>> hello and welcome to "daybreak asia." i am haidi stroud-watts in sydney. sophie: i am sophie kamaruddin in hong kong. kathleen: good evening from bloomberg's world headquarters in new york. i am kathleen hays. asian stocks set for gains after the nasdaq hit a record with tech stocks back in favor. the trade going into retreat.

the white house plan talks between president biden and jean jinping as u.s. regulators step up pressure on chinese tech companies. japan's lifted the virus emergency one month below -- before the olympics. the games are underway. haidi: let's take a look at the rally through tech we saw overnight that will play through as a theme in asia. happy friday and what are you watching out for? sophie: happy friday, keeping a close eye on commodities. the markets adjust to the fed's timetable as we are seeing the dollar turn higher, hitting a two month high. shorts are getting dumped. that is weighing on commodities with the complex set for the worst week since march 2020. gold and soybean futures have wiped out year-to-date gains and commodity related stocks, we have seen those getting battered.

yesterday's tumble led lower by industrials and materials. watching to see if tech names can attract the climb we saw in u.s. peers. nasdaq e minis creeping towards a record on those futures and switching out the chart, another sign of the retreat we are seeing. the curb notched one of the biggest two day flattening moves we have seen in the past decade as yields on the long and -- the 30 year yield fell as much as 60 basis points, prompting some strategists to bail. we have seen that trend stalling across developed markets as well pending some warning signals on growth. haidi: quite a day -- kathleen: quite a day. thank you. it went into retreat in u.s. trading, replaced by longer dated bonds. go figure. it comes one day after fed officials acknowledged the risks of inflation and said it's time to begin a discussion. for more analysis, let's bring

in eleanor craig. i know that one of your convictions has been that you are positive on commodities, value overgrowth. does today upset your investment apple card or do you think that this is may be just another one day or two day wonder and it remains to be seen just what the fed stance does mean for markets? >> good morning and thank you for having me. a lot of the price action over the past 36 hours is more to do with heading into the event. we saw a lot of complacency and a one-sided positioning with respect to markets. i think this feels like more of a position and rather than a trend change. with the fed reacting to inflation, the market is seeing an overshoot. inflation pressures will remain

elevated through summer and we have supply dislocations and demand rebounding aggressively. you look at the inventory sales at 30 year lows and i don't think you want to be betting against reflation in that environment and it is clear that global prices will remain. that along with the continued underlying economic momentum we see will continue to be supportive for cyclicals and portions of the market like financials, energy, materials, industrials and the like, which remain attractive after this positioning cleanout. >> commodities. gold down today. oil down again. the dollar getting stronger again. people are getting bullish on the dollar. does that change your mind at all? eleanor: certainly with commodities, we expect this pullback to continue with a period of dollar strengthening in focus. the market was not geared for a downside correction but i think

if we zoom out, the long-term trend is certainly intact. fundamentals remain robust and we had these real global supply deficits combining with storing demand. the supply shortfalls, structural underinvestment still in play and it will continue to meet tailwinds. spending on infrastructure and inflation pressures and that will continue to underpin the markets. given where inflation and demand is, i think positioning is still underweight on a historical basis so we view this as more of a cleanout and potentially would be using this correction. haidi: we have seen recently this real revival when it comes to aussie stocks. i'm taking a look at that massive jobs beat number. take a look at this chart. jobs market recovery. on employment rate is back below to that 20 year average.

is this a massive game changer for the rba and what are the implications for market sentiment if they are forced to move quicker than expected? eleanor: when it comes to australia, the economy continues to track stronger recovery than forecast. really showcasing that recovery strength and certainly supporting the outlook for midterm growth, providing the vaccine rollout picks up and the winter months do not usher in/lockdowns but certainly, this continued recovery because into fact that the rba are maybe too pessimistic and rates will lift off sooner than expected. what you know, there are still unknowns in terms of the climb in labor market slack that will be needed to promote the sustained wages growth in the order of 3.5% that is going to really promote inflation

sustainably, returning to the rba's target. the positive factors on the horizon at the moment in terms of the continued decline in underemployment we are seeing, which has a strong relationship with rates growth and these emergent skill shortages cutting off migrant workers at the moment. there is some evidence that wages are certainly turning a corner and accelerate sooner than expected. that does continue to promote upside relative to forecast trajectories for the economy and the probability that the rba are going to have to move sooner than expected. haidi: i just want to jump in with breaking news when it comes to deals in south korea. ebay is set to sell into south korean units to a group for 3.1 billion dollars according to reporting from the financial times in the online marketplace is set to sell that to a local consortium for that amount according to people familiar

with the matter. rivals are seeking to turn up the heat and it comes to the softbank backed coupon in the biggest e-commerce market and that consortium includes a bricks and mortar retailer. planning to take an 80% stake in ebay korea for 3.5 trillion won. the u.s. company will retain the remainder so we will see to get confirmation of the latest development and that is the first time we are seeing that number. let's get back to the markets. if under your thesis the inflation outlook -- the assessment is not just transitory, you have concerns about the fed and other central banks being able to stay the course, what are you doing in terms of inflation hedges? eleanor: when it comes to inflation, i like the conclusion, forecasting inflation is a gain but that aside, it is really from a portfolio standpoint.

in the risk of higher inflation has to be accounted for at this stage. it is no longer a one-way bet and risk is moving the other way , coming from a decade plus of inflationary positioning. that does matter when it comes to asset allocation and the portfolio so if you want to translate that into a portfolio, you want assets with a higher inflation meter. that is commodities, energy, materials, leading into cyclicals and economic sensitivity against stuff that does not need perpetual decline in discount rates to propel a continued appreciation but it is also companies with a dominant market position and pricing power that can potentially withstand inflationary pressures and really pass those costs pressures onto the consumer. haidi: always great to have you with us. eleanor creagh, joining us from sydney. let's get you to new york.

vonnie quinn with the first word headlines. vonnie: president joe biden signed a bill making juneteenth a federal holiday to mark the end of slavery in the united states. most government employees will be granted paid leave on friday. juneteenth commemorates june 19, 18 62 five, when union soldiers brought news of freedom to enslaved african americans in texas two months after the confederacy had surrendered. pres. biden: i am especially pleased that we showed the nation that we can come together as democrats and republicans to commemorate this day to overwhelming bipartisan support in the congress. i hope this is the beginning of a change in the way we deal with that. vonnie: the united states supreme court rejected the latest republican attempt to invalidate the affordable care act. the ruling marks the third time the court has backed central parts of the so-called obamacare law.

president biden said it was a big win for the american people. iran hits to the polls on friday. the presidential election is expected to see a conservative. that could come look at efforts to restore a landmark nuclear accord that has major implications for middle east security and oil market. the lfa is set to be under investigation by hong kong securities regulators over allegations it misled investors at sources say the accusation stems from the role as a bond underwriter for china energy. the conglomerate went bankrupt in 2018 p had several bond buyers day it -- 2018. it had struck deals that disadvantaged creditors. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i have on a claim. this is bloomberg.

-- i am vonnie quinn. this is bloomberg. haidi: fresh off his trip to europe, president biden's tour may take him to xi jinping. white house officials say the talks between the two leaders will be planned soon and that is coming as u.s. regulators propose a ban on chinese valence cameras and other products. that's cross over to emily wilkins for more. we have that separate report going into the details potentially of this new regulation over certain foreign apps, potentially subjecting chinese apps developers to subpoenas, too. >> we are looking at a slate of actions being considered by the biden administration against chinese companies as well as by chinese electronics companies including huawei, including electronics companies in particular, these were linked to oppression in western china and

there also concern from the fcc that this equipment carries risks of potential cyber espionage. this goes not just for equipment in the future but the sec says it was considering revoking previous authorization for equipment which might mean that some u.s. customers will need to replace their camera systems p had huawei said these actions were misguided and unnecessarily punitive. this is something developing and we are definitely going to continue to follow it as these regulations are rolled out. kathleen: as this progresses, what is the role of congress here? emily: congress definitely has a role. one of the big pieces of bipartisan legislation that is moving through congress right now is a bill that is meant to bolster u.s. research and development and that is with the idea of keeping the u.s. competitive against china and

this is something, particularly with the fcc, with a ban on electronics, it is something that congress is looking into, seeing what their role needs to be, what more they might be able to do that the fcc does not have the power to do. this is one of the few things in washington that is very bipartisan and we are expecting to see more regulations come out as the year continues. kathleen: emily wilkins, thank you very much, our government reporter joining us from washington. xi jinping is tapping a top deputy to help domestic chipmakers overcome u.s. sanctions and take on biden's revival plans for the industry. sources say president she's economic advisers will oversee the third-generation chipmaking push. the involvement of one of the most trusted lieutenants highlights the importance of the initiative for beijing as other global semiconductor powerhouses, including japan and south korea, race to shore up their own industries. still ahead, we are in beijing

for a major online shopping festival. jd.com is expected to pocket billions of dollars from its event. plus, the boj is seen drifting further away from the fed, already battling a ballooning balance sheet. our decision day preview is later. this is bloomberg. ♪ y preview is later. this is bloomberg. ♪

kathleen: china's consumption demand is in focus as the shopping festival kicks off at online platforms such as jd dotcom have launched promotions as early as last week to stoke purchases. tom mackenzie is underground at the jd.com headquarters. what are you watching out for? tom: yes, so this is the

second-largest online shopping festival in china. it does include players like jd. they run this. they started it. as you say, the likes of alibaba and others getting in on the action. it started on june 1. we look at the top line number and it is going to end at midnight tonight so that is when we will find out just the level of transactions here. this is about a barometer of the health of china's consumer. that is why we are here to see how strong these retail sales are in the e-commerce space. last year despite comparison, jd saw transactions with a value of 42 billion u.s. dollars and that was up 34%. they are hoping to beat that this time around on the first day on june 1. they saw transactions of 140% year on year so that gives you some indication as to the demand. we are at the data center at the

beijing headquarters and mapping out some of this demand, looking to see how things like livestreaming are playing into this. that pushed into second and third tier cities as well, whether that is starting to pay off. the broader picture is that the competition has never been tougher and it is becoming harder and more costly to bring on new consumers onto these platforms. kathleen: as for the chinese consumer, these are stunning numbers and yet the overall national retail sales numbers, not quite so bright. tom: absolutely. we are seeing a divergence between online and off line and between higher value goods and lower value goods and we saw those retail sales numbers come out earlier this week and they actually came in for the month of may below the jump we saw in april and clearly, the consumer here in terms of those retail sales, you are not seeing them back to pre-pandemic levels and that is a concern for officials

because they want to see the consumer kicking back into high gear to ensure that the recovery can stabilize in china. it points to something of a shaped recovery because you saw jewelry sales jumping 30% and we know that luxury vehicles and car sales have been doing incredibly well but if those staples where you have seen some softer demand, there is a bit of concern amongst people here in terms of sentiment about wages and jobs even though the jobs number this week came in slightly better than estimates and there is another outbreak of covid-19 in the province of guangdong. all of those playing into the slightly softer consumer sentiment but this is an attempt to see how people are playing out on the online space. kathleen: tom mackenzie at jd.com headquarters in beijing and later, do not miss our big interview with the jd.com vice president. this is bloomberg. ♪

>> olympic organizers may cut the number of spectators in tokyo at 10,000 and it comes as japan is slotted to end its state of emergency. isabel reynolds joins us now with the latest so i suppose this is not a surprise number given that was the number by the government at any one venue. what does this mean for the way that these olympics will be staged? >> the big question for the olympics that had been remaining was the number of spectators. so many people called for it to be held without fans including the governments main covid-19 advisor. we are talking about domestic spectators because fans from overseas have already been banned. we had this capping attendance

at any events at 10,000 even after all restrictions were lifted zero that is a kind of maximum and given the main stadium holds exceed 8000 people , we know we are not going to see masses of cheering crowds. this will be a thin smattering of people watching these events at the most. kathleen: what are the chances of another surge in cases as a result of this? >> it is not clear what would cause that. we are ending the emergency on june 20 and then keeping in place a number of restrictions including, for example, keeping bars and restaurants closing at 8:00 p.m., which has been relatively effective in controlling the number of infections here but i think a lot will depend on whether the pace of vaccinations can stay ahead of the spread of the delta variant. only 6% of japanese have had the full two doses of the vaccine, which is what is needed to ward

off the delta variants. it is way too early for people to let their guard down. haidi: how critical is this for yoshihide suga in terms of managing this, pulling it off? we are hearing more and more of a snap election post the olympics. isabel: he has very little time left on his actual term in the lower house he has to call an election by the autumn and the question is when that will be. there have been a lot of reports it will be called in september and that would make sense for him because he has to face the party leadership election at around that time. but if anything goes seriously wrong with the olympics, that could affect his chances of keeping the same number of seats or more in the election and that could is party to want to replace him with somebody more popular so he has to make sure nothing goes seriously wrong.

on the upside, it's not clear how much upside there would be from this. the olympics has not proved popular so i don't know if you can expect a swing in support even if the event goes well. kathleen: isabel reynolds, thank you. now for a quick check of the latest business flash headlines. ebay is set to sell it south korea business to a local consortium for $3.1 billion. the financial times is reporting the companies involved include south korea's biggest bricks and mortar retailer. the move is being made in an attempt to overtake a company by softbank. a chinese ridehailing company -- its planned ipo. a source tells us icbc, bank of china, and four others have been appointed joint book runners on the deal. reuters reported that china's antitrust regulator has begun an investigation for possible

anticompetitive practices. a chinese bubble tea chain is aiming to raise as much as $656 million in a hong kong ipo, offering more than 250 million shares at $17 to $19 hong kong apiece. it is set to -- shares are set to start trading at the end of the month. disney is scrapping the august theater release of its highly anticipated beatles documentary and will stream it instead. the latest sign hollywood is worried that people will not return to cinemas in big numbers. the documentary will appear as a three-part raise on disney plus for no extra cost. plenty more to come as we are taking a look at inequality when it comes to income and wealth. plenty more to come on "daybreak asia." this is bloomberg. ♪

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haidi: we are just getting inflation. we are getting inflation numbers out of japan now. national cpi year on year, coming in at a decline of .1%, slightly better than expectations of .2% and picking up from the .4% contraction we saw in april. excluding fresh food year on year, we are seeing a modest gain of .1%, slightly better than expectations, stripping out fresh food, energy, wee hours a fall of .2%, also slightly

better than expectations. we still see essentially this extension of a deflationary streak to a 10 straight month and we have had restrictions on activity as a result of the ongoing extended state of emergency as well as potentially a partial offset from higher prices of energy, gas, electricity as well. none of this looking to move the needle for the bank of japan. the boj seems to be drifting further away from the fed in its meeting on that a bit later. let's bring our japan economy editor, paul jackson. taking a look at inflation numbers, it does look like japan -- the rest of the world sees inflation is stuck on its own island. paul: the inflation party has not hit japan yet. the figure people will be looking at today is that core figure. it is up 0.1 as you mentioned and that will be the first gain

since march. it's looking pretty unexciting. i should warn you, they are distorted by cell phone fees that have been pushed down by government drive to lower those costs and put more money in people's pockets. 0.4 percentage points. they are than a bit higher. compared to the rest of the world, the inflation story has yet to arrive in japan. >> what does it mean for the bank of japan's interest rates? have yield curve control for the 10 year. paul: i think that they are going to stay there for some time to come. you know, overall, all good news for japan. the rest of the world is excited by the inflation and the idea that we could have a rising

interest rates with the fed penciling in two hikes. if japan stays where it is, which is likely, this all helps because it's probably going to mean that the yen will begin and that is -- weaken and that is good for exporters. that might help inflation. also, a weaker currency and that means your imports are more expensive and it could bring a bit of inflationary pressure. haidi: your team -- kathleen: your team, a lot of economists talking about the etf purchases. paul: i don't think there's going to be any change that has made clear that they are going to pull back in good times. only coming in when there is a bit of a shock. they will jump in. the main focus today is the

covid program, the lending they are doing, and the bank of japan has ramped up loans by ¥80 trillion, $725 billion since march last year. that is a hunk of cash and yet bankruptcies are down i one third from two years ago so the big boys and girls are kind of ok. it is the smaller firms that are still needing that support from the bank of japan. kathleen: paul jackson, thank you so much for getting us ready. japan economy editor. more analysis on japan's economy later with the former bank of japan board member plus we will hear from the board member later as well. the european central bank's chief economist, philip lane, played down the central banks tapering signals and he spoke exclusively with bloomberg about the economic signals he is watching. >> i think it is very important

to recall of course the pandemic is global but in the end, where the u.s. is today and where the euro area is, they are so different both in terms of the states in the pandemic recovery, in terms of the reopening of the economy, but also in terms of the wider inflation dynamic and fundamentally, there is a few days difference in these meetings. last week, we had an assessment where inflation, even if it was a little bit high, it's going to converge back to 1.4 in 2023. medium-term pressure. the fed has a very different medium-term outlook. that difference really just means we cannot spend too much time trying to compare central-bank priorities on both sides of the atlantic.

we are in a very different days from the fed. >> the fed noted inflation has been stronger than expected. the readings in the euro zone have been stronger than expected. they don't see it holding above target that there was always a risk that there are surprises that start to seep into expectations. your colleague, the austrian central bank governors, said 3% inflation area the ecb would have to react although he did not say what that reaction would be. would you agree with that kind of a threshold? >> what has been interesting is of course everyone is thinking more generally about inflation these days but when you start to analyze it, conditions underweight might actually take hold that we may see them in the data and they are most likely with a strong labor market and going back to that basic point, the basic difference between the european debate and the u.s.

debate is that we have a general measure of unemployment around 15%. it is very difficult when you have unemployment so high to see very strong wage pressure and the way -- wage negotiations are coming in low which is not surprising given the slack in the labor market so the narrative of this second-round dynamics, we look at it and monitor it. you have to see it converted into wage decisions and pricing decisions and we don't see it so far and the economics of it is that we know it will take a long time for the labor market to fully recover and with that -- without that full recovery, the bargaining strength to compensate for, if you like, rising prices, and without that dynamic, it is hard to sustain that narrative. haidi: we are just hearing from

the ecb chief economist, philip lane, speaking with paul gordon. we are getting just some breaking news when it comes to presidential acquisition. $1.1 billion. that is to be acquired and we will have all of the common stock in an all cash transaction for $56 a share and that is a total equity value of a consummately $1.1 billion. breaking that down, $104 million of for doc, 980 $6 million of common equity stock value and we are continuing to watch that per-share price at $56. we will get you more on that as the details get to us.

$1.1 billion. let's get you to vonnie quinn with the first word headlines. vonnie: u.s. regulators are proposing a ban on some chinese electronics products because of security risks. the order covers products from huawei and a survey on cameras linked to alleged oppression in western china including -- in separate statements, the companies denied that they threatened u.s. national security. the u.k. is considering plans to open up international travel for inoculated passengers even as a surge in cases of the delta variant. under the policy, people -- the coronavirus vaccine would not need to quarantine on arrival from a medium risk countries. they recorded over 11,000 infections on thursday, the most is mid-february. hong kong is said to have approved a plan to ease quarantine measures, cutting

hotel quarantines from 21 days to seven days for fully vaccinated travels if they pass the antibody test. they will not be included in the plan. no decision on when the policy takes effect. among the high-risk countries at the u.s., u.k., and japan. naomi osaka and rafael nadal say they will not compete at wimbledon. osaka's agent said the number two ranked player will take some personal plans to prepare for the olympics. he is planning to -- the need to recover from the french open. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. kathleen: thank you so much. let's get to sophie kamaruddin in hong kong for the latest on the market. sophie: we could see a tepid

start. futures higher. nasdaq you minis climbing after we saw the benchmark wench a fresh record. the dollar taking a bit of a breather after a five-day again. we saw it reach a two month high. gold trading below $1800 an ounce, trading near a six-week low. oil prices to the downside. still set for a fourth weekly rise and as for brent, we could see a jump above $80 for that. this morning, this friday, growing up -- pulling up the chart on the terminal. iron ore prices may have slipped. 30 day vol hovering around 2016 highs. this as the markets consider china's policy on steel and cooling credit growth on the mainland.

switching out the chart, we have seen china's credit impulse continue to slow from the peak as stimulus is eased on the mainland. that does not necessarily mean a slowdown in china. the impact of credit growth has faded in recent years as construction is no longer the key source of the demand side. haidi: interesting changes. wall street institutions are announcing plans to have your staff return to offices. bank of america and blackrock are the latest. >> we keep bringing more back. the view is after labor day, our view is we will be able to operate fairly normally and then will start to make provisions for the other teammates as we move through the fall. haidi: brian moynihan along with other ceo's, really focusing on the return of vaccinated

workers. >> the message is you have to have the jab done in order to get the job done. they are vaccinated and that is one third of their global workforce so what brian moynihan is saying, those people are welcome back in the office by early september and then they will turn their focus to the ones who are on vaccinated at the moment. haidi: blackrock is taking a much more hard-line stance. what are they saying? >> they really are. they talked to their staff and the feeling among their staff was not those who are vaccinated would feel more comfortable not working with on vaccinated workers. those who are vaccinated under the cdc guidelines will not have to wear masks anymore and so, blackrock is saying you are allowed to come back to the office if you are vaccinated. if you are not vaccinated, please do not come back over the next two months has vaccinated

people get back to a bit of normality. a lot of companies have been grappling with how to get workers back. they seem to have hit the winning formula. nabila: they are one of the world's biggest office landlord so it is no surprise they are saying office culture is the way forward for them and what they are doing here in any at their asia-pacific headquarters is that they have allowed more personal space per person so 40% more than they had previously and they have also got a piano in the foyer that staff can take turns playing so that is working out well. sydney has done really well in terms of covid but what is surprising is that even in their new york office, 100% of the staff are already back. kathleen: thank you so much, finance reporter nabila ahmed. up next, we will be joined by a senior associate, max, to talk about economic disparities in new zealand.

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haidi: a new survey out of new zealand shows inequality rose more rapidly between the mid 80's and the early 2000's and any -- than any other developed country.

earning nine times to 10 times as much. our next guest looks at how to renew our systems of democracy and its growing economic disparities. i will bring in a senior associate. great to have you with us. a lot of people looking inward at new zealand, it is such a governance success story. the management of covid, the economy is chugging along well. it is a very progressive government in power. does it surprise many people who talk about seeing the inequality gap? >> it really does and it is one of those classic cases where the reality does not match the image because new zealand used to be a very egalitarian place but in the 1980's, you can say we out thatchered thatcher, we out reaganed reagan.

those disparities increased hugely and you now have a country where the wealthiest 10% control 70% of all the wealth and within that, the wealthiest 1% control one dollar in country, contrary to what people might think from the outside. haidi: how much does it come down to the property market? there are certainly very similar themes as you take a look at inequality labs, generational gaps in australia as well. max: there is a lot of focus on housing inequality at the moment. we have some of the most overvalued houses in the world and that is creating a huge split between those who are on the property ladder, who are seeing house prices accelerate in value versus people who cannot get into housing at all

and effecting rising rent and new zealand has very poor quality housing so that is a big one of the story. it is not the only part of the story. we have very low benefits by the standards of developed countries and our top tax rate is only 33% compared to 45% or 50% in many developed countries. we have quite week trade union laws -- weak trade union laws. kathleen: it is interesting to look at all the findings of your survey and one of them is that even though new zealand's government is often rolled out as egalitarian policies, like the capital gains tax, because they think they lack public support, and you note that even though support for action against inequality, that concern is less than people thinking it is the government -- is the government the best way to solve this? max: yes, i think new zealand is

in the same situation as other countries to some extent. we had a long period of time where the dominance of economic discourse was inequalities don't matter too much. the price for economic growth. like other countries, we are coming around to a realization that that is not true, that what the oecd called inclusive growth is really important, that you have to ensure the benefit are evenly shared but we are still dealing with the hangover of that period. in new zealand, there is a lot of skepticism about the idea that government action can be effective and there is a lot of negative attitude towards people on benefits. he is lauded internationally of course. domestically, there has been some action on addressing child poverty, trying to lift the bottom, but there's been very little action to say, address excess wealth, concentrated

monopolies, unjustified profit. the top end of the spectrum remains controversial. kathleen: is the problem that people at the top make too much or is the problem that people in the middle or lower part of the spectrum don't make enough? i don't care if you are a billionaire if i make enough money to have a nice house, a nice car, my kids go to school, health care, etc.? max: sure and that is one of the huge philosophical questions in this area. cannot separate the two. we have very high rates of children in poverty and parents who are in work. you have to think about why our wages so low in new zealand? the share of company revenue that goes to owners has massively increased in the share that goes to employees has massively decreased so i think you cannot address things like the working poor unless you address the fact that a lot of extra income is now going to the

owners of businesses that used to go to people on wages so i actually think all those things you are talking about are not connected. you cannot solve one without solving the other. kathleen: thank you so much. senior associate at victoria university of wellington. be sure to tune into bloomberg radio to hear more from the days big newsmakers and get in-depth analysis live from our studio in hong kong. listen via the app, radio plus, or bloombergradio.com. plenty more ahead. stay with us. ♪

>> the challenges as it becomes a public company -- it's just needing to prove the market options of asia. i think we see that southeast asia is a lesser-known region then china or india yet the market option is clearly here. haidi: -- haidi: that was anthony tan on the challenges ahead. he will be talking about breaking away from the family

firm and striking out on his own. kathleen: we are counting down to the start of trade in tokyo and seoul. the stories we are watching today, starting with some news on nomura in japan. its biggest brokerage faces another blow. nomura's asian prime brokerage is said to be leaving the bank, citing personal reasons. meanwhile, softbank has really pushed its title as japan's second largest company by market cap to factory systems maker. the tech giant lost about a third of its value since may 10. toshiba's largest shareholder said the recent independent report showed that the japanese company has dysfunctional corporate governance and an ineffective board of directors. you are going to move on to korea because we have some stories that have to do with politics the former south korean minister has declared his candidacy for next year's presidential election, becoming the first big-name politician to formally enter the race. the banking unit has preliminary

approval for and i go and he has been covering ebay, big story. set to sell its business to a consortium for 3.1 billion dollars according to the financial times area back to hong kong. sophie kamaruddin for a look at docs to watch. sophie: watching commodity related stocks after energy led asian equities lower on thursday as the reflation trade is unwinding but jp morgan saying that the treasury curve -- provided it does not transition to a flattening, that could allow moves in cyclicals and performance to continue, haidi. haidi: all right. the market opens of course course, sophie will be watching in seoul, tokyo, and sydney. we have lots more to come on this friday's session of trading and we will take a look at whether the tech rebound has a fallback of the reflationary trade to play through to the asian session as well.

nikkei futures up .4%. this is bloomberg. ♪

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kathleen: hello and welcome today daybreak: asia, i am kathleen hays in new york. sophie: i'm sophie in hong kong. haidi: and jaime -- i am haidi stroud-watts, reflation and trade -- the dollar flexes, commodities will get pounded.

with putin behind him president biden shifts focus to china, the white house plans for a summit with xi jinping will start soon. strains in the global shipping industry, it could take months to clear a container backlog. taylor: -- tom: i'm live in beijing, a shopping festival kicks off, a big test for china's consumer driven recovery. kathleen: let's go back to sophie in hong kong for a look at how the asian market trade is shaping up. sophie: the worst day for cyclicals versus defenses in the u.s., the nasdaq at a record, we are seeing some divergence adding .4%, one topic moving to the downside. the yen is about 1.10, the second weekly drop, this is on the boj decision, we got

inflation data from japan for the first time since march 2020. checking on the open and south korea, thursday we see it resume its climb to advance above on thousand points. this is a report that ebay is allowing its korean unit -- to sell for $3.1 billion. betting on strength -- turning to australia, where the index is heavily weighted to materials, commodities having the worst week since march 2020. back below 1800. we are seeing the downside for this losing nearly 3% at the start of cash trade, banking stock we have seen support from pickup and yields, the nci index

-- taking a breather after a five-day event, cash yields on the 10 year treasury still seeing -- staying steady at about 1.51. the curve flattening overnight. it comes to inflation trades, jp morgan strategists are not entirely giving up on reflation and the opening which they say is starting to be seen in emerging markets. haidi: our next guest actually -- joining us is frank benzimra , head of asia equity strategy at societe generale. tell us what you think, where are you finding opportunities at the moment? frank: it was a turning point.

in asia, one trend has been to come back on the china equity after the underperformance and one directional of this is looking at a show that is using the reflation trade, the stronger weights we could have on taiwan and korea, we cannot cost us forever. on the other hand, we are seeing another of headwinds on the chinese equity, we find it promising. so asia, all of that is going to continue but the leadership -- we could see some change. haidi: our question on the day on our mliv blog, will be --

they're expecting to zero out carbon emissions by midcentury, there is a new urgency and does that intentionally shift? is it more expensive? does that add to the inflation? one thing you like and china are green stocks, how do you calculate that inflation fear as a result of this necessary transition? frank: one reason of the higher end chinese nuclear commodity pressure is being driven by this decarbonization of the world, a number of countries becoming -- or on target to become carbon neutral. one element is it is true some

great technology, and one interesting thing is the case of china green tech has been -- seen some major correction in a number of -- after the new year until march, we have some level of evaluation which are becoming more realistic. we will probably get some small premier, but given the expected earnings, all of the rules in valuations are trending. haidi: -- kathleen: i'm curious for what you see broadly and asia tech, we have moderation going ahead now. what should we do with our investment? frank: you could see one in the

asian tech sector because there have been a lot of discussion between the tech where treatment by the semiconductor, at the same time internet and china internet being hit by tightening in regulation. now, get a little bit of a better understanding of what internet regulation is in china. with some price which have adjusted, which has come back to a more attractive level at the time when we see some moderation in the semiconductor side, there is some issue which has been created by a long-lasting shortage which is impacting the supply. we could also see some rotation out of the tech into china

internet. kathleen: how are they pv -- how is that going to play out for investors? frank: there is a window, it is closing very quickly, the main number this week was also assuring moderation. we are seeing all the role on the doc, there is -- they're getting more deep into negative territory. at the same time, if i look at this from an equity market interview, i see the relationship has been in the

past, after a rough credit cycle it has been a distant relationship and we can see that now with the markets very much aware. we could see the same thing. kathleen: thanks to frank benzim ra, now let's get to vonnie quinn with first word headlines. vonnie: the u.k. is considering plans to open up international travel for inoculated passengers, even as a surge in cases of the delta variant. under the policy, people who have received both doses of the vaccine would not need to quarantine and medium risk countries. the u.s. -- u.k. reported the most cases since mid-february.

the presidential election as opposed to cai line conservative replace -- major applications for security and oil markets. president joe biden has signed a bill marking juneteenth a federal holiday to mark the end of slavery in the united states. employees will be granted paid leave on friday. it commemorates june 19, 18 625 when the news of freedom came to enslaved african americans in galveston, texas two months after the confederacy had surrendered. pres. biden: i'm especially see -- pleased we came together as democrats and republicans to commemorate this day, with an overwhelming bipartisan support in congress. i hope this is the beginning of a change in the way we deal with one another. vonnie: the world's most

expensive property market, hong kong is getting more expensive and heading toward a new record. the high is expected to be reached after years of political turmoil and a wave and integration. -- immigration. homeplace -- home price inflation is still moderate compared to vancouver. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. kathleen: still ahead we get a preview of the japan rate decision with former boj or number takahide kiuchi. then we discussed president biden's focus on china and the planned meeting with xi jinping. we are live from beijing next. this is bloomberg. ♪

kathleen: just days ago a deadly gas explosion in china, 25 people were -- we are getting breaking news now. china has detained eight people for this fatal gas explosion. the china gas subsidiary general manager is among those detained right now. we are also seeing that the gases is it -- gas subsidiary has quote serious defects in equipment according to the chinese government. china gets -- gas says they will help probe the explosion, shares fell after the explosion, president xi jinping had to order a nationwide safety check

after the stub explosion. this is still reverberating. you can see pictures of the rubble, the wreckage, the investigation continues. we will be getting more details on this and sharing them with you as they come in. white house officials are working on setting up talks between president biden and his chinese counterpart, xi jinping. this comes as chinese tech companies are facing more scrutiny in the united states and according to a report from reuters, there may be subpoenas or bands. joining us is our greater china executive editor, jean-luc. -- john liu. >> after the meeting with putin in geneva, they were beginning to have talks about a potential meeting between president biden and president xi. we don't have the details of when that might be.

one potential location might be at the g20 at the end of october in rome. that might make sense. this would be the first meeting between the two presidents face-to-face. they had a phone call earlier this year. but no other contact. haidi: overnight we also heard that the sec posed a number of products from a number of chinese company's be band, what do we know about this move? >> the sec has proposed a ban on security cameras made by huawei and another -- eight number of other chinese companies, there is a review period before the final vote will take place so there will be a period for companies, schools, institutions who have bought those in the u.s., they will get a grace. e -- grace period to remove those. kathleen: also taking over the

role of overseeing the next generation of chip technology, a pretty important guy, how might that affect the talk between the presidents? >> the conversation between the u.s. and china has become a technology work. of course, he is better known as the chief negotiator, she appointed -- president she appointed him to speak to president trump about the trade tariffs that were signed. his appointment highlights how important semiconductors have become for the administered in beijing, it is of paramount appointed's -- apartments -- importance. haidi: john liu, our chief executive editor. china demanding focus today as the festival kicks off, on my part forms such as jd.com have launched promotions as early as this week.

tom mackenzie is on the ground at the headquarters, tell us about the rebound of the chinese consumer. what do you see as watching out for? tom: the big focus for us, primarily where we are down here is we are at the data center nor -- the headquarters north beijing, we are seeing across the country live streaming, international goods, import markets but the big picture is to get a feel of china's consumer has yet to be back to pre--- get back to pre-dimmick levels, online purchases are still strong so we will see that reflected -- pre-pandemic levels. may days when the shopping festival ramps up, last year they saw transactions of 42 billion u.s. dollars, they are hoping to top that this year.

the first day they saw transactions up about 140% year on year, just for the first day. we will get the top line number at midnight tonight. we will also get a sense of how things like livestreaming, coveney's like jd and alibaba have invested in, how that comes into play in terms of driving consumer growth and also the push into smaller piers, towns and counties, i'm looking to my right where they are showing that 80% of new users are coming from smaller cities. even -- it is an increasingly does competitive space, it is not just jd or alibaba, video platforms like kuaishou are also becoming more competitive and some are offering discounts to pull consumers on board. those are the factors we are looking at today. kathleen: these big shopping days create good results but more broadly retail sales are not strong enough in china.

tom: absolutely true and we saw the data this week in terms of retail sales for the month of may, we are engaging in the data we see today but absolutely the may data came in below what we saw in april. it suggests again that the pre-pandemic push i consumers are not back, they are not in full gear and that is important with china's longer-term recovery. exports have been doing well, industrial production, investment around property has been strong but economists are looking for the consumer to kick back into full gear given that covid cases for the last 12 months or so have been close to zero. there has been an outbreak in guangdong, that is suppressing it, consumers are cautious. you saw that over the holiday, in terms of travel and service, it was up only about 75% of the way back up to pre-pandemic

levels. the consumer is more cautious, we will have to see whether that starts to reflect any change in the e-commerce space. kathleen: tom mackenzie speaking to us at the jd.com headquarters in beijing, later don't miss our interview with tutti dot-coms bites president -- vice president -- with jd.com's vice president. this is bloomberg. ♪

kathleen: the head of bank of america told bloomberg its customers, especially small businesses are struggling with a tightening labor market. the ceo also discussed whether the bank sees inflation is transitory. >> if you look around the world, central banks will struggle. at the end of the day it is not determined, if you the about

india and what they went through through the last several weeks, about the u.k. delaying full reopening because of the variants. that's the big question. you look at the u.s. vaccines across half the population and now it's reopened, you have to see if the variant will affect us. -- that debate aside, the question of economic projections this year are 7%, year -- the streak is 7% in march as the fed but next year bank of america security team -- if you believe the streak and give america -- the reality is the economy is growing much faster than it was with more fiscal stimulus to be spent in the customer's account, more opportunity for the economy to round out and grow in that is something people should pay attention to. last year at this time, the rate

of growth was half of what it was predicted to be. those dot plots will become uninteresting because things will be moving faster. in 2019, the same fed, same chair, different people but the same researched apartment, they were sitting there may 2019, a 2% funds rate, economic trajectory growth was 2%, unemployment in the threes, for good at that now. three times the growth rate projected, the on employment rate projection is in the low threes by the end of 2023, height raised by next year, low force the steer. -- low fours this year. it will be an interesting tug-of-war. >> it's a remarkable story of bounce back and growth, but what about inflation? they've also taken the fed's

projection, 3.4%, the core is 3.0%, you have your tentacles into so many consumers as well as mo businesses, more than anybody else. are your customers feeling real pressure from price increases? >> great debate is what is temporary and what is transitory, as we talked about this morning, these terms are trying to signal what they think. right now the firm belief is most of this is transitory. we will see. but what about the sticky things? which growth has become sticky and you see that come back, as unappointed rates come down, you are seeing the pickup and we will see with the new claims are this morning but you are seeing it tighten, if you ask our small business customers, their last -- last fall the number one issue was the pandemic. the spring the number one issue is getting people to work and supply chains.

that means inflation characteristics are out there to be filled but is it temporary? is it transitory? there will be a great debate about that but it still comes to -- what economic growth is and what you see and wage growth leading into that as to whether parts will happen. in our customers accounts they still have 65 or 75% of stimulus dollars, the average balance for people is $2000, you are seeing it ready to be's and, you are seeing growth in 2% year to date to the 14th of june versus of 19, the normal year -- 19 or 20% growth, that is strong. inflation could happen, that is the great debate but we have to get further into the question of what is transitory? haidi: bank of america ceo brian moynihan speaking with bloomberg's david westin. later we have exclusives with

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haidi: let's get a look at our markets are so far. there is a part of the trading session we saw some gains. sophie: so far the original index could still be set for a weekly loss, a big drag this week. but when you look across other markets we are seeing stocks in seoul and japan set for weekly gains, but currencies are not sure, -- we are seeing weakness

across the south korean won and the aussie. -- back around 85 basis points as rates are higher on treasuries, dutch across the border -- across the board, the nikkei 225 the second day, the weight from cyclicals, check out this jumping nearly 10% after agreeing to the drug trial. we're keeping and i on what is going on with the ebay deal for its korean unit, jumping more than 2% on that report. it could be in the running with a $3 billion unit. kathleen: the bank of japan expect to stand on its negative

interest rate and asset purchases while it extends covert aid for a third time. japan's central bank is further from an increasingly hawkish fed. joining us is takahide kiuchi, a former boj member. the sense of the boj drifting from the fed seems stronger as got the latest numbers, the cpi data managed to rise. for the first time in 14 months. it seems like japan is going to be stuck in this spot as one by one other central banks eventually start moving. takahide: i think the boj is not likely to follow the movement of the reserve because of the week cpi numbers. the inflation rate is -- in

japan, partly due to that. the recovery is tied to vaccinations. but apart from that, the trends with other countries and other central banks are supposed to stop. kathleen: how important is it to extend ages mo businesses question mark -- extend the aid to small businesses? takahide: -- with bank of japan, to help the banks and expand lending to companies affected by the corona is proven, but for

some companies -- due to infections. the bank of japan was to support small size companies and equities. -- wants to support small size companies and equities. haidi: much of this has been on export demand, right? looking at the boom we have seen in exports which has benefited, the ability to make policy for the big japan and economic recovery. do expect this to continue particularly as it looks like the domestic -- do you expect this to continue particularly as it looks like the domestic challenges will continue? takahide: i think the second quarter -- the exports are

recovering, that could cause a benefit that the export companies but i think the small size companies are still stimulating due to that week consumption. and it is caused by the corona program and also our state of emergency. the government declared a third state of emergency in april and it is continuing. but the end of that state of emergency could push up the gdp growth in the last quarter. i think the tokyo games and the state of emergency are factors, the gdp could -- and the boj still has prospects in the second half. however, small companies in the

sectors could be very severe. this is likely to continue the course of that in the second half of the year because of defense consumption continuing to be weak. haidi: if the rest of the world sees info inflation and japan does not, what does it tell you? does it mean this is a demographic story or a deeply structural story question mark --? takahide: -- the low inflation rate combined with other countries. i believe the threat of the inflation rate is determined by the trend of productivity growth

rate or potential growth rate, right now it is almost -- but it could be normal. i think it is very stable. japan does not need to take a reduction. but we need higher potential growth rate. kathleen: what is the number one thing in terms of a press conference that you are hoping to hear, expecting to hear from the governor looking ahead and have the current economy? takahide: i think there could be issues in a press conference. many people may raise questions about impacting the games or the impacts to the economy in case

of cancellation and how to reduce that and the implications. that will be interesting. haidi: takahide kiuchi from nomura. we will get more later, at 11:00 a.m. hong kong time. next, the global shipping crisis could be worse with what happened in the suez canal, we will tell you about the situation in the ports. this is bloomberg. ♪

vonnie: this is daybreak: asia and i am vonnie quinn with first word headlines. u.s. regulators are imposing a ban on chinese technology products because of security risks, including security cameras. the companies have denied that they threaten national security. under investigation by hong kong security regulator under accusations that they say stem

from -- china nrc, the conglomerate went bankrupt in 2018. several say cls a misled -- clsa misled competitors. the u.s. supreme court has rejected the latest republican attempt to invalidate the. the 7-2 ruling marks the third time they have backed the so-called obamacare law. it provides assurance to 32 million people, president biden says this is a big win for the people. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ haidi: the global shipping industry already facing pandemic shots but they are now facing another test, the shutdown of

one of china's busiest ports, it could take months for the backlog to clear. joining us is james, what is causing the problems we are seeing in the southern chinese port and other ports? when do we see a solution? >> there was an outbreak of covid late in may which is basically under control now but there were a number of cases in the port and amongst workers. the local government had to shut down the port, they have been gradually returning to normal but they are still operating at about 50% capacity. now say they will operate at 100% capacity by the end of june, but this is one of the biggest ports, it has a capacity of about 13 million containers each year.

it is the manufacturing heartland of china. it has affected the amount of cargo. now that it is back up and running, it will still take months to deal with the backlog. that is coming into the christmas shopping season, which is important in the third quarter. kathleen: many around the world about this problem, is this a recurring issue? >> i think it will be a recurring issue until china changes how it deals with outbreaks. there is no guarantee there will be an outbreak and loads of people are not vaccinated yet so they may be bringing the virus in. china's strategy now is to shut everything down and protect everything. until that changes, this will keep happening. kathleen: that is economy editor james maker. -- james.

china is planning to ease hotel quarantines for travelers, it has become a sore spot for country reporting few local cases. steve joins us from hong kong. what do we know? >> can you feel the frustration welling question mark a lot of people in hong kong have been frustrated, hong kong has been relatively unscathed by the coronavirus outbreak. there have been very few daily cases that are untraceable, local inspections, there was a 40 day stretch as well. that has built up frustration not only in hong kong but in places like singapore. they seek europe in the united states opening up and lifting restrictions, they feel they are going to be left behind and they will not be able to travel. one of the biggest stumbling blocks to traveling has been in this up to 21 days quarantine in hotels at high cost and low availability this summer.

what we are hearing from sources is people close to the situation are saying the hong kong government has apparently improved, we are not gotten confirmation yet, -- approved, we knock on confirmation, this plan that came from a panel of government advisers who recommended a relaxation of these quarantine rules. they have this plan to lower the quarantine for most places, most arrivals to seven days, currently it is 14 and 21 days in extreme cases. and they blocked some arrivals from some destinations, so from 14 days until 74 places like australia and new zealand who are low risk, high risk locations like the united states, the u.k. and japan will not be part of this new relaxation. of course, that accounts for a lot of the ex-pat community here. that is where we stand right now. hong kong is still extremely low vaccination rate, about 24% of

the population has gotten at least one shot, far fewer getting people does of the two shots for sinovac and biontech. haidi: in japan we are hearing about the state of emergency being lifted about a month ahead of the olympics. as well as how many domestic spectators will be allowed. >> the state of emergency has really hammered economic growth in the regions that produce most of the economic growth, about half of the economic growth and gdp output from tokyo, osaka and other regions affected by this long-standing state of emergency. prime minister sucre is saying they should ask -- suga saying they should relax that this coming sunday but the reserve the right to reimpose the state of emergency during the olympics, they start to lie

23rd. -- july 23. if cases spike they could reimpose the state of emergency. the capacity issue, newspapers are reporting that some communities have temporarily agreed to limit capacity at the olympics at 10,000 spectators per event, we will have to see how that lays out that they can adjust that depend on the venue, sport and outbreak situation. haidi: our asian correspondent coming from hong kong, the man who was charged with ensuring that a city is ready for the next world cup will allow it to be the first truly global celebration since the pandemic. he also said he is keeping close tabs on the tokyo olympics for the lessons that can be learned. >> as the vaccine becomes more

and more available and more people are vaccinated, as teams are vaccinated, we are hoping and we are optimistic it will be the first truly global celebration in 2022. >> vaccinations it sounds like will be pretty much mandatory for those who can receive them. >> every country has its own restrictions but from everything we have seen, not a medical expert but it is a given with vaccinations today, -- you see tournaments today, the euros are playing as we speak, in america, the common bowl is playing in south america, and july there is the gold cup and all of them have a form of covid protocols being implanted. >> specifically from the tokyo

olympics. >> and a sense we want to learn from every tournament. >> but with the olympics you are watching and will see what happens question mark --? >> we have people in europe right now looking at the europe tournament, looking at the covid protocols they have over there, we are learning from their operational experiences, there are people that will be in north america in the united states during the gold cup, we are learning from south america and brazil right now and we will be looking toward tokyo and learning from what they have. >> i want to talk about using the world cup to categorize sports and how do you see that? >> major in international tournaments cascade -- have a cascading effect on different sectors of the economy. the contribution to the economy would be about $20 billion, it is very high level, once the

tournament ends we will make a proper assessment. a significant portion goes toward construction, another toward tourism and when you say that there is a cascading effect there. we are talking about hospitality sector, the transfer of knowledge and hosting major events, and a catalyst for the economy. no doubts. we're talking about that and sports technology, hotel management, hospitality management and so on. it all depends on how we utilize it, we are trying to with the tournament -- we have always said this is a transformative tournament but more importantly is not -- it is not impose on the countries development plans, it is meant to serve as an engine to move forward and accelerate a lot of the initiatives government has committed to or had planned him a in terms of urban develop mentor economic diversification. -- development or economic

diversification. kathleen: don't miss our coverage of the qatar economic forum, the event will feature heads of state and top ceos and it kicks off june 21. this is bloomberg. ♪

haidi: an indian billionaires

dream right out in the global world -- wealth ranking, a report raised questions about offshore investors. he lost more money this week that anyone in the world, his fortune tumbling by about $13 billion. continuing the fallen thursday, let us get more from our equity reporter in mumbai. what happened? in the adani group? >> -- i will remind you last week he was closing the gap, but it seems the market had other plans. local reports monday said a company there has frozen the accounts of three -- who are very large in the company. the company denies it and they

followed up on tuesday, sharon communication with the depository to show that the accounts are active -- sharing communication with the depository to show the accounts are active. but why did this happen even after the company has clear the air? number one, they did find a large portion of the company -- second, there was also -- almost negligent coverage for the company and there was a blind spot for information. kathleen: how does this episode impact the company going forward? >> it brings forward issues with the group, one they need more investors to come into the company.

second, if they have wider coverage so there is more information for the people. if you look at the adani group, -- some of these companies are almost monopolies and they are aligned with the current agenda which gives them a good path for growth despite the selloff. we want more information and more coverage, more critical investors. kathleen: that was newport a chart area in mumbai -- big stories, now it is affecting stocks. sophie: china gas shares as the local government released they

detained eight people in relation to an explosion, keeping an eye on taipei with deutsche bank bullish, local media in taiwan reporting the company is evaluating setting up a new spac in germany. offshore, trading around 6.45 after five days closer to its 100 day moving average. the yuan appreciation may slow, citigroup seeing gains -- against the chinese dollar. haidi: coming up, don't miss our interview with jd.com, the shopping festival kicking off today. plus we will interview others

later on, an exclusive with asia's are just resettling asset management, and from therapeutics. they make the debut in hong kong today. that is it for daybreak asia, market coverage continues, in hong kong. ♪ ♪

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>> is 9:00 a.m. in beijing and shanghai, welcome to bloomberg markets china open, i am tom mackenzie live at jd.com headquarters as the beijing shopping festival kicks off. >> a difference in consumption, i am david engel. coming down from trade, -- david ingles.