quest good morning. walk into daybreak australia. i am haidi stroud-watts in sydney. >> i'm sophie kamaruddin in hong kong. quest good evening from bloomberg's world headquarters in new york. jay powell says the fed has taken that first dive into tapered health but there is still rent to cover before it happens with inflation still transitory. >> u.s. stocks advance on the

fed statement. facebook falls in late trade. >> the regulatory leader calls a meeting with bank executives trying to soothe fears about beijing's corporate crackdown. this is the picture, we are seeing u.s. futures muted at them opening. this as stocks and bonds rose. we saw a little bit of a dip but then they reversed all of those. we saw the nasdaq 100 leading the game at .4%. alphabet is the big booster. we also have the right -- the likes of caterpillar. we have seen stronger demand in the u.s. health prices. take a look at facebook and

qualcomm. we have seen, facebook is under pressure after hours. they have revenue that beat estimates but they also warned we were going to see slowing growth in the future. that did not sit well with investors. the focus today was those retail traders really jumping back into the markets given that we continue to see this buying. when it comes to those, it really moves into the markets, we will have back-to-back inflows from those day traders and this coming on a day when some people were kind of cautious. chair powell emphasizing there needs to be substantial progress when it comes to the labor markets.

>> unevenness is the name of the game going forward for this recovery. as we see what happens with the delta variant, the vaccine rollout as well. let's listen to what jay powell had to say. >> the committee continued to discuss the progress made toward our goals since the committee adopted is assess -- the excess purchase got last december. this includes their pace and composition. the labor market has a ways to go. there were people at work with excessive waves of covid over the past year. there has been less of the way in economic invocations. we are clearly ways away from

raising interest rates. >> let's discuss the market. always great having you with us. the delta variant, this new wave is not going to have as much impact as previous waves but when we talk about indoor mask mandates and so forth, maybe that is impacting the broader equity and bond markets. >> i would expect discretionary spending but also because of the labor shortage of -- at restaurants and car rentals and airplanes. word gets out it is not fun -- not fun to travel these days.

i think there could be some issues there. just in general, it -- my take away from that meeting is that the fed is now talking about tapering but they are still in that holding pattern, asset purchases will continue to buy securities. we are also looking at inflation as being temporary. that is just something we will have to work through before we do anything. >> inflation being temporary. how do you factor that into the market allocations the rest of the year? >> this is because of merging expansion. because of corporation abilities

to pass along labor inflation. i have gone into some low volatility. using the jp morgan etf and also using a buffer. just taking on a near-term cautious attitude. we are not quite halfway through there. >> when you look at the new mask mandates, places like texas that are breaking through, the delta variant is still in full force. does this speak to the strength

of the u.s. consumer? >> as i just had, we have seen some pressure on people returning to the labor force when they have these variants going around. if you look at the portion of the population that received the vaccine, a large majority of those who had not received it yet would be those who have children at home, people call it the 45 inch category. they may be backpedaling, going out and about, spending on events and things that have been tricked of in the past, now becoming a little more restrictive. >> foot are the implications when it comes to the valuation gap when you look at european

stock? >> we have looked at that gap between the u.s. and europe. the gap is typically more in the 2-3 point area. right now, it is about six points. it is one of the largest gaps of the past 26 years. europe has been harder hit by covid so they are coming from a lower base than the u.s. but now they are giving the vaccines rolled out at a very accelerated pace. i think there is a real opportunity, especially in the euro zone itself. >> always great to have you with us. we are getting some breaking news. according to cnbc, softbank is selling part of its business estate to cover those losses.

of course, we have seen just it is asterisk few weeks they have had since the highly anticipated u.s. rpo with the regulatory crackdown. we are hearing that softbank is selling a pretty sizable chunk of the uber steak to cover those losses. according to that report, that is about a third of its total state. we will continue to watch for that particularly as we see this. this is quite a bit of uncertainty. let's look at how we are setting up for the rest of the session. >> we will be watching how softbank shares react in tokyo. we have the nikkei two to five

on shaky ground after the index snapped a two-day gain. we have some strong results from aims like nissan. we have the likes of stantec reporting and pulling of the board, we are seeing early transactions somewhat muted. look at the offshore y-- yuan. amid questions about whether pricing is done for chinese markets, they don't believe that to be the case. we will also be digesting the fed commentary. that momentum is waned. morgan stanley sees it as a downside risk. and sticking with the expectations that they will delay the taper plan. morgan stanley also seeing headwinds building on china's

admission curve. >> a bipartisan senate group has reached a tentative agreement. it marks a significant breakthrough in the drive for massive spending and other critical projects. joe biden says he feels confident about the package which is smaller than he first proposed. nancy pelosi called it good news. >> we very much want it to pass. our chairman is saying we like to see it and perhaps we will have some discussion about it. i can't commit to passing something that i don't even know what it is yet but i am hoping for the best. >> gina raimondo says some

tariffs on imported groups can be effective. she cited 2018 steel levees. she has previously defended levees but some rest manufacturers have said they are giving her their business. they're working toward having the u.s. lived the import tariffs by years end. chinese security regulars convened with investment bank executives. trying to ease markets here. the hastily arranged school was -- we are told the take away for some bankers is their change in education policies was targeted but not meant to hurt other industries. global news, 24 hours a day, powered by more than 27 hundred journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg.

coming up next, facebook taking a beating after that revenue warning. we will be drinking -- breaking down those latest tech results. this is bloomberg. ♪

>> facebook shares slipping in after hours trading after it took a cautious tone on the outlook for the rest of 2021. the social media -- >> we know businesses are experiencing challenges because of platform changes. we want to make sure they are continuing to get great results going into the future. we are collaborating across the industry to develop new technologies to help minimize the amount of personal information we process. while allowing us to show relevant ads and measure their

effectiveness. >> what was the takeaway for investors, ed? ed: investors are concerned about that platform change. with apple and i was prompting users to decide whether they want to opt in or not to being tracked from an advertising perspective, many people are opting not to track. this is basically facebook saying we have known about this for some time and we are putting some bones -- flash on the bones and saying in the coming quarters, they expect the rate of growth to drop pretty significantly from this quarter just gone because of that. 56% topline growth in the quarter, very impressive. that outlook is pretty conservative going forward. >> what else do we know about the user growth trajectory? >> facebook is experimenting with something mark zuckerberg is calling the meta-verse. new products to build out the

ecosystem. we know they looked at monetizing that because of the time spent on that cap. they are looking now to virtual reality, augmented reality with new hardware and headsets. that is the concern, that the boot -- big boom in growth will end in the second half of this year. >> a positive outlook when it comes to the ship shortage. let's take a listen. >> we expect material improvement in supply by the end of the year. as i said before, we are still seeing more manned then supply across the business but things are continuing to improve on the supply side, consistent with what we said. that is were afflicted in our guide. >> it was a very bullish

quarterly forecast they gave. >> they are seeing strong demand globally. this is the biggest maker in the world of smartphone chips. computers for example in the automotive sector, they are saying to bloomberg that they are now going toward $10 billion in sales in those nontraditional categories. if the chip situation is going to improve, that is a way that they will rise -- arrive in the second half of this year. >> we are also anticipating the final earnings in a little more than an hour. the company saw better than expected profits as memory prices and shipments drove on. they also bounce back from disruptions but the chip shortage continues with wait

times still on the rise. this will likely s from the global crunch. the markets open in less than two hours. samsung is an outside heavyweight. this shows how the cloud is skewing the market overall. we are in the midst of earnings season from mike or soft to four. they are seeing the results hit by the shortage of microchips. the release may be underway in the form of bipartisan infrastructure deals working their way through congress. gina told bloomberg there was a need for a serious investment to enhance america's capability to produce these chips. the only way to solve this problem is you need to make more semiconductors in america. there is a bill working its way through the house right now. that is a $52 billion investment in the semiconductor industry.

that is essential for us to solve this problem in the long run. we don't make any leading edge chips in america. you have to stimulate that production. >> there is that $52 billion bill. it is a larger bill working its way through congress. what you said is we need to make them in america. does that include overseas companies making them? would you be in favor of giving money as well? >> i would be in favor of them having operations in america. samsung, tfc, there are companies in allied countries. we want them operating in america and producing chips in this country, yes.

>> we have a significant chip issue. where have you seen other problems in the supply chains? gina: tukwila in home building supplies. glues, adhesives, you see it playing out, home prices are high. the prices are a little high, that is all because of lack of supply, just disruption in the billing -- building supply chain due to covid. we are working through that. the president convened a supply chain task force which i am on. we are working on it feverishly every day. you are seeing improvement and i think we will continue to see improvement in supply chains as we put the pandemic in our rearview mirror. >> the overall mission is to

create conditions that promote economic growth and opportunity. let's talk about the labor force. how challenged our way -- are they? gina: it is a real issue. i think there are a few components. one is women are struggling to get back into the workforce because of the lack of child care. lack of quality child -- quality , affordable childcare. we need to invest in the childcare info structure so women can fully purchase paid in the workforce and be productive. also, we have a skill gap. every company i talked to says they have many jobs available for people that have tech skills , digital skills, cyber skills and they can't find enough people which means we have to invest in job training, tech

apprenticeships and early help americans get upskilled so we can close that skills gap. >> that was gina speaking to david westin. we will get more details on that, next, this is bloomberg. ♪

>> day traders seized on the routes. these are some of the most beaten-down names. our market reporter joins us now. it surprises me, i would not have thought chinese adrs would have been the target for the robinhood crown but that is what we saw.

>> the chinese stocks had a great day. it is quite a big rally. i think the catalyst is that the chinese regulators caught all of these big investment bangs into a meeting. this is a very unique case. they are now targeting every profitable private business. that should really calm the markets. >> what is the rationale? long-term investments? do they think that if they hold onto the stocks they will see gains later on? ye: it is kind of like a baby

out of the water. there are company is not rightly talking about the chinese regulators that are being sold off. some of the good companies may be due to bounce back. i think you're absolutely right. it is becoming clear that they need to reassess their portfolio to realign their interests with the government interest. any to find a company movie in the direction the government wants to move in like high end manufacturing, health care, all of these that can improve the people's lives. whether it is high interest loans or big mobile gains. i think these are the lessons people learned over the last

couple of days. >> we saw those ev makers as one of the most bought. we will have plenty more to come on daybreak australia next, this is bloomberg. ♪ and there you have it - wireless on the fastest, most reliable network. wow! big deal! we get unlimited for just $30 bucks. i get that too and mine has 5g included. impressive. impressive is saving four hundred bucks a year. four bucks? that's tough to beat. relax people, my wireless is crushing it. okay, that's because you all have xfinity mobile. it's wireless so good, it keeps one upping itself.

pres. biden: looks like we reached a bipartisan agreement on infrastructure. bridges and roads. high-speed internet. clean drinking water. capping the orphan wells. over thousands of them abandoned. abandoned mines. a modern and resilient elected great to build. >> we very much want it to pass. the chairman of our jurisdiction

is saying we would like to see it and we may have to have some discussion about it. i cannot commit to passing something that i don't even know what it is yet that i am hoping the best. shery: nancy pelosi and president biden speaking after a bipartisan group of senators reached a tentative agreement on a $550 billion infrastructure package. it marks significant breaks during the drive for a massive infusion of new spending for road, urges, and other critical projects. joining us now to discuss is mckenzie hawkins. they have agreed on a framework already in late june but they struggled for weeks so what led to this breakthrough? >> the senators have been struggling for weeks to hammer out details on transit and water and today, they finally reached an agreement and they are headed in moments potentially to a procedural vote that will allow senators to move toward on this bipartisan remark and hopefully

as majority schumer hopes, get the passage next week. haidi: what does the timeline look like between now and when they recess in august? mackenzie: they have a procedural vote lined up tonight. and then they have about one weeks time to hammer out amendments and move forward on actual legislative texts. schumer has warned senators that could be here later than that date if they fail to get the bipartisan infrastructure past. shery: how does this bill fit in with the rest of the democrat agenda? mackenzie: there are two bills. the first is this bipartisan framework that deals with hard infrastructure. and there is a separate 3.5 trillion dollar package that democrats are looking to pass on their own through a budget reconciliation process.

democrats are hoping that they can get procedural vote on that separate resolution before they head to the august recess but they are not anticipating hammering out the details of that bill until they return in september and it could take in two and of the legislative calendar in december before they move forward on the 3.5 trillion dollar package which carries most of biden's economic agenda. haidi: mackenzie hawkins there. let's talk about how the infrastructure deal changes the outlook for u.s. growth. the chief economist for a management company joins us now. we are seeing progress. moving through the motions. to what extent -- markets have priced a lot of this and but how much of a boost to do you expect from these measures? >> this is a package that will be phased in over eight years so that is very important when you think about it from a financial market perspective. it will boost gdp growth like

all spending those but this is a framework and we need to see more details in terms of what the exact multipliers will be. this will be lifting gdp growth and more broadly, we improve the infrastructure in the united states, that will be having some positive impacts on productivity . and also on the economy. this will be lifting gdp over the coming years and that is of something that will be helpful for overall economic growth. haidi: what about the funding side of it? are you comfortable with the way that is being to medicaid? --communicated? >> that remains to be seen with the profile is in terms of financing, but when you look at the level of 10 year rate today, that is of course very low so in that sense, the cost of

borrowing at these historically low levels is of course also a very important input in this discussion in terms of what the overall cause will be. at this point, it's clear that financial markets will raise to these levels. as you discussed, we can debate why rates are so low and whether they will continue to be low but the key point of this at this stage is still that the rates are very low. from that perspective, funding costs remain very cheap. shery: well this fiscal package have any implications for the fed when they are thinking about the timing of the taper? >> at this point, this is so many years out in the future so i don't get will have any direct implications but it is clear if you take it in the context of jay powell's press conference and what the fed was doing, it is very clear that the market

interpretation of what the fed did today was that it was very continuous development. from that perspective, this is probably not going to have any major impact in the near term but it will probably be a much bigger issue when you think about the coming years both for potential growth in the u.s. economy and also it shows the ramifications for gdp down the road. shery: what about for inflation expectations given that inflation is transitory and they don't expect these high inflation readings to affect public sentiment? torsten: you have not seen today any dramatic move either. markets today were more busy with the fomc meeting and jay powell's press conference so from that perspective, at least from that dimension, it does not look like the markets have changed the view on the back of this infrastructure news.

haidi: great to have you with us, torsten stok, chief economist for apollo management. iron ore shipment data out of fortescue, seeing full year in order shipments between 180 million tons to 185 million tons. fortescue iron ore shipments for the fourth quarter beating the average analyst estimates. fourth quarter numbers coming in at 49.3 million tons, slightly better than expected. when it comes to the companies fundamentals, bloomberg intelligence seeing they have strong cash flow as well as financial flexibility but there are some headwinds when it comes to iron ore. morgan stanley saying that iron ore markets in china could be more volatile moving forward. we did see rio tinto dropping after their results as well so we will continue to watch fortescue going into the start of trading in sydney with that

iron ore player reporting better than expected shipments for the quarter. let's get the first word news with vonnie quinn now. vonnie: iran's supreme leader called the u.s. stubborn for discussing tehran's missiles and regional influence during the nuclear talks in vienna. that said no more trouble ahead for the negotiations. the president-elect said he wants to return to the deal. the u.s. is blaming iran for the nuclear impact. usurping the purge. the best way to write out the pandemic. -- second and third spots. it's vaccination drive plateaus and cases surged with the delta variant. daily virus infections in tokyo hit a fresh record.

the capital recorded 3177 cases and is already under a state of emergency as the olympics play out. they may be placed under similar measures this week. japan has been criticized for hosting the games despite widespread fears that could spread into a super spreader event. u.s. on the picture mr. simone biles will not defend her title in the individual all-around final competition. she pulled out after performing. according to usa gymnastics, she will focus on her mental health and be evaluated daily to see if she will take part in next week's individual events. 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. this is bloomberg. shery: president biden's promised summer of joy turns grim as delta infections skyrocketed across the u.s. -- skyrocketed across the u.s.

this is bloomberg. ♪

shery: the delta variant is causing infections to rise across the u.s. with hospitals beginning to feel the strain. numbers echo the pandemic speak with texas logging in more than 10,000 virus cases. for the first time in almost six

months. let's get more from our health care reporter. we are seeing the cdc starting to move. >> the u.s. is averaging about 52,000 new coronavirus cases every day, about four times where we were just a few weeks ago when joe biden declared victory on the coronavirus and hospitalizations are also on the rise. and the evidence -- the new evidence -- haidi: what do we see in terms of closing the gap in some of these virus hotspots with vaccinations? we have had some pretty encouraging news when it comes to how these new vaccines could be better equipped to deal with the delta variant. angelica: we are seeing in hotspots that vaccinations are

on the rise. people are starting to get vaccinated because they are seeing so many people getting infected. the cdc deciding that even people who have been vaccinated should wear a mask inside in those covid hotspots because they have seen new data suggesting even people who have been vaccinated can be infected and spread the virus. shery: the delta variant is affecting a younger demographic and faster as well. angelica: yes. one of our colleagues at bloomberg published a story about how younger people are getting vaccinated as some of our viewers might remember early on. people were saying that this virus only affected old people and young people were seemingly immune from the virus and were ok but we are hearing from

hospitals especially in the hotspots in the 30's that they are seeing younger people because younger people tend to have lower vaccination rates than some of the older folks who probably think they are at higher risk. shery: our health care reporter with the latest on the coronavirus pandemic still raging across the u.s. we have an alert on the bloomberg when it comes to south korea's chipmaking industry. the government is planning to provide more than 5,000,000,000,001 according to the south korean finance minister making comments at a meeting today saying that the governor -- 5 trillion won according to the south korean finance minister making comments at the meeting today. it would be around 4.3 billion u.s. dollars and remember, south korea already unveiled a very ambitious plan when it comes to spending for the country's chipmaking base of around

roughly 450 billion dollars already. samsung electronics and sk hynix are going to be at the center of the investments in semiconductor research and we are watching samsung very closely today because we do have this final -- the spinal earnings results coming up later today, haidi. haidi: watching out for those. in australia, scott morrison is helping and increasing vaccination rate will mean an end to the lockdowns by the end of the year after sydney announced stay-at-home restrictions are extended as virus cases continue to climb. georgina mckay has the latest. what does this newest extension look like? take a look at the graph in terms of the steadily climbing numbers and i am just wondering if we have an extension but nothing changes, what their hopes are that we will be able to get back to zero. >> good morning. while fellow cities have exited their most recent lockdowns,

sydney's has been extended for a third time manas set to go for nine weeks and not do to end until the end of august. with cases continuing to rise and the premier setting ambitious vaccination targets before returning to a pre-covid life, many are saying that this lockdown could bill well into september. cases reached a new high yesterday with 177 cases reported and a large portion of these cases were still in the community so the current extension has increased restrictions on movement. now, they cannot leave unless it is for authorized work. an extension of some of the areas already not allowed to leave for anything but authorized work and people cannot shop outside a 10 kilometer radius anymore. the state amended its decision to fully close the construction industry. it can resume on some jobsites

but workers cannot come from those areas. shery: what does all of this mean for the broader economy given we are talking about the most populous city? georgina: the economic impact of the lockdown across me could be quite severe at least in the short term with the retail and tourism sectors being the hardest hit. it is important to note that the new south wales is australia's largest economy responsible promised one third of national gdp so with the delta spread showing no signs of slowing down, this is hitting consumer confidence. commonwealth bank is predicting that the economy could contract to .7% in the third quarter and the australia new zealand bank is forecasting perhaps a 1.3% contraction so the economy could take a hit in the short-term but yesterday, scott morrison

announced further economic support for the states and federal governments will spend some one billion australian dollars a week to protect jobs and businesses. haidi: georgina mckay with the latest on the virus outlook. economists are adjusting policy as well in terms of expectations. sophie kamaruddin has the morning calls. the latest when it comes to the trajectory. people are scrambling to reassess at morgan stanley. sophie: economists seeing a disruption to the near term outlook, which will prompt the rba to downgrade the 2021 forecast and likely delay tapering until november which morgan stanley says could put downside pressure on the aussie dollar and the belly of the yield curve but flipping the page, the medium-term outlook remains robust on the accelerated back and roll out into the fourth quarter.

as georgina mckay pointed out, more fiscal support coming through so the rba resuming its tapering path in november. to finish that up i august of next year. one quarter later than initially forecasted and we have morgan stanley expecting that rate lift off to still happen in the second quarter of 2023, haidi. haidi: let's take a look ahead for australia and new zealand. we will be getting the outlook for july in the coming minutes time and we are also expecting sales from companies including resolute mining as well. it is in talks after rejecting a bid that was between -- aussie dollars per share. we will continue to track any progress on that deal. rio tinto announced a record interim profit after wednesday's close in australia, delivering more than $9 billion in dividends for shareholders. paul allen has the details.

soaring commodities prices but there are concerns about headwinds. paul: the message is clearly that it is not going to last. do not get used to it. all of this was propelled by strong commodities prices which has been propelled by very generous recovery packages from governments around the world. particularly in the case of rio tinto and the other australian miners coming out of china. this was the first set of earnings under him and he says the long-term potential of china is intact but he sees a nonsustainable level of development happening in the first half of this year. the numbers themselves are very impressive. $12.2 billion underlying profit for the first half, more than rio tinto made in the integrity of the financial year prior and dividend -- that is the biggest on record as well. iron ore accounting for 85% of rio tinto's profit.

when that iron ore price does get above $200 per ton, it is not sustainable and it is bound to reduce. shery: prices for copper hovering near record highs. what is the supply outlook right now? paul: there are some risks there. the biggest copper mine in the world, which is run by bhp, there was a threat of strike action hanging over that. as prices rise for copper, workers want a bigger share of the action essentially and they are calling for an additional bonus which will be equivalent to 1% of dividends. bhp made a counter offer. what we do know is that leaders are recommending that their members reject that offer, saying strike action is the only tool remaining available to us. that is a credible threat because the workers have gone out before, back in 2017.

so a vote is due on july 31 so we could see a bit of action in the copper price in and around that day. haidi: we are watching macquarie going to the start of trading in sydney as well, saying that -- when it comes to the annual policy that ranged between 50 to 70%. the contribution was significantly up on a year ago, citing improved trade commissions in the first quarter of 2022 according to the media release. macquarie really expected to be one of the banks emerging with strong funding and capital positions out of the pandemic as well. it is expected to start paying dividends in that 50% to 70% policy range. that is a little bit lower than the top end expected by

bloomberg economics, which was 60% to 80%. this is bloomberg. ♪

>> here is a quick check of the latest business flash headlines. facebook beat estimates but warned of headwinds in ad revenue. the giants to rose could stall

-- the giant said growth could stall. apple's new rules require user consent attracted a. shares fell, reflecting concerns that sales growth may slow as people spend less time on their devices. qualcomm delivered a bullish fort lee -- quarterly forecast. california-based chipmaker forecast earnings well above analyst estimates and said supply constraints are expected to ease by the end of the year. qualcomm is the biggest maker of smartphone ships but it is attempting to expand to supply chips for computers, networking gear, and electronics. apple will require staff and customers to wear masks at most of its retail stores in the u.s. the change takes effect thursday and will take effect even for those who are vaccinated. apple is responding to a resurgence in covert cases. the company had already started

mandating masks earlier this month. apple pushed back return to office deadline for corporate workers. a surge in covid-19 force google to delay its office return date from september to mid october. the company robo choir workers coming back to show proof of vaccination. the ceo said google will extend paid leave for parents and caregivers through the end of the year. >> -- into the fed decision. dennis lockhart joins us shortly plus we take a look at the strategy in asia and how it has been impacted by the pandemic with the asian executive vice president, scott leavy. "daybreak asia" is coming up next. we are counting down to the start of trading in major markets across asia. asians stocks are set to rise.

traders are considering expectations from the fed as well as another day of trading in china. lots more to come. this is bloomberg. ♪ (announcer) the core is key to losing weight,

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haidi: hello and welcome to "daybreak asia." i am haidi stroud-watts in sydney. sophie: i am sophie kamaruddin in hong kong. shery: good evening. i am shery ahn. our top stories this hour. jay powell says the fed has taken the first dive into taper talks but there is ground to cover before it happens with inflation still transitory.