♪ >> welcome to daybreak

australia. we are counting down to asia's major market opens. >> i'm annabelle. investors keeping their powder dry with some warning of stock swings. janet yellen admits china may retaliate against biden administration tariffs increases. and the albanese government announcing australia's second budget surplus without stoking in laois and. heidi: given all the threats we are seeing sydney futures muted. a worried session on wall street will way on what the fed does

and other central banks. headwinds are building and the risk of threats on china and retaliation. certainly not a great deal of risk appetite. kiwi stocks looking softer, k futures looking glass of not making too much of a move. it's near the top of developed markets, it is what can they do a cost-of-living crisis. it will flesh out further expectations or hopes of race

cuts. haidi: that's right, speaking with economists about the need for fiscal prudence but here is the outlook for futures online, reflects intraday caution and equities, bonds, the dollar not moving, traders are on account down to the inflation friend. we will see moderation, too high to warrant any rate cuts. let's look at where we saw the action and i don't know if you're ready for this just yet. but also the return to mania, i won't that into the details, but we had keith deal who drove the

mania in 2021. is it fear of missing out? the institutional side is a different story, let's shift to that interview with janet yellen saying china could retaliate against steps the u.s. takes speaking exclusively to bloomberg, janet yellen declines to confirm if biden is going to resume tariffs. janet yellen: he believes it's unacceptable to be dependent on china and he wants to make sure given that china is not playing by the rules, they have enormous

subsidies in manufacturing resulting in overcapacity. he wants to make sure the stimulus divided through inflation reduction act to support these industries creating good manufacturing jobs in parts of the country that have been overlooked or have suffered from deindustrialization, he wants to protect these investments and i don't want to get ahead of the 301 review on tariffs, this is a commitment president biden made and i agree with it, i was in china and made clear we would not allow chinese overcapacity to arm's our emerging industries. >> does the u.s. one a trade

war? >> we believe we should have the productive and we do in most areas trade and investment relationship. stabilizing our economic relationship, we do not with us -- wish to dishing gauge -- disengage. but china engages in unfair us is like massive subsidies industries that are critical, cases where we will protect ourselves. >> we've seen beijing respond, could they go after tesla or american arm dogs? >> president biden believes anything we do should be targeted to our concerns and not rod based.

hopefully we will not see a significant response but that is always a possibility. haidi: janet yellen speaking supposedly. let's get some analysis with a global market strategist at j.p. morgan. it seems like a flashback in terms of stocks and a risk of a trade war. how much are you concerned about this as we get closer to november? guest: it is a risk we think about. i think that we look at what has been announced, still a realization that china finds 90% of critical minerals. of a place in the supply chain

and it is strategic around certain industries, more narrow than broad-based tariffs. this would have consequences but the markets are preoccupied with short-term inflation and what a november election might mean. we don't get into it until after august. international relations can be a determined, split could be deterred and have a meaningful impact when we think about the outlook for economies in 2025. heidi: janet yellen was talking

about subsidies and we see that across major economies and future made in australia policy measures. is this a theme you would be investing around? kerry: i think it comes to the idea of globalization. the idea that countries cannot be reliant on trading partners, they need to diversify by and that leads to industrial policy focus. that is what made in australia will be. how that can benefit certain sectors, there is a theme whether it is around renewable

technology, critical minerals that are needed, it will become a theme and also the poor for households thinking about pressure, knock on effects and retailers, there will be implications from the budget, some of them long-term, some short-term. annabelle: which market is looking most attractive? we are seeing a lot of investors shifting into china. do you prefer other markets? >> china is showing signs of stabilization. that's for a catalyst to release

savings and boost a mystic demand. there is focus on subsidies because the government is driving growth and cannot rely on trade when it comes to the growth outlook. china shows some promise. very low, tactical opportunities come through their but it is too early to be positive on china until we see the release of demand in china. other markets, japan is one that has continued to form. earnings growth and a focus on what we are seeing in korea and taiwan given the supply chain's, chips and semi conductors.

global growth is looking better. annabelle: you're thinking that they're going to cut rates in september, is that right and if so, how do you see that asia because some are saying asia could outperform when the fed reduces. kerry: we're definitely looking at inflation outlook, inflation trend heading lower for us means the fed can cut by one or two rates in september. it is a baseline call and if inflation takes up we would see dictation priced out, rather than hiking rates. we should see that coming down,

a boost for emerging markets and if it is a case of growth, nominal growth being good, you see corporate's creating earnings and equities doing well. that spillover effects is what we are looking for and hiking rates if rates are going down and demand is being created. annabelle: that was carrie craig . thank you for your insights. still ahead, $.10 total revenue grew at a slower pace. a preview of china's big tech earnings and first emmanuel macron calls for a level nine yield with china. our interview is next, this is bloomberg.

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♪ >> anglo american has rejected a second approach, $43 billion. the takeover would have made me the world largest copper review. frank paul allen out of melbourne. still no deal. what is the sticking point? paul: the borrower last night

responded to bhp's offer by thick it is undervaluing the company and future prospects. the structure of the deal would require them to an there iron ore projects. management spoke to shareholders within anglo-american and they are under a lot of pressure. anglo-american has failed to keep up including glencore and bhp. >> and -- and -- and -- and they are under pressure so we

understand we will get more details? paul: yeah, it was last year when anglo-americans board launched a formal review into its internal assets and future strategy. strategic review is the precursor to divestments or spinoffs, however shareholders have been left in the dark ever since that strategic review was launched. overnight, the company said it would release results of the review so they have been scrambling to present shareholders with an option of growth and promising value in the future. popular business will be a significant asset as the world transitions, it's a key metal and that is why vhp is seven

kane their hands on it. there are a few things the board could do, the first is a fertilizer project, $9 billion project eating up a lot of money. that is one option to slow down or find a joint venture partner. two other assets, one is the diamond business struggling for quite some time and the amplatz business. we wait to see what the strategic review says and whether it can add value. heidi: a lot of focus on those plans. that was paul hunt. more in the next hour. the french president unveiled

more than $16 billion in investments from companies including amazon, microsoft and morgan stanley. he spoke with editor-in-chief john bagels waited. he began asking about tou thao energies moving to the u.s.. >> i await for any confirmation. it is interesting it is tied with the idea that he would face extra measures here that he would not face in america. >> do you mean green economy? >> yes, but also you said you cannot let d carbonization and growth be enemies. >> and this is my point, we have to be sure when we regulate we should not over regulate and we have to deliver.

we need investment and flexibility. i saw asset managers, where's the beef? are you compliant? this is my point. and this is why we need the u.s. and europe. synchronization is the u.s. should be more serious and realign in the europeans have to invest more. and realign themselves. >> if i look at all those people they have done spectacularly well by exporting to china. they have done well and all of the prescriptions in terms of

europe having higher trade rules, being tougher, you know what will happen? europeans will want to put tariffs on electric vehicles and he will put tariffs on cognac and that will help those successful french business people. guest: this is the mistake we made 20 years ago on solar finance. i am very simple. i do not blackmail, i just look at the picture. when you have chinese electric vehicles entering into our markets and your tax between 15 and 24 in the chinese market you have an issue. on all the different sectors what we want is reciprocity. we want, in fact, regarding relations with china, level playing gold.

so what we ask for is that, we want to be sure that in terms of terrorists, subsidies, we have a fair competition. and it is not a geopolitical agenda, we want to be sure it is fair. it is fair to launch and look at the details of the situation and revise it. if we are threatened by the fact that you can have measures, you do not do what you have to do. this is why they decided not to implement the first measures. so i think it is a normal approach. look at the situation, the european union is the most open place but you cannot survive if you have subsidies in some part

of the market and inflation reduction act does not fly. >> europe has got to get tougher? >> we are protectionists. >> the germans do not agree with you. >> it depends who in germany and from which perspective. some german companies incorporated in china benefiting from subsidies, their interest is to preserve that. especially european markets. the german economies interest is in line with the french economy, creating jobs, creating value, predicting your business and your people and fair measures. it is normal.

for me it is a no-brainer. >> that was french president emmanuel macron speaking with bloomberg editor-in-chief john bagels waited. and you can get a round up of the stories you need to get your day going in daybreak. it is also available in the bloomberg anywhere app. customize your settings so you only get the news that you care about. this is bloomberg. ♪

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>> off off off some stories we're following, the u.s. ordered a crypto mining company off an airbase that houses nuclear missiles.

the proximity of the partners operation is a significant risk. the company must sell the real estate. senior south korean and chinese diplomats held their first tops in beijing in six years. china's foreign minister of long ee told his korean counterparts that they should impose cooperation-ism. coming up, we will get the outlook on big tech as traders await reports from alibaba and tencent

>> australian government set to unveil its budget.

centerpiece will be the maid in australia policy with interventionist ambitions. paul allen has more. paul: australia's strength has been built on digging stuff up, an old idea that has paid off. adding value to raw materials. this week billions in spending will be thrown at green steel, solar panel manufacturing and other industries. >> not replacing private investment in the opportunities of the future but attracting more of it will require public investment and we need to make sure we get value for money or that >> a future in australia is a flagship policy is the government eyes an election campaign. it was born out of necessity. the u.s. says the ira, japan has

the green transformation act. france is giving billions to clean energy companies. government intervention is having a moment. australia is a recipient of a loan to alpha, which produces critical minerals to the energy transition. australia has abundant deposits but limited manufacturing in a supply chain dominated by china. reducing dominance will require more than cheap loans. >> it is critical for australia to build its own supply chains for critical minerals processing, but to challenge china's dominance is impossible because china's power is not just in processing, it is the

value chains supply chains behind it. paul: it's worth remembering it was a decade ago subsidies in australia were polled causing shutdowns in productions. subsidies are back for as long as the political climate encourages it. paul allen, bloomberg, sydney. heidi: as we wait for the details we are seeing muted trade start for sydney stocks. futures are down. a cautious start, kiwi trading on the back foot. we've seen u.s. equities, mixed investors on the sidelines for a data fueled week capped off by inflation.

nikkei futures are looking optimistic. upside of 3/10 of 1%. caution is spreading more as we see yen intervention may be a little more remote going into the inflation report. annabelle: inflation report is the big market countdown given u.s. in the rearview. tencent and alibaba are set to report their numbers. tuesday posting its slowest growth since 2022 and alibaba lags in the e-commerce. with us is eleanor long. it is the first time we have

seen tencent and alibaba reporting on the same date, were you watching most closely? eleanor: it is the first time they report on the same date. we expect tencent results quite solid. operating profit will be around 16%. for tencent, doing business was the major concern. they were into client and they do not have blockbuster shares. revenue growth will decline because they are very aggressive in monetizing. we expect the business that rebounded year on year because they already changed monetization team after talking. they are going to introduce

virtual item to increase and revive growth. for their second-tier game, monthly active users is over 500 million. that including the golden bachelor and crossfire, which we see this game growing at over 30% year in year. they have 20 approved game in the pipeline and upcoming game is dns mobile which has over 20 million pre-registered users. we expect this can contribute five to 10 billion revenue this year. overseas, shares reposition last year leading to a revenue decline, but this year at they are done with repositioning, so growth is more than double year on year.

they have a new game coming out, it is called squat buster. size will be comparable to growth star. they will have delta force to be launching in oversea market, so we expect game business can regrow and nine-game can grow high teens to 20% because ad revenue is driven by traffic growth at 50% year on year, growing users. outlook is one or 2% and they have not done e-commerce. that will offer the boosted revenues. they increased the monetization of their payment as well as their e-commerce business. although topline growth is slow, profit growth will be high so a

lot of the revenue they are recognizing in a net basis and they will have a high margin for this business, so we expect online can sustain 15 or 20% growth. 5% overall total yield and trading at 14 times. >> we've been showing a graphic of the revenue breakdown so what else tracking because you can see fintech is making out the large proportion. eleanor: gaming is growing 8% but we have not really talk about many game which is basically booming. small game studio struggling to compete because of regulations and the intensified competition in the market because the

government resumed gave them approvals. so without innovation, it is difficult to compete and they go to many games to get revenue. tencent recognized on a net basis that gross profit is basically 100% and that is why although topline growth is slower, the gross profit growth is 15 or 20%. these companies are looking for quality and that is why growth will be much high compared to revenue growth. we can see it as a high-growth company for these top names. >> when it comes to ai, what are your expectations? it is a difficult struggle for

access to chip technology for china, but those companies are the best place to come out in front. eleanor: i think the china internet company has already acquired a lot of high-performance chips before the band, so they had enough to train their model. they will dumb it down, the model to smaller models and train them with industry specific data is and enable the customer to use the model in a cost-effective way. it is efficient and they can use the low performance chips for inferencing. they can solve domestic alternative to support inferencing.

china i do not think will lag, but the challenge is the future and what if we want to upgrade the model to a more advanced model, we need more chips to support the evolutions and china needed to come up with their own alternative solutions. chip design they would be able to do, they need to invest more to come up with solutions. annabelle: we are expecting to see a lag on profitability and rise in sales. what are you looking for? eleanor: e-commerce is going to improve in the march quarter because he focused on regrowing

traffic and not help them to increase monetization and they are acquiring 5 million new merchants, most are white label providing no price product for consumers, so we expect e-commerce may regrow which is faster than retail sales versus last year so it is a lot better. while the advertising is growing the commission revenue is coming down. they are planning to introduce advanced products to improve efficiency so hopefully in the future, growth cap will be narrow. on the earnings side, we do expect profit will be down here on year because of reinvestments on apps and aggressive global

expansion. also sonar is closing down some store. by december quarter we will be able to see e-commerce regrowing and profit will grow. in the meantime we have $12 billion to support share price while restructuring the business. haidi: thank you for your insights, that was eleanor. switching to another story, softbank laid out plans to get aggressive after reporting a surge in asset value. let's bring in men jong lee.

aiming to go on the offensive once again? reporter: yes, they revealed some positive results with profit on the group side which gets ready to do more investment on startups and technology. we did not see clarity on what companies or, they plan to spend on new technologies and we saw the vision find continuing on a shrinking trend where they are investing and busy. we need to see more from

softbank on what kind of investments they have planned. >> what are we hearing in terms of the turnaround when it comes to the vision fund? we are through divestments. reporter: correct, the company releases quarterly data on investments and for the past eight quarters it has been disposables. they explained yesterday that this is natural because they are seven years into the fund and it is time to dispose of assets. when we asked about their plans, when they plan to pick up the

pace, we did not get a clear answer on when they become more aggressive, we've come from the vision fund. annabelle: still ahead, the biden administration planned to hike tariffs. here why bloomberg thinks the move is symbolic. this is bloomberg. ♪

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>> president biden believes anything we do should be targeted to concerns and hopefully we won't see a significant chinese response. >> janet yellen there speaking to bloomberg about whether beijing may retaliate against washington.

she was speaking after we reported chinese ev's could face tariffs. bloomberg ev analyst joins us to talk about the implications. how much impact do you see in a tariff hike in the broader sector? reporter: this more just have more symbolic meanings because chinese ev's have been locked out of the u.s. market. the u.s. imported less than 11,000 ev's so chinese ev's were out of the tariff is at high level compared to europe, australia where they have a free-trade agreement.

because of this requirement they have to compete with local ev's, meaning they will undermine a core advantage on affordability. annabelle: there is debate around china, but could they look to cap mexico? reporter: definitely. in fact we already see top ev makers increasing capacity in mexico, thailand, indonesia. the primary purpose is to capture local demand driven by new policies and models and they hinted at using overseas

production bases as an export hub. they're waiting to see how the collection pan though and whether the u.s. will introduce tariffs. haidi: i wonder what options are there for chinese automakers? they could manufacture offshore, but where do you see overcapacity including? reporter: i think it will prolong in china. they also resort to competitions like reducing domestic prices to capture demand. overseas market is where they see more growth. most chinese automakers looking for europe and south asian

country where they can absorb excessive demand. but for u.s. given the tariff and policy environment, potential in the long run. annabelle: in this environment what are the broader implications? >> increased tariff and other form of trade barrier could be detrimental to governments climate targets. the reason is in most of the markets like europe or the u.s., a lack of affordable ev's is one of the reason sales are stalling. chinese automakers have a portfolio and whether it is a chinese or korean brands they

can bring competition and pressure locals to make better cars. so according to the long-term outlook, transport sector is on a positive trajectory to reaching a zero emission by 2050. but it is still low down which means we will have to speed up and if the governments do not speed up the measures they will miss the target. haidi: that was our ev analyst in shanghai as president biden prepares tariffs. a trade group pushes for levies on used chinese cooking oil. used oil is weakening demand for u.s. ingredients.

a group that represents the soybean processors wants levies higher than 15.5%. more ahead on daybreak australia, this is bloomberg. ♪ ♪♪ ♪♪ ♪♪ ♪♪ sandals jamaica sale is now on! with rates from $199 per person per night. visit sandals.com or call 1-800-sandals

>> the market turned with great

momentum, we are seeing the end of deflation. >> that was susan chan speaking about japan becoming an attractive destination. that has underpinned the big run-up and optimism, but this is the outlook, producer prices are in line with estimates. ♪

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♪ >> we are counting down to

asia's major market opens. in asia we got interesting earnings keeping things dynamic. haidi: where do we take the rally given the barometer when it comes to chinese consumers. it is more of a weakness, but looking ahead to the budget implications and balancing act between stimulus and policy. annabelle: yeah. we mentioned going into the last hour, producer prices came out and pretty much in