haidi: a very good morning. i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. welcome to "daybreak asia." china's latest regulatory crackdown is set to rock the $100 billion private education industry. big investors facing risk include softbank and others. traders bracing for a busy week headlines by a fed decision,

plus the dangers of data and earnings. the u.s. and china set for high-level talks with tensions high and cooperation at risk. haidi: this is what we are seeing when it comes to the countdown towards the start of trading across measure markets here in asia. we are seeing a pretty mixed start. traders are weighing the u.s. rally on account of corporate earnings, starting to kick off in asia proper as well as the tech sector cracked down and of course, don't forget the federal reserve meeting this week as well. we are seeing the dollar hold pretty steady in the early part of the trading session. we had that -- those trade numbers coming out from new zealand just shortly before taking a look at the annual trade deficit widening by the june numbers. sydney futures up by .3% as we continue to have some confusion as well as concern that we could see that new south wales sydney lockdown being extended by the government. chicago nikkei futures up a

tepid amount, .2%, as we get into day three of the tokyo olympic games and this is a pretty steady picture when it comes to futures trading in the u.s., so let's get back to the top story, one that will weigh on hong kong, shanghai, and shenzhen market as they open for the week. the tutoring and education tech sector has become the latest target of china's sweeping america tory crackdown. companies that teach all subjects can no longer go public under the new rules. it jeopardizes what has become a $100 billion industry. let's cross over to our executive editor, john liu. there has been concerned for some time, just the myriad players who have popped up. what do we know about what the government is trying to do here? john: there's a number of things the government is trying to accomplish here. one is this tightening of the

curriculum, what is taught in schools. our kids getting patriotic education? another thing is this concern about the population and demographics. china's population probably in the next couple of years will tip over into shrinking so parents these days feel like they do not have a choice except to send their kids these afterschool tutoring services because no one wants their child to fall behind and that has increased the burden for parents if they are thinking about having additional children. finally, there is this great concern about the wealth gap that developed in this country. education used to be seen as this rate equalizer and that has been greatly reduced because parents who have more financial resources have been able to pay for these tutoring services to help the kids at ahead of others. shery: what are the implications in china's broader tech industry? john: i think you see this greater scrutiny of not only tech also business in general. our companies taking advantage

of their position in the market? our companies abusing their ability to set prices, to affect how consumers are spending? companies properly protecting the data that they get from their users? all of these questions are much more in the limelight than they ever have been. shery: john liu with the latest. the u.s. and china holding their first high-level talks into march later monday. washington's number two diplomat, wendi sherman, will meet the foreign minister, who issued this morning ahead of the meeting. >> the u.s. has been using its strength to put pressure on other countries and thinking it is superior to others. we need to tell the u.s. clearly , there is no country in the world that is superior to others. china will never accept any country that claims to be superior to others. if the u.s. has not learned to

treat other countries equally, china and the international community has a responsibility to help the u.s. learn this lesson properly. shery: jennifer epstein joins us now with the latest. what does the biden administration want to achieve with this meeting? jennifer: this meeting is really only the second major in person meeting by a top official after the meeting that secretary blinken men chinese officials had in alaska earlier on in the administration. it is one of the initial contacts that they have had and sherman is expected to talk about wanting a level playing field and guard rails in safe to ensure that the u.s. and china do not end up in conflict and that sort of direction that she

will be headed in. haidi: there were a lot of issues when it comes to the protocol going into this meeting, right? the fact that the foreign minister is meeting with sherman but not holding negotiations with her, was this the compromise that was acceptable for both sides? jennifer: yes, you know. this is somebody who is at a lower rank than wendi sherman is, but it was something that the biden administration kind of reluctantly agreed to in the interests of trying to initiate -- to carry on these conversations at a higher level because there really has not been much interaction, as i said, between the secretary of state and top chinese officials, let alone president biden and president xi, and that is certainly a direction where i think that this administration does want to have some of that engagement, at least on issues

where there could be some agreement. shery: jennifer epstein there. let's get you to vonnie quinn, who has the first word headlines. vonnie: thank you. the top infectious disease expert says the nation is moving in the wrong direction in combating a new wave of the endemic. a third booster shot may be needed, especially for the most vulnerable. he told cnn it is a problem that half of the country is not vaccinated. modeling shows the u.s. faces a worst-case scenario of daily deaths reaching a winter peak of 4000. glaciers parliament will sit for the first time this you on monday. the five-day session will give lawmakers an opportunity to grill the prime minister over his government's highly criticized handling of the pandemic and the economy. an imposed state of emergency gave the embattled leader wide-ranging powers to tackle the outbreak including suspending parliament and

inducing ordinances without legislative approval. south africa's president, cyril ramaphosa, unveiled a new relief package. recent riots over the jailing of jacob zuma. in the measures include reinstating a temporary monthly welfare grant of $24 for the poor in more than 27 million dollars in humanitarian relief. south africa has eased restrictions of covid cases slow. china is bracing for more disruption at your a typhoon made landfall on sunday at -- bracing for more disruption as a typhoon made landfall on sunday. more flights may be grounded monday following hundreds of cancellations. shanghai diverted large container ships from one of the world's busiest shipping centers . israel is said to have carried out airstrikes in gaza after pro-hamas activists launched incendiary balloons from the

strip. local media reports that balloons caused at least three fires in southern israel. the latest violence comes two months after an 11 day war between israel and palestine killed 200 and 50 people mostly in gaza. 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. shery: still ahead, we speak to one of china's earliest bitcoin moguls about beijing's crackdown on crypto's. the founder and ceo, bobby lee, joins us later this hour. but first, we get the outlook for the dollar and other currencies as we look ahead to this week's fomc meeting. a strategist of cba joins us next. this is bloomberg. ♪

shery: investors around the world are waiting to see if the federal reserve takes any steps

towards tapering even as surging cases of the delta variant raises concerns about the u.s. on global recovery. kathleen hays is here with a preview. kathleen, what should we be expecting this time around? kathleen: two weeks ago, when jay powell was giving his testimony to congress, he said this discussion on tapering started in earnest at the june meeting. it is continuing now and it will continue at the july meeting so we know that they are going to talk about it. they are buying $80 million of treasuries, $40 billion of mortgage-backed securities a month. the question is, what did they do now? again, when powell was testifying, he said the economy is always off from the threshold the fomc would like to see to start. there is a camp that says they could start sooner. signal early next year. others are maybe holding back more. another interesting question they will look at of course is when they taper due to -- the housing market is so hot and you

are pouring gas on the fire. we know one fed governor, four fed presidents are in favor of doing the taper first. probably starting it sooner but powell, john williams, and others say we should do them at the same time. they both affect mortgage rates. finally, our bloomberg survey figures that the fed will not move anything on rate for tapering now and they are not even going to talk about it in their policy statement. jay powell will probably have to talk about it in a press conference. shery: he will probably get lots of questions about the delta variant spreading. kathleen: great story in the last couple of days from our bloomberg eco-team saying most economists are still looking for a strong u.s. recovery despite the surge in deltek cases because he will not see a lot of new lockdowns and people may spend a little less but for the most part, they say they have a lot of savings. they will keep going. let's look at the reasons from bloomberg economics, how they stack up.

hospitalizations are not surging. that is why you don't look for the big lockdowns pit many of the impacts are some smaller southern states so that is not going to happen overall. and again, people are getting the vaccine and they are the at risk groups. they are probably also the people who say they are not so worried about catching the virus so they see cases rising and they will stop spending money. the fed will talk about it. it will be interesting to see, especially in powell's press conference, how this is affecting their look at tapering and other aspects of policy. it will be interesting to see how the inflation -- haidi: it will be interesting to see how the inflation messaging changes. the white house has been changing its language. kathleen: this is very important and interesting because joe biden and others, and jay powell, have been saying the inflation surge will be transitory, but voters are

starting to express concerns. president biden has eased a bit in the latest gallup poll. democrats are looking to the midterm elections. there is concern at the white house that if they start talking about inflation being temporary, don't worry about it when so many people are -- this could be a problem. republicans have two days of testimony. there were so many questions about inflation. republicans are arguing that $1.9 -- the trillion dollar stimulus. spending on social infrastructure will put more fuel on the fire. this was such a big deal when powell testified. it will be interesting to see now if titan continues --if biden and his team take some of the political pressure and heat off of the fed when they need to make a move because so far, some of the more progressive wing of

the democratic party have been pushing back against the idea that the fed would consider that at this point. shery: kathleen hays with the latest on the fed, the fomc, and the upcoming policy decision, but let's get a quick check of the fx markets as well because our next guest expects dollar outperformance in the second half. joining us is the currency strategists and internationally economist at commonwealth bank of australia. great to have you with us. how much of the dollar strength is coming from haven demand given we have more concerns about economic growth? >> this has actually been a relatively new development compared to when we last updated our economic forecast so our initial expectations were really driven by the fact that we were fixing the u.s. economy to outperform over the remainder of the year and that was really being driven by the fact that some of the other major economies are still struggling with high infection rates and

the economic recovery has been lower than we were initially looking at. the fact that we have this new global growth concern being driven by the fact that the delta variant is spreading rapidly, that is adding another element to our expectation that the u.s. dollar can outperform over the remainder of the year. shery: how much support will come from the euro given that we now have this new policy framework from the ecb? kim: i think what we are seeing at the moment is after interest rate differentials had no impact on currency markets all of last year when they converged to the lower effective bound, we are now seeing interest rate differentials impacting currency markets again so the fact that people are looking for the fomc to start tapering, the outlook for the u.s. improving, meanwhile, in the euro zone, you have an ecb that is now expected to leave monetary policy ultra-accommodative even longer.

it is definitely supportive of the u.s. dollar and that will remain a headwind for the euro as well. haidi: could that become a headwind for emerging markets and markets here in asia? kim: that is what we are expecting, yes. we are expecting must currencies to underperform versus the u.s. dollar at the moment with the exception of potentially the yen but that is just if we do have concerns around the global spread of the delta variant start to really gain traction. shery: does the handling of the virus, the likelihood now that we will see the extension of the lockdown in new south wales and the slow vaccine rollout, what are the implications for the aussie going award? kim: we do think that we are facing a little bit of a headwind, especially in the near term, so we just recently said we think the aussie can fall to around 70 in the near term and

one of the main reasons driving that is we are expecting australian tenure bonds to fall to 1%. we have done some research and our research shows that when the australian u.s. 10 year's broad -- year spread falls below zero, that is a headwind for the aussie dollar. given that that spread is now negative, -25 basis points, temporarily, that sets a temporary headwind to the aussie. shery: could we see headwinds for the kiwi dollar as well? we are nearing a technical pattern called the death cross with the 50 day moving average approaching the 200 day moving average. what is driving these moves on the kiwi dollar? kim: the kiwi dollar has been interesting because you have actually got one of the most hawkish central banks, the rbnz, and the fact that markets are pricing the rbnz to start hiking

the official cash rate as soon as august. but the kiwi is sensitive to global growth development. so if we do see these ongoing concerns about what the delta variant could do to the global growth outlook, that does suggest that the kiwi can continue to decline despite the fact that the outlook for rbnz rate hikes continues to improve. shery: what about the outlook for the chinese yuan and what is really moving the currency there? kim: yes, so we have actually recently downgraded our chinese 2021 gdp growth forecast so we were forecasting 9.2% this year and we recently downgraded it to a .6%. in part, that is a reflection of base effects but we are seeing downside risks due to chinese economic growth now and that is really because policymakers are shifting their focus towards reducing financials rather than supporting the economy.

however, one thing to keep in mind is that we are also expecting a bit of easing from the people's bank of china so again, when we are talking about interest rate differentials, if we do see interest rates fall in china, that's going to remove one of the headwinds that has been a support for the cnh lately. that suggests that there might be a little bit less downside than we were initially expecting. haidi: always great to have you. kim mundy from cba. you can get a roundup of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on their terminals and of course, that china crackdown on education tech companies, front and center as our top story today. you can also read all about that on the mobile as well in the bloomberg anywhere app. this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo and seoul. some of the stories we are watching today. in japan, markets reopening after the long holiday weekend. we will be watching the tokyo olympics. aside from covid-19 cases, organizers and athletes may have to deal with another kind of disaster, a typhoon. we are seeing the tropical storm approaching japan and this could be making landfall this week. meanwhile, as japan is said to make dramatic changes to its energy mix by the end of the decade, reporting that the environment ministry will announce a roadmap on monday for the country's 2030 goal to cut read house gas emissions. on the economic front, we will also be watching for japan's july manufacturing pmi data due in the next hour. in south korea, the government passed its second largest after budget, seeking to shore up the economy.

the virus wave shows little sign of abating. south korea is planning to issue as much as $1.5 billion worth of overseas bonds by the end of this year. on the earnings front, some companies reporting today -- the industrial bank of korea as well. haidi: and of course, we will continue to watch intel and some of these chip and intel affected stocks in asia after the third quarter sales forecasts fell short of market estimates. demand for chips continues to shrink in the face of stiff competition. pat gelsinger said he is comfortable with the margin profile and added the company is making an investment for long-term leadership, something he is not apologetic about. >> we are bringing on the new factories which have yet to be depreciated and that is a normal cycle in the business as we bring on the 10 and seven nanometer costs at scale so it is very typical as we go through that and they build up in the

longer term. overall, we feel comfortable with the margin profile for the business to return to levels that the industry would expect. this is very normal cycles. we are investing for long-term leadership and we are not apologetic about that. we are committed to be a growth company that is leaving in technology. between r&d, capital, we will make those investments to have that occur. we have an analyst session at the end of the year where we will lay out the multiyear picture to the marketplace more clearly but overall, we are not concerned about q3 margins. we are being more competitive. the products are being well accepted by our customers. we are exactly on the strategy that i have laid out. >> i want to talk about the shortage. you said it will linger for a couple of years paid i wonder how much that is adding to your optimism about the foundry business and taking on tsmc. pat: it certainly is a factor, emily. right now, everybody, you know,

boy, what have you got? can you run more wafers for me? there is a clear search for supply of the industry which is a bit of a tailwind and there's very few companies that can do leading-edge technologies. they are looking at us quite aggressively that way. also, this rapid buildup of new capacity, it takes time. and building a new one from scratch is a three-year to four-year actual size to have it built -- exercise to have it built. that cycle of significant demand, and as i said, i think we are in for a decade of good semiconductor industry characteristics, because every aspect of human existence is going digital. everything digital needs semiconductors. as you look underneath that, this will be a good cycle for semiconductors. shery: pat gelsinger there. we will have plenty more to calm on "daybreak asia -- two, on -- to come on "daybreak asia." 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 ♪

>> this is daybreak: asia. i'm vonnie quinn. at least six mainland china listed companies made exchange filing sunday after beijing cracked down on for-profit afterschool tutoring. a day earlier, beijing unveiled sweeping overalls of the $100 billion education tech sector, banning country -- banning companies from teaching school curriculums from going public. u.s. and china are such a hold

the highest level talks since march. the deputy secretary of state will meet the foreign minister on monday in china. the minister warns the u.s. must learn to treat other nations equally. the white house as the chairman will raise human rights concerns while raw offering -- while offering reassurance the u.s. is not anti-china. nancy pelosi is not backing off on her plans to promote a bipartisan infrastructure package. she warned she would not put a bill on the floor prematurely. democrats are still working on the details. bipartisan negotiators may announce details as soon monday. tobacco giant philip morris is said to be planning to end of cigarette sales in the u.k. within the next decade. the male is reporting that the ceos strategy to phase out cigarettes and turned to

e-cigarettes. jackie mason, the rabbi turned comedian known for his irreverent brand of stand up, has died. he was famous for his sharp wit and piercing social commentary on relationships and judaism. he had appearances on broadway and the ed sullivan show and one -- and won a tony in 1988. he was 93 years old. 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. i'm vonnie quinn. this is bloomberg. haidi: let's take a look at the virus impact in asia. the liv-ex are underway. meanwhile, in korea, -- the olympics are underway, meanwhile, in korea, -- let's

start out with philip x. what's the virus situation looking like? >> we had a few more positive cases reported by the organizers over the weekend which have been causing concern here and overseas. most of those who have tested positive under the 2020 testing regime are contractors and staff. athletes make up a small minority. we will watch closely to see if conditions in the village makeup to any -- village lead to any kind of spread. with what we know about the way the virus spreads, it is not entirely surprising there are -- there are positive cases. when you go outside the athletes village, the seven day average keeps increasing in tokyo and we are under a state of emergency here to contain the spread of the virus. shery: how higher the stakes

right now for the japanese government? >> the stakes are high. we have seen more headlines come across the terminal this morning. the cabinet approval rating of the prime minister has really been tanking and that continues. respondents are not happy with his government's management of the virus and are concerned about the olympics, as well. he is a general election coming up just a couple months after the olympics. we will watch, how do we deal with any a liv-ex related virus spreads, what is on the cards its first stimulus after the games are over? and is suga the man who will take this party into the elections or will his party members try to dump in makkah that is what we will watch closely. shery: the country just passed

one of the largest extra budgets for the pandemic in korea. how much will this help their economy? >> on saturday, the national assembly passed a 35 trillion won spending bill, about a 3 billion-dollar u.s. spending bill. unlike the previous five stimulus packages introduced during the pandemic, this time individuals look at a lot more cash. small businesses will get some compensation that would mitigate negative impacts from the surging virus. the actual spending bills, the handouts, will come sometime in the next month, before one of the largest holidays in korea in the fall. the help is coming but it will take some time. analysts say it will help mitigate some of the bad impact

that a lot of small businesses have been seeing since the distancing measures have been in place. >> we have seen the highest level of social distancing measures and so -- in seoul. how does it play out when it comes to how the market will process the echo >> it has been two weeks since seoul imposed a high social distancing measures. the stock market has been trading pretty much sideways since then. the bigger problem has been that places outside seoul have seen higher virus cases. stock market investors have been paying more attention to the earnings and the fed and foreign buying trends lately as they expect the upcoming's to most member to help mitigate the impact -- the upcoming stimulus

to help mitigate the impact from surging cases. we just started the earnings season. shery: the latest on chronic iris -- coronavirus cases in japan and south korea. you can watch more of our olympic coverage and keep track of the metal count -- metal -- medal count on uber.com. haidi: new oriental education, one of the major players in the technology sector in china, say they will comply with the relevant rules and regulations of the chinese give robert -- of the chinese government. they expect the measures to have material impact. we have more details on these broad sets of reforms. they are looking at banning

these companies that teach school curriculums from making profits, raising capital, or going public. they also can no longer offer tutoring related to the school syllabus on weekends or during vacation. bloomberg intelligence saying they see the likes of new oriental only to worsen on this crackdown. operational losses could go through into 2024 and beyond. we will continue of course to watch these, new oriental one of the stocks of many to watch going into that market opening. it is a $100 billion industry we are seeing be affected. coming up next, our next guest says this cap -- this crackdown on china unprotected currency could lead to an outright ban on holding crypto current -- on crypto tokens. this is bloomberg. ♪

haidi: a quick check of the latest business headlines. china's market regulator orders tencent to pay half a million you on or around $77,000 in fines after an official investigation found its 2016 acquisition of china music corp.

violated regulations. tencent says it will rectify the situation. robinhood made its case for investors of all kinds to buy shares, opening up to the public what is typically reserved for institutional players. they responded to customer questions about the business model and growth plan. it is allocating as much is 35% of shares for its own app. it is expected to start trading on july 29. a singapore company has agreed to go public with a blank check company backed by richard lee and peter thiel. it is expected by 2022. the combined entity will train -- will trade on the new york stock exchange. a vein per -- posted a 70% jump in profit on the first quarter, helped along by strong interest earnings.

net income and, beat estimates and almost doubled in the same. from a year ago. u.s. cinemas have had a disappointing weekend with ticket sales down 27% on last week at $66 million. new releases, including the newest installment of the g.i. joe franchise, struggled to attract fans. some of these sales are running 77 -- 77% below 2019 levels. shery: let's turn to mcdonald's. the ceo saying that working remotely has worked well, but at the same time you lose some of the culture. he outlined a return to office plan for the world's largest restaurant chain in an upcoming

episode of the david rubenstein show. >> i think one of the things we saw was our ability to say they tester stay connected through connect -- the ability to stay connected through technology. all the different teleconferencing tools. they have all worked reasonably well. we learned we cap -- we learned we have the ability to stay connected. we ultimately are an in person business. we are in person in the restaurant, we are in person in the office. you lose something from culture, from connectedness, by being so remote. while it works well for the time, we are committed to getting back into our offices in getting back to the restaurants. >> will you be bringing back all your employees five days a week like before or will he say, three days a week echo >> we always provided flexibility. we had one day of what we called

flex time where people could work from home more if they needed to come in, we left it up to them. we will extend that to two days. ultimately, it is about, you have to do what you need to do to do your job. the expectations are not changing. if you have the ability to maybe have a little more flexibility, but at minimum, three days, you need to be in the office or restaurant. haidi: he speaking with david rubenstein. you can watch the entire episode here -- on thursday at 7 p.m. in hong kong. shery: bitcoin has rebounded to a key technical level helped in large part by, -- positive comments by elon musk and kathy wood. both big boosters of crypto. meanwhile, warnings of more challenges ahead.

a su keenan joins us with the latest. let start with what technical analysts are saying. reporter: they are saying that the fact bitcoin rose above its 50 day moving average since mid-may is a positive sign for the bitcoin hold. it rose again sunday. its fifth consecutive day of gains, to as high as $34,000. it is kind of volatile. it was seeing further declines below 30,000. it fell below three 9000. in june, a big slide, and that had many protecting bitcoin could go as low as 15,000. the big boost seems to have come from last week's conference on bitcoin. it mentions tesla ceo elon musk very positive, saying he wants bitcoin to succeed and that his spacex corporation, in addition to tesla, has bitcoin on its

balance sheet. kathy woods says corporations should consider adding bitcoin to their balance sheets. bobby lee, the crypto mobile in china, says he believes china's crackdown will probably intensify and says it may lead to an outright ban. he sees a 50-50 chance of that. nonetheless, he think that will rise above 60,000 again and peek above $250,000. that's a bullish projection. haidi: speaking of companies with bitcoin on their balance sheets, will this be a moment of reckoning? >> that will be interesting. a lot of analysts, increase -- in particular dan ives from wedbush is looking at the big

corporate boosters. tesla's bought a lot of big coins and made public gestures in doing so. in light of the 41% drop in the second quarter of bitcoin, analysts say some of the revelations and write-offs could raise eyebrows. with tesla the concern is less, as the analyst says he believes that sales in china are the focus for tesla stock, although it has lagged in 2021 largely many believe due to the decline in bitcoin. the real concern is what is going to happen with microstrategy. it made bitcoin a central part of its business. the company spent as much is $2.2 billion on tokens as of may 18. this will be something to watch. capital reports july 20 seventh. this week microstrategy reports july 29. again, bitcoin relevant --

pickling revelation will be in focus. back to you. haidi: su keenan there with the latest. we will be speaking to one of china's earliest bitcoin moguls about beijing's latest crypto crackdown. we will ask whether he thinks that the beijing government could really put an outright ban on crypto. we will be sure to tune in to bloomberg radio to get in-depth analysis from the daybreak team there. we broadcast live from our studio in hong kong. you can listen via the app, radio plus core -- or from bloombergradio.com. lots more ahead. this is bloomberg. ♪

shery: we are watching coffee closely. we are seeing downside pressure in the last session, but only after we saw 17% gains in last week. not surprising given we have seen this worst frost in brazil's top coffee producing region into decades or so. extreme climate also an issue in china or we have seen floods in the profit -- in the province of heinan. life -- live hogs are holding at the $92 level. we are seeing pressure on corn.

scorching he is leading to food inflation. still, the u.s. agricultural secretary as saying he not too concerned about food prices. take a listen. >> the overall food inflation rate is not that much higher than it normally is. there are certain select items in the grocery store folks may see for a. of time increased cost, but we think this will even out as we recover and begin to get the supply and demand in better balance. i think you will continue to see a moderation of the food inflation. >> of course it's very interesting, pure inflation pressures, we are also seeing the u.k.'s inability to find basic things like pints of milk and cereal in supermarkets there. the issue there, where they have

a lot of people being forced to self isolated, they have been exposed to a soaring number of delta cages -- cases. labor shortages are creating problems in the supply chain. even as we thought to see the other side of the pandemic, it seems like we continue to monitor all of these effects. shery: we saw food prices ease a little bit in the sow index in june, but this was after almost a year of rising food prices so we continue to watch the soft commodities market very closely, haidi. we are now seeing kiwi stocks trading like this, when it comes to trading across asia. we are seeing kiwi stotts -- kiwi stocks up for intensive 1%. the kiwi dollars gaining ground. there ago, on the chart right there. we have seen a little pressure for the kiwi dollar, but it has

been steady around 69 u.s. cents . this is we had -- as we head to the 50 day moving average approaching the 100 -- the 200 day moving average. this is we see pressure on whether it is virus infections, something we watch very closely in australia, of course. futures still pointing to the upside. we have seen the aussie dollar suffering its longest run of weekly losses since february of last year because of the pressure on virus outbreaks and of course, haidi, you guys had anti-lockdown protests in several cities. haidi: yes, the anti-lockdown protests and the aussie kiwi taking a breather with the cancellation of the travel bubble for at least the next eight weeks. hedge funds bullish on the aussie dollar's are counting on strong inflation data.

whether that is enough to be enough to pull it from the eight-month slows -- the eight-month lows is yet to be seen. it is a pretty mixed picture heading into the start of trading. we already had the market reaction to this on friday, when the initial report came out, but we have more details of the weekend as to what the chinese government is specifically wanting to do with these chinese tech education firms. not allowed to be profitable, to go public, certainly not allowed to go public overseas. is this a full nationalization? what are the implications for this $100 billion sector now? shery: if you telling injury -- an industry to go nonprofit, does that mean you're wiping out a sector? we are hearing from the oriental education that they will be complying with the rules and they expect the measures to have material impact. this of course as we not only watch as education stocks over

in china but also those big investors, softbank, which have sunk billions into the industry in recent years, but now companies can no longer seek profits. it is changing the game when it comes to the industry itself. haidi: i have to sort of snore a little bit when i see things like, they will comply with the relevant regulations -- well, what choice will they have? when you operate in china the government makes policy joint is and you do not have much of a choice other than to fall in line. look, i understand what beijing is trying to do. expensive education, justice year, heartbreaking competitiveness of even junior education, primary education, or pre-primary education and china is so fiercely competitive and extremely expensive for parents, it is one of the reasons why we have not seen the birth rate climbed back up even as they have eased on the one and two

child restriction rates. this is just one of the things we are seeing player -- play out. it will be very interesting. lots of the institutional investors have said these chinese names are really good values right now. we just have to see the regulatory headwinds and if the fundamental growth story is strong. shery: we heard last week about the broader tech industry in china, saying that, given the pressures they are all under right now, it is a buying opportunity. to each its own. do you see this as an opportunity to buy long-term? we will be asking all the analysts and investors we have on the show coming up. we will be dissecting china's industrial profits, korea's gdp growth, australian cpi in focus with andrew tilton as we look at key data -- as we look at key data in the wake of wet -- in

the week ahead. the market opens in sydney, se oul, and tokyo are next. this is bloomberg. ♪

shery: welcome to "daybreak: asia." haidi: asia's major markets have just open for trade. our top stories. hijacked by capital -- china's radical overall of its $100 billion educational tech sector. traders are bracing for a heavy week ahead of fed decisions.

in the u.s. and china set for high-level talks, with tension high. shery: take a look at the market open. japan is coming back from a long holiday weekend. we are seeing the nikkei gaining ground with consumer, discretionary, and material stocks leading the game in japan, playing a little catch-up. we're seeing the yen holding at about 110 low against the u.s. dollar. we are talking about the japanese yen being this year's weakest g10 performer. we will watch what impact that has on the equity market. the 10 year yield is holding at the level right now. we are watching for the bank numbers coming up in a half hour. take a look at the kospi. gaining .3% and extending three sessions of gains. we saw the korean won and kospi

rise on the technical rebound, given that we have the won's rapid drop last week and a risk on sentiments of concern with growth around the world. and of course, what's happening with those virus infections, as we see record numbers there. haidi: let's take a look at -- we've talked about how this will be a busy week. a week for aussie traders with the inflation numbers. anyone who is bullish for the aussie is hoping the inflation number will give it some uptick from the eight-month low we have seen in trading. no response so far this morning. new zealand stocks are playing -- are trading higher, just at about .1%. we have seen that 50 day moving average for the kiwi dollar approach the 200 day moving

average. we have seen this about nine times over the past 10 years. six out of those nine occasions we see a drop in the kiwi. let's get to china now. lots of news coming through. we are seeing new developments when it comes to hong kong banks and brokerage cut -- and brokerages cutting the evergrande stocks. some of them have cut them from list so shares allowed for margin trading. that's according to the hong kong economic journal. clients can no longer lend to the shares to hsbc to gain extra purchasing power or leverage. we are also hearing the list includes chief group. it comes on the back of lots of these de-risking developments, on the back of at least two of hong kong's biggest lenders wreak -- read -- reconsidering a halts on mortgages for china evergrande's unfinished

properti our next guest says risk reward in asian equities is the best he has seen all year. there is an upside when it comes to the regional benchmark index, including japan. joining us is the asian equity strategist at j.p. morgan. i have to pick up with china. evergrande we've watched for a while. education tech sector over the weekend the, where does this story go? does it change the idea that once the regulatory headwinds are over, the growth story for chinese stocks is excellent still echo -- is excellent still echo -- is excellent still? guest: most of these issues, you mentioned the china education. they seem to be quite isolated. evergrande is specific to that

company, and for the education sector, if you look at what the -- at the breadth of what has come out this weekend, some of these points are specific to the education points, but other topics people are worried about, such as asking these education companies to go nonprofit, these are something investors are worried could extend to other spaces beyond the china education. we think they should be seen as something that is very particular to the -- we think this should be seen as something that is particular to the education sector. as we see regulations slow down, you will realize the growth process -- prospects of the china internet space over the long-term is still quite strong. haidi: last week we were talking about the downsides -- the downside impact on china tech. now are we -- now we are talking about education. isn't the worry that beijing can do anything it wants with any

sector, if it feels like the way that sector is operating is not aligned with its strategic or social policy interests? guest: there is two points to this. first of all, you have to admit that pretty much any government can become interventionist in the private sector if they choose to do so. in china this has always been the case. investors have also -- have always worried about regulations. investing in china has been partly inclusive of these concern. if you look at the internet space in terms of relative valuations with the u.s. internet space, is trading at the biggest deeps -- at the biggest discount we have ever seen. coming from 2011, swings well, when they were trading above u.s. internet valuations, now it is down 2.65. there is investor concern about these issues. you see this in price of

valuations already. the question is, what happens going forward, and whether the current valuations sufficiently discount the risk we are seeing right now. shery: what about broader asia? this chart shows the earning estimates are on record highs we have not seen in years when it comes to broader asian companies. do we have more room for upside given how we have underperformed other regional benchmarks? guest: we did a deep dive on earnings last week and the conclusion that on an aggregate level, earnings are still trailing macroeconomic outcomes, so all the macro variables that tend to drive earnings in asia, you are seeing that earnings still have some room to catch up to those outcomes. based on our estimates, we've seen about 35% eps growth this year, followed by about 12% next year. that should bring forward eps by the end of this year to above

$60. pricing that in, i would say that the market still has some room to go on the upside. obviously, if you look at valuations right now, valuations everywhere are relatively elevated, but if you look at where they stand relative to earnings revisions, i would say that valuations in asia are currently fair, and they have not been for a long time. shery: given that we continue to see that delta variant spreading, where do you go? to go into reflation trade? do take safety and some of those growth stocks in east asia, perhaps not the chinese ones, but south korea or taiwan? guest: i was a the answer is in the middle where you go with momentum. -- i would say the answer is in the middle where you go with momentum. it is going from early cycle to mid cycle. in mid cycle, it is momentum stocks that do the best.

the delta variance will put some pressure on reopening trade for at least some time before it starts to pick up again. it will probably come to asia at a slightly later -- stage. bond yields have muddied the fed's reaction. we will get clarity by september. in the interim, it is momentum stocks that should continue to do boo -- should continue to bit -- should continue to do well. that's what we are looking at. many of the semantics fit into that space, like decarbonization, automation, and semiconductors. shery: his take on where to invest in the coming months. let's delve a little deeper on china's regulatory crackdown to the tutoring and education tech sector. john, what exactly are the details of the latest crackdown? reporter: so, any company that

has been providing afterschool tutoring, helping kids with the school curriculum, they have to become a nonprofit. there have been new rules in terms of foreign shareholders in those countries. they are not allowed to own or control those companies. companies in this space are no longer going to be allowed to do listings or raise money. you see a tight crackdown on what they are able to do. the landscape changing quite dramatically. haidi: john, is this sort of a social intrusion, if you will? why is beijing doing this? reporter: the reasons are myriad. the ones i will point out, i think there is a growing concern about what children are taught. the chinese government has tightened up what curriculums are taught, which schoolbooks are used, primarily that's

around making sure children have a patriotic, so-called patriotic, education. there's also a concern about demographics. china will tip into the population -- it will start shrinking pretty soon. the government wants to reduce the curtain on parents to having children. these services have become -- parents have to make a choice, because they are worried their children will be left behind and not be competitive if they are not sent to the schools. shery: -- haidi: the executive editor for greater china john li u there. goldman sachs is worrying that the virus resurgence will dampen their forecast. coming up, the u.s. and china are coming into their first high-level talks since march. we tell you what to expect. this is boone berg. -- this is bloomberg. ♪

shery: the u.s. and china hold their highest level talks since march on monday. >> the u.s. has been using its strength to put pressure on other countries and pinking it is superior to others. we need to -- and thinking it is superior to others. we need to tell the u.s. clearly, there is no country in the world that is superior to another. if the u.s. is not learned to treat other countries equally, china and the international community has a responsibility to help the u.s. learn this lesson properly. shery: let's bring in bruce einhorn. the bar seems to be very low for any sort of success in these talks. reporter: you are right. as we just heard, the chinese foreign minister is already

talking about teaching them americans -- teaching the americans a lesson. just the fact this meeting is taking place is significant. last week, the state department did not have china on the deputy foreign -- the deputy secretary of state's itinerary. the meeting is taking place. that is assigned -- that is a sign the two sides are talking. but we should not have great expectations. haidi: there was so much back and forth over just the protocol. it sounds like expectations are pretty low, if the fact that the meeting is taking place is something at the moment. reporter: the u.s. does expect that they will be able to make some substantive, or at least, maybe not progress but have discussions on things the u.s. wants to bring up like hong kong and xinjiang.

obviously it will not get much of a reception from the chinese. on the other hand, the u.s. thinks it is important to engage on china with things like china -- with things like climate change. there is room there for the two sides to make some progress. i think the key word there is some. let's not expect much to come out of this. haidi: bursae nor they are giving us an update as those talks pick up. let's get to vonnie quinn. she's got the first word headlines rest. reporter: haidi, thank you. bloomberg has learned that the u.k. government is looking for ways to remove a chinese nuclear company from all future power projects. this includes a $27 billion power station in suffolk and a proposed one in essex.

china is bracing for more disruption after a typhoon made in fall on sunday on the coast south of shanghai. 100,000 had to leave their homes and state tv reported more flights might be grounded on monday. they also diverted large container ships from one of the world's busiest shipping centers. the top u.s. infectious disease expert says the u.s. is moving in the wrong correction -- wrong direction in combating the pandemic. dr. anthony fauci says a third booster shot may be needed in the most vulnerable. 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: one of china's first

bitcoin mogul says the crackdown on cryptocurrency will probably intensify. it could even lead to an outright ban on holding the token. bobby li is the founder of this firm. he joins us from shanghai. great to have you with us. we are seeing what happens when an industry or companies operations do not align with watch -- with what china wants. is it in beijing's interest in nurturing the crypto industry echo -- industry? guest: patient probably has no interest. i think it wants to regulate it to achieve its overarching goal for the digital rmb and the atof the rmb and the stability of financial systems in the country. even though there is a hard-core

cryptocurrency community in china, it certainly is not being looked after in any way, unlike the stock or housing markets. haidi: do you think an outright ban is a real risk echo -- a real risk? guest: this is been talked about for many years, since 2013, when cryptocurrency first came on the radar in china. at the time we did not think cryptocurrency would ever get more regulated, but over the years, also in 2017 we saw more action taken by the regulators. at this point, i do fear that possibly of four or five years, the country my even outright panic. but it is too early -- the country may even outright ban it. but it is still too early to tell. it is a wait and see approach. the trading in china has certainly come back a bit in terms of volumes. shery: would it make sense for

beijing to do that given that they want to push the digital yuan to the forefront? guest: right now bitcoin does not compete with the digital n. i think that is just a narrative. the banning of exchanges, the banning of bitcoin mining, is really to tamper down all the trading and excessive -- you know, the excessive trading of the high-risk movement and all that. cryptocurrency trading is very volatile. they are afraid of people losing money and causing society to have unrest and all that stuff. it is not too much about it being direct competition to the digital yuan. shery: does that mean the influence and importance of china to the crypto market will continue to fall? guest: yeah. china has played an outsize role

in the cryptocurrency industry, in the price of the movements and all of that in the past four or five years. i think china's influence over cryptocurrency book continue to wane in the coming decade. that is normal and that is absolutely fine. i do not think the cryptocurrency industry will suffer, necessarily, from china's pullback. overall, bitcoin is a decentralized global network. whether or not china participates does not affect cryptocurrency or bitcoin in the long-term. haidi: we have seen the likes of elon musk just have an outsize impact on what happens to impact and what happens -- what happens to crypto and across the crypto universe. is this something that is a big risk for conventional companies,

holding bitcoin on the balance sheets? guest: cryptocurrency is very volatile. the risks of the balance sheet adjustments are certainly there. tesla had to have a charge for the gap in earnings for q2. cryptocurrency however is also expected -- bitcoin specifically is expected to appreciate much faster than many asset classes in the coming years. so that is why elon musk and tesla made the decision. in the long-term, the tesla investment will pay off many folds over. the rest of -- the rest of this year we will see many fortune 500 companies looking to add bitcoin and crypto holdings to their balance sheets directly. shery: bobby lee, great to have your insights. author of the bestseller "the promise of bitcoin" joining us

from shanghai. funny more to come on "daybreak: asia." this is bloomberg. -- plenty more to come on "daybreak: asia." this is bloomberg. ♪

shery: take a look at the markets right now across asia. we are seeing the nikkei catching up to the gains we saw last week across asia. japan back from a long holiday weekend, of course. every sector in the green at the moment for the nikkei. a different story for the kospi, down .2%. we are seeing the likes of energy and consumer stationery stocks, consumer stocks under pressure. we continue to see this mixed picture in trading across asia. haidi: we are seeing in city marginal gains at the moment but the number of coronavirus cases

is passing 2000. we saw protests against the ongoing lockdowns and there was some protesters against the vaccine, as well, turning violent and chaotic on the streets over the weekend. our bloomberg reporter covering all this joins us now. there are been dozens of arrests following those protests. reporter: good morning. thousands of people took to the streets across capitals in australia, including in sydney, which recorded a record number of cases on saturday. police have urged the community to reporter anyone who was known at the protest. 35 charges have been laid already and more are expected. 5000 have gone to the police.

shery: the situation could improve if we had more vaccinations across australia. what is the progress there? reporter: that's right, shery. the situation has improved slightly. about 12% of the australian population has been vaccinated and the prime minister scott morrison has set a million doses a week have been administered recently. -- has said a million doses a week have been administered recently. the health minister has recently revised his recommendation for adults over the age of 18 in sydney, saying anyone should seriously consider getting the astrazeneca vaccine as the delta variant spreads across the community. shery: georgina mckay in sydney with the latest on the coronavirus outbreak. coming up next, we get the latest views from goldman sach'' andrew tilton. and some of those forecasts for

third-quarter growth, given the spread of the delta variant. this is bloomberg. ♪ (announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you? think again! even a jeep can't burst it.

give the aerotrainer a shot. pain and stress is the only thing you have to lose. get it and get it now. your body will thank you. (announcer) find out more at aerotrainer.com. that's aerotrainer.com.

>> we have japan pmi numbers. for preliminary numbers, 52.2 in expansion territory when it comes to the manufacturing pmi. expansion territory for six consecutive months. the services sector under pressure, coming in lower than even the previous month at 46.4, which is of course contraction territory, been there since january of last year. the composite number at 47 point seven, weaker than the previous month of june.

this as we continue to see the virus restrictions across japan, renewed state of emergency started july 12. not surprising we have some pressure on those pmi numbers. covid-19 cases rising with the spread of the delta variant. our next guest says that renewed state of emergency in tokyo, locked down in sydney and restrictions in south korea have put a dent in his spirits for the forecast in the region. andrew, always great having you with us. how big of a dent are we talking about? >> the biggest hit has been to southeast asia where there is significant covid and we have cut growth forecasts. over 100 basis points, as much as 200. in the rest of the region, adjustments have been smaller. generally a few tenths of a percentage point to growth in the third quarter. this includes japan.

also australia looking like it could be a bigger hit given the extended lockdowns in that country. >> when it was the beginning of the pandemic, we saw supply chain disruptions. with renewed lockdowns, what does that mean given that in your recent report, you pointed to supplier delivery component of recent pmi's under pressure. >> this is related to the speed of deliveries from suppliers in different economies. particularly some of the northeast asian economies, you are seeing a big slowdown. there are a couple elements behind that. one, which has been widely covered, is the semiconductor shortage. the auto sector in particular. some components needed that are slow to be delivered, or short of supply, causing a reduction, temporary reduction in

production. the other issue has been shipping in terms of availability. high cost on many shipping routes. those factors, semiconductors and shipping, leading to delays throughout the asia production chain. that has been exacerbated by covid. you have had courts temporarily shut. -- ports temporarily shut because of local covid outbreaks. >> our markets underpricing the impact of broader economic impact of what the chinese government is doing with regard to regulatory overhaul? >> certainly we are seeing an impact in terms of unlisted chinese equities.

i would distinguish between the equity market, the impact, which has been significant for some particular companies, and the broader economic impact, which we think will be modest. the question is are we going to see an impact on investment in those sectors that is big enough to have a macroeconomic growth impact? clearly at the sector level is important. at the macro level, thus far, we don't see signs that it will be large enough to really change the near term growth trajectory. the second half growth trajectory in china is likely to be modest by chinese standards in the 5% to 6% range by our estimates. >> the robustness of trade data and the trade flows around the

region -- does it feel like the trade wars and the overall impact of u.s.-china tension is last year's story? what are you watching out for as they resume talks? >> the impact of the delta, the change in trade flows is something in the numbers at this point. we did have significant reductions in trade flows of some commodities when tariffs were put on. as you said that is somewhat last year's story or even a couple years ago insofar as we have seen trade flows addressed to those -- adjust to those. covid has been the dominant theme driving trade. the shift in consumption globally from services and more goods consumption during the pandemic, people not able to go out to restaurants or movies, buying computers or teepees instead, that shift to work from home products and things like medical equipment has boosted

china's exports in other areas. despite the u.s. tariffs and despite covid, chinese exports have been very strong. one question is whether that will remain strong in the second half of the year and as we get into 2022. both we and the chinese authorities expect some deceleration. that will underpin activity but will not be a driver for growth in china going forward. >> there is interesting conversation about how the language may have changed around inflation with the fed. is it your view that what we see around asia, the price measures are a temporary pass through, or are there more lingering disruptions we are setting up for? >> the key question, our view is the bulk of what we are seeing is a misalignment of demand, a

sharp rebound creating these bubbling up pressures in various sectors of the economy more visible than the downstream in places like the u.s. where you are seeing sharp increases in some sectors. having said that, as you hinted, we don't think a lot of this will be long-lasting. we are going to see adjustments in the areas i mentioned previously, semiconductors and shipping, that will be reducing these narrow price pressures. we will then likely see a shift to more traditional labor pressures over time if the recovery continues and broadens and covid is brought under control year. economies are able to reopen.

we could see more upside pressures on wages, which could lead to potentially a more durable inflation cycle. that, i would emphasize, is likely a year or more off. at this point the price pressures we are seeing are either commodity-related or otherwise related to supply-side bottlenecks which we think will be transitory. >> andrew tilton, great to have your thoughts. this is the picture across markets. the nikkei playing catch-up even they are coming back from the long holiday. every sector in the green, not surprising considering we have a lot of weakness for the yen. the years weakest g10 currency against the u.s. dollar. the kospi down. we are watching the kospi very closely as we get virus infection numbers out of south korea. more than 1200 cases in the last 24 hours already.

the asx 200 up 0.2%. watch out for the aussie dollar. it is seeing the longest losing streak on a weekly basis since february of last year. more than -- millions of people under lockdown. the kiwi dollar close to the 50 day moving average approaching its 200 day moving average. we saw a drop in the kiwi dollar so watch out for that. japan, nintendo up the most since earlier in july. we are also watching the drugmaker should novy. it started phase one clinical trial of their therapeutic agent when it comes to antivirals and treatment for covid-19. canon electronics, also tokyo steel higher after their half-year earnings. >> ones to watch throughout the session. next, southeast asia continuing

to have coronavirus outbreaks. we get the latest. ♪

>> this is daybreak asia. i'm vonnie quinn with the first word headlines. the u.s. and china are set to hold their highest level talks since march. wendy sherman will meet foreign minister one knee on monday.

the ministers warned the u.s. must learn to treat other nations equally. the white house says sherman will raise human rights concerns while offering reassurance the u.s. is not anti-china. at least six mainland china listed companies made exchange filing sunday after beijing crackdown on afterschool tutoring. the companies are evaluating the downside risk. beijing unveiled a sweeping overhaul of the education tech sector abandon companies teaching school curriculums from going public. -- was removed after a weekend of protests marking the country's 64th anniversary of independence. lockdowns have been reimposed,

facing one of africa's worst outbreaks. the prime minister was sworn in last year. cyril ramaphosa has launched a relief package. measures include reinstating a temporary monthly welfare grant of $24 for the poor and more than $27 million in humanitarian relief. south africa has eased restrictions as covid cases slow. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> southeast asia continues to feel the pain from the delta resurgence. malaysia is lawmakers will scrutinize government handling of the pandemic and the economy. the shutdown of factories is hurting big companies like nike and adidas. let's get the latest from our senior asia economics reporter. let's start with malaysia.

>> malaysia has been caught up as many countries have in rising political tensions. for malaysia that is unique given the multi-political struggles. it is exacerbated by this latest virus resurgence. we can expect prime minister to be under intense grilling for a range of issues. first on the agenda is the emergency declaration in effect until august 1. it has given the pm a wide range of powers including the ability to shutter parliament. it is a big jester the lawmakers will have a chance to fight back on starting today. this declaration of emergency has been in place since january and cases have surged, most recently with the delta variant. we are seeing that rise as we are in neighboring countries.

with much of the country still in lockdown we are seeing a rise in public anger including distrust of the government, leading to that vaccine hesitancy, which is making vaccine progress that much harder. a lot of problems to be faced in parliament. the opposition coalition has said they won't introduce a no-confidence vote, but that is little consolation to those who are skeptical a constructive debate can go on. we will see, but they have a lot on the agenda. they will be talking about more economic aid. >> we have so many manufacturers in southeast asia. exporters deeply entrenched in the global supply chain system. what will the resurgence of the delta variant due to the global economy? >> that's right. this is a story we have been watching all pandemic. mostly the narrative has been a positive one up to now.

goods trade actually a buffer for regional economies and even the global economy. these exporting countries, really seeing the gains. right now the story is kind of turning, vietnam especially in the spotlight. vietnam and malaysia, especially amid the latest virus restrictions. in vietnam we are used to seeing the booming trade story, booming growth story, and yet they have struggled to contain the virus and they are starting to see it interrupt factory production. they were able to quarantine workers, they even have workers sleeping overnight at factories, which helps buffer the electronics industry, but what we focus on most recently is the peril -- industry which is seeing a lot of interruptions. nike, adidas, and others are

seeing problems with production in time for the holiday shopping season. we should see consumers on the other side of the world taking more notice of the fact that goods are not going to show up on the racks close to the holidays. >> now, the philippines president rodrigo duterte's expect it to use his last annual address to congress to push for pandemic recovery measures that could bolster his favorite candidate in next year's election. let's get more in manila. what are we expecting from the address? >> when it comes to the speech, it is best to expect the unexpected. he oftentimes goes off script. in his last address to congress last year, he was talking about china and the covid-19 pandemic one moment and the next moment he was attacking business people

and his opposition. in terms of opposition from business group to lawmakers, they are expecting dutere to complete his reform program. there are awaiting directives from the president on further pandemic release -- relief packages and they are expecting dutere to push for measures to open up the economy to foreign investors. >> howdy presidential elections next year factor into this? >> philippine leaders typically use their final address to congress to push for support for their chosen candidate in next year's presidential election. for president duterte, he has not anointed his preferred candidate, but his spokesman has narrowed down that list to five

politicians including dutere's daughter sarah dutere. and his longtime aide. president duterte is also flirting with the idea of running for vice president in 2022. we can expect him to talk about his personal political plans when his term ends next year. >> let's get back to the vaccination rollouts. whether it is -- or hesitancy, we are seeing a slowdown. particularly places that are dealing with hesitancy like hong kong, which is more of these flashy incentives, you can win an apartment you can live in

rent-free. you can win a tesla, gold bars, a shopping spree. in australia it is hard just to be able to get a vaccine if you are under the age of 40 and you don't fall into the special conditions that are still in place. it is pretty crazy when we know there are entire countries struggling to get access. >> it makes you think. there are countries around the world who would kill for these vaccines and then you have these flashy lotteries to convince people to get those shots. in west virginia you can score lifetime hunting licenses, custom rifles. north carolina is giving out $25 payments to people who get their first dose. we are not expecting these incentives to change people's minds, especially those that are heavily opposed to vaccinations, but at least those who have been procrastinating, who have thought i will get a shot next week, that this will incentivize

them to get those shots, right? >> i wonder whether a carrot or stick approach is better. we saw in france, you need to be vaccinated to enjoy nonessential services and venues like restaurants. was there a spike in the take-up? is that a better way? >> tilde blah seo is asking for companies to mandate vaccinations -- bill de blasio is asking for companies to mandate vaccinations. >> listen on bloombergradio.com. plenty more ahead. ♪

>> china has announced overhaul of its private education sector saying it has been, quote, hijacked by capital. there is a ban on companies from going public. we are seeing the noose tightening. this is hugely problematic. do these companies survive without being able to do what the government says they are not allowed to do? >> it has been tough.

specifically, the government is stepping in to control the prices they are ascribing to their lessons. i think that is going to be very tricky particularly now you are a nonprofit organization. going forward is going to be tough. >> what sort of companies will see the biggest impact depending on what sectors they tackle? >> the k-12 education sector , these are the companies that are exposed.

this particular sector of education in china will see the greatest impact. >> we will be watching that closely as the markets open in china. catherine lim. let's get a check of the latest headlines. china's market regulator ordering tencent to waive exclusive music rights and pay fines after an investigation found its acquisition of china music violated regulations because it was not reported to authorities. tencent says it will rectify the situation and faithfully carry out the order. robinhood made its case for investors of all kinds to buy shares opening up to the public. typically it is reserved for institutional players. the company's leadership team responded to customer questions about its business model and growth plans.

it is allocating as much of 35% -- s 35% of shares from its own app and is excited to begin training -- trading. a blank check company backed by richard lee and peter thiel. the transaction is expected to close by the first quarter of 2022 and the combined entity will trade on the new york stock exchange. it is backed by tpg capital and kkr and is the biggest real estate marketplace in southeast asia. >> the former assistant u.s. trade representative for china will be giving up her take on u.s. china relations. we will also get more on china from an author. our market coverage continues. we look ahead to the start of trading and will be watching

trading in the chinese private education firms surely to be affected again by china's clampdown. the rest of asia seeing a positive session on the back of new record highs.

(announcer) looking for a better way to lose weight and feel good? how about the one with the 98% success rate and the more affordable weight loss solution? that's golo. there are no monthly fees and it's guaranteed to work or you don't pay. how can golo offer all of that? because it's not like any of those diets you've already tried. it's the new way to lose weight. no stimulants, no starving, just results. results you'll keep for life. no more sacrificing to lose weight only to put it back on. no more sacrificing, period. it improves your lifestyle and delivers incredible results. with over 2 million satisfied customers, golo is the new way to lose weight. this is the only program i have ever done that i have never deprived myself of anything. (announcer) if what you're currently doing to lose weight isn't working, or you feel like diets don't work, you're right. don't give up. get golo. go to golo.com and get your life back, with golo. (chorus) golo!

>> it is 9:00 a.m. in beijing and shanghai. >> it is monday. we are counting down your first sessions of the week. let's get to your top stories today. no profits, no ipo's, no foreign capital. china lays down tough restrictions on its education sector. yvonne: high-level talks with jen jen and the u.s