>> hello, good morning, welcome to daybreak australia. >> we are counting on to asia's market open. >> i am shery ahn. the top stories this hour. u.s. stocks tumble as the 10 year yield goes below 1.3%. covid variant concerns slump --

trump risk trade. >> we will take at when the latest state of emergency will boost the chances of a stimulus package. >> global taxation tops the agenda as g20 finance administers meet in venice. they said the proposal is there. we are seeing u.s. futures muted at the open but this after the s&p 500 fell the most since may. we have anxiety about the reflation trade and not to mention our growth stocks as well. economically sensitive industries under pressure. we saw the 30 year yield dropped below 1.9. we had dated with the u.s. jobless claims arising uninspected last week. extensive gains up .4%.

we did get those numbers for you as a stockpile are falling for seven consecutive weeks. it has all been about that reflation trade, that reopening trade that is now under threat. we are talking about those airline stocks who are piling in. now on the cusp of the correction, down almost 20%. two percentage points away. >> it feels like investors thought reopening the reflation trade would be a one-way street but now we are seeing concerns with that delta variant. the other thing we are watching are the meme stocks, the reddit traders, the favorite stocks are now tumbling closer to a bear market territory as well. investors are deciding to pull away from the most speculative equities in search of safer havens. this is the group of 37 meme stocks falling people 6% on thursday. that extends its retreat from the june 8 highs. just shy of 20%.

this also just there are some concerns that we might see some sort of liquidity adjustments in the markets. right as we continue to get greater uncertainty with regards to the reopening outlook. our next guest says -- let's get more analysis on the market. you said we could see a temporary technical pullback this summer. is this what we are seeing now? >> i think it is too early to tell. when you have investors that are very much in stock, they start getting a little bit nervous. you start seeing them get out of more speculative pockets. that will include value and cyclicals and it will also include meme stocks. i think there is only one direction they will go over the medium term. whether this leads to a

correction which would be a buying opportunity in our view, that remains to be seen. >> how do you rebalance your portfolio when you know there is going to be greater uncertainty when it comes to monetary policy and the virus outlook? >> when it comes to the virus, ethic it is important to keep covid at the forefront. we would never discount out any other variants here in california. they had a triple newton strain. i will spend my evening examining it. i think with all that said, we don't expect that we will get logged down in major markets like last year or even partially this year. i think while covid remains a threat to investor sentiment more so than the economy, it is something we are watching and when it comes to inflation and monetary policy, the fed really

has left their decision up to fate. fate is not serendipitous. it is based on a lot of big eta. for that reason, we don't anticipate that they are going to turn hawkish or have earlier lived off white as early as some markets are worried about. >> we are seeing that small caps are now headed for the first monthly loss in about 10 months or so. we have seen the longest winning streak since 1983 or so. with the yield curve now flattening, what will happen to these cyclical trades? >> when it comes to sickle close, a lot of them will be about flattening with the yield curve. when it comes to broader value, there are consumer staples and

telcos that can do better with flat yield curves because they are dividend payers. they are percent -- they are perpetually in the search for yields. they may get a pickup. >> where would you find those opportunities? within the u.s. or abroad? >> we still have a bit of u.s. bias but we are looking at shipping that. we are looking at the pace of vaccinations. we are believing that as the u.s. is starting to stall in its vaccination efforts, while the emerging markets developed -- there started to pick up the be a commensurate pickup in consumer spending and that is where some of those cyclical names can really get their second wind. it is abroad versus in the u.s.. >> what you make of chinese tech

names at the moment listed? the investment case is pretty conflicted. on the one hand, it is tantalizingly looking like the business case is pre-strong but would you risk that regulatory uncertainty? >> tactically, it is very difficult to get behind any of those. those companies are caught in a crossfire. beijing is saying you have to keep chinese citizen dead in the mainland. from a tactical perspective, we would steer clear but there is a massive emerging middle class in china. that middle class will be very tech savvy and we believe in that theme. we believe in that theme over a multi-decade horizon. >> ending on the theme of pulling away from riskier bets,

what are your bets coming away from the crypto space? bitcoin has not done a lot. >> we don't invest in crypto. but we do pay attention to it. we are all asset investors and crypto has influence in all other pockets of markets. there is still a resistance around 30,000 per bitcoin. we think if we start getting to that level, that is where you may see another pickup. if it breaks down further, if it becomes oversold, that could be a more interesting picture. it is an asset class where it is more like having a fundamental case. that is one reason we are not in the space right now. >> max, great to have you on. let's bring sophie back in from

hong kong. investors have a lot to digest. >> yes, they are set for a weekly drop. we have the biggest week of losses as -- this is back below 110. emerging market policies have days of losses. this ahead of inflation data from china. we may see more signals of softening recoveries. with that dovish tilt from beijing, that lays low chinese assets on thursday. we are seeing the chinese bond rally pushing the yield. looking ahead, citigroup's are

moving to 2.9, 5% on the chinese 10 year yield. given the economic eta -- data from china that could be lacking. >> still head on daybreak australia, will get a preview of that global corporate tax firm. coming up next, the tokyo olympics have been spectators in the city. the new state of emergency being put in place, this is bloomberg. ♪

>> you are watching daybreak australia. president biden says the u.s. is on track to end its mission in

afghanistan by august 31, even if the taliban mix can submit the withdrawal. biden-related on america pot longest war. he says the u.s. will continue to provide support but it is not there to build a nation. president biden: u.s. support for the people of a cannon stand -- afghanistan will endure. we will speak out for the rights of women and girls. >> a top eu official says the potential closure of the only remaining border crossings would be catastrophic for millions of civilians. the eu commissioner for crisis management made the announcement ahead of a crucial vote for the un security council. it is due to close on saturday.

british travelers who are fully vaccinated against covid-19 will no longer need to quarantine when returning home from moderate risk nations. the u.k. transport secretary says starting july 19, returning passengers will be told to take a coronavirus test within two days of returning instead. global news, -- global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan, this is bloomberg. >> planning to request emergency authorization next month for a booster dose of covid-19 vaccine after claiming that it can sharply increase immune protection against covid variants. robert, heidi was just saying earlier that here in the u.s., things are back to normal.

what do we know so far? >> i talked to the head of research today and they are going to apply for a third dose booster in the u.s. in a month. that is based on a study that shows that a booster can increase antibodies 5-10 fold. antibodies are winning a little bit after you have been vaccinated for six months. >> that is why we are seeing more infections in young people. what does this mean? -- mean for how effective they are against delta? robert: they will still give you strong protection against disease and hospitalization

against delta. there was this recent report out of israel that indicated while protection against disease was still strong, the protection with the pfizer vaccine was only 64% effective. israel is one of the first countries to get there vaccination campaigns going. that might allow the transmissible variant to penetrate a little bit. >> what is the outlook for places like japan where you have thousands, hundreds of athletes coming in from abroad and they are not fully immunized or the vaccination rollout has been pre-slow? >> this virus has become transmissible. amongst people who are fully vaccinated or not vaccinated at

all, they have to -- who are not fully vaccinated or not vaccinated at all, it is important. >> let's get more analysis on the economic impact on japan from this latest fourth state of emergency. tom, does this change the outlook for growth or stimulus to provide something of an onset? tom: this lockdown will be a drag on japan's growth. we were anticipating a rapid rebound in the third quarter. we still think there will be a rebound but with the lockdown in tokyo and okinawa, there will be a blow to consumption. that will mean that the forecast for q3 growth comes down. we are looking at a 6% q on q trade growth for the third

quarter. japan just cut that to 3%. with that blow to growth, expectations of a fiscal package to offset the drag are going up. haidi: they are having concerns about chinese growth as well. we have inflation data in focus today. what are we expecting? tom: i think the focus today will be on the ppi numbers. ppi has been hitting worryingly high levels and china, contributed to the global information -- inflation narrative. what if china's hi factory -- high factory numbers push up prices elsewhere? we think the june numbers will provide a little bit of assurance. china has been moving against high commodity prices. we think what that means is that china's ppi is going to edge

down and take some of the heat of that global inflation debate. haidi: up next, as the boeing 737 max is inching toward a return and china, the country may return test flights. we will get you the latest, this is bloomberg. ♪

haidi: bloomberg has learned that chinese aviation officials have signaled their conducting flight tests on the boeing 737 max. that is one step toward lifting the grounding in china. what could be the timeline here? >> the timeline remains very uncertain. what we know is that for months

now, the whole world, at least the aviation world has been hanging in the balance, wondering what china will do with the 737 max. what we have learned is that the country has signaled it is willing to schedule a flight test in this case. it is a significant step forward. if it does indeed occur, the details have not been hammered out yet, it would be a significant step forward in returning the plaintiff service in china. >> china was one of the first countries to ground the max. will there be any indications for the broader u.s. china relationship? >> there are significant implications for those

relations. there would be a thought in relations when the biden administration took over in january but that has not occurred. there seems to be a continuing tension between the two countries and progress on something like the max could end up being the carrot or indication of progress more generally. that is something we are keeping a very close eye on. haidi: what does this mean for this plan? >> that is a very interesting question looming in the background. the c919 is china's entry into the single aisle aircraft. it is a >> competitive -- competitor -- it is a direct

competitor to the max. we expect it to be certified and put into service in china this year, whether and when it will be put into service in the u.s. and elsewhere is not as clear. there are many u.s. and european parts manufacturers that are supplying equipment to the plane. the future of the plane is very important. the future of the c919 and the max are lined up next to each other. they are not directly linked exactly but in both countries' minds, there is at least a tenuous link. the future of the max is being closely watched just for that reason. haidi: alan in washington with the latest on that boeing plane.

here is a quick check of the business flash. tesla debuted the cheaper versionyl of its model why sport-utility vehicle in china. $46,000. it is 20% cheaper than the original. that launch comes after ciesla's -- tesla's china car delivery slipped last quarter. morgan stanley says the personal information of some customers with dormant stock accounts was stolen after one of the hacks. they were exposed names, dates and births -- dates of births, social security numbers and passwords. morgan stanley would not say have any customers were affected. wells fargo says it is shutting down all personal lines of credit and will no longer offer the product. they say they can offer credit

cards and personal loans. the personal lending book was worth $5 billion at the end of march. this is in the interest of simple fine operations and improving profitability. this tokyo insurer says it wants to diversify its global footprint as it moves on from the green cell capital scandal. the ceo says it is eyeing smaller acquisitions. they became embroiled in the scandal after guaranteeing billions of dollars of security -- securities. let's take a look at the day head for australia. we are watching two stocks on the main gauge. sentry capital will be replacing bingo industries.

analysts are saying -- managers of some $270 billion in retirement savings are being kept safe in stocks even as the central banks are being -- eyeing exits. shery: look at the markets right now, we are seeing u.s. futures muted at the open. this after they fell the most since may. we are seeing the downside pressure when it comes to kiwi stocks, down half a percent. the sydney lockdown continues. the aussie also under pressure, the lowest since december. chicago nikkei futures unchanged at the moment as we have wci extending gains. plenty more to come on daybreak

australia, this is bloomberg. ♪ look...if your wireless carrier was a guy, you'd leave him tomorrow. not very flexible. not great at saving. you deserve better - xfinity mobile. now, they have unlimited for just $30 a month. $30 dollars. and they're number 1 in customer satisfaction. his number? delete it. deleting it. so break free from the big three. xfinity internet customers, take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds.

>> you are watching "daybreak australia." i am su keenan with the first word headlines. pfizer says it real request -- will request emergency authorization for a third with your dose of its covid-19 vaccine. the news comes after early data shows it can sharply increase immune protection against the coronavirus. the company has received initial data from an early humans that he showing that a third dose of its existing vaccine is safe and can raise antibody levels by

five to 10 compared with the original vaccine. it is official. in the tokyo olympics will ban domestic spectators at events in japan's capital. the decision came from the olympic minister -- the prime minister, i should say. a fourth state of emergency for tokyo from july 12 through august 22. more than half of the 43 olympic and paralympic venues including the site of the opening ceremony , are located in the capital. twitter has pledged to fully comply with india's new internet regulations. it joins the likes of facebook and whatsapp in doing so. the social media giant and india's government have been embroiled in a dispute over rules that critics say curtail free speech and privacy. indian officials demanded twitter and facebook follow regulatory rules including taking down hundreds of posts and divulging sensitive user data. executives face possible jail time. we are told that china's

aviation officials are willing to conduct test flights on boeings beleaguered 737 max jet. it marks a step forward and possibly -- in possibly lifting the grounding in the manufacturer's largest overseas market. sources say that boeing is preparing to send a delegation of regulators this month. it has been cleared by more than 170 other countries. finally, jack ma just got overtaken. the founder of the world's biggest electric vehicle battery maker has overtaken ma in wealth rankings. his net worth jumped to 45.5 billion according to the bloomberg billionaires index, more than the alibaba cofounders 48 billion. he has the latest in a string of next-generation tycoons in china amassing fortunes in the clean energy boom. 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 su keenan. this is bloomberg. haidi: sydney's delta strain covert outbreak has reached a record daily high as authorities grow more concerned that some residents are not complying with lockdown restrictions. joining us now with the latest is georgina mckay. we saw yesterday's case numbers reaching a record high. what is the response given that we sort of jokingly but also throw our hands up talking about this as a kind of lockdown lite. georgina: good morning. w>gk(-■%■sydney rec8 cases in the community yesterday, and over half of those cases came from areas in sydney's southwest and today, state police launched an operation in this area to up the police presence in this part of the city, targeting those who are not complying. this is a lockdown lite. there are hard restrictions as we have seen in melbourne in the past. the state government is begging

people to stay home. it is saying case numbers are too high. the reality is, this lockdown could very well be extended the arms next friday. some sydney residents are not as diligent about weighing home this time around because they can look overseas nce economies opening up and death rates declining. shery: we sound like a broken record now. in the vaccine rollout, what is being done to speed up the process? georgina: interestingly, yesterday, the federal government announced a significant acceleration of the program in new south wales. the state is going to receive an additional 300,000 vaccines with equal parts pfizer and astrazeneca. and astrazeneca. they are also reports -- there are also reports turkey leading that the federal government has secured a contract to triple its access to the pfizer vaccine to around one million doses a week from mid-to-late july and the federal government met with business leaders in australia

such as qantas to discuss how work cases can become -- workplaces can become involved in the rollout. haidi: georgina mckay with the latest on the covid situation. australian pension funds are keeping their faith in stock confident. that as central banks are looking to pull back from the exceptional malaise that has been supporting markets. let's get more from our pension reporter. how does this play into the strategy and the uncertainty of the post-covid world? >> the pension funds, they are very long-term investors. these guys are making bets for two years to three years in advance and we are seeing a little bit of resurgence of the virus, which is going to crimp economies in the next three months to six months, you would think, but as we look at the post-pandemic world, economies will start to reopen, as we have seen in melbourne, so in that sense, economic stimulus gets

pulled and companies are thriving, people are spending, moving around, and that is what they are betting on, company earnings are going to drive those gains in stocks so they are keeping a little overweight there. shery: we have seen such a run-up to global equities. msci world up more than 30% this past year so there must be some risks even as they are investing long-term. matt: there certainly is and there is certainly risk to this outlook. the question is what happens with nation. speaking with the cio, he said if he had a genie in a lab, he would rub it and the first question he would ask is what is going to happen with inflation, whether it will be temporary or if it is going to be more structural. that will all derail their portfolio allocations, particularly into illicit assets. because that flows onto what central banks are going to do,

so that is the big question, particularly how it will impact them. and short-term, it is what happens with the delta variant of covid-19. as we are seeing, my colleagues up in óv÷9

>> you are watching "daybreak australia." the bond rally this week has seen more unwinding. the reflation trade has hit a wall. the yield gap is near the narrowest levels of the year but j.p. morgan asset management see this drop in yields. that is a temporary blip. the global recovery is still on track. the yield for treasuries rising

back to 175%. they are pointing out that the negative real rates picture is not discounting growth at all. the recent angst send treasuries jumping and put a dent in risk assets. emerging market stocks capping an eight day loss. southeast markets, a notable drag. taper concerns. as vaccinations ramp-up, goldman predicting that emerging-market stocks will rise 13% in the next 12 months to hit 1500 points on the msci gauge for em stocks with mexico among the referred place. it will help support that move for em's. haidi. haidi: global taxation is top of the agenda as finance ministers and central bankers gather in venice. our secretary general the minimum of global tax proposals is very fair.

>> as a result of the globalization and digitalization of economies, it has created significant inequities. and the deal that is -- that was 131 countries around the world through the oecd g20 process. it's a very fair deal. >> is this 15% tax rate really a revolution? dani burger explains. governments have a new mantra for how they might pay for it all. >> for too long, there has been a global race to the bottom and corporate taxes. >> the u.s. proposal for a minimum rate for 15% is an interesting and solid basis. >> last month, g7 countries agreed to a global minimum corporate tax of 15%, what they

called a landmark agreement. last week, the oecd managed to get 130 countries and jurisdictions on board. the current goal for implementation could be as soon as 2023. the oecd's current plan would bring in an extra $150 billion a year. >> what would harm innovation is the absence of trade wars. taxation would harm innovation. be such a historic crackdown. the 15% level would be higher than ireland's 12.5, but lower than all g7 and most other e.u. nations. ireland and hungary have not yet joined the plan. ireland is likely to remain the go to in europe including google,ñ,ñ,ñ, for ambitious enough. >> 15%, still a big drop ahead of us. dropping to the minimum instead of dropping to the bottom.

we need a minimum corporate tax trade that is close to the level where we are now on average. we would have to be at around 25%. >> those most at risk must be the zero tax territory, countries like the uae, which is not part of the g20, might choose to be exempt. however, offshore tax havens including a network of british overseas territories like bermuda, cayman islands, also jersey, the isle of man, under pressure after britain hosted the g7 meeting. for the $7 billion going through those islands, it might be the end of the game if global powers find a way to not only agree on but implemented a 15% global tax. that was dani burger. our next guest says the g20 fund will kick off the last stretch of the tax negotiations. let's bring in a professor of law from georgetown university

law center. great to have you with us. how long could this last stretch cake given the issues that remain? >> thank you so much for having me. this could take a while. the oecd has actually been working on this plan for several years with the 139 countries. they got agreement of 131 of those countries, and there's still a lot of steps to go forward. there is still the issue of whether or not more countries will agree, but after that, there's still technical details to be worked out so the oecd has acknowledged that more work still needs to be done between now and october and the oecd has said that there is not a plan for this to go into effect until 2023. and then after this goes into effect, the issue is how many countries really do implement this into their domestic lives so the oecd is not imposing a requirement that countries have a minimum tax.

it is saying if you have a minimum tax, this is the form it should take. it should have at least 15% as the rate. the question is who implemented it and the technical details. where are we at right now when it comes to the u.s.? we heard from kevin brady, saying that there are many issues that need to be ironed out before we have the backing of risk -- of congress. the united states already has a global minimum tax. we were the first country that implemented it and we implemented it under the trump administration in a tax bill passed by a majority republican congress so the biden administration is going to remind republicans of this fact and the issue for the united states is whether or not the amendment to make it stronger comes in line with the 15% number but we actually have this

on the books. we are the country that already has this. so when members of congress say that they are not willing to implement this, that ignores the fact that we actually already have it which i think is an interesting thing to remember. haidi: when you take a look at the eight countries that have expressed concerns, what are these concerns, and are they reasonable? lillan: there are 139 countries that have been talking about this from all around the world and countries do not all represent the same concerns. some of them are european countries. there's ireland and estonia and hungary and they are concerned that their tax rates are below this percentage and they don't want this minimum tax to go into effect. they also likely do not want the european union to implement its own version of the minimum tax services and expression of optimism but also possibly about the european union implementing

a directive of some sort to deal with this. the other countries have some different interests. there are several countries in africa and one of the issues of this negotiation have been whether or not the concerns of countries outside of europe and outside of the americas are being taken into account so this may also be more of a geopolitical statement about whether or not the interests are being incorporated. one thing to note is that even if countries themselves don't implement the minimum tax, they may end up feeling the effect of it because the way the minimum tax works is it is a top up tax. it basically says if a subsidiary does not pay 15%, then another country can make up that difference. so that is one argument that the oecd is making is that not everyone has to implement it for this actually to have the effect of pushing up tax rates. haidi: what is the gap between getting the sign-ups and

actually getting the domestic ratification? lilian: that really depends on the individual country, so some countries have been sort of looking for an opportunity to implement this in their own lives. this gives global signoff to that. they will be willing to put this into their own lives probably in the near future. for a lot of other countries, they will want to wait and see and see what happens when more countries put this into law. two companies end up shifting outside of the countries -- do companies end up shifting outside of the countries or do they not feel that affect? there is the issue about whether or not they can do this on a unilateral business or they need european union support. that could be a real hurdle being implemented. lillan: lilian faulhaber, professor of law at georgetown

university law center, grateful to have you with us. plenty more ahead on "daybreak." this is bloomberg. ♪

haidi: a ceo says a faster way to go public is a way to get into the spac craze. they will own 5% of a satellite

data company that plans to go public. we spoke exclusively -- they spoke exclusively to bloomberg. >> the market is really an existential threat to private equity. remember, private equity is the only way companies like this could raise money and now the public gets a chance. i mean, yes, many of these companies are earlier in their lifecycle than the traditional ipo. this is a way for investors to get in earlier. they get 20% of the profits. now, investors can invest in these companies. enough money to launch 300 satellites to take a daily image of less than a meter. every square inch of the earth. think of that for insurance companies. it is amazing so people can invest in it now.

with respect to fraud, this is another way of doing an ipo, so with an ipo market, the spac market -- >> we want to get more to the specifics of that deal. one more broad question. you mentioned how fast they are. does that mean regulators have not been able to keep up? howard: i think what happens is in an ipo, you file your documents and you have to wait -- you have to go through a nine-month process before you can go public. with spac's -- they are already public. you can put out your information directly to investors and investors can decide whether they like the company you want. everyone can take a look at the business and the answers. if they decided they did not want to invest, they can have their $10 back. they get the option to take a look.

i reinvested $25 million in the company. just about $25 million. we think this company will do incredible things. really a the course of data. i hate to say it, but space is the final frontier and i think that this is incredibly exciting . $140 billion annually for the data coming out of space. amazing. >> howard, you talked about this being a huge advantage when it comes to esg's. do you think governments will be comfortable with a private sector company taking this kind of level of detail over their country? what do you think is the security push here? howard: the united states -- the history of satellites -- someone would build a satellite and the

united states would buy -- the military or government would buy all of the data. now, they are taking it to another level. $10 million to get a satellite in space and 30,000 kilometers a day in images. it costs less than a million dollars to get it in space launched on june 30. totally cool to watch, by the way. it was amazing. 300,000 square meters of data. every government up until now is going to buy satellite imagery. that is a great market of all the coverage. right now, they could afford it. it was not available to them. it is going to happen. there are people taking pictures of my household. nothing i can do about it. lillan: howard fitzgerald

speaking with bloomberg's guy johnson and taylor riggs. we have seen more and more headlines about burnt out bankers. howard: young bankers who decided they were working too hard, these were hard jobs. you want to be a doctor, you have to work hard when you are young. you should know it going in and make those decisions in life. to complain about it after you have this great job, i don't know. it's a little soon. shery: we have seen more of those complaints when it comes to bankers being burnt out, especially from the work from home set up. he is comparing it to medicine. it is really a hard job, especially when you are getting started, in order to get ahead. haidi: there seems to be a sort of, you know, these millennials that are just complaining, they should suck it up.

we have seen unapologetic comments from the likes of david solomon, saying that work from home is an aberration. james gorman they met a few are comparable going to a restaurant in new york, you should become double coming into the office. we are seeing a lot of these firms, including piti and jp morgan raising first-year salaries. you are not going to be able to retain junior talent. lilian: providing -- shery: providing peloton bikes as well. lots of perks to retain those talented individuals. haidi: we shall have to wait and see to see how that plays out because they certainly -- there certainly seems to be a lot of push for change. james frazier has been meeting to have boundaries between home and work life to get more of a worklife balance as well. coming up in the next hour of daybreak asia, we will be getting more markets inside from state street global macro strategist marvin loh, but that

is it for "daybreak australia." "daybreak asia" is next and we are counting down to the start of trading this friday. this is bloomberg. ♪

haidi: hello, and welcome to "daybreak asia." sophie: i am sophie kamaruddin in hong kong. shery: good evening. i am shery ahn. our top stories this hour. agent docs are on track for the worst week since may as fears grow that a virus resurgence could hamper the global economic recovery. pfizer plans to seek u.s. emergency authorization