to cohesively have some effect . Mark i do actually. Let me state from the get go that we are not invested in china or hong kong in any major way. Our two overweight in asia are japan and india. But the stimulus if you added up is starting to become meaningful. The national team, in other words Government Support for stocks, they are probably going to officiate a large support program for mainland chinese stocks. President xi jinping and President Biden are probably going to meet in San Francisco next month. I think we could get about a 15 rally in hong kong between now and the end of the year, which by the way is what happened last year. The Fourth Quarter is seasonably a good one for hong kong just as it is for the United States. Haidi you are also a little more optimistic when it comes to the alleviation of chinas tensions with the west. You look at it is going to be a pretty busy docket, president xi jinping and biden meeting. And of another possible meeting on the sidelines of aipac. Do you think there are encouraging signals leading up to this . Mark the overriding issue is taiwan and i dont see a resolution to that. That is the splatter in the works if you will but i do think there is a potential for improvement in relations. We will just have to see what comes out of aipac. I think the american side certainly want to improve relations and i strongly suspect many on the chinese side to too despite differences over taiwan so we could be positively surprised. Certainly in neither of their interest from an Economic Perspective to continue the sour relations. Haidi when it comes to a couple market tilings we have seen this year, india is one you think is looking expensive. I also wanted your thoughts on japan as well. Mark well japan story is one of a tremendous amount of cash on both household and corporate Balance Sheets. Households have Something Like 13 trillion in cash and Bank Deposits and companies, over 50 of their Balance Sheets are in cash. This is a legacy of decades of deflation. Now they have inflation in japan and their inflation rate on a headline basis is even higher than that of the United States. I think that will continue because of the collapse in value of the yen and the steadily declining size of the working age population, which will put pressure on wages. What that means i think is that returns on equity in japan are going to continue to rise, they are very low right now but i think they can go up to 11 or 12 . And you will progressively get more Companies Buying back their shares and increasing their dividend payouts. That is the story of japan in a nutshell. Haidi always great to chat with you head of Asia Research at julius baer lets get you back to hong kong. Annabelle is looking at these chiprelated stocks trading in the tokyo session. We are watching this because of the tightening of these restrictions on china by the Biden Administration. Annabelle thats right, i think it is really interesting when you take a look 10 minutes into the session you can see these are some chip link names in japan and korea. You can see it is those names in tokyo that are sliding the most at this point. That really speaks to the types of companies that are in japan and really this is a space that dominates in chipmaking equipment and also chipmaking materials or supplies. Rather than in korea where that is more of the memory chipmakers and focus there, really the impact of these Biden Administration curbs, these possible further restrictions that are being discussed internally and what we are hearing from sources is that it is going to seek to strengthen controls on selling graphics chips for Artificial Intelligence applications and also advance chipmaking equipment to chinese firms. It is a tightening of the restrictions that is going to affect japan names in particular. You can see already losses building into the session. The other group of stocks in focus today is the oil linked names. These are Airlines Stocks that are slipping as we get underway at the start of the trading week. We did see brent crude spiking on friday, that is down to the israel hamas war. But we just had that breaking news headline at the top of the hour around President Biden. Haidi thats right. We will be getting the latest on that as well as the situation with how it comes to the u. S. Trying to contain the regionalization of the middle east conflict. President biden, we hear he is considering a visit to israel in coming days as the war continues to escalate. We get an update next, this is bloomberg. Haidi recapping breaking news earlier. Bloomberg sources says President Biden is considering a trip to israel after being invited in a phone call with the israeli Prime Minister but netanyahu. Joining us now with the latest, michael we continue to see more subtle diplomacy with highlevel officials and now potentially President Biden trying to go to the region to try to deescalate tensions. What are we seeing right now on the ground as we continue to hear signals of a potential ground incursion into gaza . Michael i think there is a real sense of urgency around the diplomacy with the conflict in the main aim of that is to try and ensure that civilians can get out of the firing line in northern israel. We have had israel urged the yuan to try to evacuate people from north of the enclave and we have seen about 600,000 who have left gaza city and around that. President biden i think that is more of a show of solidarity with israel. Certainly his secretary of state has been meeting with leaders around the region in some shuttle diplomacy where the main aim was to put pressure on iran to keep it out of the israel Hamas Conflict to avoid it from escalating. There is a lot of movement there. The main point is that the west has been trying to encourage israel to try to minimize civilian casualties. Very hard when you are going into an urban area but it is really important in terms of israel retaining international sympathy when it goes about this ground operation. This is the prelude to that ground operation i would say. Haidi the u. N. Has already called this recommendation to evacuate more than a Million People impossible. You talk about how the International Community is now responding in support we have seen for israels right to defend itself but how is the humanitarian aspect now playing out . Michael it is very difficult haidi. The latest numbers we have seen as an estimate of 2300 People Killed in gaza and that is the largest increase in many years in terms of israeli incursions. It is a builtup area. We have got civilians all around the place and military targets in amongst that. Whether it is propaganda or not there is talk that hamas has tried to keep more people up there to make it more difficult for the israelis. About half of what israel wanted in terms of evacuations of civilians has taken place but it is very tough to try to defeat hamas or root out hamas as they talk about it when you are in heavily populated areas. There are a lot of people in gaza. You go in there with ground operations, who is a friend, who is a foe . These are eternal questions when trying to move out a Guerrilla Force in heavily populated areas. It is really tough. Shery Michael Heath there with the latest on the ongoing conflict in the middle east. You can get more on these stories go to dayb on your terminal, and you can get the latest on these stories. Also available on mobile and our app, you can customize your settings so you only get the news and industries on the assets that you care about. This is bloomberg. The public are looking for sensible considered management and there is no doubt that Christopher Luxon has the skills for that. His vote in the election means he will have a reasonably straightforward political environment, probably better than he might have expected. Haidi that was the former new zealand Prime Minister bill english they are speaking about the next Prime Minister, chatting to us earlier. And new zealand centerright Political Parties have begun to jockey for position as he prepares to enter talks for a Coalition Government. It lets more get more on this treaty. At this point do we know what the new government is going to look like . Will it involve Winston Peters . At the moment the party has a one seat majority but we still have to have special and overseas votes counted and they tend to favor the left. It is entirely possible that that majority will disappear once the final Election Results are published on november the third. I think the likelihood is that Winston Peters and his new Zealand First party will need to be part of the next government in order to secure a majority in parliament. Shery of course a lot depends on the shape of the government but at the same time we know that christophers background, coming from the business sector and being in politics only three years, we have any idea of what sort of Prime Minister he will become . Matthew during the Election Campaign he really sought to make his political inexperience and asset by saying i am not stuck inside the walls of parliament. I am out and about. I under understand what affects real people. He says his experience as a businessman in terms of negotiating and doing mergers and acquisitions, getting a team to work well together, are all skills that he can bring to the political arena. For example when he has to enter these negotiations to form a Coalition Government. Haidi it was a struggled mandate, perhaps expected given how strong the swing was over the weekend. Does the government going to do with that . What will be the policy priorities . Matthew i think it is fair to say that national performed a little better than polls suggested and labored it a little worse. National came in at 39 of the vote. It is still not a resounding mandate, not when you compare it to the size of governing parties in previous coalitions. Nevertheless it is a clear mandate and i think that national will be looking to focus very much on the areas that it promised to the economy. Cutting Government Spending. It has been very clear it wants to deliver tax cuts to lower and middle income households that are struggling with the costofliving crisis. Those are the sort of measures you can expect it to push forward as soon as a Coalition Agreement is agreed. Haidi our Wellington Bureau chief there, australian Prime Minister is now facing a struggled to reunite the comp country after one of his key Campaign Promises to include a voice for Indigenous People in the constitution failed. Lets bring in our asia opinion editor ruth. This is seen as a significant loss both for the Australian Government and First Nations people who wanted that voice. How did we get there. Ruth well, that is an excellent question. It was a simple proposition that was put to australian voters and it could lose in such a significant way, this is a massive loss to First Nations people who were hoping that enshrining their voice in the constitution would give them a say on matters that really affect their community. First nations people have very poor Health Outcomes compared to nonindigenous australians. Everything that successive governance has thrown at that problem has so far failed. The vote also i think showed a massive divide between the inner city and rural areas. There was a divide on education and income level lines. And these are things that will be raked over by campaigners for years to come as they try to work out how we will ever get another referendum up in this country. Shery how is the world responding to this result and what of the reputational implications for australia on the global stage . Ruth how can australia outlook to show any leadership on issues of human rights in the region when it cannot even enshrine its First Nations people in the constitution or recognize them in that way . Pacific island nations and Asian Countries are looking to australia to provide leadership on important issues like the threat of Climate Change and what that will mean to our region. And i think they are also looking at australia and thinking can you be a partner with us on this when you failed your indigenous population so fundamentally . Haidi it has been really interesting watching the voice vote from here in new zealand. What we saw in the election, a Strong Performance is looking like that representation is looking to more than double in the next parliament. What could australia do differently Going Forward if not the voice . Are there any other paths to reconciliation . Ruth as you point out, new zealand has had a treaty with its indigenous population the indigenous population of Northern Europe has a representation in the parliaments of finland, sweden and norway. Taiwan in our own region recognizes its Indigenous People in their constitution. So australia has a lot of good examples you can follow. If the voice failed perhaps they can legislate rather than doing it via referendum and of course the individual states and territories are now looking to implement treaties with their own First Nations people statebystate, rather than doing it from the federal level. Shery ruth there with the latest on the voice referendum and the overwhelming defeat. It lets look at how european futures are trading early in the asian monday session. We saw them fall on the friday session with european stocks pressured, trimming that weekly gain. Not only european stocks but also u. S. Stocks were really bracing for the weekend and potential escalation in the middle east conflict. We actually had tech and travel and leisure stocks slumping the most in the european session on friday. We are seeing not a lot of change right now, perhaps a little upside along with u. S. Futures as well. It take a look at how u. S. Futures are trading because we saw the stocks fall on the friday session as well. We are now in the thick of earnings season, we are expecting Goldman Sachs and Morgan Stanley to report. We continue to see haven demand on the treasury side of things. Take a look at the dollar index which is Holding Steady after the bloomberg dollar index already saw gains of more than 6 from their july low. Coming up next we will speak with the head of mcm group chinas relations with the u. S. And taiwan American Companies are doing on the mainland as geopolitical tensions loom. This is bloomberg. So, youve got the power of xfinity at home. Now take it outside with xfinity mobile. Like speed . Its the Fastest Mobile Service around. With the best price for two lines of unlimited. Only 30 bucks a line per month. Thats hundreds in savings a year when you wave bye to the other guys. All on the most reliable 5g network nationwide. You really shouldnt walk out the front door without it. Switch today at xfinitymobile. Com. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Annabelle this is daybreak asia with a check on markets. Half an hour into the session for tokyo and seoul and sydney, 90 minutes underway but at the start of the days trading week it is really about assessing or registering how much investors are reacting to tensions in the middle east. Coming on the last 10 minutes or so is a headline that President Biden may visit israel in the coming days. This could be something to help try and bring down those tensions. We are at risk of a Ground Invasion in gaza. Traders are very sensitive to that, so far assets are moderating somewhat. He had seen investors pile into those but the japanese yen, gold Holding Steady. Equities under pressure at the start of the week even though u. S. Futures are in the green. That is one story of course. The other we are watching is geopolitical tensions and lets take a look at some of these big chipmaking or chip Equipment Suppliers in tokyo because this is where you are seeing a lot of losses. Essentially, the u. S. Is looking to tighten chip restrictions on china. These were announced in october of last year but there has been a certain number of loopholes that companies have been able to exploit. These would be tightened particularly for chip equipment makers. This is a market dominated by japan, in particular north asia. That is where you are seeing most of these losses this morning. This is all about trying to moderate chinas technological ambitions and really seen as the next front in the cold war. Our chief north asia correspondent in beijing this morning with our next guest. Stephen the development we just got overnight, of course with the United States considering tightening and broadening those export control restrictions on china so the Chinese Military potentially does not get access to those advanced chips. At the proprietary chips from the United States as well as advanced chip equipment making tools, yes. The u. S. China relationship is fraught with a number of different issues that possibly could be addressed next month if president xi jinping and joe biden have that long awaited but not yet confirmed a summit in San Francisco on the sidelines of a peck to discuss u. S. China business relations. We welcome Manny Menendez the founder and ceo of consultancy group, you have been doing business here in china since relations were established in 1979 with the peoples republic of china. So 44 years. Would you say we are at an impasse or do you see some bright spots where they can improve . Manny i think the gap that happened between president xi jinping and biden in november and 2022 in bali, there was a big gap where there were no communications. And that is never any good to. We always have to have dialogue, no matter how difficult it is engagement is the key. There is a lot of Common Ground but those are sensitive issues and the only way to get through that are constant meetings. I was so pleased in june to see secretary blinken, followed by secretary yellen and his secretary were mondo and then john kerry. And then we just have had great meetings with Senate Majority leader chuck schumer. With a bipartisan u. S. Senatorial delegation, i think that is really positive. Did it bear fruit from your perspective . Manny absolutely the fruit is engagement, discussions. I think it was a respectful ambassador burns had it on the head. It was frank discussions, candid discussions. There are issues on both sides of the pond and we have to address those issues but there are those common areas of Climate Change, poverty alleviation, many issues we can work on together. Stephen how much of these various moves whether by the u. S. Government with export controls but also china has made a number of moves on National Security. Xi jinping has put an emphasis on National Security whether it is a crackdown on data for consultancies that do business here, what do you see the erosion of confidence going because of these moves by both nations . Manny i think it has been impacted for sure but part of it is we need to get more granular on items that we call sensitive in nature. If there is a National Security concern lets get into what the granular level is on both sides so there is no misunderstanding. When you dont have Constant Contact and i housing this Constant Contact now happen which is i think tremendous, since june. All of the leaders coming from the u. S. To dig into what are the issues and how to resolve them, i think you have to do that and it has to have a High Frequency and i see that happening. Stephen we have heard from china that they dismiss janet yellen and other cabinet members of the biden who have pivoted the rhetoric into derisking. They are not decoupling. China says derisking is decoupling, would you agree . Manny no i dont i think the two economies cannot decouple it is impossible. I think there are areas where you need to bifurcate, there are areas where this is ok that this is not ok and that is where these lines are drawn and it needs clarity. I do not think that is derisking i think there is bifurcation in certain areas like where you mentioned chips. All chips are not National Security chips so i think we need to get into i just looked at samsung and sk, hyneks just got an indefinite waiver from the u. S. To sell. Micron is in the wings. Micron i heard is coming to the cii, cie conference in november in china they have a 600 million investment. Stephen they have a review here as well so there are companies that are under pressure. How would you assess right now the level of confidence that americans are doing when they come to you and say we need to be advised on how to best enter the market. I am sure it is different from sector to sector. Manny i was just going to say that. The way to look at it, in certain sectors if you are in the consumer space like the cost goes on the starbucks on the walmarts and so forth who are doing business. I think they are ok and it is growing. I think if you get into other areas they feel pressure and again that is why these delegations are having our leadership sit down and say this is what u. S. Companies amersham is doing a great job of bringing issues forward to the Chinese Government from the American Business community. Stephen what is your assessment of the chinese economy right now . It has been sputtering, Third Quarter gdp numbers are out tomorrow likely 4. 5 . Not great but it is growth. You are on the ground here, what are you feeling . Manny what i have seen in the second and third tier cities, the economy and especially Consumer Spending is up. I see a lot of confidence in people shopping, i think the more firsttier cities might be a little slower. I do think that the recovery from covid and the pandemic has been slower than people thought. Not just in china and the u. S. But globally. Stephen i want to ask you about that road because that is why im here in beijing theyre going to have it the next couple days. It is a bit scale back from the last time they met prepandemic. There have been allegations that this is a bit of a debt trap for developing nations who are battling high borrowing costs and their debt loads themselves and potential defaults. Would you agree to a certain degree that the belt and road is a debt trap or has been good for developing nations . Which you have been a part of doing business with for decades . Manny i think the belt and road is a great initiative. My Company Philosophy is world peace world trade. The more people trade with each other the more we cooperate in the more cooperation we have is a good thing. In a 10 year span, 130 countries signed up for belt and road and maybe 30 ngo organizations as well. It takes time. Some countries will see more benefits more quickly, others more slowly. There is not onesizefitsall in belt and road but i think the philosophy behind belt and road is excellent and i think it is the right thing forward. With that i think because of covid and the change in the global economy, there has been low what lower numbers. I think it is 2. 9 they are looking at global growth. We have to do it secretary yellen brought up in that is to focus on debt and look at debt relief because these countries, some countries because of the economic trajectory thereon, they cant pay that. So you have to look at do i pay my debt or do i feed my people or do i work on Climate Change . I think we have to address the issue especially for emerging economies and say lets have a really global discussion on debt relief and how to restructure debt for those who cant pay it because they have to put the priority to the people, to food, shelter, Climate Change and other priorities and you cannot do both if you have a debt burden on your head. Stephen we will see over the next couple days with the green initiatives are going to be a larger part of the belt and Road Initiative. Manny i think it will be. Stephen founder and ceo of mcm group thank you for your time. Manny thank you. Shery Stephen Engle they are live from beijing where he will bring its coverage of the third eldin road form this week. Lets stay with china where the slowing economy is starting to weigh on president xi jinpings river delta project. President xi has been trying to turn the area into an economic powerhouse hoping to create a Silicon Valley of the east. Our Shanghai Bureau chief charlie joins us now. We know that this region has been a rich part of the country already. How significant is this drive to make it even more of a powerhouse . Charlie the program is something that the Chinese Government has been talking about for years. It is just not gain the significance until late 2018 on president xi jinping announced it has become a National Project elevating its status to something on par with the belt and Road Initiative you just mentioned. It is a crucial Economic Strategy aimed at overhauling chinas growth model, shifting away from previous growth. That is a path that is heavily reliant on relentless expansion of laborintensive industries. The programs basically is comprised of four parts in the first one is about boosting chinas tech capability, reducing its reliance on Foreign Technology and boosting indigenous technology. Second is about boosting Cooperation Among governments of provinces around the region which includes shanghai, and others. Which together account for the total of chinas gdp. It is a very important part of chinas economy and the third one is about infrastructure. So the program is urging to invest like trillions of you on yuan to boost connectivity of roads and bridges and highways. Highspeed rails as well as infrastructure from pipelines to power grids to create and further drive expansion of what is already the worlds one of the Worlds Largest city clusters. And the program also emphasizes Green Development, between Economic Development and economic growth. Shery it does seem like very ambitious points and at the same time i cant help but wonder about the broader chinese economic slowdown. Not to mention geopolitical tensions in china, steve was just talking about the belt and Road Initiative and how it has been criticized as a debt trap among some nations. Where does this river Delta Initiative go from here . Charlie it is facing a lot of challenges including geopolitical tensions. Tech investment, china is definitely not in attracting tech investment because of the u. S. Sanctions. In the integration amongst regional economies is a problem because the economic slowdown is made local governments competing harder for project investment, rather than boosting coordination amongst each other. The structure investment requires a lot of investment but the fiscal coffer has been dented by three years of covid lockdown. And also decline in land sales and revenue is drying up. Probably the biggest progress is Green Development. China has started construction, the first phase of the pilot zone of the Integration Project which is a watertown parlor. A village basically. Designed to showcase the Green Development model, showing harmony, coexistence and Economic Development. With economic ecological protection. It is something that china has been working for but whatever, it is a multidecade longterm strategy. That will have profound impacts on chinese future economy if successful. Haidi coming up next we will take a look at some major u. S. Bank earnings and why the industry space is bracing for tough times ahead, despite windfall profit right now. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Shery the parade of u. S. Bank earnings continues this week and it appears the industry is bracing for tough times ahead despite posting windfall profits. Su keenan joins us now with the latest, friday jp morgan, wells fargo, combined they saw their best Third Quarter ever. What is the problem . Su according to jamie dimon its a lot of things they have everything from higher Capital Requirements to loan losses to the fallout from war. Jp morgan, citi and wells fargo saw combined profit rise to 2. 5 billion but despite those windfall profits they rode off nearly 4 billion in bad loans and that is roughly double the amount of chargeoffs they recorded a year ago. That is an issue and you had jp morgan, Ceo Jamie Dimon out sounding the alarm saying this is the most dangerous time for the world in decades and that caution is needed given the war which is adding new volatility both to the market and the economys soaring debt. And the fed. Quote while we hope for the best we are preparing the firm for a broad range of outcomes. That said lets talk about the prophet, jp morgan it posted another quarter of Net Interest Income similar to wells fargo. And both boosted their fullyear forecast for such revenue. You are looking at trading which faltered across the board in terms of comparisons to last year but citi was a standout. Citigroups currency traders had their best Third Quarter in eight years and that drove third line at past expectations. This was pivotal for them because they are now involved in the most aggressive restructuring in two decades. There was a lot of green on the screen for jp morgan and wells fargo. All Bank Executives spent friday fuming about new Capital Requirements imposed by regulators. This is the first Earnings Period imposed since these new rules that require the eight biggest banks to set aside 19 more in reserves. Haidi what are you watching out for this week . Su the fact that these banks on friday had very good trading revenue and banking fees. It doesnt bode well for the investment banks. Goldman and Morgan Stanley which are reporting, also bank of america. But goldman and bank of america on the 17th Morgan Stanley on the 18th. What is important is that goldman is expected to ramp up its unwinding of different units related to that illfated expansion in retail banking, dealmaking. Still expected to be less than it was in the heyday of a couple years ago. Morgan stanley is tilted toward wealth and Asset Management under its ceo, Bloomberg Intelligence expects this to support thirdquarter strength and bank of america its trading revenue analysts say it could be consensus but it is the bank with the stock most under pressure down roughly 20 year to date. You are looking at the weaker dealmaking there. Analysts say the impact of higher Interest Rates will also show up in bank of americas results and it is expected to write off significant bad loans as we saw with some of the other banks. It is as one analyst says a theme or a story of managing relative declines versus big strength in prior years. Haidi su keenan there watching banks in the u. S. Also banks in india and focus setting the stage for what will be a big week of earnings in asia. Joining us is breaking news editor felix. Lets start off the earnings focused when it comes to indian markets. Felix india is the focus next week but earlier this year we saw the central bank requiring lenders to set aside more capital in order to drain liquidities in the system and maintain their price. But overall preliminary data shows credit growth in India Remains strong. Just bank is going to report earnings today. We may see Second Quarter profit jump by a third, not to mention finance and Indusind Bank we are expecting to see more than a 20 jump in profits as well. Shery we have already seen samsungs profits sliding but that plunge is really slowing this quarter. It looks like its Chip Division is doing better we might get more indications coming from another big semi giant this week from asia . Felix yes so they are going to report final numbers later this week. So we are expecting this quarter they may see 11 decline for sales but overall right now investors are now questioning whether the downturn in the industry has come to an end because the ai market is offsetting weaknesses in other sectors. Especially and nvidia accelerator chips in that ship applies to the bank model using chatgpt. So we may see some rebound to be materialized next year. Shery breaking news editor felix there with the latest on what to expect from earnings season. You can get more on those results go to tliv to get commentary and analysis from our expert editors. This is bloomberg. Shery take a look at some of the top corporate stories, microsoft has completed its 69 billion dollars purchase of Activision Blizzard after a nearly two fight with Global Regulators threatening to scuttle the deal. This is the largest ever acquisition in the videogame industry. Microsoft one over u. K. Regulators after making regular cash alterations to its agreement. Microsoft with this fundamental concession, restructuring of the deal which puts all of the cloud stream rights in relation to activations games, content, all the games available now but also any content created over the next 15 years. And of those rates are put in the hands of ubisoft, an independent capacitor and that breaks the stranglehold we were concerned microsoft would have over this important cloud gaming sector. Shery disney plaster a record 35 Million Viewers on the streaming platform during saturdays cricket world cup match between india and archrival pakistan. Disney said that the highest peak number achieved across all forms of cricket beat pakistan by seven in the match. Disney has been weighing options for its india businesses after losing streaming rights to the India Premier League cricket tournament. Haidi that is it for daybreak asia markets coverage continues as we look ahead to the start of trading in hong kong, shanghai and qin gang. Stay with us, Bloomberg Markets in china open is next, this is bloomberg. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into its an amazing thing when you stream on the xfinity 10g network. When you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. The idea that we have saved five Million Peoples lives, its overwhelming. Its everything. 9 00 a. M. In hong kong in beijing and im rishaad with ivanka. Yvonne