haidi: welcome to "bloomberg daybreak: asia." sophie: we are counting down to asia's major market opens. shery: our top stories this hour, asian stocks set to follow wall street lower escrow concerns returned. treasuries gained along with the dollar. jay powell defends the fed's

dovish stance while admitting he is uncomfortable with inflation. will hear exclusively from chicago's charles evans who sees tapering around year in. plus the biden administration said to aim morning at hong kong on fears investors are shrugging off the risk. haidi: let's get started as we count down for the end of the week. sophie: asian features are mostly lower. markets consider slowing growth and earnings momentum in the face of various outbreaks. the global economy sees inflation be transitory. jumping on a yearly basis. will be watching to see if the boj boost disinflation outlook today.

futures are under pressure and we're seeing bond yields fall in the early asia session. the aussie tenure falling below 130 for the first time since february. this amid a bond rally that has put treasuries set for a third week higher with the u.s. ten-year line, a key level to watch. this is the drop in your continues to confound investors. shery: the st. louis fed president saying is time to start tapering bond purchases as the central banks achieved his goal on inflation and jobs. however, fed chair jay powell doesn't think the economy is ready yet. >> this is a shot going through the system associated with the reopening of the economy and has driven inflation well above 2%. of course we are not comfortable with that.

this particular inflation is unique in history. we don't have another example of the last time we'll -- reopened a $20 trillion economy. were trying to understand the base case and also the risks. shery: olivia, this coming out a time when powell continues to say these price pressures are transitory. olivia: that's right, but jay powell did acknowledge that they don't know if there are other factors that will come forward and make the inflation we are seeing more permanent. so we've got the first indication today that they are watching for further inflation in categories with three openings. haidi: what can we expect from the fed then in the coming months? olivia: the fed will have its next meeting at the end of july, and some analysts expect them to start talking more about tapering asset purchases during that meeting, based on some of the comments today.

we will be watching closely to see whether powell really starts talking about that more. shery: congressional hearings are unique when it comes to other concerns like social issues. what other concerns were raised? olivia: senators brought forward concerns about banking regulations in light of the 2000 eight financial crisis. senator warren was quite concerned about financial stability and whether the fed was looking at that. there were questions about climate change and powell said he thinks banks are likely to have to test to nice for climate risk in the future. haidi: our next guest should just we are about one third to one half the way through this phase.

does that suggest inflationary expectations will continue to rise? >> if you look at the breakeven curve in the united states, the two-year inflation expectations are still well above 10 year. we're still in for 24 months of pretty difficult inflation data. you should also be aware that inflation surprises are still well above those being forecast by the market pundits. the difficulty at the moment is not just the fed doesn't perhaps see how these prices are going to develop, but also the markets , it's difficult to forecast them. fort lisa next 12-18 months, we will be living with heightened inflation pressures, also unveiled by the beige book where the majority of respondents pointed out that they felt inflation was not going to be transitory is perhaps the fed alludes to. haidi: that's a big part of the

issue, because even jay powell himself said this is an unusual and unique type of inflation that we have because of the structural distortions of it being pandemic related and us never being here before. how do you hedge against that uncertainty as an investor? >> it would be a nightmare if the federal reserve chose to drop the average inflation targeting and prematurely raise rates. or indicate that they would raise rates at this point. certainly for equity markets they have not priced at in at all and other asset classes would also reflect a pretty heightened level of volatility. that's the sort of scenario that's not priced in either the dollar or equity markets. for our perspective, the good news is that corporate profits

come about the sales number and nominal inflation number is actually very high. so companies are developing some of the best profits we've seen over the last 30 years. in a sense, were not necessarily running on hot air but a very elevated level of profit. the good news is at least for the next 12 months, i don't think the prophet cycle will pull the rug from under the equity investors. we're still quite bullish on banks, cyclicals, energy and materials. and we generally feel it is still a reasonable and -- environment for equity markets to outperform other asset classes. shery: what about big tech? this chart shows how the market cap continues to fall as they are raking in profits. >> faang stocks plus microsoft account for about 20 are of the s&p 500.

they tend to be perfectly inversely correlated to the u.s. ten-year treasuries. they've done very well in the last when he performance. they're primarily getting earnings upgrades, which again is very much a feature of their business models. from my point of view, your starting point to this cycle is the heard rate on their profits is already quite high. secondly, valuation starting point is difficult as well. you still got a lot more population of stocks out there outside of the big tech stocks which are less overvalued. two other things to highlight, over the last several days, they've reinforced antitrust measures by president biden and the g20 signing up to the minimum corporate tax rate of 15%. both of those elements would be difficult for the faang plus microsoft in the longer term. shery: if we get more profit for

not only big tech but other sectors, does that mean that will be reinvesting those profits and could we expect asset plans to expand? >> the one thing that is a benevolent cycle is the animal spirits have risen must faster -- much faster than we saw, capex could be two or three times higher. you should also bear in mind that companies including the banks are doing an enormous amount of share buybacks. so that profit recycling won't just going to capex, it will be seen going into share buybacks and increase dividends as well. shery: sean darby, always great having you on. >> u.k. prime minister boris johnson has proposed creating a new breed of local mayor to

exert more power over england's towns and counties. the aim is to level of neglected regions and tactile inequality across the united kingdom. overhauling skills training and planning reforms. hariri has stepped down after the company rejected his latest cabinet proposal. lebanon's political crisis is adding to the country's dire economic situation. cuba says it will ease restrictions on food and medicine imports. the prime minister said hiking items like soap and shampoo and medicines brought to the island by travelers. the concession is designed to help alleviate shortages that

fueled protests over the weekend amid rolling blackouts and soaring inflation. blue origin is taking an 18-year-old to fly aboard the first mission to space. the flight is scheduled for july 20. he will be the youngest average applying to space. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. haidi: still ahead, alibaba focusing on women founders of australian tech companies. next, president biden is planning to discuss u.s. businesses doing business in hong kong. more on that story ahead. this is bloomberg.

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shery: the u.s. plans to issue a warning friday about the risk for companies doing business in hong kong. president biden says conditions are changing as beijing consolidates its threats. pres. biden: the situation in hong kong is deteriorating and the chinese government is not keeping its commitment that it made on how to deal with hong kong. shery: let's bring in alex mine. does the morning come with any sort of action? alex: no, this is probably going to be information that a lot of businesses already know. plenty of corporations understand there is some risk operating anywhere that falls under the jurisdiction of the chinese government, and they

accept that risk is part of the cost of doing business in hong kong. the potential profits outweigh those risks so far. haidi: hatters this it in the pace of what we now see as the biden administration approach to china? alex: the strategy is starting to come into focus here. i think it is fair to say it's not a lot different than the strategy of the last year of the trump administration, which was to confront china at just about every turn and to answer provocations from the chinese with sterner positions from the u.s.. haidi: alex there with the latest.

we try to piece together the official announcements, some of the reports and scoops and thoughts that we speak to hear bloomberg. it's kind of putting together this picture of the approach from the u.s.. it appears some of the communications and goodwill may be fading and woke we're hearing is that china has refused to grant a meeting with the u.s. officials, the secretary of state was meant to travel and apparently according to this report they asked to meet with her counterpart and instead offered the number five person in the ministry responsible for u.s. affairs. how do you read into that? shery: there was a lot of hope and expectation that perhaps that meeting could lead somewhere. last week at the g20 there were expectations china did not attend, they just attended virtually. so the next one was perhaps this

one. the last high-profile meeting was the alaska talks, and that didn't go too well. so there was a lot of hope on this meeting. guess we'll have to see what happens on that front. we are now also hearing that economic dialogue that was held for the past decade and halted in 2017 during the trump administration will remain halted. so we are not holding our breath for the next opportunity that these two sides may have for communications. but up next, with the olympics just a week away, the governor speaking exclusively to bloomberg about her vision and hope for the games. this is bloomberg. ♪

haidi: the count down the summer olympics is on.

a beacon of hope for the world to find its way out of the pandemic. we spoke about her vision for the games and preparations ahead of the opening ceremony. >> there is unity and diversity. it will be the most gender balance games in history, following in the footsteps of the real games. and it will be the first city in the world to host the second summer olympics. as we are once more in a global pandemic, and attempt to serve as a beacon of hope to show that the world comes together to face these difficulties. shery: one week ahead of the

opening ceremony, how are you feeling about really going ahead with the olympics? >> can i talk a little bit more about the recovery, because the idea of us hosting the games originated following the great japan earthquake which occurred in 2011. we aim to encourage the region to the power and at the same time expect -- express our gratitude to the world for the steps it has taken toward reconstruction from the disaster. while we regrettably cannot welcome spectators at this time, we are preparing to create a new way for audiences around the globe to enjoy the games and we are especially working to strengthen online information

broadcasting to people worldwide. and during the games, briefings will be released online every day from the tokyo media center on pnc, which is run by us. shery: how are you feeling now, just one week ahead of the opening ceremonies? >> we are preparing whatever the circumstances are, and the success of the games lies in the excitement and emotion created by the competition of the athletes. we are welcoming all the athletes and those people from the international federation who

are working for these games. in order to make this a place where athletes can deliver their best performance, we will work with all parties involved in making this a safe and secure games. shery: there has been a lot of criticism about japan's vaccination rollout being a slower versus other g7 economies. is there anything the tokyo government is doing separately in order to accelerate the pace of the rollout? >> we are accelerating the pace of vaccination as much as possible. but i do mention that the start of vaccination was a bit delayed compared to other major countries. but we are accelerating

dramatically. haidi: that was our exclusive conversation with the tokyo governor. turning to the virus outbreak in other parts of asia, indonesia speeding up vaccine rollout while the outbreak in australia is growing. we seen indonesia becomes a near epicenter of the delta variant outbreak in asia. how quickly is the vaccine rollout progressing there? >> we can see them really speeding up. the vaccination rate yesterday was the highest. however, a few short of their target. when we look at the numbers yesterday, is not just indonesia , the southeast asian region is

becoming the new virus epicenter. with that growing situation, we can see they are really in a not so good position because the vaccine rate is only better than africa and central asia in the world. so for them right now the big question is whether they can act quickly enough to erase a variant strain. shery: of course were seeing that variant spreading rapidly across australia. melbourne is the latest. >> they are having a five day lock down like's always sydney a few weeks ago. the governor decided to take this action because the delta variant is what they really worry about spreading quickly.

so they want to escalate early enough. that is another issue with their vaccination rates, also very slow compared to other developed places. they don't want to have a situation like happen to sydney which is already locked down for several weeks. they really need to do something. it really highlights the situation for those covid zero places in asia, that there starting a cycle of lockdown and reopening and when they find smaller clusters, they have to lock down again. we really need to see how quickly it can ramp up. shery: the latest there on the coronavirus pandemic across asia. we will hear from a who science councilmember in the next hour. biogen share sank almost 7% on thursday to the lowest in more than a month after two major

hospital systems and a group of health insurers said no to administering is controversial alzheimer's medicine. the u.s. food and drug administration approved a drug on june 7, even after an advisory panel recommended against it. a pickup in demand in the cruise industry. the ceo says 2022 bookings are on the rise and pricing is stronger than 2019. >> my experience right now is the economy is strong and there is a lot of pent-up demand. people are anxious to travel and to enjoy things again. for quite some time that been on lockdown or near lockdown. so there is a lot of excitement and interest. shery: softbank's vision fun is investing $1.7 million in south korean travel apps ahead of an

ipo that is in planning. sources say the deal boost his value to more in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.

>> this is "bloomberg daybreak: asia." the german chancellor has pledged swift help for people best -- devastated by floods in germany. more than 60 people our dead, dozens are missing due to the torrential rain. mobile internet services are also impacted in the floods hit part of luxembourg, the netherlands and belgium. in looking to cut pollution by

55% by 2030. it will ban new combustion cars by 2035 and impose costs on dirty home heating. >> we believe this can be done and they should understand that meeting our goals of at least 55% reduction in 8.5 years times is a legal obligation. >> africa has the world's lowest vaccination rate among continents, is forging ahead with plans to procure johnson & johnson vaccines. despite that warning about a rare condition that attacks the murder -- immune system among people who receive the shot in a small number of cases. the u.s. is also donating wheeling sub doses. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than

2700 journalists and analysts in more than 120 countries. haidi: the president of the chicago fled said inflation has picked up more robustly than he's expecting next year. we sat down to discuss his thoughts on the economic recovery. >> here we are now in a strong rebound, the economy is recovering very strongly and growing very well. the numbers are so large i have a hard time keeping them in my head. am expecting this year real gdp growth will be on the order of 7%, that is an extraordinary number. when you take an economy that was 75% and take it back up towards 100% and more, that comes with some growing pains. the growth has been good,

looking for 7% this year, looking for 3% next year which also is a very good level of growth. the kind of numbers i find a little more transparent in terms of naturalness or the unemployment rate numbers, even those are subject to a lot of interpretation given variations. looking for the unemployment rate at the end of 2021 to be about 4.5 percent. we are at 5.9% unemployment right now we have come down dramatically and that is good, but there is still quite a long ways to go from 5.9 to what i thought a few weeks ago we could get to at the end of this year. i'm still optimistic that is the case, but that is certainly one of the things i am monitoring. next year i'm looking for employment to be under 4%. really looking for a strong economy that has been supported strongly by fiscal support.

the previous administration and congress have been strong in their support on bringing the economy back full strength as quickly as possible. i think that is the setting. of course in line with things taking place more quickly than i expected, inflation has picked up stronger than i was expecting. i certainly was expecting us to overshoot, go above 2% this year because of reopening base effects were prices dropped a lot last year. inflation is expected to be well above 2%. however, i'm looking for core pce to be 3% year-over-year at the end of this year. that might be a little optimistic. given some of the developments. i never would have guessed that used car prices would be increasing so extraordinarily as they have. a 10%, then 7%, then another 10%

monthly rate for used cars. so we've had a lot of unusual developments. i'm expecting those will be transitory. i know that is a loaded word. i think the inflation pressures will be more normal next year and i'm looking for 2.1% for pcu inflation in 2022. i think a lot of the reopening heat is going to subside. shery: chicago fed reserve bank president charles evans. the bank of japan marching to a different tune, not surprisingly as it maintains at super accommodating monetary policy and focuses on a new green lending program. kathleen hays is here with the preview, given the inflationary outlook, not surprising they are now going to move. kathleen: exactly, but of course they are going to tell us something.

they are definitely not going to give us a surprise like the reserve bank of new zealand did two days ago. but they are going to -- the 10 year yield being charted around 0%. quarterly economic projections, people are waiting to see if all the state of emergency being extended again, the economy is not going to make any money on the olympics because there's no one coming to see it anymore. the forecast for 2021 forecast cut to 3.8, not such a bad picture, and oil prices are up but no big changes there. will the governor talk about the rising energy costs and commodity prices and how it will hurt japanese businesses?

will he have anything to say about the fed heading toward that tighter policy and what it might mean for boj policy? haidi: does that mean we're expecting more focus on the green initiative to combat climate change that was put on the table last month? kathleen: that's what i think everyone is waiting to hear because potentially it's a pretty big deal for central banks around the world. how will they influence companies to be more green and maybe bank lending on the green front can help. so they will be offering some financing incentives, how much? right now our team in tokyo is hearing that they will be offering zero .1% to subsidize to the banks to offer cheaper loans to businesses who will make environmentally sound investments. already our team is hearing that the boj has been talking to banks and some of the banks are

resisting the whole plan because they are afraid their prophets might get squeezed. the bank is getting a subsidy so maybe they expect to get a lower rate there. even some of the officials are concerned that we are diving into something that is still pretty new. are there risks with -- that go with trying to fund these projects when you don't know what the ramifications are? it looks like the whole definition of what a green investment is to the banks themselves, before they get enthusiastic about this. shery: it's a landmark decision given those climate risks. let's stay with the green economy, kathleen hays there because a joint venture between toyota and panasonic wants to slash the cost of ev batteries. the target is reduction of 52%

by 2022. his ambition to become a major player in the industry. >> on the back of the global movement toward decarbonization, manufacturers are accelerating electrification, whether toward the hybrid or ev is important for us to follow the trends by changing the way we do our job, at fast and cut overall lead time. that will improve our competitiveness and eventually result in our business expanding. >> he said last year if you are able to increase your productivity by 10 times you will stand a fighting chance against the number one ev battery player. do you have any changes in that thought or does it still stand today? >> aiming to increase permittivity by 10 times is just one way to improve our competitiveness.

we have been taking many measures, including roofing battery performance are scaling back factory investments. the competition is quite fierce in the industry so we are constantly revisiting and improving our measures. >> how do you intend to increase your productivity? ? 10 times >> the procedure requires a lot of time and experiments involving many different divisions. we can simplify the process by digitalization, using ai technology. that would boost productivity by at least three times. we like to be quicker in responding to consumer demands. we can then aim to increase productivity by 10 times and eventually 20 times going forward. >> recently it's been reported that the chief is richer than jack ma of alibaba.

do you have similar kinds of ambitions? >> no, i don't have that kind of ambition to be rich. i just feel i should be focused on what we should do at the moment. i feel more fulfilled when i promote electrification together with our partners. >> joint venture of two of the automotive battery industry, having these companies come together, what type of advantages do you think that brings? >> both toyota and panasonic have strengths. we are now working together to maximize our strengths by combining not only to companies but bringing to whole groups together. >> one of the characteristics of the tokyo olympics is the electrification of the olympic fleet. what significance do you think it holds that japan is holding a

green olympics this time? >> the olympic games will bring attention to japan and it is a great opportunity to promote electric vehicles globally. i want is many people as possible to experience our technology in the future. shery: we are counting down to the start of trade in tokyo and seoul. some of the stories we are watching today, new coronavirus -- coronavirus cases hitting a six month high in tokyo, a warning sign was just a week before the summer olympics kick off. will also be watching fast retailing, after it lowered its full-year profit outlook on covid restrictions in asia. we will have more on that later. something vision fun is investing about $1.7 million in

south korea's largest travel app ahead of the startup ipl. let's turn to korea because bond traders are wagering that the bank of korea is on track to raise interest rates in the coming months, despite a jump in virus infections. the be ok governor saying he will be attending a parliament session today. the sole economic daily reporting that citigroup is also seeking to sell at southeast asian and south korean businesses to standard chartered. we will have all of that coming up on "bloomberg daybreak: asia." this is bloomberg. ♪

haidi: we are seeing news that pimco is facing a lawsuit being filed by some of their female workers alleging that the money manager really operated as a fraternity that favors white males, according to a california court. the court has rejected pimco's request to throw out most claims in the lawsuit that was filed last year by two female employees at the firm's newport beach office, saying essentially the country -- company culture marginalizes the needs of women and favor men regardless of

qualifications. this is something we see a lot of across the financial industry but also across tech and investment more broadly. shery: we have more evidence of a fraternity culture, perhaps we should just look at venture capital. even at its peak in 2019, only 2.9% of funding went to women. one firm looking to change the dynamic is headed by marissa warren and kate vale. his focus solely on female founders. good to have you with us. why did you find the need to have a find that actually focuses on female founders only? kate: good morning or afternoon, wherever you are. as you said, only 2.9% of all vc funding went to female founders,

an all-time high in 2019. at the moment it's sitting at about 2.3%. something really has to be done to shift these numbers. i business partner and i thought we would come together to create a solution to the big problem. shery: in order to fix a problem, you also need to convince people that this actually works, right? what are you seeing in returns of actual performance of these women led businesses? kate: we know when we back a woman she will deliver 35% higher roi than all male founder led companies, so we actually think it is a no-brainer. haidi: looking at data from boston consulting, we are looking at businesses that are generating more revenue compared

to their all-male counterparts. when you look at numbers like venture capital firms earning 18% more time the index of all male versus all women. it's difficult to look at these numbers because this is not the first time we've talked about this. what pushes this trajectory toward representation and what is really hindering it? kate: mercer and i thank we need more bright females involved in the space. we need more female vc firms focused on women and we need to see more female general partners. in australia at the moment it's a pretty sad state of affairs. we estimate there's about 130 vc firms in less than 10 female partners across all those firms. we also think if we have more female investors it will change things over time. we are very lucky that we have

two incredible female investors and we get more business helping us move the needle. haidi: how important is that you have male allies in this industry to make important within the cohort of all male dominated conversations that we know still very much do dominate. kate: absolutely, it is very male-dominated, as we know. per liquor -- particularly in the pandemic, they invested more in male lead businesses. we really need to see a shift in that. we are quite fortunate that we do have a number of men involved with us in our program, whether investors are helping firms we've invested in along the way. but we definitely need to see change, particularly in the australian market where it is pretty dire at the moment.

haidi: kate vale joining us there from new orleans. where do investors go? shery: take a look at the rbnz after inflation top the target right for the first time in 10 years. yields are rising across the curve as markets boost bets for tightening. a 90% chance of a rate hike in august, projecting the first of three hikes with the push toward 1% in february. futures taking higher this morning. a bullish sentiment in treasuries as well. it will be difficult to see further curve flattening which seems to be a nonevent.

the yen trading steady this morning. mulling a potential break lower in the dollar yet. so a potential push on those real yield differentials. shery: over in japan, will be watching fast retailing ahead of the open. the company cut its profit outlook. this is bloomberg. ♪

haidi: will be watching retailing in tokyo, after lowering the profit outlook. let's get to our reporters covering this out of tokyo. what are some of the highlights and how did we see covid really play out here? >> it was really a rebalancing of expectations for fast retailing. the company lowered its full-year forecast and the reasons they gave for things that have been working the pasture were going against it. most of its unicorn stores are in japan and china and have a large footprint in asia. in the beginning that helped a

lot because they had been doing relatively well. now with the spread of the virus variant and slow vaccination in these places, the government is still increasing new countermeasures against the violence -- virus to curb people's movements and its dampening the company's expectations for sales in these markets. additionally the company has slowed down in china, saying that customers will not be spending money on clothing are choosing to spend on travel and other items. so those factors that had helped fast retailing in the past are now working against it. shery: and it has not escaped the controversy, what do we know? >> this is the wildcard here. the company is a global brand and china. however, it has not been

targeted by chinese customers like h&m or nike which has been on the front of things. however, on the western side, it's also been scrutinized by regulators. we had learned back in may that the u.s. had blocked a shipment of shirts on suspected use of force labor. additionally the french authorities are apparently starting a probe that looks into uniqlo and other retailers involvement. shery: let's turn to sophie to check on what other stocks we should be watching at the open. sophie: we're watching semiconductor names in tokyo after one ceo spoke a plans to build a fabrication plant in japan.

for the country to have a stable chip base and keep up with the u.s. and europe. flipping the board and what has already been a record year for south korean ipos, will watch one debut in seoul. it's valued at $4.7 billion and high demand solid oversubscribed by over 1000 times. the company planning to add distribution channels as the vaccination effort ramps up across the globe. haidi: coming up, will look at the latest covid outbreaks around the world with a who signs councilmember. plus we get more on aipac, the ceo is with us on how investors can progress.

there's a lot for investors to digest what we're looking at a downward day going into the final session of the week here in asia. this is bloomberg. ♪

♪ haidi: hello and welcome to "bloomberg daybreak asia." i am shery ahn in new york. haidi: i am haidi chabad in sydney. our top story this hour, asia set to dip. the fed chair admitting inflation is uncomfortably high. present button says the

situation in hong kong is deteriorating. he is prepared to warn. the delta virus variant gives south east asia the fastest growing death rate. >> japan, south korea, and australia coming online. let's get straight to the market action. we are seeing u.s. futures extending declines to 0.2% on growth concerns. how are we setting up? >> there are growth concerns and a potential peeking of earnings momentum has been weighing on markets. we have the nikkei losing more than 1%. the yen is holding steady below 110. we could see a push towards the 109 spot on the real yield. jgb is picking up ahead of the boj decision. you have pimco overweight

equities for japan and emerging asia as they seek global midcycle. on the back of cutting employer operating keeping an eye on that spot. the open in south korea, we are seeing downside moves for korean stocks. the korean won holding steady. this is on the announcement from the finance minister regarding its monthly economic session report due out later this morning. we will keep and i on st by center. switching out the board to check out the antipodes. the new zealand very much in focus after that big jump in inflation, over 3%, topping the target range. potentially by august. the kiwi dollar jumping. we have seen yields move as well.

check out nasdaq futures moving lower this morning after the tech lead drop we saw in the u.s. overnight. >> we are seeing that starting to trade now. that is the move. adr dropping after the outlook was cut. full year operating income view also missing estimates. we are seeing that plunge in the early part of the session over 3%. our next guest says he is overweight tech. james leung is the head of multi-asset for baron asset management. we have seen this rotation into value start to flag. does that mean with the uncertainty over inflation we are seeing more consideration on whether tech still has a compelling long-term story? james: we do. we saw tech has a drawdown over

the last few months because of the rising bond yields. i think the long-term story that they could generate revenue over the medium-long-term has not changed. we remain overweight tech. there are certain sectors within tech that we like more and less than the others, for example we have been like semiconductors for a little while now. we are straying onto the software side, internet side of the technology sectors. we remain overweight there. >> which sectors in particular? we see a lot of risk concerns when it comes to trading in hong kong and china with some of the listed tech names. james: certainly at the moment, the hot topic is the regulatory risk on the big tech side.

i think the authorities are not only concerned about data security, they are also concerned about or uncomfortable about these tech giants and new business models that may have some type of potential of systemic risk. for the moment it looks like -- is still estimates on these chinese tech giants, so we advise investors stay away from these chinese life technologies until such time that these tech trends come up with constructive safeguarding measures that may comfort the authorities. then we will like them again. >> are there any other tech stocks across the region that you like, perhaps not necessarily in china? james: i think some of the tech

stocks not within the tech sector but benefiting other sectors like health care, logistics, and someone. -- so on. we think these sectors will continue to excel in the post-pandemic world. we are still quite constructive on some of these sectors. >> let me turn to another sector, commodities. in this post-pandemic world and during the pandemic we saw food prices soaring. the u.n. for price at the highest and adept date -- in a d ecade. how do you hedge for inflation? james: i think food stuffs will continue to be in demand because if we continue to reopen the

economy in the developed world reopening will be sooner than the emerging-market world, but as the world moves to the tail end of the pandemic, hopefully, consumption of food stuffs will continue, and we see that across economies. that is why we have the overweight position in every business sector. >> james leung, it was great having you with us. let's turn to vonnie quinn with the first word headlines. >> thank you. lebanon's prime minister designate has stepped down after the country's president rejected his latest cabinet proposal. the two would not be able to agree on a way forward even after more time to consult. lebanon's political crisis was

adding to the country's already dire situation. cuba's communist leaders say they will ease restrictions on food and medicine imports. the prime minister pledged to lift limits and tariffs on food, hygiene items, and medicine brought to the island by travelers. the concession is designed to help alleviate the shortages that stoped protests over the weekend amid roaring blackouts -- rolling blackouts and soaring inflation. pfizer will pay $355 million to avert litigation over an alleged scheme to couch purchasers of the epipen. the sentiment would resolve class-action claims against pfizer targeting the drug companies. africa, which has the world's lowest vaccination rates, is forging ahead with plans for

johnson & johnson's covid-19 vaccine despite an fda warning earlier this month about a rare condition attacking the immune system among people who received the shot. so far the african union has ordered 400 million j&j jabs. global news 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> the delta variant continues to push through southeast asia. we will be discussing with who science councilmember coming up next. president biden's plan to underline the risk to u.s. companies doing business in hong kong, we will bring you the details on that story. this is bloomberg. ♪

>> the u.s. plans to issue a warning friday about the risk for companies doing business in hong kong. present biden says additions are changing as beijing consolidates its grip. president biden: the situation in hong kong is deteriorating, and the chinese government is not keeping its commitment that it made how to deal with hong kong. >> for more, let's bring in bloomberg reporter roos einhorn. what do we know about this business advisory? >> the significant thing is that this is something that the president himself is now saying, so that gives more weight to what we are expecting to get today, which will be an advisory from the administration to businesses warning them that the situation, especially when it comes to the legal situation in

hong kong, has changed. for years, decades, hong kong's great strength has been that it has an independent judiciary. the u.s. is warning companies that with the passage of the national security law, that is no longer the case. the biden administration thinks that u.s. businesses operating in hong kong have not yet fully digested all of that. >> it comes at a time when congress is increasing its pressure on china. we are getting a particular idea what the biden strategy and approach to beijing is. what we have on the legislation that is targeting china? >> the senate just passed, unanimously -- that is extremely rare in the u.s. for republicans and democrats to totally agree -- but the site unanimously passed a bill that would put more pressure on companies sourcing things from shins on.

the assumption would be anything coming from there was made with forced labor customs and border protection provided a waiver. that is just one of the proposals in congress, all designed to counter china. >> how does this fit into the broader biden administration vision when it comes to rallying allies against beijing? >> we were expecting deputy secretary of state wendy sherman to make a visit to china next week as part of an asian swing she is making, and that would have been the first major diplomatic exchange between the two sides since the chilly meeting that took place in alaska earlier this year.

they just announced the itinerary for wendy sherman's trip, and it includes visits to japan, korea, not to china. we are not going to get any progress there. tony blinken just met with the french foreign minister. they released a statement that the two sides are working to counter chinese human rights abuses, so diplomatic pressure continues. >> bloomberg reporter bruce einhorn. adding to the selling pressure for chinese adr. let's bring in our senior chinese analyst. there are more risk -- investors that have more risk appetite that say there is opportunities given the following valuation.

what does that look like in terms of finding a bottom? >> i think as you may be aware that even -- has been talking about the risk, and in fact if you check out the holdings of their funds, they have been offloading quite a bit of those stocks as early as february, many of the biggest names like jd and alibaba. we see the continuous crackdown along the lines of -- such as the one we saw earlier for alibaba. and obviously the latest predicament of didi global. we see more to come as

cyberspace administration of china has taken to crackdown the tech companies. >> even arc investment technologist say when it comes to all the issues these chinese companies face, they have not necessarily affected their fundamentals. what are we expecting in terms of their operation? >> in fact i am not sure whether that is out of any kind of prudence for investors to make that type of statement. if you take a look at the potential impact from the crackdowns, it could be profound. didi global has been facing -- in china. that means didi cannot take anymore new users.

you are talking about an inability of the company to serve existing users. if any restrictive measures like this is applied to bigger names, you may imagine their ability to serve their customers will be severely impaired. we still do not know whether this ban will be lifted anytime soon. what china has shown what they will do, i would very politely disagree that it will not impact any of the fundamentals. >> bloomberg intelligence senior analyst with the latest on those chinese adr. tsmc boosting its sales outlook as it attempts to alleviate the chip shortage that has walloped the auto industry. we will get you the latest. this is bloomberg. ♪

>> a quick check of the latest headlines. apollo local management ceo says the firm is in a generational shift after the departure of the billionaire cofounders. he helped create a successful insurance business and told us he hired 300 people remotely. >> we will and we are in the process of a generational shift. we have done the entirety of this generational shift from home. that means governance, one share one vote, and leon stepping down from the firm at the beginning of the year and josh stepping back upon the closing of the deal. >> p.j. solomon is the latest

financial firm to raise salaries for bankers. the bidding war for employees on wall street heats up. new salaries range from $100,000 for new associates to $300,000. intel is reportedly exploring a deal to buy global foundries. dow jones says the deal would be intel's largest ever acquisition and would value global foundries at about $30 billion. the report says the deal may not materialize, and global foundries could proceed with their planned ipo. >> talk a little bit more about the chip sector. taiwan semiconductor underscoring its crucial role in helping to alleviate that global chip shortage. it is expecting sales to rise 20% this year as it ramps up production.

joining us with more details. what to tsmc's latest numbers tell us? >> the numbers we saw yesterday only underscore the importance of tsmc in the global supply chain. they expect revenue this year to rise more than 20%. that phrase more than is doing a lot of heavy lifting. that is the key difference between their comments three months ago when the expected revenue this year to rise a flat 20%. from the outside that looks like things have become a bit more bullish for them. tsmc, this just indicates how important it has become at the edge of the semiconductor industry. there is a global shortage of semiconductors for everything

from the cutting edge chips that go into smartphones to the slightly older technologies that you will find in cars. tsmc is trying to appease everybody and supply all of its customers. it is traditionally a picky company in who it agrees to work with. these numbers to indicate -- do indicate that they are being bullish. another key thing they said yesterday is that this global shortage will continue into next year. that does echo what they had previously said. that puts them in a good position globally. >> what did they say about japan? >> there has been a lot of speculation about their plans for japan. tsmc, largely its production is all in taiwan. it does have some facilities in china.

the countries that it supplies, especially the u.s. and japan, they found that concerning. there has been a bit of a push to push tsmc to spread its production out more geographically. they have already agreed and started working on a chip plant in the united states. japan has got into the act as well. japan used to be a leader in this sector. it is no longer in that status. they realized that they may be need outside help to help reinvigorate their own fading chick making -- chipmaking industry. they have been pushing tsmc to invest in japan. there previously have been talks that tsmc had agreed to establish an r&d lab in japan. yesterday at what we heard is that tsmc is now doing its due diligence on whether to establish a fab in japan.

this could bring more chipmaking technology to the country. >> the global race for chip dominance continues. let's get you a quick check of the fx moves around the region. big day still had for central banks. expectations of not much movement from the boj. holding pretty steady at 109 at the moment. we will get more details are expected when it comes to its greenlandic program as well as its latest growth forecast. one is seeing a little downside. a bit of a boon when it comes to commodity currencies as well. we are seeing the aussie dollar trading just above 74 u.s. cents. we are seeing the kiwi dollar skyrocketing above 70 u.s.

cents. >> i look at that chart and i still cannot get over the fact that we are around 110 yen per dollar. we have seen incredible weakness against the u.s. dollar. not surprising then we have this bloomberg economics news safe haven rankings. take a look at this. the dollar outpacing the japanese yen, going from the fourth place to the top place this year when it comes the tops even -- comes to the top safe haven asset. >> i expect this will continue to move around with global central banks as well. it will be very interesting to see what this landscape looks like post-covid as well. coming up next, south east asia is emerging as a new battlefield for the fast spreading delta variant. we will be talking through it

with the double ho. -- with the who. that is up a little bit later. this is bloomberg. ♪ [ "me and you" by barry louis polisar ] ♪ me and you just singing on the train ♪ ♪ me and you listening to the rain ♪ ♪ me and you we are the same ♪ ♪ me and you have all the fame we need ♪ ♪ indeed, you and me are we ♪ ♪ me and you singing in the park ♪ ♪ me and you, we're waiting for the dark ♪

>> we have breaking news. we are getting nonoil domestic numbers for june, 15.9% increase year on year, the estimate was 8%. also an increase of 6%, beating expectations. electronics exports rising more than expected. we have seen strong demand when it comes to exports of electronics and demand from china. exports to the region, 27.6%

year on year gain, so a growth engine for an open economy. it is supporting growth in singapore. june nonoil exports rising 6% month on month, beating expectations. take a look at the broader market. the nikkei down. let lower by tech and consumer discretionary stocks. not surprising, some strength for the japanese yen. under pressure, but around that one-week high. we have this haven demand, given the growth concerns across the u.s. and the rest of asia with the delta variant spreading. the kospi is down 0.50%. haidi: yes, is putting southeast

asia front and center. we are seeing the rollout slope for the vaccines. the outbreak has outlived latin american and india. we are in hong kong with a guest to talk about the efforts to contain the outbreak. sophie: good morning. our guest is a professor at the university of malaysia and a member of the who science council. good morning. thank you for joining us. you have been in constant contact with others to chart a path to recovery. what lesson can we learn from asean? >> good morning. there are two main lessons. one is prevention. there is no room for complacency. until there is an extensive

coverage of vaccination of the population, the measures of public health, reduced social gatherings, social distancing, masking, and all that has to remain in place until we have the acceptable number of people vaccinated. number two, in terms of hospital preparedness for the surge. we saw it in india and to a certain extent in kuala lumpur. there is nothing like being prepared for it in the hospitals and having adequate beds and icu's ready. sophie: most governments are reopening in light of the economic impact. if you know about the covid

mutation, what is the stronger preparedness, to provide more support in the hospital sector or other aspects of policy? >> one thing that is important is having a good testing strategy. the problem with covid-19 virus and infections is that it is silent. 40% of all people have mild or no symptoms at all, and so having am isolation and support strategn n -- in isolation and support strategy is key. i think that is where one of the problems lie in malaise that appeared because -- malaysia.

we were not looking for infections and isolating them or contact tracing them quickly enough to contain it. sophie: we have seen a shifting community transmission to factories in the manufacturing sector. it enough testing and tracing being done in these areas to boost those efforts in malaysia? >> if i may correct you, although it would appear that a large proportion of the infections are in factories, and it is true, perhaps up to 25% of infections are coming from the factories, but an equally large portion is already in the community. we have 60% are infections that are unlinked, indicating it is out there in the community. so a testing strategy would have to be the find, test, trace in

the community, but you are right, a comprehensive program in the factories and construction sites as sources of infection -- sophie: vaccinations are a key area that will allow for a faster pace of reopening. i spoke with the finance minister, who reiterated the need to stay agile to allow the recovery to take place. following that interview, what is your assessment of the vaccination progress in malaysia to achieve those goals? >> that is one area where we are doing very well. in comparison to many of our neighboring countries. in the last you days, i believe our vaccination rate has been 400,000 per day, which is very

good, but could be even faster. i think we have approximate 25% of the population now having had windows, and about 12% have had two doses. nevertheless, we need to pick it our vaccination. i believe it will happen soon, to areas where there are high incidence of infections, and including kuala lumpur. kuala lumpur has reasonably good coverage of vaccine, but others will need to -- sophie: could malaysia reach the government's goal of the whole country by early august? what is the situation on the ground to achieve this? >> as the supplies of vaccine come in, we should ramp up

vaccination, but it will require mobilization of health-care workers and other support staff to make sure we have it happen asap. the projection is by october that we would reach our target population coverage. until then, we are having to do all the other necessary things to combat the surge in infections. sophie: thank you for joining us this morning. she is a professor and special diseases at the university of malaysia and science council member for the who. >> we will be looking at japan and a look at the decision with our guest. this is bloomberg. ♪

vonnie: these are the first word headlines. for a second day, jay powell defended his stance. he said he is not comfortable with elevated inflation. meanwhile, charles evans expects

to see a policy adjustment by the end of the year. we heard from jim bullard, who said the following. >> we can taper, and setting those parameters the right way, we don't want to jar markets or anything, but it is time to end these emergency measures. vonnie: for chanson propose creating a new position to exert power over towns and counties, tackling inequality across the u.k. he says mayors should take charge of skill training, reforms, and designing transport. the eu as rolled out its climate plan as it looks to cut pollution by 2030. the e.u. plans to bring shipping into the world's largest carbon

market and ban new combustion cars and fine dirty home heating. >> we believe this can be done. they should understand meeting 55% reduction in 8.5 years is a legal obligation. vonnie: 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. >> the countdown to the summer olympics is on. the tokyo governor says the games becoming a beacon of hope for the world to find its way out of the pandemic. i spoke exclusively on one person's vision for the game and plans ahead of the ceremony. >> it is unity and diversity, and i am glad to say it will be the most gender-balanced games

in history, and following in the footsteps of the rio games. there will be refugees who also to participate. tokyo will be the first city in the world to have the second summer olympics, as we are now in a global pandemic, and want to make the case to serve as a beacon of hope, to show that the world comes together to face difficulties. >> one week ahead of the opening ceremony, how are you feeling about really going ahead with the olympics? >> can i talk about a little bit more about the recovery? >> right. >> the idea originated as the recovery olympics and paralympics. the japan earthquake occurred in

2011, and we aim to encourage the region through this, and at the same time, express our gratitude to the world for their support by the steps taken forward towards reconstruction from the disaster. and while we regrettably cannot welcome people, we are preparing to create a new way to enjoy the games, and we are especially working to strengthen online information broadcasting to people worldwide. and during the. appearance -- period of the games, it will be released regularly. it is run by us. i would like to invite members of the media, you, and others around the world to use it.

it will be attractive for that. >> how are you feeling now one week ahead of the opening ceremony? >> well, we are preparing whatever the circumstances is, and the success of the games is the excitement and emotion created by the competition the athletes. so we are welcoming all the athletes and those people from the ioc or international federations and stuff and those who are working for the games. in order to make this a place where athletes can deliver their best performance, we will work with all parties involved to have a safe and secure games. shery: there has been a lot of criticism about japan's vaccination rollout things

slower, especially versus other g-7 economies. is there anything the tokyo government is doing separately to accelerate the pace of the rollout mark -- rollout? >> yes, we do the best and are accelerating the pace of vaccinations as much as possible, but the point, yes, the start of vaccinations was a bit delayed, compared to other major countries, but we are accelerating dramatically. >> that was our exclusive conversation. later today, the boj is expected to keep its policy settings unchanged, but with details of its new initiative to combat climate change, let's bring in our guest, head of japan economics at bank of america. great to see you. what about the growth

projections given the state of emergency has been extended, right? izumi: yes. in the near-term, we are looking at sluggish growth as consumption remains suppressed by the state of emergency, but in the second half of the year, we see a fairly strong rebound in japanese growth. i think vaccinations will be key. as discussed earlier, the rollout was off to a slow start, but we have seen acceleration over the past month. at this point, 80% of seniors have gotten the first dose of vaccine. we are looking for consumption to come back, probably mid-september onward, and i think you will see a better picture in one months time. >> what about the inflation outlook, given we have undershot

the inflation target in japan? izumi: yes, so unfortunately for the bank of japan, the headline of inflation figures will be subdued, unlike the u.s., where prices are a concern. generally speaking, japan's prices did not fall dramatically at the beginning of the covid shop, as we saw in the u.s. there are credit factors weighing on headline cpi, so we think core inflation will be in a range of 0.5% to 1% in a one year or two years time. >> we heard from the conversation with the guest earlier, saying she wants the olympics to like the weight in terms of japan's recovery. we know there will not be too much of an economic pass-through, but could it be a boost when it comes to sentiment

given how controversial the games have been in the run-up? izumi: yes, i have to say the event itself will not have a big boost on sentiment, but the economy and what the picture looks like, at the time, as i mentioned, there should be significant progress with vaccinations. there will also be a tremendous sigh of relief at having pulled off the olympics and paralympics successfully, so i can see that being a boost for sentiment when we get through this event with no big way for any kind of incident like that. >> we have been expecting more details on the screen lending initiative. what are you expecting? does it address one of the issues, the buildup of bank deposits during the pandemic? >> yes, you are referring to the boj meeting today that they will keep key policy targets

unchanged. the board did vote to introduce a new facility that will provide key funding for climate change-related projects. the facility itself looks like it will be fairly small. we will see what kind of incentives they offer to financial institutions to make those loans, but this news is symbolic. it shows if you look around, globally, central banks are making climate change almost part of their mandate, and i think the boj has been pretty cautious about getting involved in climate change policy as a part of a monetary policy toolkit, but it shows this is a trend going forward and they will have to increase their involvement in this area. >> always great to have you with us. you can turn to bloomberg for the boj decision. you can get commentary and

analysis from bloomberg's expert editors. that will be getting underway. ♪

♪ >> the asset manager announced plans to redeem the notice in september. the firm has begun to buy back its 2.875% bond for 100 cents on the dollar. the move is seen as easing concerns about the near term liquidity for the embattled firm. set to be nearing a deal to sell a 25% stake in its overseas assets that could be valued at $2 billion. the deal could be reached as soon as this week with the consortium that includes a chinese state back fund and a singapore fund. a source has the hydropower company which has been added to

a u.s. backlist plans to use the funds for overseas acquisitions. >> after multiple delays, china's national carbon market begins trading today with 2000 companies, the world's largest. our energy editor has more details. the sheer size makes this interesting with some significant implications. >> yes, exactly. this market will cover 4.5 billion tons of co2 omissions. that is three times the size of europe's carbon market. it will initially cover only 2200 companies in the power sector, but those companies account for half of china's admissions and roughly 14% of global emissions, based on 2018 numbers. the market itself operates fairly straightforward in a straightforward manner. the government gives power

plants the right to a certain amount of pollution in a given year. if they pollute less, they can sell the excess pollution rights. if they want to pollute more, they have to buy extra allowances. we have not seen a transaction yet, but some pilot projects, private systems, the price was 40 yuan baton, which is $6.18, so lower than we have seen in the eu recently. >> how much will this impact the amount of emissions? >> i think there has been quite a bit of criticism aimed at this plan, and a lot of people have said that will be a limited impact in the short term, and again, this gets back to the idea that beijing seems to be giving out quite a lot of these, some people would argue a surplus of these permits, which would allow even the biggest polluters if they want to pollute more, those additional

allowances may come at a very cheap price. the price for carbon in the european union recently hit a record earlier this month at 58 to 59 euros a time, so you see emitters moving away from coal. the initial thoughts on the chinese market is this really won't help with decarbonization in the short-term, but does give officials a policy tool towards a larger goal, becoming carbon neutral by 2060, so i think people are viewing this as a tool towards the clinical. >> part of the long-term goal. thank you. coming up, the chief china economist for goldman sachs and her take for the china slow and prospects for recovery. plus, we hear from a portfolio manager on the outlook for markets in fixed income, and why

he says the recent pboc cut was useful but unnecessary. that is daybreak asia market next. ♪ this is bloomberg. ♪

>> 9:00 a.m. in beijing and shanghai. >> good morning. we are counting down on the chinese mainland in hong kong. stoxx under pressure -- stocks under pressure. jay powell admitting inflation is uncomfortably high, treasuries in the u.s. dollar advance.