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tv   Bloomberg Daybreak Australia  Bloomberg  October 19, 2020 6:00pm-7:00pm EDT

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♪ haidi: very good morning. i'm haidi stroud-watts in sydney. we are counting down to asia's
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major market open. shery: i am shery ahn. here is how markets are looking right now. u.s. futures rising at the open. stockster we saw u.s. seeing its worst day in about three weeks. investors were concerned about the prospects for more government spending. we saw some conflicting reports on whether or not that is coming. the s&p 500 lost ground, 1.6%. all 11 sectors were down, led by energy stocks. it also drags down cyclicals and small caps which managed to stay in positive territory. a bearish reversal from the gains briefly seen around the open. we had record cases in europe, fears of a double-dip recession. take a look at oil because it's also under pressure and headed towards the $40 a barrel level. oil fell in the regular session as well with warning of an uncertain outlook for oil demand.
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see how things are shaping up for the asian markets. here is sophie kamaruddin. sophie: this tuesday, you have asia stock futures never really lower and nikkei futures in chicago, we are seeing them gained after the benchmark a raised its loss for 2020 with earnings and potential buybacks seem to be catalysts. continuing to outperform the rest of the region with ty stocks the worst performer in asia this year. this morning opening higher by 2/10 of 1%. of business segment less optimistic as the myth improves. the offshore u.n. is stable at 68, holding a two day gain. mcquarrie sees more upside in the coming three to six months for the currency, with bonds under pressure in china's recovery. on the equities front, chinese stock valuations after the gains in 2020. shery: joining us for more is
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founder and cio kim forrest. great to have you with us. we have downside pressure on stocks but we also had bonds being down, commodities mixed and a little higher. not a true risk off when it comes to the cross assets. how do you read today's market volatility? and how do you take advantage of what's happening right now, especially as we still don't have a stimulus package? kim: sure. how do i put this? i think if you are a pessimist in the short run and an optimist in the long run, it might benefit you as an investor. by that, probably assume a stimulus package does not get passed shortly but one will in the long term, then pick stocks that are kind of good quality companies that are down and out for many reasons, then hold them for a while. that is kind of my stick here. to be short-term pessimistic,
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long-term optimistic. towards thee headed heart of earnings season and it is really funny how you said on your notes that you are really excited about it because you get to pick the winners and losers. kim: yes. shery: that's interesting because earlier this year, because of the pandemic, we didn't know where earnings were headed. what are you seeing now? kim: here's the thing. we had one quarter of completely unknowing and everybody got kind of a pass. when it's earnings season, even when we were getting a pass, there were still winners and losers. i am just picking one of the targets here in the states, a huge winner and it was a surprise because they didn't necessarily have a huge online presence that people were aware of. they were a winner in the quarter. that is what i mean by surprise winners and losers. havenot all the companies
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issued guidance. we are just kind of all fumbling atthe dark, kind of guessing what earnings could be given this weird time we are living in. there are still winners and losers because we are going to see if they have met those expectations that are pretty low , but more importantly than that, we will be listening very carefully to what they are saying to us about what the conditions are right now and looking forward. i think that's where your next crop of winners and losers could come from. it is reading those signals and trying to figure out who has a winning strategy for the crazy times. we are going to be a little less crazy but we don't know when. reading,u talk about how does that marry into your other big theme for 2020 which is the death of the business cycle? how much is that changing assumptions, expectations? again, the crazy year that is
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2020. kim: right. i think the really big, old-fashioned kind of value, whenever you have a recession, you thought you were at the bottom. you could go in, buy materials companies and be a winner, right? i think those kind of formulaic picking of industries is probably a thing of the past. what you really want are some kind of hallmarks for growth and that would be just feeding into some of the trends that we know are out there, like 5g, internet of things and the tech area. , may be more areas sustainable energy sources, that sort of thing, that looks like it will be a longer-term play to try to pick some winners. in terms of -- we started talking about stimulus as we have pretty much over the last
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few weeks. the idea this is a political football, i am concerned that stimulus is baked in by the market at this point. is there a sense we can only go down from here which is setting up a disappointment? there is an assumption that either it gets done for the election or it gets done under a reelected president from or in a in agenerous way biden-harris administration. kim: right. there's different levels of stimulus and where it goes. that's your winners and losers if you are trying to play the stimulus game. going toight, this is be like that movie groundhog day. until we know who's elected and the whole crop of them elected, not just the president, but the senate is important too this year. that is going to be very important on forming where the money is going to go. stimulus has to pass. stimulus will pass. it is just a matter of when, how
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much and who. is and always the way? way?n't that always the haidi: we are glad to have you to talk through these interesting times we live through. kim with us today. let's get to karina mitchell with the first word headlines. karina: the u.k. rejected a move by the european union to revive stalled brexit talks, saying there's no basis for h resumption without compromise. london says it was a constructive move demanded a more on the mental change of approach. boris has warned an accord is unlikely and says u.k. should prepare for a no deal split. meanwhile, global coronavirus cases have now searched past 40 million and shows no signs of slowing. u.s. infection rates rising in 48 states, while europe is imposing tighter restrictions on daily life. london, paris and other big
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cities under strict curbs, while ireland is enacting some of the toughest restrictions seen. the world health organization says failure to control quarantine rules has led to the resurgence. thai stocks hit a six-month low after investors were driven away. the benchmark set index closed at its lowest level since april 16 as demonstrators vowed to keep up the pressure from constitutional reform. the index has lost more than 5% of its value since protesters took to the streets of bangkok. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts. i'm karina mitchell. this is bloomberg. haidi: still ahead, a food startup aims to take a bite out of plant-based meat market. we talked to the founder and ceo later this hour. coming up next, sources telling
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us softbank is charging ahead with this new public stock trading arm, more than $20 billion. we have the details for that story next. this is bloomberg.rg. ♪
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haidi: softbank has reportedly announced over $20 billion for its new trading arm despite some early skepticism from shareholders. the japanese conglomerate considered tempering and spending ambitions last month amid concerns they were causing the upheaval we saw in tech stocks. for more, let's talk to sarah mcbride. what are we seeing that is new here? is basically a doubling down. before when we learned about this strategy in august, investors didn't like it at all.
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seems softbank is sticking to it. they have stakes and netflix which is going to be reporting earnings this week, and amazon later on. both of those companies seem to be doing well. investors suddenly like the strategy a lot. softbank share price is hitting high levels. shery: one of softbank's highest profile investments, wework, and now saying the former ceo did not get as much money as originally thought. what happened? sarah: it was kind of incredible. last year, when adam neumann left the company, he hit the headlines for his huge package 5n leaving, including a $18 million payout that was just considered a bit over the top, on top of some other payoffs. and employees were just furious.
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today, it turns out he never got that full $185 million. speaking of the wall street journal tech conference, it was said the agreement that would give him that money is no longer in effect. somebody later told me that is because that particular payment was tied to a tender offer that softbank never made. the tender offer expired. although adam neumann received a portion of the payment, he never got the full thing because the tender offer didn't go through. so it is a bit complicated. adam neumann still got a lot of money but not quite as much as he thought. sarah mcbride in san francisco. aesident trump calls
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disaster and ireland is going into a new lockout. we have the latest development in the global pandemic. this is bloomberg. ♪
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shery: president has again complained about anthony fauci, putting him among people he considers devious and a call with campaign workers. he said the government's top infectious disease expert has had a lot of bad calls expert has had a lot of bad calls. dealtates in th with more cases. michelle cortez with the latest. dr. fauci has been seen by the american public as the rational export, voice. other than complain, is there the president can actually do against him? is actually. fauci in place as a result working
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under francis collins, head of the national institutes of health. president trump cannot directly fire dr. fauci. he could ask dr. collins to fire dr. fauci and then there could be some discussion that goes on. there are processes in place in order to get rid of government officials. it is not a straightforward you are fired kind of event. it would be very difficult for that to happen. it certainly would not be fast or quiet. if something like that does occur, if there is some kind of effort to get rid of dr. fauci, i am certain we will all be hearing significantly more about it. haidi: meantime, we are seeing a surge in coronavirus cases and elsewhere. are we likely to see lockdowns across american cities? how widespread would they be? michelle: american cities are trying very hard to take measures to mitigate the spread of coronavirus.
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really trying to encourage people to socially distant and wear masks and that sort of thing in order to avert the need for any kind of a significant lockdown occurring again. really, there is just not the political will for it. i think that's going to happen at this point, we are going to see these cases rise. they are rising right now across the entire country. hospitalizations are also increasing. we are starting to see some hospitals that are nearing some breaking points here. as that gets more and more intense, there might come a time when certain areas will have no choice but to try to put some kind of measures into place. at this point, we are still going the opposite direction. cities and counties are trying to open up their schools, trying to get kids back, trying to get their economies going again. so, we are really hearing two sides of this. we are hearing this ding, ding of concern of number of cases rising, and also seeing
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increasing frustration among the populace not wanting to social distance, not wanting to wear masks an opening back up. at some point, there will be a crisis of the two. shery: we are seeing surging of cases in europe and governments clamping down. michelle: yeah, this is definitely not stopping anytime soon. europe is about two weeks ahead of the united states. we are seeing areas in ireland where they are shutting things down. we are seeing certain parts of the u.k., liverpool and manchester. we are seeing measures in london. we are seeing some of these cases in paris. so, it is not ending. we are still in october. winter is coming. us,i: michelle cortez with the latest on the virus. coming up, janet yellen tells us what needs to be done to get the u.s. economy back on track. she says it starts with more
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fiscal spending. this is bloomberg. ♪
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karina: you are watching daybreak australia. we go to our top stories where sources in washington say democrats and republicans on narrowing their differences on a new stimulus package with nancy pelosi hoping to have an idea on whether a bill may pass by the end of tuesday. she is due to have more talks mitchteven mnuchin and mcconnell who says the senate may vote in the coming hours. democrats say a significant gap still remains. president trump's reelection campaign is taking on the debate commission ahead of his face-off with joe biden later this week. the campaign is challenging the topics and potential rule changes, although stopping short
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of threatening to pull out. the president's campaign manager says the commission's provided antics have turned debate season into a fiasco. the president says he will remove sudan from the u.s. list of state sponsors of terror after the african nation promised to make a long sought after payment to american terror victims and their families. iny will pay $335 million compensation to those directly affected by the bombing on attacks on u.s. embassies in kenya and tanzania. are on the list . plans to create technology to allow remote control of roving vehicles and permit real-time streaming of high definition video. nokia says it will create a sustainable lunar presence and could go live by late 2022. the system will be integrated into a lunar lander which will self configure on the mode.
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global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts. i'm karina mitchell. this is bloomberg. reportedlygroup has won the green light for its massive listing in hong kong, paving the way for what could be the world's biggest initial public offering. incredible demand for cash. sophie kamaruddin has been tracking this story. we know they wanted to push this through before the volatility potentially coming from the u.s. election takes over the market. what do we know? sophie: we have seen this approval process taking longer than anticipated. it did have speculation there was lost being put up as the company foregoes investors for its share sales in hong kong. with hong kong's regulators have given the nod following china security
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watchdog allowing for the ipo to take place in hong kong. as for what other steps remain and still need to wrap up the registration from its shanghai ipo, and application was submitted on october 22. the regulator has 21 days to accept or reject that exchange. as you have seen in hong kong, there has been huge competition for brokers offering 20 times leverage for retail investors bullish on the sale. a valley about $280 billion at the very least. this morning, we learned recently that may evaluate ant shares in the index compiler. how can we expect that to affect the hong kong dollar? sophie: demand for the hong kong dollar has not been this strong since before the global financial crisis in light of the ipo flood we have seen through
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2020. it has pushed to boost the defense of -- it has increased the cash full by about $36 billion through this wednesday. that is more since 2008 and 2009 combined. the up just the start of cycle for the hong kong dollar which has seen its strongest defense since april. expect more action to defend the peg latest round of selling we saw peter that was the biggest daily intervention yet. shery: sophie kamaruddin there. in the u.s. on the stimulus front, janet yellen is adding her voice to calls for more fiscal support and aid for unemployed workers. she told bloomberg what needs to be done to get the u.s. economy back on track. with biden andet
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harris and brief to about financial sector issues but i am not working with the campaign. but you asked me what i think we need to do to get the economy back on track. so, i would say what heads my list is dealing more effectively with the pandemic with the health related issues. getting the infection level under control through contact tracing, testing, isolation of people who have it. i think we need a much more effective effort than we have had. if we have that, it will be good not only for health but for being able to open up the economy. we are seeing that in countries ranging from germany to korea to china that have been successful. and then we need support for the
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economy, both for monetary and fiscal policy. monetary policy has done a huge amount. fiscal policy response in the united states has been extremely impressive, but actually, it is much larger than fiscal support than what was done after the 2008-2009 financial crisis. but the fiscal support has now lapsed. so far, spending has held up. unemployed workers who got the extra $600 a week through the end of july, they used that to stay current on their bills, to support their spending. they even stashed some of it away so they have been able to get through this last couple of months and pay their bills. but it is running out and i think we need to do that. state and local governments also
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face huge budget shortfalls. i am working on a task force with the governor of california to address the pandemic. they face a $54 billion shortfall this year. i think that is important. said if congress were to pass the $2 trillion fiscal support plan, he expects the federal reserve to potentially buy up all of that in order to help things along. do you think this is an advisable step? reserve's the federal asset purchases, they have not made clear their plans going forward. i am expecting them to offer more guidance but their objective is going to be to try to keep both long and short interest rates at low levels to support an economic recovery.
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everis not their objective to directly try to help the federal government finance its budget deficit. that would be a very dangerous kind of support to provide. but, i do expect, i think asset purchases have worked. they are holding down longer-term rates and i expect there to be ongoing purchases. to thebably not geared federal deficit. haidi: that was the former fed chair janet yellen. she was joined by a chorus of current fed workers calling for more government stimulus now. kathleen hays is here. the two and fro on capitol hill continues, we are getting fed numbers chiming in. youerine: it is interesting mentioned the two and from in
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capitol hill because as janet yellen stressed at the beginning of the peace, we have to get the virus under control. sayingse, nancy pelosi the republicans are not agreeing to. is that a little bit political? i don't know but it is being widely heard, that call from yellen for extraordinary fiscal support. fed sayingair of the more monetary and fiscal stimulus is needed. the outlook is unusually certain, but he says the path of the virus will have a lot to do with the recovery going faster or slower. raphael bostic, the first black american to be head of the reserve bank of atlanta, is worrying more fiscal help is needed. he is particularly worried about job losses becoming permanent. widespread permanent job losses could become a material risk recovery. permanently laid off workers find it more difficult to rejoin the labor force.
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this would make recovery more difficult to sustain and he thinks it could hit the lower income workers harder. shery: let's talk about monetary stimulus. what is expected from china today? katherine: we are looking at china's loan prime rate. the rate that banks charge companies to borrow. it is seen steady as she goes. the one year lpr is 3.85%. it was lowered in april. the five year lpr is 5.65%. you can see the red line is the one year lpr. the yellow line is the key, the medium-term lending facility. the people's bank of china kept that steady on october 15. until that moves down, they probably will not follow a move lower with the lpr. are saying the government is pretty satisfied that the recovery pace. the third quarter gdp came in light relative to forecast but it came at 5%.
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look at the retail sales out yesterday, those look good. the data showed consumers more willing to go out and spend. bloomberg economics said look for the lpr's to fall again possibly later this year on weak overseas demand. the virus is surging again in europe. is that going to slow down? same thing for the u.s. unemployment also remains high so they think more may be needed. haidi: in terms of this part of the world, one are we expecting from the reserve bank of australia, particularly as we've already had quite a lot of communication and signaling coming from the governor last week? katherine: we did. i think a lot of people figured those remarks, the very well-planned speech from phil low has stolen the minute under a bit because he did make it clear that the door is open tomorrow easing. this is kind of interesting because vicki rate, the blue line is at 0.25.
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zero bond yields, which they , belowught some bonds that rate. that is pretty striking. the 10 year yield has come down a lot. both of them down near record lows. even so, look at the aussie dollar. it is not that impressed with any of this. the aussie dollar apparently would like to see more aggressive easing. phil low even talked about the fact rate cuts would not really work as well if you are still in the middle of a pandemic. it got to wait until things are more under control for rate cuts to be stimulative he also talked about buying more bonds. the aussie dollar has come off its highs but still remain very high i love that chart, lift off. the low rates may not be low enough. there needs to be more aggressive easing. that is what people will be coming the minutes for today much get some background to what phil low was saying and thinking
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ahead of the november meeting. shery: kathleen hays there. up is up, a food start looking to take a bigger slice of the plant-based meat market. we speak to the founder and ceo of next. this is bloomberg. ♪
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haidi: the plant-based meat
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market is expected to do almost $28 billion globally the next five years. an australian startup is after a slice of that. and as raise new equity from investors including goldman sachs in a $77 million deal which will help its presence in asia. nick hazell joins us now. i want to start more broadly. pandemic,ring how the changing consumer trends, supply chain realities of this year have changed the nature of the area of business your product is in. nick: yeah, it is a huge challenge for any business. every startup is used to pivoting so in that sense it is probably easier for us than larger companies. the fundamentals have not changed at all. the fundamentals of meat consumption globally, inability to meet demand for animal based meat globally, that is a given.
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that will never change. what has seemed to change is consumers are reevaluating their relationship with what they eat, just like they are readily available ending -- reevaluating other things. open foreing more consumers to alternatives that are more sustainable and healthy. boost how much of a psychologically, but also what you plan to do with that money is that latest fundraising and investment you have received? nick: it is a great vote of confidence from investors who really know what they are doing. we were quite overwhelmed by the response. it is a very important area for investors. the rating is very important. we have big ambitions to be number one in australia, but to expand globally. the growth of meat consumption globally and in australia seem
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to be reducing consumption. in asia and particular where growth and meat consumption is rising. that's if the existential problem we have. we don't have enough land on the planet to grow enough grain to feed the animals we are eating. this is the opportunity v2food is clearly facing into. very much around this growing trend and how do we actually sustain it. shery: in the u.s., we have seen the craze around impossible burger, beyond meat. where in asia are you seeing those opportunities and is the excitement as to get us it has been here? nick: it is beginning, yes. it depends on how you frame it. meat consumption in asia is not that high. if you are going to do successful in asia, you've got to be successful in the areas of meat and cuisine which are really important, particularly in the mainstream.
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we make sure we are focusing on the sorts of meat that are eaten and developing our r&d to make sure we deliver what mainstream consumers want to buy. if we are only confined to wealthy niche items, that is not going to actually have a material effect on sustainability on a planetary scale. we are pretty serious about having to make a difference there. shery: what do you see in terms of competition at also when it comes to reaching the asian audience, how the culture affects the appetite for your product? i know in countries like south korea or japan, going out to eat meat is actually pretty fancy. you wouldn't get meat during wartime. it is ingrained in korean and japanese people's minds that meat is really luxurious. nick: absolutely. i think that's what we need to face into. as people get wealthier, they
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aspire to eat more meat. that is the condition across the planet. meat is a luxury as you get more wealthy, you aspire to eating more meat. if we are going to be successful in plant-based meat, we have to make sure it is as aspirational as animal based meat. that is the trick. we will be nice to think we know all the answers. whore working with partners are china-based, agent based and they will be working with us to unlock those insights, understand it better and make plant-based meat not just delicious and trisha's and affordable, but it has to be aspirational as well. haidi: how are your partnerships going? in particular, is crucial to have these restaurant partners, these fast food partners as well. does it suggest cracking into the mainstream demand will be key for the next leg up for growth? nick: yeah, we launched in
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australia with hungry jacks, which is part of the burger king empire, with the rebel whopper. we think fast food has a role to play. what we do is we look at where the bulk of meat consumption is and try to understand what does the supply chain look like and how do we enter into that supply y that isn a wa affordable for everyday consumers? in some markets, that is an important part of that an important to get your brand out there. but it is not where the bulk of meat is being consumed. we need to be in other areas as well. shery: competition in asia? nick: huge. everybody is coming to this space. all major food multinationals are entering the space and very active. there are lots of players as well. the physics of this opportunity are undeniable. theou look at intentionality in china to have
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meat consumption over the next 10 years or so, you are talking tens of millions of kinds of meats, which is many multiples of that in terms of the size of the opportunity. hundreds of billions of dollars. that is going to attract a lot of capital. it is going to attract a lot of startups and it's already attracting most of the major multinationals into this space. we have a belief we can be successful, we can be a part of that, because -- not because of our size because we are a startup, but because of the technology we have developed together. because of our australian-ness, which is very marketable because we have a reputation for food safety and food quality. we believe we can play an important part in asian and developing markets. shery: nick hazell, thank you so much for your insight. it was a great conversation. ceo tellinger and
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us about the meat market in asia. if you are away from a screen, you can always find in-depth analysis on bloomberg radio, broadcasting live from our studio in hong kong. listen via the app or bloomberg radio. plenty more ahead. stay with us. ♪
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haidi: let's get a quick check of the latest business flash
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headlines. shery: third new revenue at ibm beat estimates boosted, where the company will focus six lucidly after spinning off legacy business units. the ceo took over in april and wants to shed ibm's division. the corporate computer systems accounts for about one quarter of the company's total sales. after that, he says he will go all in on the cloud and ai. google has reported to be in talks to buy a london outfit for about $1 billion in what would be one of the biggest property deals in the city this year. it's negotiating to buy the tower, although nothing has yet been agreed. google already occupies about 40% of the complex north. it is also building a new campus in the area. a snapshot of the notable views ahead of the start of the asian trading day. e.m. rally has
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been losing steam a bit. investors on the sidelines, focused on the u.s. election so what is the sentiment? sophie: at fidelity international, paul says he's waiting to trade price action after november 3 given the liquidity spinning out and elevating, approaching that date. he cautions properly pre-election positions are likely to get squeezed, with a comfortable consensus for e.m. gains on a blue suite potentially unraveling. morgan stanley strategist also playing the waiting game before adding e.m. exposure to see if a boost does materialize. also, some catalysts and another reason to stay on the sidelines. economics queues. morgan stanley paying attention to flash pmi data this week into the fourth quarter. shery: we have some eco numbers and a lending rate out of china
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today. what are we expecting from the markets? sophie: we do have some risk on sentiment coming through the offshore yuan which is trading below 668 this morning. for theiling in 670 currency by end of 2021. on the bonds front, ubs seeing chinese bonds providing a haven play, given differentials to d.m., and expects pickup in the fourth quarter is the pboc. ubs calculating ownership of chinese bonds will rise to 14% to 15% to about 9% after included in the benchmark index. ubs estimates it should attract $150 billion of inflows over the next few years. shery: sophie kamaruddin in hong kong with an outlook for what to expect from the chinese market. we do have the market open in sydney next. this is bloomberg. ♪ so you're a small business,
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haidi: very good morning. i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. welcome to "daybreak asia." wall street fell to its lowest in a fortnight with a stimulus deal remaining elusive in washington. new data show key parts of the u.s. economy are slowing ahead of the election. the ant group is said to have won the green light from hong kong exchange.


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