Shery you are watching daybreak asia live from new york, wellington and hong kong. Annabelle australia has just come online. Haidi asian stocks are set to follow wall streets gains in an effort to contain the israel hamas conflict. Israels defense minister warns of a long war as Antony Blinken returns for further talks. World leaders arrive in beijing for the belt and road forum. Facing an uncertain future as the economy slumps. Annabelle we had the open of a sx starting the day. The focus is on currency because we are keeping an eye on the aussie and kiwi dollars. Near lows against the greenback even though we saw a softer dollar in the prior session. Weve got rba Meeting Minutes due out later and that well plus understand why the new governor elected to keep rates on hold in our first meeting as chair. We had new zealand inflation data for the Third Quarter that came in softer than expectations, so it boosts the case that they will keep rates on hold at the end of november. And cut in the first half of next year. In terms of what else we are seeing there is an outlook for stocks and the asx 200 has turned green as it comes online, tracking the wall street session and the focus really what is happening in the middle east and perhaps some signals coming through that the situation could have stabilized. We are seeing green and tracking the china session today given that we have had another move overnight to try to prop up sentiments. This one relates to shortselling, we can get through the details but it is about margin requirements. Other investors, so many efforts to prop up china and we will see if this is a meaningful rebound. Shery broadly speaking, interesting that weve seen a rush to save hayes and havens. Every sector in the s p 500 was in the green, muted trading in the Asian Session right now but this as we saw treasury yields around the board. We saw the 10 year yield around 4. 7 levels. Diplomatic efforts continue to contain the israel hamas war and we have now seen oil remaining on the edge despite the fact that we may see President Biden headed to israel. We have secretary blinken already there and we are rebounding from losses in the new york session to about 86 a barrel level for oil as we are trying to gauge of course a potential venice supply into the market soon and of course a Ground Invasion by israel into gaza is possible anytime. Haidi yeah. And we are watching this very closely. Antony blinken is back in israel with further talks as diplomatic efforts prevent the war from spreading. Israels defense minister is bracing for conflict. This will be a long oil war, the price will be high but we are going to win. Four israel, the jewish people, and the values that both countries believe in. Haidi meanwhile israel continues to urge civilians to move to the south of gaza. Lets get more from reporter anna edgerton. In terms of the diplomatic overtures, what is Antony Blinken trying to accomplish . Just to try to stop this from becoming more of a regionalized widened conflict . Thats part of it and the two main things he is trying to accomplish right now, the first is to address u. S. Citizens being held by hamas in the gaza strip, roughly 20 citizens. Then trying to help the hundreds of americans who are trying to flee to the south to get through the Border Crossing into egypt. Theyve been working with egyptian and israeli authorities to open up safe passage for american citizens and foreign nationals and working very hard to get the agreement between the two countries. The other part is trying to keep the conflict from spreading. Part of the reason the u. S. Has made a show of force for israel is to deter other actors like hezbollah and iran from getting involved in the conflict and turning it into a wider regional issue. Shery what is the calculation by washington if israel goes on a ground offensive into gaza . Where did they see the conflict going from here . We have seen biden warrant netanyahu directly against a Ground Invasion and a more protracted occupation recognizing israel has to do what it needs to do to defend itself but addressing humanitarian concerns. And a lot of civilians in areas being targeted as military strongholds used by hamas and trying to gauge geopolitical fallout. Leucine Vladimir Putin in russia reach out to other arab nations before he reached out to netanyahu in israel in weve seen china get involved and tried to shore up partnerships with other allies in the region, so its not just israel and hamas, israel and other neighbors. It is also how this blocks around the conflict. Haidi the implications are widening. As it stands where do we see israels campaign against hamas . The main thing were waiting for is the Ground Invasion and they prepared for that with a series of airstrikes and other efforts against militants. And this heavily populated area. We see israel opening up on additional humanitarian cory dewar to move to the south. But the u. S. Is going to be in for a lot of fighting and some brutal days ahead. Shery bloombergs anna with the latest on the war. Lets discuss the broader implications for financial markets. Joining us is the founder and investment manager at alfano. Great to have you with us. How should markets take a prolonged war as the Israeli Defense minister hinted at . Yeah, i think a prolonged war like this, what is happening in the middle east continues for a long time. It can have significant implications. We could see an increase in the oil price and other Energy Products and that is inflationary and can lead to stagflation in the u. S. And other markets of the world. We have an impact on Global Growth and Global Economic development which can slow down the conflict and reduced trade across the world. Besides the loss to mankind in human lives, the war is not a good situation to be in. Shery do you position defensively and what does that look like in your portfolio . Yeah, in the u. S. Market specifically we are focused on strong Economic Growth coming through and sticky inflation in the narrative by the fed that is talking about higher for longer Interest Rates. In that context it is important to look at valuations of companies and stocks and invest in companies that are able to achieve superior Earnings Growth while having valuation support. At the same time. Given how expensive the market looks and how bonds are trading. Haidi do you see this as upside or Downside Risk . I think given how strong Economic Data has been over the last few months in the labor tightness we have seen, Consumer Spending has been good. It seems that companies are likely to report decent earnings. Weve had good earnings, the few Large Companies that reported on friday and today and monday, we see very good earnings from companies and talking about strong Consumer Spending and managing the Balance Sheet in the interestrate environment. When you look at consensus expectations there about, 1 up in earnings for this quarter which is a benign expectation and likely that the companies will lean on those given the positive environment. The rest we have to see. Haidi uh, what are you looking at in terms of what we could get from china if the stimulus measures percolate through and take some affect . Do you see that as being a source of considerable risk when it comes to asia and emerging markets . I think the recovery in china is long overdue and it feels that they might be bottoming out. Recent data has been slightly positive and of course if we see liquidity booming in china in support from monetary authorities it is likely to have a positive impact and could be recovery in china which on the wider asian Global Markets i think it will have a positive effect. From a gdp standpoint as well as it can also mean that Strong Demand from china would peak Inflation Higher especially in commodities and other globally traded products. So we have to see how it plays out between sectors and what it means for the u. S. Market but it does look to us that china is going to be part of that. Shery some banks have reported. What are you watching out for when it comes to hints of the health of the American Consumer . Yeah, i think one is Consumer Spending as well as the loan losses that would give an indication of the edge levels and how the consumer is beating inflation pressures. We are looking at how high Interest Rates are playing on Consumer Spending, the Balance Sheet and for corporates. Which one is able to break through the environment, stronger cash flow and earnings and are able to manage their net positions given the expense. It will be interesting to see the housing market, how that plays out. And these segments are indicators of how u. S. Consumers are doing. And given the inflation that has been in play lately. Haidi really great to have you with us, partner and investment manager at alpha future. Still ahead, an assessment of the u. S. Bank earnings and why they see rising credit risks. China hosts the third forum live in beijing when it comes to expectations amid a slowing economy. This is bloomberg. Haidi president xi jinping is set to open the third forum. The Flagship Initiatives future uncertain as the economy slows. Stephen engle is on the ground in beijing and a lot has changed in the last few months but certainly from the original vision and establishment of the initiative. This year the 10th anniversary of the belt and Road Initiative is a coroners an of the president. Five years ago was the last time they held the forum in beijing. There is lots of optimism but the world has changed tremendously and the chinese economy has changed dramatically. Debt loads have increased, the slowing economy has a weight on this initiative. We are likely to see a scaledback forum here. Its only going to be tomorrow. Today will be the ceo conference where there will be a number of member nations and ceos including World Leaders trying to look at renegotiation of debts or projects. There will be hands out. The president is here looking for one billion u. S. Dollars from the chinese to reinvigorate some stalled financing all of Infrastructure Projects in his country. The delegation is in my hotel and they have a large presence. African nations and developing nations will be here so it will be interesting to see whether xi jinping in a scaledback initiative can reinvigorate this program. The other big story on the sidelines is Vladimir Putins participation. We can talk about that in a little bit but the initiative right now as it stands with zambia in default, ethiopia in a debt crisis, other african nations facing higher debt loads. Will there be restructuring of developmental loans . Will china be open to reinvigorate this cornerstone project . Shery there are other big names that are potentially going. Hungarys Prime Minister but as you said really the focus is on Vladimir Putin. What are we expecting . Stephen well, we do know from state media from russia that he is likely to meet xi jinping tomorrow, the 18th. It will be interesting to see whether they double down on the last time Vladimir Putin was here before the olympics, was it last year . I am running out of my calendar timeframe but i think it was february before the winterland dixie was here. They signed a no limits partnership. Will they be doubling down at a time when external shocks are front and center on the newspapers whether it is the war in ukraine or the urgent crisis in the middle east which only exacerbates the debt loads around the world, refinancing costs for developing nations. And a lot of external shocks, a slowing economy, a dragged out were in ukraine, but Vladimir Putin not only will be meeting with his old buddy but with the heads of mongolia, vietnam and thailand on this trip. Shery Stephen Engle joining us live from beijing. Lets stay in china because separate analysis show apples latest iphone 15 is trailing in sales in the country compared to its predecessor. For more Bloomberg Technology reporter mike joins us now mark joins us now. Stephen was telling us how things have changed in china where we continue to see the slowdown. What else is driving the sluggishness in sales . The new phone, it has been well received early on in china, one of the only places in the world where it can be sold after the ban on u. S. And elsewhere. An increase in nationalism in response to some of these bands and Government Agencies in china and other entities are putting their foot down and saying if you are going to use an americanmade phone we dont want it at the office and that may have pushed people back from buying the new devices. We have to take a look at the numbers to know the full context and story of what is occurring. There is a chance these numbers are not as bad as the analysts are leading us to believe. Maybe they are worse but the signs weve seen show good stuff in china for apple regarding the iphone 15s. Long lines at stores as well as shipment delays from their website. Telltale signs so we will have to wait and see to get the picture of what is happening. Haidi how big a drag would this be if we see weakening on the demand side . We know the Global Demand picture for smartphones is not necessarily great either. Its a huge problem, chinas one of their biggest markets, their second or Third Largest after the u. S. So you want to have good performance in china if it is a big portion of your business. Apple is one of the only American Technology companies at full speed in the region so any slowdown is not a good thing for the company. I believe these numbers are not as bad as the reality and we need to wait to see how the first week and a half of sales did in china to get an idea. We want to see a full review to get a good idea of what is going on but the risk is there. We wrote about it before the iphone release. There was a possibility numbers would be down on an annual basis because of what is going on in china but youre seeing increases in improvements in the u. S. So i want to see the numbers to know what an impact this has had. Haidi Bloomberg Technology reporter mark. Im sure youll be first to know about the details but you get around of the st to know in todays edition of daybreak. Its right there on the terminal at dayb and in the bloomberg anywhere app. Customize settings so you get the news on industries and assets that manage matter to you. This is bloomberg. With spy . Haidi taking on the top corporate stories this hour. Calling on united autoworkers to end a strike morning that the stoppage will hurt local communities in the u. S. Economy. The executive chair says both parties need to come together to end acrimonious talks. Uaw president sean has responding by calling on the ceo to get a deal done. The clock is ticking for Country Garden to avert its first ever bond default. The developer missed the deadline for the 15. 4 million coupon last month. The bond carries a 30 day grace. That ends october 17 through the 18th before a default can be called. Country garden warned it would not be able to read its payment obligations. Lost a spot as the richest person. The founders wealth shrank since wednesday when the Company Reported softer sales growth was a trend. Now over 155 billion just below amazons jeff bezos. Shery take a look at currencies. We are watching the kiwi dollar because we are seeing significant weakness after we got Inflation Numbers earlier today showing the prices have slowed more than expected to a twoyear low so traders are repricing higher rates. With strength on the kiwi dollar in the previous section given that christopher said he would be forming a new government of the centerright we have Election Results from the weekend. Were watching the japanese yen still in the 149 levels. Watching the psychologically important 150 level last reached in the beginning of this month and on the others of trade not a lot of movement for the aussie awaiting rba minutes from the october policy meeting and the offshore you want doing at the 7. 30 level. Still ahead higher Capital Requirement when people come, they say theyve tried lots of diets, nothings worked or theyve lost the same 10, 20, 50 pounds over and over again. They need a real solution. Ive always fought with 510 pounds all the time. Eating all these Different Things and nothings ever working. Ive done the diets, all the diets. Before golo, i was barely eating but the weight wasnt going anywhere. The secret to losing weight and keeping it off is managing insulin and glucose. Golo takes a systematic approach to eating that focuses on optimizing insulin levels. We tackle the cause of weight gain, not just the symptom. When you have good metabolic health, weight loss is easy. I always thought it would be so difficult to lose weight, but with golo, it wasnt. The weight just fell off. I have people come up to me all the time and ask me, does it really work . And all i have to say is, here i am. It works. My advice for everyone is to go with golo. It will release your fat and it will release you. Annabelle youre watching daybreak asia. A check on the market. Ozzie stocks coming down to the open in tokyo in the next hour but the direction for equities is clear today. U. S. Futures are fairly flat but they ended the day higher and that is where we are going to be taking direction from so a lot of futures point to the upside. Australia is half an hour into the session. A few factors are driving this but if you want to talk about a couple firstly we saw perhaps not any deescalation in tensions in the middle east. But certainly it was a stoppage of further escalation so investors are taking cheer in that. What else is in focus is lines from fed officials. We heard from the fed president earlier, he is considered neutral on the fomc committee but he said the fed should stop thinking about the need to raise rates for now given that Small Businesses in the u. S. Are struggling to absorb the tightening today. Sets us up for a positive session as we go into the opens but Something Else we will be watching is how china comes online as well. This story dropped after the market close yesterday but weve heard china announced it is tightening its rules around shortselling so just to go through some of those details more it will require a harder margin and restrictive lending of shares by Strategic Investors and senior management, so in tandem this is about trying to boost Market Sentiment and confidence. We seen the csi 300 losing 6 this year despite support measures coming through so this will be closely tracked whether it can try to shore up sentiment. This in focus in this part of the world but sherry is watching the results out of the u. S. Reporting season. Shery just Getting Started with u. S. Earnings and we will get more results this week including bank of america and Goldman Sachs on tuesday and Morgan Stanley on wednesday. Jp morgan, wells fargo and city issued warnings on everything from higher Capital Requirements and rising loan losses to the fallout from war. Ken is director of research. Great to have you with us. I mean the results seem pretty solid when it came to the headline numbers from some of these banks reporting. It was really that concern about the outlook, about the future of business. What stood out to you . Great to be here. And uncertainties as noted and for the banks, they went through the Third Quarter and actually delivered solid results in terms of a diagnostic. The u. S. Economy looks good off of the u. S. Consumer and outside the u. S. Still is very stable and spending and not really seeing a steep increase in terms of loan loss from consumer. Even corporate and middlemarket loan liens are quite good. That along with a high rate environment, an optimistic view, things look pretty good. Taking that to next year where there is the view that the u. S. Economy might have a soft landing in the fed moved to a rate cut regime the second half of next year. For an investor typically the Financial Sector and banks do better nine months before we see the first fed rate cut. Here is the concern. The concern of course is that perhaps we havent seen the full effect of the feds increase of rates and what it does in terms of not only borrowing rates, cost of capital, Investment Banking is at the bottom of the trough. I was looking for a little more life in terms of equity underwriting and m a but its not there. So the last point on a pessimistic view for next year is that the economy may move into the session and along with this is the narrative that we are hearing more often that banks are becoming like utilities because u. S. Regulators across the board are looking and that means for banks less that they can return to shareholders. Shery when you have these risks for financials among these large u. S. Banks, who are the better positioned ones . Right, so for the Third Quarter of 2023 in the last three to five years Jpmorgan Chase is ahead of the pack in terms of delivering Strong Performance in each of the major businesses and delivering by far the highest return on equity, 18 in the Third Quarter. When you look at wells fargo or citi they are multiyour turnaround story still becomes bank specific, righting the ship , improving costs and catching up to jp morgan. Bank of america is another Consumer Bank that they have which is as good as jp morgan but they have been penalized because they have a higher level of unrealized losses in terms of treasuries, better held to maturity. That was a big issue with the banking crisis in march. Goldman sachs will bring the issue of as i mentioned before do we see green shoots for Investment Banking . David solomon is in the spotlight with the core franchises, worldclass cleansing themselves with a multibillion writedown and the sale of green sky and consumer strategy. Goldman which we have a hold on, jp morgan is a buy, the others are halts. Goldman will be interesting because the u. S. Financial media loves to play up the David Solomon story. Mm. And very quickly weve got about a minute left. Wondering how you feel about the consumer at the moment . The consumer looks fine. We very closely look at all the banks and all the metrics that would say in terms of whether we are getting any concerns about acceleration of credit deterioration. I would say our conclusion is were just still reverting to the historic average fee for the pandemic so not too concerned. However when you look at the large banks, they tend to lend to the best credit quality households, higher fica scores. When you begin to move down to the Smaller Banks or to the shadow banks, the Consumer Finance companies, it is a whole different answer than what i just gave you for the Largest Global banks. Haidi ken leon, director of research on big banks. We have breaking news when it comes to the chinese property sector. The state linked developer ocean group extending the voting deadline for a bond coupon until october 19. We know that late last week they sought consent for two month race time for the repayment of a bond in 2025. That was the last exchange filing. We know this was the countrys 25th largest builder and of course just one of the many names that have been embroiled in the widening of the property crisis that has been deepening so we are also watching the other big one, Country Garden as they try to avoid their first dollar bond defaults. A coupon due on october 17 through 18th, we will continue to watch that sector closely. Coming up next, speaking with about how the increasing severity of extreme weather will impact new zealands property values. This is bloomberg. J. P. Morgan Wealth Management knows its easy to get lost in investment research. Get help with j. P morgan personal advisors. Hey, david ready to get started . Work with advisors who create a plan with you, and help you find the right investments. So great getting to know you, lets take a look at your new investment plan. Ok, great this should have you moving in the right direction. Thanks jen. Get ongoing advice; and manage your investments in the chase mobile app. Shery china is preparing to hold a forum in beijing this week while the block is increasing funding of Clean Energy Infrastructure and warring money into fossil fuel projects. Its estimated over 3 billion flowed into oil and gas this year even as chinese engagement in low Carbon Energy took up more than half of what was spent in the sector. Bloomberg nef gas sisi joins us now. How much focus will there be on energy at the forum . Yes, energy will be a key focus of the initiative formed together with trade flows and infrastructure and investment. We look at the past decade of the initiative and 10 years of china has significantly increasing its energy usage and almost doubling oil and gas imports. So when it comes to trade flows the belt and road as a conduit for the majority of chinas oil and gas imports. If we look at the past two years of Energy Policy i think this is key for chinas overseas investment, chinas energy security. For example if we look at petrochina, those countries accounted for over 80 of overseas oil and gas reduction. And investment. Haidi saudi arabia has invested in key assets. Do you see a stronger connection Going Forward . Short answer is yes. Saudi aramco have invested in chinas Oil Refineries in the past since 2019 so if we look at crude imports from saudi arabia it has significantly increased, almost doubled since 2019, where they find new customers in the new mega oil refining assets. Sophie looked beyond 2025 or 2030 even though we might have demand displacement from the electric vehicle penetration we see stronger growth in many sectors like aviation and petrochemicals so we are expecting a stronger connection moving forward. Haidi do we see the Energy Transition having an impact . Yes, i think the Energy Transition is what everyone is talking about now. And i think it might be a key area of growing opportunities for china when every country is transitioning to a low carbon future because when we talk about china we are talking about manufacturing the biggest capacity when it comes to low carbon technology. Solar panels or Wind Turbines or even electronics produce Green Hydrogen so china has the largest capacity, one of the lowest costs when it comes to low carbon technology. So i think there will be more investment and more exports in the future. Haidi bloomberg nef will analyst there. Climate change and unique tectonics are producing an unprecedented challenge. A third of houses within one kilometer of the coastline making the country liable to be the first to experience a managed retreat from at risk areas. Lets bring in a climate economist who was part of the working group that gave recommendations to the government, bringing in belinda, managing director. Great to have you with us. Looking behind me across the beautiful coastline and shoreline, new zealand has such incredible Natural Beauty and it is understandable that a lot of people would want to make the investment and build their dwellings exactly in the places we are talking about but the risk is really starting to build. It is and in particular weve had low variability in terms of what we experience from the coast. We do not get large storm surges and we have small title range. What that means is we have hugged our coasts tightly. Weve centered populations at the coasts, very close to sea level, which means we are even more exposed to when there is a shift and storm surges from sea level rise. Haidi we have been talking about trade. Does that go hand in hand with insurance retreat in new zealands case . Absolutely. Insurance retreat is a term from 2017 when i started looking at the impact on property rises from Climate Change and sea level rise. Urance retreat is going to occur decades before the property itself is washed into the sea. Insurance retreat is something weve been having a conversation for years now about and weve identified there is a significant number of houses that are likely to lose insurance in the next 10 or 20 years. We have been atthe forefront of that however in other countries that have started to see insurance retreat from other hazards, we think this is likely to be something that will appear more and more frequently as Climate Changes. Shery how seriously do you think the new government will take these issues . So the new government is likely to be the least interested about mitigation and more about adaptation read they are more likely to respond with investments in infrastructure like seawalls, levees. They are likely to respond to a significant public concern about the issue. One thing bubbling away in the background is whether the state will step in and provide public insurance when private insurers pull out. That is likely to be a significant concern. It is an attractive market in terms of reinsurance for earthquakes because we are not correlated with other parts of the world. If there is extinction of the mandate to provide public insurance when private insurers pull out it is unlikely insurers are going to want to pick up the risk. Shery some of those properties have a time limit on them now. What needs to be done at this point . In response to the major events this year, the cyclone gabriel, the safest step is to move people out of homes where a house has been damaged by a natural event. We need to put cap on that so we are not providing compensation for extraordinarily high houses but we should be moving houses, not rebuilding. What we can see from Climate Change is those houses are going to be hit again during their design life. Haidi what is the impact on the broader economy, when it comes to the property sector . We know during covid and postcovid these higher end houses in new zealand have been attractive for investors domestically and foreign investors. Will we see a big hit . So there definitely has been a spike in property prices in new zealand and as far as concerns from regulators, they are concerned about house prices in new zealand because it is such a large proportion of the lending portfolio. In terms of property prices they are likely to return from a downward trend in new zealand with the new government so we will have an increase. One thing that is concerning is the new government is going to open up planning regulations to allow people to build more property in more locations and that is likely to mean we have green developments in our most hazardous locations. So you have situations where homes are being built and sold intentionally for investors that are inside flood bands that have a time limit on them. Haidi is government regulation keeping i guess in time with the Climate Risks we are seeing . In terms of there has been attempts to reform planning laws called the Research Management act. The government is not keen on those reforms but what is happening is that because there was a mandatory wording brought in based on the task force of climate related Financial Disclosures that was brought in on the first term of the previous government five or six years ago read that has put a lot of pressure on banks to get a better understanding of the risk, so less likely to be that we get through planning regulation and more likely to be that we have restrictions on this risk coming through the banking sector. Shery belinda, managing director, good to have you with us. Thank you. Tune into Bloomberg Radio to hear more from the days big newsmakers. Get indepth analysis from the Team Broadcasting live from our studio in hong kong, listen through the app, radio plus or bloombergradio. Com. This is bloomberg. And youre trying to do that through multiple systems, that makes it very, very cumbersome. Its not just tech, its not just people. Its how they Work Together to provide that experience to the customer. As a finance organization that is what you want to do. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh shery these are some of the stocks we will be watching when trade opens in korea and japan. Keeping our eyes on apple suppliers following a report that iphone 15 sales were off to a weak start in china. Some stocks on our radar including samsung and tp k. We will be watching crypto related Health Shares after a false report after the bitcoin atf was trading at a hundred level. We are seeing not a lot of movement at the moment after we saw the s p 500 and the sector was in the green. You seen tip about efforts to really contain the israel and hamas or so the flight to safety flows, easing a bit in the new york session. We had treasuries falling in the 10 year yields climbing to 4. 7 . Not to mention of course and we are starting the earnings season and the outlook is weakening. We are seeing downgrades really outpacing the earnings revisions upgrades that we have in seeing so far. Haidi right, and were getting headlines that President Biden will in fact be visiting israel in a show of support after the hamas attack. Shery were waiting for confirmation of that visit as we have secretary blinken in israel at the moment. He ended a meeting with Prime Minister netanyahu that lasted seven and a half hours. We are now getting confirmation that President Biden is expected to meet israels Prime Minister, netanyahu, to also discuss u. S. Aid. But of course, additional aid will really depend on what happens in the house and we still do not have a u. S. House speaker. Haidi certainly the political dysfunction and stalemate on capitol hill is not helping the situation. There have been concerns about security implications if the u. S. President visits. We did see both the Prime Minister netanyahu and secretary of state Antony Blinken briefly having to take shelter in a bunker earlier in those talks as we saw signs warning of a rocket attack. Some security concerns are ongoing as well ahead of the president s now confirmed visit. Coming up in the next hour of daybreak, bnp paribas wealth telling us why they are overweight on equities despite equity eating escalating risks. The 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. This is daybreak asia and we are counting down to the major market opens. And overlaying the market jitters we expected a positive session, more of a rebound as we saw the return of more Risk Appetite in the u. S. Session but we are watching the developments and we know Antony Linkedin and the Prime Minister of israel met earlier and we are waiting for the confirmation of bidens visit. We are hearing from sources he will visit israel in a show of support after the hamas attack but the open is upon us for japan, korea, and australia. This follows linkedin meeting with netanyahu for Antony Blinken meeting with netanyahu and essentially they are expected to make an announcement at the embassy this morning so we will track this closely because given that we did not see further escalations in the war between israel and hamas, it is something that is being attributed to why we saw the gains in wall street and playing into the session this morning. 10year yield study but the japanese yen holding back from the 150 level on a slightly weaker dollar so something that could be supporting matt and the nikkei 225 coming online and the other thing supporting the sentiment, headlines from the Philadelphia Fed president saying the fed should stop the Hiking Program now given the impact of timing is affecting u. S. Small businesses and the prospect that we will not see a fair rate hike later this year and other supportive factor. Bloomberg intelligence looking at future trading looking at a less than 10 chance of a hike. That could help relieve the pressure on outflows we see in emerging markets in asia in particular. At the start of the session today the korean won is former against the greenback up 4 10 of 1 . It was under pressure in the price session. Sensitive to what is happening in oil markets. Crude coming online a little more firm but the focus on supplies. The cause stack is a tech heavy sector and looking at the asx 200, i. T. Stocks leading gains. Brent crude starting to trade, moving higher. The focus is on crude supplies. Deescalation or a stoppage of further escalation in the middle east and these are supportive factors for oil. Material stocks are gaining in australia. We have a lot of chinese property stocks and debt a watch today because Country Garden, the clock is ticking for them to afford their first ever public dollar bond the font default and a smaller chinese Property Developer extending the deadline for bonds so still the risk for china property still a focus but in the session today it is still the deescalation of tension in the middle east we are watching. Haidi that is a lot for investors to try to focus on. Our next guest remains overweight on equities but acknowledges the escalation of geopolitical tensions is a key risk. The chief Investment Advisor for bnp paribas, how do you address that risk . For middle east tensions, it is difficult to predict what will happen. For oil prices, it could be very sensitive and the risk premium for oil prices should be rising. We remain overweight on equities. Overall, the positioning is quite bearish. A lot of negative news is already priced in and during the summer, it is usually weaker months but towards the end of the year we do not think we will see a rally so any corrections for now we take as buying opportunities to build up positions for a year and rally. Year end rally. Haidi what opportunities do you see . More green shoots when it comes to china . The Property Market remains a risk and we are continuing to watch the Country Garden deadline. We continue seeing negative news flows on china and for Investor Sentiment it is already very weak and Investor Expectations on china are very low. Top meetings are coming and we expect to hopefully see some news in terms of how the government will support the economy and that might surprise the market on the upside. We have a chance to see rebalance in chinese equities but the key point is how sustainable a rally be because in the past couple of months rallies tend to be a verse and as long as there is no big bang stimulus in china, any rebound could be shortlived so for now we see the Chinese Market as a trading market. Shery grace, it is good to have you with us. We have to interrupt the conversation because we want to go to a press conference by secretary blinken that just finished. Basically he confirmed the reports that President Biden will be heading to israel. We already reported that we heard from people familiar with the matter that he would go to visit designed to signal u. S. Solidarity with the closest middle east ally and prevent the conflict from engulfing the region. Antony blinken said biden will tell other groups not to attack israel. We can go back to our guest to react to what we just heard regarding ongoing geopolitical tensions in the middle east. Grace in the hong kong is actually therefore this conversation. Thanks for sticking around because i want to get to the Risk Appetite that this might bring to the markets already just speculation that we might see more diplomatic efforts to contain the war led to the easing of the flight to quality. Will we see more of a rebound once biden goes there and we get more progress on the tensions . Yeah. Obviously, i mean, if, i mean, like, we see positive progress in terms of solving the problems now for the middle east, obviously that is good news for the market. But as i mentioned earlier in terms of this like geopolitical tension and conflicts, yeah, it is very hard to predict the outcome. In terms of i mean i mean investor positioning, i think i mean, it still actually makes sense to have like hatches. We are still like overweight at equities but we think like gold and Energy Stocks are actually good hatches in terms of just in case there is like any escalations in terms of the geopolitical tensions. Shery is japan a good hedge . If we see geopolitical tensions escalate from here, we might see higher oil prices, which is not great for japan, and we might see safe haven rallies for the yen. Yeah. For japan actually in terms of the relative i mean we are still overweight on japan. I think of him thinking i think um comparatively speaking in terms of fundamental like the economys actual getting like more momentum in terms of consumption spending and also in terms of like the reform we expect to see like the improvement in terms of the return of equities and then we will continue to see that rating in the jacket that japanese equity markets. Shery grace, great to have you with us. Thank you so much for sticking around. Still ahead, World Leaders gather in beijing is china prepares to host a forum. We will discuss what is next for the initiative. And diplomatic efforts get underway to contain the in the israel hamas conflict. We will have the latest. This is bloomberg. At ameriprise financial, our advice is personalized, based on your goals, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice . I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. This will be a long war. The price will be hard. But we will do it for israel and the jewish people and the values the country believes in. Shery Antony Blinken said President Biden will also visit israel and reaffirm his support for them. Lets get more from our asian managing editor. What will President Biden try to accomplish during his visit that his top dt been able to . He is trying to basically find a way to deescalate a rapidly escalating situation. Israel has been poised for a Ground Invasion of gaza for several days. There was reporting it could have taken place last weekend but was delayed because of the weather. We are hearing olaf scholz might follow President Biden to israel as well. So there is just a renewed diplomatic push, a recognition from everyone in the wider world that a conflict or war that expands into a regional war that brings in other players would be devastating not only for the middle east, but for the wider world. Haidi where are we when it comes to expectations for the ground offensive . Are we in waiting mode as they tried to get civilians to safe places . One of the Big Questions is whether there will be safe passage out of gaza into egypt. There is a rapidly developing humanitarian situation there and there have been lots of warnings about the lack of food and necessities for the people of gaza. What happens to them essentially if there is a Ground Invasion . So there have been warnings to evacuate the north, in particular. This takes time and there was a lot of concern over what happens. There is the thought that as long as diplomacy continues, Antony Blinken meeting with netanyahu for hours, President Biden showing up, potentially other leaders on the way, as long as the diplomatic push continues, there will not be the Ground Invasion. That is the theory. So we will have to see how the diplomatic efforts pay off. Haidi president xi jinping is set to open a forum, the future of his Flagship Initiative is looking uncertain. Steve is in beijing. This was established at a time where chinas economic clout looked different. Absolutely. It times are different three years coming out of the pandemic and china pretty much shut off during the world during that time. The last time they held this forum was 2018 and it was going well. In the last decade most estimates put china essentially drawing 1 trillion worth of investment into the projects but that has tapered off and the latest estimate. Chinas overall activity is down 40 from the prepandemic peak in 2018 and one estimate says the average investment deal decreased by 48 in the first half of this year compared to that 2018 peak. Some say the belt and Road Initiative, because it is a signature project of the chinese president and his powerful mandate, maybe it went too far too fast in the beginning and reality is settling in in the geopolitical world that has lots of external shots. The war in ukraine, now that strife in the middle east adding to debt and inflation burdens on developing nations. Zambia, ethiopia, and other developing nations like sri lanka, pakistan, are in debt crises and there have been allegations that china has been driving a hard bargain on Payment Terms rePayment Terms and they have been trying to recoup investment over the past decade and a time where the chinese economy is clearly suffering and having their own debt crisis in property. So what you will likely see over the next two days, today is the ceo conference that will be held in the vacant rooms behind me later this afternoon followed by a oneday event tomorrow with xi jinping giving a keynote speaker. Keynote speech. Vladimir putin will be here. Five years ago it was a three day event. Today it is a day and a half. The question is can xi jinping convince his invited guests that the belt and Road Initiative is still strong and can be reinvented reinvigorated. Shery we are expecting a more mutated event. Muted event. And attendance seems to be reduced. Absolutely. You will have some developing nation leaders and asiapacific leaders, the new type Prime Minister, Prime Minister of tilings, a number of african degradation leaders are here but Vladimir Putin will also be here. Will that overshadow some of the Development Needs and Debt Forgiveness or repayment restructuring needs of some african nations like kenya. The kenyan president is coming here looking for money to help reinvigorate their own stalled Infrastructure Projects. That is just one example of a number of Different Countries looking to renegotiate. But with putin here, he is supposed to meet with xi jinping tomorrow. The last time they met, they struck with the no limits partnership. Will they double down on that when the war in ukraine is dragging on and on and there is also the new crisis in the middle east. Shery Stephen Engle joining us live from beijing. More to come on daybreak asia. This is bloomberg. Sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Haidi demand for liquefied natural gas is likely to prove stronger than expected on the current pipeline of Global Projects will not be enough to keep up. He highlighted to some of the Energy Transition efforts as one of japans stop japans top traders of the fuel. We have completed financial closing of a major offshore wind project in the renewable area. We just started a new project in the e methanol area. That is a green molecule that i think has significant and promising future in the area of Maritime Aviation fuel and it could be a precursor to Building Blocks required for toys and medical equipment. And we also have a new project in biodiesel and these projects will shape the future of our portfolio that is transitioning from Traditional Energy related business to low Carbon Intensity area in the future. You have significant shares in the lng business. Is there anything you are considering to stabilize that or reduce that risk in that area . Lng natural gas we think is a very important transition fuel for the world to move to a lower Carbon Intensity state. Lng, we have some good promising projects in that area. We would like to make sure these projects go forward. There is a lot of work to do in each project and we want to make sure it is competitive. Also we want to have our portfolio well and strategically diversified. This helps the Stable Energy procurement needs of many of our customers and by staying true to these requests from the demand side and making sure we can deliver on the projects, we can show a solid return and use the transition fuel in combination with the other newer fuels, including renewables, we would have a very robust portfolio in the future. Your employees are scattered around the world and you promote diversity and inclusion within your company. How have you been progressing on that front and how have you been promoting more women into instrumental roles . Our female representation of the manager class, the global population i think is doing better than japan and this is a accumulation of a lot of work but in the end, we see diversity and inclusion as a holistic approach of people respecting and understanding each persons professional background. Diversity is a must but inclusion is the most important step. I would like to see us providing a lot of good stages, if you will, for the great employees to show their performance. We are working on it. I like to think our whole team is on board for this. Shery the ceo speaking exclusively with us in tokyo. After we saw gains and risk on sentiment get started with the european session, diplomatic efforts were seen as encouraging in order to contain the israelhamas war so retail, mining, and travel sectors led the advance but we are watching polish stop because we see replications from sundays elections as well. Still ahead, beijing gears up to hold their third belt and road forum. We will take a deep shery breaking news out of singapore. The trade figures. A year on year contraction of 13. 2 for september, a smaller contraction than economists expected. It is easing from the previous month and the size has been revised downward. Growth of 11. 1 , a jump from where economists expected coming from a contraction of the previous month. Electronic exports year on year, contracting 11. 6 . Not great but after seeing contraction of more than 20 every month this year, the numbers seem to be improving a little and the pharmaceutical exports very volatile, falling more than 30 . Third quarter gdp numbers coming in better than expected this month so we are seeing perhaps more positive numbers coming out of singapore despite the fact that it is a contraction year on year but smaller than expected. Haidi i am also watching the minutes from this months rba meeting. It seems like things hinged on a couple things but ultimately the central bank considered raising rates but decided to stay pat was the stronger choice and that suggest they are joining with cautious policy stance being adopted under the new government Michelle Bullock fair [indiscernible] code to see more of an economic slowdown they also mentioned the moves in the aussie dollar in recent months ive eased monetary conditions and today we are looking at the prospect of the low being set by the aussie alongside the kiwi as well at home prices might mean policy is less restricted and they talked about more broadly more further tightening might be required but in this months meeting they decided pausing was the best thing to do so they will have before the november meeting other data to work with saying the low tolerance but delay forecasting cpi returning to target and that really any further tightening really depends on the date of the in practice and the risks these concerns are up 4. 1 they obviously do not want to create further drag on the economy bell. Annabelle a bit of a cautious stance coming through but the moves not seeing much reaction. Aussie dollar weaker. Kiwi likewise. Near fresh year to date lows of both currencies. New zealand inflation data a big factor this morning because it came in softer than expected at 5. 6 in the estimate was 5. 9 in the Third Quarter so it tells us perhaps the rbnz also likely to pause when it meets in november. Probably in the session today the focus is the move higher we are seeing for stocks and gains of 7 10 of 1 for the broader index this morning, every set their in the green every sector is in the green. The Philadelphia Fed president suggesting there is more need for further rate hikes. He softer dollar coming through. The wall street day ended higher. A deescalation of tensions or absence of further escalation in tensions in the middle east and President Biden will travel there but what is it worth noting if you change on is perhaps low conviction in terms of traders here because the trading volumes are 22 lower than where they would typically be on a 20 Day Moving Average so perhaps a lot of investors as well choosing still to sit on the sidelines given the amount of uncertainty we still face here. Haidi could you blame them with the latest in the market and geopolitics and china . Vladimir putin will attend the forum in beijing. He will meet xi jinping wednesday. Rebecca wilkins joins us now. There is a lot at play, a lot going on. It all comes when the economic slowdown in china perhaps leaves the position in a position of less strength with the belt and Road Initiative. Absolutely and what we have seen with the russiachina relationship is a dynamic shift. Russia has become more economically dependent on beijing and relies on them for buying cheap discounted commodities and the shortfall short fall of goods as foreign businesses fully flee. But there is an element of disquiet in china of what china gets out of the relationship with putin and that is on show at the bell and row form today and even when we look at the lackluster response from some parts of the world, certain european nations and the unwillingness to get on the stage with Vladimir Putin at a forum like this, it shows some diplomatic costs to china in maintaining these very close ties with Vladimir Putin. Shery what can we feasibly see during the meeting at the belt and road forum given what you are saying about that tricky balancing act for president xi jinping . We can expect to see a push to reform the rbi. We have seen the shift in the pullback in spending and the shift from the president that small is beautiful, shifting to a different type of model of investment and there has been more skepticism, not least because some of the debt deals that have occurred over developing nations of the last few years and there is a recalibration over what the belt and road is. And the israelhamas conflict hangs over the forum. We have heard calls from palestine and israel and negatively blinken Antony Blinken for the president to use some leverage to step up their involvement in the conflict so there is not just the scrutiny of bri but a broader scrutiny of the role china and xi jinping want to play on the world stage and the expectations of other major players. Shery joining us now is a senior fellow at the school of international studies. Raphael, great to have you with us. How much is that state state fort xi jinping given the challenging macroeconomic and geopolitical backdrop . From a chinese perspective, this is very much a celebration of the 10 Year Anniversary of the belt and Road Initiative, which is his big Foreign Policy idea he has added to the roster of ideas the Chinese Government and Chinese Communist party advances. So in the next day we will essentially see a celebration of this and a lot of the issues your colleague just highlighted, the ones in the background on those are visible to those digging closely but i think the optics of this will be positive and that is the intention of china, they want to show days that they are a big important power on the world stage and that big important leaders come to china and that will be the theme of the session. Shery how much is there to celebrate in an environment where there is growing criticism of china as forming the us debt trap for developing nations at a time where covid seems to have changed the narrative on what investments on infrastructure mean for these countries, not to mention italy already told china they are pulling out from the ra . We have to think about how the concept of the idea is taken a different parts of the world. In the west they are saying this is part of an attempt by china to ensnare parts of the world, claim requests from developing countries and trap them using debt. But a different narrative in those developing countries. They appreciate the investment and want more of it. From their perspective, the slow down we have seen of the belt and road is negative. These countries need investment, infrastructure, someone to lend them money or offer them money to borrow to build things they want to build because they cannot do with themselves. If they went to western creditors, some are accessible but sometimes the demands or requirements are too high or the timeline or feasibility or something where the chinese offer a different no Strings Attached approach in some ways. So this means developing on the narratives you mentioned like debt trap diplomacy resonate the same way. Some countries are still happy to accept chinese investment. Earlier this year there was a meeting between president xi jinping and leaders of the Central Asian countries and the belt and road was repeatedly mentioned in positive terms so i think it depends on where you are looking at this to determine how the ideas landing. Shery the problem is some of these countries, despite getting help from china, are not avoiding default. Zambia defaulted and the largest creditor nation there is china which makes beijing lung bad look bad. Sri lanka, pakistan also falling into debt crises. So when china is struggling with their own economic issues, how much more can they reasonably do . That is the biggest problem. China has noticed through the belt and road it suddenly has carried a lot of debt with a lot of countries that it will be a struggle to pay it off in anyway so we are seeing restructuring of debt. In some cases they have written it off although that is not as widespread. That has happened in a number of african countries. This recognition from that chinese perspective, chinese bankers rethinking a lot of what we saw around the belt and road. In the early years the numbers that were being thrown around on projects done were unrealistic. Lending vast amounts of money to countries that have never struggled to ever pay back the western creditors, why would they pay back china . What we saw around 2018, the banks really pulling back and focusing on realistic projects that are feasible where we have a prospect of getting the money back. This was never intended to be a giveaway, it was intended to be commercial enterprise so what we have seen recently is the chinese attempt to grab at that narrative and that is the small is beautiful that your correspondent mention, focusing on specific projects. Shery as a commercial initiative, do you see a problem with the fact that we saw policy banks be more involved than now and we see a proliferation of private Chinese Companies becoming more active in the bri . Policymakers in beijing shifting from debt from one side to the other of the economy. I wonder if this will be a longterm issue if you have more of these private Enterprises Getting into these projects that might not be profitable. The privateChinese Private cg out talking about belt and road, they were sticking a label on it that would be seen positively. Alibaba in 2019 signing a huge deal with the russian entities to localize aliexpress in russia and a massive online retailer that would cover Southeast Asia and the places where alibaba reaches and what we saw happen in the wake of the invasion of ukraine is the alibaba stopped pouring money into it and pulled back investments and said it is too risky. So if we look at that 2018 when the project was being advanced they were talking about it through the narrative of the Shanghai Organization but when it came to the crunch they made a commercial decision that it was too risky to give Big Investments to russia so i think Chinese Private companies are motivated in a different way than the policy banks that drove and road investment. Shery raphael, good to have you with us with the preview of the belt and road form an issue and the broader significance of that project for president xi jinping in chin to avoid their first ever public dollar bond involved default. We will get an update next. This is bloomberg. Its easy to get lost in investment research. Introducing j. P. Morgan personal advisors. Hey david. Connect with an advisor to create your personalized plan. Lets find the right investments for your goals okay, great. J. P. Morgan Wealth Management. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Shery the clock is ticking for Country Garden to avert their first ever public dollar bond default after missing the original deadline for the coupon on the note last month. The developer warns they will not be able to meet all future offshore payment allocations. Loretta, the company said earlier they plan to seek a holistic debt restructuring plan. What does that mean for the potential default we are talking about here . As we said, this is the first ever public bond default for Country Garden if it fails to pay the coupon and i think that still is a milestone event because so far Country Garden has not really publicly defaulted on debt payments and one of the implications of that is it will trigger a series of cross default related to other debt instruments, not just dollar bonds. So that is significant for Country Garden. On the other hand, it warns it is seeking a holistic restructuring, which means it is not expecting to be able to pay any of the debt payments, it is trying to negotiate with advisors and bondholders for eight restructuring. It would halt all payments. This has been seen in the previous developer restructuring scenarios. I think one risk we have experienced with evergrande in the past two years is that this will be another lend fee and potentially messy restructuring process for Country Garden. Shery and it is not just Country Garden. Tell us about if we eventually see an offshore default by Country Garden, what market implications are we looking at . The market has been the selling off the on debt expectation that Country Garden will eventually default and we see so much struggle and had with paying the 50 million coupon that was due last month and if you look at Country Gardens maturity schedule, it has two more coupons that are due on dollar bonds this month alone and it has more next month so even if it is able to pay this upcoming maturity, the question remains if it will pay others. So it is not sustainable. A default scenario is a reminder that the property prices for chinas developers is far from over. Shery loretta chan joining us from hong kong. In the u. S. , we are just Getting Started with earnings season. Big bank results this week with Goldman Sachs and bank of america. At j. P. Morgan and city and wells fargo posted strong results. They warn of pressures ahead for the industry. Su keenan joins us with the latest. Morgan stanley later in the week but lets start with goldman best Goldman Sachs and bank of america. We expect them to mirror the results from the trio of banks that reported friday. While at j. P. Morgan, city and wells fargo had a good day friday and the shares were up and they reported a record Third Quarter profits, they rode 4 billion in bad loans, double the amount of a year ago. Bad loans is something analysts are focused on as we wait for goldman and bank of america which report before the opening bell and Morgan Stanley midweek. For goldman, analysts say they report at the market open one week after announcing an agreement to sell a lending platform. They sold it as a loss, part of the unwinding in the fourway into Consumer Banking. That will dent thirdquarter earnings. It was a 60 million hit. And we will see how the tracing trading business fared. Trading numbers are up compared to one year ago, declines seen across the board except for citibank. And there are predictions that goldman on trading probably did not do as well as competitors. Shares of goldman are down more than 8 year to date but when you look at bank of america, which has shares down 18 year to date, that is viewed as the most troubled bank they will be looking a mother things at how the Net Interest Income did, again this is a major focus for all the banks, especially bank of america. Bloomberg intelligence analysts have said the Investment Management and some of the banking will be a strong aspect for the bank but you are looking at a bloomberg chart of how higher rates are pressuring bank funding. A higher rates for longer is a key theme for all the banks while initially it provided more revenue, there is concern now about the adding cost of Holding Assets and the pace of new assets for morgan, analysts say could slow. And still an aspect of them perhaps meeting their goal in three years, trading likely did decline and analysts say that is due to the comparison of the very smart performance one year ago. Shery su keenan with the latest on u. S. Bank earnings and what to watch out for this week. More to come on daybreak asia. This is bloomberg. On wednesday, President Biden will visit israel. He is coming here at a critical moment for israel and the world. He is coming here to do the following. First, the president will reaffirm United States solid early with israel and our commitment to security. Shery secretary of state Antony Blinken explaining that President Biden will be visiting israel this week. He will travel wednesday in the visit to signal u. S. Solidarity with israel and is expected to meet with Prime Minister netanyahu. Antony blinken already met with him. We are expecting President Biden to stop in jordan, speak with King Abdullah the egyptian president. That is it from daybreak asia. Our markets coverage continues. 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. 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. Coming up to 9 00 a. M. In hong kong and beijing. Yvonne