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 and. our top stories this -- i am shery ahn. our top stories this hour. hawkish comments from the fed vice chair. as global virus cases top 200 million, the who calls for a

halt to booster shots to help poorer countries catch up. nintendo quarterly profits set to slide with switch sales flat and the lack of new games to drive revenue. haidi: let's take a look at how we are setting up for markets. a pretty modest getting. sophie. sophie: hearing muted price action this thursday. plenty of earnings to get through with nintendo, konami, and others reporting from japan. we get inflation updates from taiwan, philippines, and thailand. nikkei futures little changed this morning with japanese stocks getting a boost when it comes to the outlook, upgrades on cheap valuation and typical exposure. while the bank to cut its view neutral on vulnerability to higher yields. we are seeing treasury futures tick slightly higher after a mixed cash session that had fed clara does remarks in -- clara

data -- clarida's remarks in focus. it will continue outpacing em shares at a 17 year low against their dm peers as emerging markets are facing pressures. in indonesia, cases moderate. it has seen the death count top 100,000. shery. shery: let's delve into those comments by richard clarida confirming he is on board with moving up the date of the fed's first rate hike in the start of its bond tapering process. kathleen hays joins us with more perspective on the spirit how significant is it to hear such comments from the number two at the fed? kathleen: you have the fed chair. he is number one. vice chair, number two, john williams, new york fed

president, number three, they are the core of the fed, the ballast. when you see -- he says in prepared remarks, when he says rate hike conditions being met by the end of 2022, paving the way for a hike, listen. >> it is the outlook -- if the outlook's turn out to be the actual outcomes for inflation and unemployment realized over the forecast horizon, i believe these three necessary conditions for raising the funds rate will have been met by year-end 2022. kathleen: vice chair richard clarida saying he is in favor of announcing plans to taper this year and starting the process next year. the money markets, they are now

signaling more than ever that yellow lot. not the blue line, but 22 or the 23. that is what they are looking for now. if the vice chair, who is jay powell's right-hand man, the guy who supports him, if he is saying he sees the rate hike in 23 does -- 2023, does that mean we can move tapering up and rate hikes up? shery: we have talked about the debate ongoing within the fed. there is still divergence. how much has the consensus been shifted towards moving faster? haslinda: you think -- kathleen: you think about last march, at all the fed people saying we do not know. we have to wait and see. here we are almost at the end of the summer and received jim bullard who had shifted more to the 2022 -- 2023 rate hike camp saying on taper, he wants to

finish by the first quarter of 2022. he is echoing the fed governor says he wants the taper to start in september. he wants to be done in the first quarter. jim bullard it also saying he is worried about inflation. maybe not temporary. let's listen to what he told us. >> i would expect something between 2.5% and 3%. it will come down but not as fast as what many people have in mind. kathleen: that was jim bullard speaking at a webinar. let's give you one more idea. charlie evans spoke to bloomberg television last week. he is sticking to 2024. he things may be it could spike and come back down below target. there is still debate going on there. haidi: elizabeth warren bashing jay powell's record. meanwhile, praising leo

brainard. how much does this potentially way into the debate for his reappointment? kathleen: we know that many liberal democrats, the progressives on that side of the aisle are saying that they do not want a republican man heading the fed. he has done a great job but let's get a woman. let's get a woman of color. elizabeth warren criticizing jay powell for not being tough enough on banks. she counters with leo brainard, governor at the fed who has been much more adamant about saying we have to be the cop on the beat for making sure banks don't get us in trouble again. take on too much risk, etc. jay powell's term is up in february. people think he might even be making it this fall and letting us know which direction he's heading. there's a lot of people on jay powell's side as well.

senator warren has been pounding the table hard on this one. haidi: kathleen hays p had let's get more on the markets with our asia mliv editor, garfield reynolds. we are seeing sideways trading at the moment. did the jobs report change the state of things when it comes to expectations? garfield: i don't think it really did. the number often has a bigger impact than the u.s. because that is when it comes out. people want to be able to trade something. there is a fairly clear realization that that number does not necessarily mean anything for payrolls. there have been times when it's been spot on as a predictor and other times where if you went by what adp get, you would have lost a lot of money.

we at payrolls -- we have payrolls coming out. with clarida not moving the needle that much on what the fed is expected to do, he basically said i am right in the middle of the dot plot. with all of that, i do not think there is going to be a lot of action in treasuries or government bonds here in asia. might not even be a lot of action in equities although the big question mark for a lot of people across the region will be what does china do today? will there be any fresh pronouncements that might cause alarm in sectors of the chinese market and in other markets across asia? shery: does that mean we might see the markets getting a bit more defensive? we continue to see rallies in the u.s. but when it comes to sector rotation, it seems people are setting up for more

defensive plays. garfield: definitely, especially in asia. sometimes it can seem that there is a little bit too much emphasis on the virus that given even with this spate of delta hospitalization rates and death rates in developed nations in particular are quite low depending on vaccinations but across asia, there are a lot of places doing it tough when it comes to the virus. here in sydney, we are locked down for the rest of the month and we do not even have particularly strong outbreaks when you compare it to what is going on in japan, indonesia, korea, thailand, so asia is biased to the downside precisely because of that dynamic. when you have a week lead from the u.s. overnight, i think you expect muted carrying conditions for the day. haidi: what are you watching in

fx? we saw the greenback, but i am wondering how sustained that is going to be. garfield: i would be looking for the kiwi to maybe pick things up. the aussie dollar is so very interesting because it is being washed back and forth by perceptions at the rba has turned a little bit hawkish. even if i think those perceptions are bit overplayed. and those two currencies are pretty key for risk appetite, for proxies, with how sentiment is going. so although the u.s. volatility came back overnight because of the clarida comment, i think there will be a lot of concern spreading across desks around the region if the aussie and the kiwi stay significantly down today.

also, interesting to see how the yuan reacts during the day again to the clarida comments and the prospect of a little bit more support for the u.s. dollar. shery: garfield reynolds with his take on what to expect in the market today. you can follow more on his lori and all of the day's trading as well under our markets live blog on the bloomberg at mliv . that is your function. you can get a market run down in one click. there is expert commentary and analysis from the likes of garfield reynolds and you can and out is affecting your invest in's right now. still ahead, the chip crunch has been a driving factor in earnings outlook for auto makers. we will discuss with our just. up next, the can then make -- pandemic has hit another milestone. indonesia becomes the second asian country to breach 100,000

deaths. we will get the latest. this is bloomberg. ♪

vonnie: this is "daybreak asia." the biden administration approved its first arms sales to taiwan. the proposed $750 million deal must go to a congressional review process and the negotiations between taiwan and contractor bae systems before any contract is signed. it is sure to be announced by china, which sees taiwan as part of it territory and is sure to inflame tensions between washington and beijing. sources tell us the boeing jet left seattle and is headed to china. regulators stepping closer to ending the two-year grounding there.

175 nations have cleared and the jet to resume after boeing redesigned the control system following two deadly crashes, one in 2018 and the other in 2019. it was seen as a gauge of broader u.s.-china relations. the director general of the world health organization wants a moratorium on booster shots in order to let order countries catch up -- poorer countries catch up and vaccination rates. he says holds should remain in place until the end of september. now to let the w.h.o. achieve its goal. protecting health workers and the vulnerable. indonesia has recorded more than 100,000 coronavirus deaths. it has become the second asian nation to breach the threshold. while it is adding fewer numbers of cases daily than the united dates, it's door vaccination coverage -- states, its lower vaccination coverage has led to a higher death rate.

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. haidi: the u.s. is considering a plan to require all foreign visitors to be vaccinated for the coronavirus according to a white house official. this comes as covid cases continue to surge, spurred by the highly infectious delta variant. joining us is tim arnett, who leads our health care team. any idea about potential timing? timothy: this is a plan under consideration. it is not yet fully signed on. the biden administration is weighing its options here. timing is unclear. they are trying very hard to both control the number of infections in the u.s. caused by the delta variant and also increase the number of people here who are vaccinated.

shery: tell us the latest about what was happening in the u.s. because we are hearing the wills in florida need more oxygen. timothy: that's right. -- hospitals in florida need more oxygen. timothy: that's right. there are logistical issues. one of them is the fact that there is no longer a state of emergency related to the pandemic so there are some restrictions on how many hours truck drivers can be on the roads. florida is a pretty big state and to move oxygen around, you could be looking at some long drive times and things like that. so you know, these sorts of snafus are rising up as more and more people there become ill and they need to move different resources around. haidi: what are we hearing about booster shots? lots of excitement about whether we can get third vaccinations. are they concerned that we need to be getting the rest of the

world vaccinated for their second shot first? timothy: clearly listening to the w.h.o. today, there is concern that not enough countries have reached a level where the number of vaccinations can start to make a difference in the curve of their pandemic. in the u.s., you know, there are no current approved booster shots. we know that some people have gone out on their own and sought boosters but the fda's still considering its options on booster shots, looking international data, and it looks like there will be a couple amongst the way on making a decision which will sit with the moratorium the w.h.o. would like to see. shery: timothy annett with the latest on the pandemic. coming up next, we will get more on robinhood after a wave of retail traders followed kathy

would and piled into the stock, leading it to surge 50%. this is bloomberg. ♪

shery: shares of robinhood surged for a second day as retail investors piled in with trading halted at least three times in the latest session due to volatility. su keenan joins us the latest. robinhood really becoming a meme stock now. su: it certainly seems that way because we have retail investors finally following in and by the end of the session, we did see the stock lock in a 50% gain on the day and that certainly is a doubling of the day you price -- debut price.

intraday, it was above $85 and that took the market cap to a peak of 65 billion dollars for a disappointing valuation on the debut. after hours, we did see the shares fall back quite a bit and there's been a lot of attention on the fact that when they here in the u.s., it was the first day of options trading and the bulk of the options of your to be bearish. the stock goes lower than here. it appears to be driving a lot of the volume. it was a very different tory movie saw on the trading debut last week where the company had set aside 35% of its shares. a very unusual strategy and it seems retail investors just did not write. -- bite. it was a lukewarm reception at best. to see volumes surge tenfold, a

lot of analysts scratching their head. we know that individual investors love using options, and again, this was a debut of options trading the ipo. that does appear to have impacted the volume. haidi. haidi: what are analysts saying about this stock in the longer term? su: they are questioning the shaky fundamentals. this is a no fee platform, preacher trade a lot of the volume or revenue, which does come from flow, which regulators are looking at. there is some concern about the regulatory usher on robinhood and so, to compare the meme stock surges we saw, some analysts are saying we have seen this movie be ran does not end well -- movie before and it does not end well. some of my colleagues went

online to monitor the reddit chat rooms and they noticed there were a lot of positive pumping up of the stock and we also sell some criticism. there are a lot of robinhood traders that were angered by the fact that when they were trading meme stocks, they could not get out. the reference in some of the message boards, if robinhood gets to a certain height and starts to fall, we will be barred from selling it, so that is an action as well, but a fascinating one for the stock had many are watching it closely from here. shery: su keenan with the latest on robinhood. let's turn to cryptocurrencies. we are seeing bitcoin extending those gains we saw in the new york session, headed towards $40,000. elizabeth warren wants congress to respond to the explosive growth of digital turbines and is urging u.s. regulators to do more with the powers they have to police the market.

spoke to david westin earlier. >> the way i think about this is if people are going to be out there trading, there needs to be a cop on the beat because when there is not a cop on the beach in any market, it is the small traders he get cheated -- who get cheated. for example, if you trade in stock, you know that pump and dumps are illegal and a broker has to come through with what the broker promised and you will be insured if the broker runs away with all the money. those are things that are not darien crypto. putting basic rules in place so if anyone can trade with some basic confidence, the biggest kinds of scams will have a cop on the beat to blow the whistle and put a stop to it. >> who is the cop on the beat? who gets to decide who the cop on the beat is? is it the fcc? do we need you in congress to tell us? >> that is a good question.

the answer is, right now, we don't have any cops on the beat to speak of. there will be a lot of different approaches. gansler is now talking about what the fcc can do but there are other spaces for other actors depending on how you think crypto plays out, whether you see it as a currency, as an investment. that means you really put it back on congress. ultimately, it is important for congress to do its job. it's important for each of our regulators to step up and take hold of the peace that is within their jurisdiction. >> senator, you understand this area so well. from your point of view, give us the sense of what the biggest advantage, the biggest upside to cryptocurrency is, and the biggest risk. >> the biggest upside to cryptocurrency could be expansion or democratization of

access to the financial system. you know, right now in the united states, we have tens of millions of people who are either unbanked or underbanked, which means they have to pay 3% of their paycheck to get their cash, they have to pay money in order to make a payment on their utilities or to pay the rent payment. that is costing those people a lot. it is possible that moving to a digital currency system or expanding to a digital currency system could bring in more people and there are a lot of different ways that could be designed. the downside of course is as long as it is at an unregulated system, you might be pulling more people in so they can get cheated and that is not what we want. haidi: elizabeth warren speaking

with david westin. the biden administration approves its first arms sales to taiwan in a potential deal with potentially $750 million. we have the details on what to expect from beijing. this is bloomberg. ♪ s bloomberg. ♪

vonnie: this is "daybreak asia." in the united kingdom, anyone 16 and older will be able to be vaccinated for covid-19. the government made the change after a recommendation from the health advisory committee. the panel says 16 and 17-year-olds should get the pfizer shot. officials are not recommending vaccinating anyone under 16 unless have underlying health conditions. bloomberg learned the white house will soon announce new limits on car emissions and new electric hickle sales targets. the mandates mark president biden's first major attempt to

regulate emissions. the standards were drafted by the epa and patterned after a compromise reached at two years ago between california regulators and automakers. andrew cuomo is facing mounting pressure to resign over allegations of sexual misconduct including from within his own party. county prosecutors indicate they may pursue criminal charges. a poll shows 63% want cuomo to step down, 59% want him to be impeached if he does not. the governor says he has done nothing wrong. a belarusian olympics sprinter who says a feud with her team officials made her feel she could safely return home, has landed in warsaw on a humanitarian visa. polish authorities confirm she flew in from tokyo via vienna. in a standoff at the tokyo games, the belarusian team officials tried to force her to fly home early after she criticized them.

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. shery: beau biden administration approved its first arms sales to taiwan in a potential $750 million deal amid rising tensions with china. let's cross to stephen engle for more on this. the size of the deal is not huge but it is pretty symbolic. stephen: it is symbolic because we have been waiting for science on the biden administration what their taiwan policy will be and what impact that will have on the china-u.s. policies and relationship. obviously, this will not go down well in beijing. it is a small deal, $750 million. self-propelled howitzers, those are land cannons to propel or defend the land in case of a land invasion from china and

also some gps guidance for some projectiles. they are traditional conventional weapons with a modern touch. the pla has been making more incursions. the pla airport has been making more incursions into taiwan's air defense identification zone with 87 such incursions in 2020. that was more than the previous five years combined. in 2021, we have surpassed those 87. there has been more from the taiwanese perspective, more provocation. xi jinping talked about china's historic mission to regain control of taiwan and also on the u.s. side, the u.s. defense echo terry labeled sign of the key threat guiding u.s. defense spending priorities. this is not going to go down

well in beijing. we are awaiting the first response to it. another step in what had been 23 billion u.s. dollars worth of arms sales from various administrations to taiwan. haidi: this is not a huge deal in and of itself. how does it compare to the previous sales we have seen? stephen: this is a conventional weapons sale that has to get congressional approval and it also has to go through the contract negotiations with the taiwanese government before the deal can be signed, sealed, and delivered, delivery date sealed. it is small compared to what the trump administration approved in the waning days of the administration that included f-16. 66 of the new model f-16 models from lockheed martin, and there is the sale of antiship missiles for coastal defense. on top of that, there was

extended range land impact missiles from boeing at the cost of $1 billion. mobile artillery rocket systems from lockheed, .5 billion dollars. 350 $7 million worth of surveillance and reconnaissance missiles from raytheon. they have made a to catch up with what the trump administration did but still, that is why this is important. the first one under the biden about seven months in to that term. haidi: stephen engle with the latest on that arms deal to taiwan. let's take a look at how we are setting up for the open of the thursday session. that is half an hour away from the start of trading in major markets. pretty muted. sophie: and a bit of a risk-off tone. moving to the downside. the yen trading near a two month high, the 109 level thereabouts and jgb futures, we are seeing them go lower. could see some consolidation after the benchmark yields fell to zero for the first time since

december. we have seen yields gravitate towards zero. flipping the board, we will be watching reaction in e.m. markets. u.s. services reading which surged to a record. a shift in goods and services has been underway. particularly in the e.m. space. the question from exports growth has helped offset soft demand when it comes to that domestic picture. factories are also a headwind when it comes to the export picture. in thailand, a key shipping body calculates he could see exports take a hit of as much as 300 billion baht. it is the worst performer in asia this year, trading above 33 this year for the thai baht on that outlook. shery: gm shares plunged the most in a year after profit misses estimates. we hear from the ceo. the chip shortage continues to

take its toll. christine joins us to discuss. this is bloomberg. ♪

>> gm shares tumbled by the most after the automobile missed profit estimates and it also struck a cautious tone about

future earnings. mary barra spoke with david westin. mary: we increased our guidance for the full year so i think that shows our confidence that we are going to continue to perform on top of an exceptionally strong h1, but we will be very fluid. right now, we work daily for the team that is working on it but weekly from a leadership team, looking at making sure we understand the semiconductor situation and we are allocating chips to our highest demand to take care of our customers and also the vehicles that -- capacity constrained. that is especially full-sized trucks and suv's. there is a lot of growing uncertainty because of the delta variant. we have seen an impact in malaysia and we mapped it out in detail so we are working to share our safety protocols because we have the experience to say when people follow those protocols, they can be in their manufacturing operations or

whether it is design or r&d, they can do that safely. they can work with our tier ones all the way down to our tier fours to make sure they have that benefit and we will keep maximizing production. >> we are all trying to come to terms with it. a very uncertain development here. give us a sense of what you might -- you think it might mean for general motors. more broadly in your manufacturing. mary: we did announce to our teams yesterday and it started today that we are reinstituting the mandatory mass policy at all of our sites because we know when people wear masks and follow the appropriate social distancing and sanitizing recommendations, people can be safe at work. i think we are in a very different position then we were over a year ago. really, we were not sure. we know the protocols work so we will be applying those. as we leverage all the learnings we had over the last 15 months, that will put us in a better

position. we are monitoring carefully and the team will continue to adjust. david: we talk about headwinds you have been facing pit what about possible tailwinds with respect to pricing? there is something of a shortage of vehicles. prices seem to be pretty robust. how much is that lifting your profitability? mary: strong pricing environment and the strong demand is something that is really supporting our strong earnings. when you look at general motors specifically, we have an incredibly strong product portfolio. customers are responding. we are working to be more efficient with inventory. we have given our dealers tools where we can see what is coming. many times, a truck arrives at a dealer and most of the vehicles around the truck are already sold. we are helping them order to best configured vehicles for their era, using data analytics. that is moving vehicles faster.

even though there will come a point where we have more availability that they will see some moderation in price, i still think we have a strong pricing opportunity and of course, we will be more efficient over the lessons learned in the last six months. david: i mentioned the substantial investment general motors is making. the demand for election vehicles, i know you will take some orders for the lyric in september. do you know that there will be the demand there? i know you will have the supply. mary: we do a lot of customer research and customers are telling us, if it is a beautifully styled vehicle with 300 miles of range, it is affordable, and there is a robust charging infrastructure, they are very interested in owning an electric vehicle. that is why we are working on the ecosystem to make sure as customers buy an electric vehicle, it is an outstanding customer experience. that is what we will need to do to drive ev adoption and i am confident that we will. when i look at our products that are coming out, the vehicles, we

have not shared many of them, but when you look at the strong demand for the hummer ev and the strong interest in the lyric, that will begin to take orders next month. i feel very confident we will see strong ev adoption. >> mary barra. let's get more analysis on how the auto sector is faring. just a range of challenges. the senior vice president of research at the center for automotive research joins us now from michigan. great to have you with us and of course, it is not just mary barra. we heard from every major automaker just flagging the stubbornness of this chip shortage. how elongated is this challenge proving to be? >> you know it is bad when they shut down the most profitable minds. they talked about maintaining truck production but they have shut it down as have other automakers, so we know that it is tough when those happen but i think we are really at the bottom of that, starting to see

some boost. if it were not for a chip shortage, we would have a lot of other materials also causing some disruptions in our supply chain. >> it is interesting because i feel like in the past year, gm has been able to navigate a lot of the challenges but the tone of caution was pretty striking. if it was not chips, it is also concerns about commodity inflation and other resource inflation as well. kristin: every time there is a major disaster and we think about the tsunami in japan, there is a reevaluation of supply chain and location. we go through that right now. at the same time that the industry is completely changing the products, completely changing the processes by which they tilt, and investing a lot of money in these new facilities, new processes, new products, it is a big bet, and everything is in motion. shery: which automakers are the most exposed to the chip shortage and to rising commodity costs? kristin: in the united states,

it is general motors and ford. the detroit three automakers are more exposed than any others. the japanese, korean, germans who sell here, seem to have weathered their way through this. but there's other disruptions happening, too. it is not all related to chips. shery: also coming at a time when the american consumer really wants to buy those cars. what are you expecting in terms of demand, given that prices are so high now? kristin: demand has been extremely strong for electric vehicles. overall sales were down about 15%. electrified vehicles were up almost 6%. we saw it very strong. the electric hybrids are all just flying off the dealer lots. when we drive around, the dealers have very few vehicles

on the lots. they are sold before they come in and it is causing some automakers to reevaluate the way that we sell cars, moving towards a system where customers get the exact vehicle that they want versus coming into the lot. haidi: even with the big china tech crackdown, concerns over semiconductor chips, we have seen the ev makers, the likes of tesla, largely being spared in the selloff. how much flexibility is there for a workaround for the likes of tesla? >> there's a lot of work around and optimism for ev's. the new president has yet to enact any of his promises for the auto industry and climate change and addressing that through increasing electrification. there's a couple of bills moving through on infrastructure packages that will support that. we will hear about fuel economy

maybe tomorrow. out of the biden administration. there is very aggressive support for incentives in the regulatory realm to push ev's even further. haidi: who is going to benefit most from the and which makers will struggle when it comes to that? kristin: mystic part is going to be a problem for those who are not all in on ev's, i believe. there are a number of automakers who have been lagging a bit. they had their ev day earlier this month and promised to outspend and now invest -- out invest everybody about volkswagen basically. there is a lot of strong performance and strong bet s on ev's. they have exhausted their consumer incentives are getting a refresh will be beneficial for those companies. shery: you mentioned all of those promises made by the biden

administration. when it comes to addressing chip shortage is, when will they filter through to the industry? kristin: i'm sorry? shery: when will they filter through to the industry? when will we see that using of the risks from the measures from the biden administration? kristin: the biden administration's moves on chips will take some time. it really does come down to a national security issue for the united states not being able to make some of the chips needed so they are putting money on incentives to draw the investment here. chip investment is in orbis -- e normous. they are working with u.s. allies that are chip producing nations, making sure they have the health protocols in place, that they are getting vaccines, staying in production or keeping production up and running a slurry of cases to taiwan net sent a little shocked through the industry here in the united

states but they seem to have gone through that. everyone is keeping an ion those producing countries. shery: kristin dziczek, it was great talking to you, senior vice president of research at the center for automotive research. also, do not miss a big interview coming up in the next hour. we have an exclusive interview with the rakuten ceo about their latest deals including the acquisition of a u.s.-based tech company at a valuation north of $1 billion paid up next, the videogame industry saw a big roost during the pandemic but that may coming to an end. we will get you a preview of nintendo's earnings report, next. be sure to tune into bloomberg radio to hear more from the days big newsmakers, get in-depth analysis from the daybreak team. we are broadcasting live from our studio in hong kong. listen via the app, radio plus, or bloombergradio.com. plenty more ahead. stay with us. ♪

shery: counting down to the start of trade in tokyo in less than 10 minutes. prime minister suga's plans to have people with mild covid symptoms recover at home has sparked a backlash months ahead of a general election. he was pushing the idea to relieve strain on hospitals amid record infections.

hitachi is in an exclusive discussion to buy the real signaling arm of -- for $2 billion, a deal that would allow the japanese firm to expand in europe. japanese earnings including sharp and nintendo. haidi: ahead of those results, let's take a quick look at the videogame industry, seeing the effect of covid on stay-at-home entertainment, demand waning in some parts of the world. they reported weaker software sales in the earnings report. nintendo expected to follow suit. joining us now to discuss is our senior editor. how does it perform when it comes to the gaming division? >> when you look at some of the overall, they had a great quarter. they beat estimates, raised the forecast, which is quite unusual for them to do in the first quarter. as you say, a lot of focus was on the gaming division and that

had a weaker quarter as you would expect. not so much because of sales. they are selling every place that they can make -- as soon as they make them. but the demand is waning that we see. we saw this through software sales. not as much of a software platform. also the demand for playstation plus where we saw a quite unusual drop in subscribers and in monthly active users. because sony is the type of company it is, that was balanced out by better performance and some of the other divisions and picture divisions where they are expecting better profits than they forecast earlier this year. shery: with american adrs under pressure today, what does this mean in terms of market reaction? >> the market reaction to this will be fairly muted.

it was a very good quarter and definitely outperformed expectations. the divisions that are performing well are not the one sent investors are typically interested in. investors want to see underperformance in the gaming division and outperformance in the chip division. both of those were essentially flat. the profits that they have in the first quarter were not anything exceptional either's are not expecting any huge bump today. the adrs will probably be good for sony over the next couple of months. haidi: nintendo has a different set of challenges, right? >> that is right. nintendo does not have all the other divisions to offset weakness that sony does if sony has a bad quarter in gaming. obviously, nintendo, all of its

eggs are in one basket. so we will expect i think nintendo to have less of an interesting quarter. this time last year, they had an exceptional quarter as the pandemic raised demand for the switch. you never know because this time last year, they had trouble making enough switches to meet demand so perhaps we might see that actually with most of those production issues resolved by now, they might surprise us on the upside. haidi: the latest on those earnings and the gaming sector took a hit with that crackdown coming from china on the industry but what is really interesting is despite the fact that we are seeing these crackdowns from gaming to education, to attack, there seems to be a safe haven in all

of this sportswear companies -- in all of this. sportswear companies surging. we have continued to hear from these authorities in china that they are going to keep spending on the sector. haidi: they really want that sector to grow. we are seeing gains in the likes of sportswear companies. the tokyo olympics are ongoing, counting down towards the winter olympics in beijing as well as the overall shift in focus. less focus on the academics and the drive for parents to make their kids xl, get them outside, get them exercising and potentially supporting the next chinese olympian, i guess, one of the other -- shery: they want to increase fitness trainers, so there is a lot planned by beijing for this

sector. haidi: it is hard to exercise when the air quality is often bad as well. the market opens her in sydney, seoul, and tokyo. they are almost upon us. this is bloomberg. ♪

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♪ shery: hello and welcome. haidi: taking a look at the major markets opening in asia. a weak u.s. jobs report. facing steep odds.

and we will be speaking exclusively with a ceo about upcoming earnings and plans. japan and australia coming online. sophie: some downside pressure at the start of trading action here in asia area we are seeing the yen retreat. we have earnings reports ramping up. industrials like kobe steel. typical exposure in japan. that upgrades the japanese market to overweight. checking on the open in south korea.

citi recommending going bullish. those are great bets for the market. that is it for the board at the start of trade in sydney. people buying energy stocks. bonds very much in focus. the 10 year yield dipping slightly slower -- lower. the 10 year yield for treasuries near a five month low. pulling up a chart on the terminal, we see a global rally in bonds.

bets have been ramping up for more accommodating policies around the world. hopefully it will get toward that zero level. you still have this big yield gap. haidi: let's get some more market analysis from homegrown. -- hong kong. there are implications for early 2023 here in asia, particularly emerging markets. are you more concerned about the regulatory headwind toward china? >> i think we still need to see. right now people are focusing on the internet. i think the concern has been

placed for china. in various forces sector. especially to get a mortgage. that is limiting the cycle of selling. i think they could do this for a while. haidi: instead of china, you are looking at some of these markets with less regulatory risk. talk us through your picks in those markets. >> we are looking at the whole market. taiwan and korea are different from the sector.

it is the tech sector. for india, the consumer market is relatively skinny. i think our people will still like that market or a while -- for a while. shery: with the delta variant spreading across asia, are you a bit more cautious in these casino names around macau? >> we are trying to accumulate some casino names. they have the whole population now. earnings will not be too long.

the extra concern will be in china right now. there is probably some cause for concern. i think that is the concern. we have seen this quite strongly earlier this year. it is a very aggressive time. haidi: despite the regulatory risks across china, it is interesting to see some sectors still benefiting. we were talking about the sportswear side of things. we do have the beijing olympics coming up.

are there any more investable sectors that are safer from risk? >> people like that because it is the first company in hong kong extended exposure in the u.s. the community likes this one. the current market is tricky. these companies are trying to increase power. they are more toward where the high premium market is.

this is good as well. they are a big operator in china. this is a good time to buy. shery: it was great getting your thoughts. thank you. let's get the first word headlines. >> thank you. brazil's central bank lifted its key rate by one percentage when -- point. this comes as the economic recovery and a severe drought strains and expectations that inflation will be about target next year. consumer prices are also staying elevated. inspector general of the world health organization once a moratorium on booster shots to

get poorer countries help in vaccination rates. he said a hold should remain in place until the end of september. they want to vaccinate at least 10% of the population in every country. indonesia has now worded more than 100,000 coronavirus deaths, becoming the second asian nation to reach that threshold. it is adding fewer numbers of cases daily than the united states. there has been a higher death rate. only 8% of indonesians are fully inoculated. in the u.k., anyone 16 or older will be able to get vaccinated against covid nine. the government made the change after a recommendation from its health advisor me -- advisory committee.

officials are still not recommending vaccinating under 16 unless they have underlying health conditions. the biden administration has approved its first arms sales to taiwan. the deal must go through a congressional review process. the proposal is sure to be denounced by china, which sees taiwan as part of its territory and should inflame tensions between washington and beijing. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. haidi: still ahead, our exclusive interview about the company's acquisitions in the u.s. and new partnerships in europe.

china tech seeking foreign capital. a lot are shut out. we will have more on that story.

haidi: chinese state media has called to stop tax incentives for the gaming industry, calling it unnecessary. this might be less than back in 2018. let's get more from our asia tech editor. let's start with these incentives. what are they and how much would it hurt the gaming industry? >> i think this is a holdover from the days when beijing was

trying to clamp down on the software industry. the industry is talking about in many ways local support and consensus intended to propel the software. an information society, as we say area you have companies like tencent that are pan global area truly international corporations. haidi: how does this play into the broader picture? is this really an existential moment for the gaming industry? >> they are really nervous about what is coming down red they want to bring up this commentary.

state media first went hard at tencent. now they are pulling back a little bit. it pays to pay attention. haidi: you can get more of context and analysis on the ongoing crackdown at the bloomberg technology channel on youtube. her arrest treated -- created a diplomatic incident.

they have been covering this. it does not bode so well for them. >> that is right. it has been a long road to get here. as she goes into this final stretch, the advance -- chances come down to one in a hundred that she will be released. the large majority of cases from the u.s. you end up going through this. haidi: what happens once the person is handed over? what can we expect to happen? >> there will be a few more steps. these hearings will go through august 20. at that point, the judge will

make a decision. at that point, she will have the chance to appeal. both sides have the chance to appeal. it could be a very long time before we are talking about her being handed over to authorities in the u.s.. haidi: there has been criticism of canada's extradition laws. >> the extradition wall has been criticizing it. it makes it very difficult for the person in possession to see

a trial. she has tried to enter evidence that would show that the u.s. claims are misleading and based on unreliable evidence. you go up against the way in which exposition -- extradition laws are written. it is hard to enter new evidence. haidi: our vancouver bureau chief. you can get a roundup of the stories you need to know. also available in the app. this is bloomberg. ♪

♪ shery: let's get your check of assets. bitcoin moving down for a second

session. still close to that $40,000 level. there is a rally. it is helping the index gain to the highest level since june of last year. this coming at a time when we have seen those currencies being criticized for being too broad and too practical. we have partisan lawmakers coming up with an alternative. this is what elizabeth warren had to say about the industry. >> if people are going to be out there trading in it, there needs to be a cop on the beat. when there is not in any market, it is the small traders who get cheated. that is what always worries me. haidi: supporters of this amendment have said this is a

responsible step, a step toward making it responsible. it will be very interesting to see how it comes to a balance between nongovernment involvement, which is the appeal of crypto, and issues of privacy. you were speaking to the western union ceo a little bit earlier. a platform like his to transfer money and make payments. western union is the biggest player in the transfer space area up to $1 million in deals. we spoke with the ceo earlier. >> that makes us focus on a huge

market. an opportunity. there is an opportunity for that. we are building a unique platform. connecting 200 countries. most of our transactions can be made in minute. that is what the market needs. our platform allows that. we will have more focus on that. >> has the work in digital revenues been because of destruction from covid? people have not been able to physically transfer money.

how does that work with your remittances business? >> good question. the good news is the digital system is moving very fast. more and more customers are using it digitally. their mobile phones. they are sending money to different locations. there are billions of accounts globally. digital transactions are the fastest growing part of our business. we are happy with the growth rates there. western union is very well-positioned. we have our own channel. we are serving different customer needs. we are a fast-growing, huge business. we are very pleased with our retail recovery. the growth of retail up to the

pandemic in parts of the world. i believe western union is well-positioned. shery: well in-store transfers be driving it? how much of your retail network is back fully operational? >> it is seen as an essential service. the customers are extremely loyal. most of our locations are active. we just added 18,000 locations to our network. this is still growing. it is growing sequentially. the strong growth comes from digital. really paying out one of the locations.

i think this strategy works pretty well at western union. having a huge local branch. shery: what is your stance on cryptocurrency and blockchain technology? many people sending money are looking to the crypto world. >> they are. if you look at the prestige of western union, we are a platform for old friends. you can use 137 different currencies. we have the platforms to do this. we have some interest. we are ready to serve any currency in the right way. shery: the ceo of western union. here is a quick check of headlines.

shares jumped 50% in new york after a wave of retail investors piled into this platform. there were gains in a volatile session. bloomberg reported a wider than expected loss in the second quarter after driver shortages. it says it will narrow losses to $100 million in the third quarter and turn and adjusted profit in the fourth. they are boosting pay for junior investment bankers in the u.s. sources tell us fourth-year analyst will receive $100,000 a year, up from the $85,000 they are currently paid.

>> this is daybreak: asia. i am vonnie quinn with the first word headlines news. andrew cuomo is facing mounting pressure to resign over allegations of sexual misconduct, including from within his own party. county prosecutors indicate they may pursue women all charges. a poll conducted among new york voters shows 63% want, to step down and 59% one him to be impeached if he does not. the governor says he has done

nothing wrong. senator elizabeth warren -- while criticizing chairman dave powell as to protective of big financial institutions. the democrat is a member of the banking community and a key voice ahead of president joe biden's decision. >> my concern is that over and over, he has weakened regulations. he has led the fed to ease out there. he has led to help -- the fed to help protect the biggest financial institutions. i am very concerned about that. >> sources tell bloomberg a boeing 737 maxygen has left seattle and is going to china on a test.

moving a step closer to the aircraft's almost to your grounding. this is after boeing redesigned to the flight control system following two deadly crashes. one in 2018 and 12019. the fate was seen as a gauge of broader u.s. china relations. bloomberg has learned the white house announced limits on current missions, new electric vehicle sales targets. the mandate marks president joe biden's first major attempts to regulate the emissions. we are told the standards were drafted by the epa and patterned after a compromise between california regulators and automakers. global news, 24 hours a day on air and bloomberg could take, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg.

>> like get you the latest on the markets. pretty steady trading here in asia. >> we have some tepid moves for stocks. this as markets seek more clarity on the chinese regulatory front. energy is a key laggard today. we will keep our eye on emerging assets. this demonstrates the shift in goods and services. we are waiting on it today. switching out the board for a quick check on earnings, we have sony delivering a profit but this was in line estimates. shares slightly higher this morning. continuing to lag. honda climate to late june hi. switching of the board in tokyo, where watching telco continue to

engage in price competition. earnings are due on friday, shares are lower ahead of that. rocco 10 -- this stock is touching an april hi. the japanese tech giant, racuten is donating to one and one. it would build the first fully mobile virtual network. the japanese conglomerate also announced it has acquired this u.s. mobile tech company after discussing partnerships. we have the ceo joining us from to -- the ceo of rakuten joining as. my understanding is that you have provided your clients with

this but this would be the full adoption. how much will this deal contribute to your bottom line? >> we have this developing the platform network. the cost is going to be very limited. as far as hardware procurement, we made it very clear that we are going to add a slight margin on top of it and then give it to our clients. the keyword for this is no more secrets. even the cost for it is limited. >> we are now seeing you

structure your business around the symphony business. give us a sense of the demand out there. who are you targeting? what sort of carriers are you targeting? >> because of this tension between china and the u.s., we are looking for new solutions for a 5g mobile network. the existing approach is too expensive for most carriers. obviously for the green mobile companies but not limited -- for the indian mobile companies. we are definitely the front runner in this field. i think we have a couple of years of head start.

>> you have talked about the global chip shortage and how you're pushing back the rollout of the rakuten one. we have no clarity about the chip supplies. it is that because you have acquired some chip supplies already? >> we are not talking about millions, we are talking tens of thousands. even though we are having a challenging kind of environment, our partners, including intel and qualcomm are partners.

they reconsidered what we are building and what we are doing is the future. their expectation is also significant. >> you mentioned the challenges. we have seen that in the mobile business, when it comes to the bottom line. we saw the credit rating for the s&p ratings company. can you give us your assessment of the credit market? what can you tell investors? >> this mobile business is going to be huge. we are trying to achieve basically three things during -- through this project. one is very profitable and the second is it will have a

positive strategy with our existing e-commerce. we have already seen a 60% uplift for people who join our mobile service. also, the third is basically this symphony business that can be even bigger than what we were competing for the last 24 years. >> we continue to see a series of crackdowns in different sectors of that economy. are the opportunities they are still worth the risk? >> we don't have significant business in china anymore. we used with baidu but we shut it down. i think our exposure to chinese business -- >> are you looking for more investment? >> to china?

>> yes. >> we are not really thinking about doing business in china at this point. >> what about partnerships with chinese companies because we know there is an investment from tencent being scrutinized by the japanese and u.s. government. give us an update on that front. >> the investment is minor. they do not really have voting shares. they gave up voting shares. they know we have a cap on the amount of investment we can make. in essence, your financial investment from one of their venture capital arms. and then they had some investment -- they have highly respected companies, including tesla and so forth. i am very confident this is a

pure financial investment, nothing more than that. >> you are not looking for anything more than that with chinese partnerships. >> no. tencent has a very good network of distributing content. they are getting bigger for e-commerce. we would like to sell japanese products and also japanese content through the network. that is about it. >> let me talk a little bit about the ongoing a liv-ex in japan. you not being a fan of the elliptic's going to tokyo -- olympics going to tokyo, are you happy that they have taken place? >> i am happy that we have gotten some to gold medals. but the counts of people with the variant are going up. hopefully we will be able to

control that. i don't know how much it came from the olympics. we have to keep our social distance and try to control this. we are incorporating many vaccine centers. >> the state of emergency has been extended and expanded. how is that affecting your overall rakuten business whether e-commerce or mobile question mark >> -- mobile? hiroshi: overall, it is positive. people buy stuff from online. it came back.

close to 95% of the people over 65 years old are already vaccinated. i think the business suffers significantly. but it is much better than this year. e-commerce is in good shape. the mobile division is growing fast. other than that, this announcement is going to be really huge for us. >> before we let you go, i want an update on this free mobile prescriptions you gave for one year. that was a huge splash back in april. how is the transition going? >> this is smaller than our

budget. now we are providing three months and it is going really well. on top of that, now we are not really building mobile networks as a standalone but it is part of our system. you have to wonder how much synergy we have between bubble subscription and also e-commerce and these services and the synergy is really significant. i am really happy. >> always great to talk to you. congratulations on those announcements. coming up next, buying this real estate firm for $5.2 billion. after the break, we will get more on the deal from jeff. this is bloomberg. ♪

>> ara asset management, this is the real estate management. the combined group will manage hundred $29 billion of assets and it will be the third largest asset manager globally. let's bring in jeffrey. he is the chairman of asr. tell me about the and if it of

this deal and how it changes the nature of your business. cripes thank you for having me. this is a landmark transaction for esr. we think the ability to bring to best in class businesses together to form the largest real asset manager in asia with nearly 130 billion of a um powered by the new economy platform is really unique. we are at a point in time where there is a once in a generation change in real estate. global capital partners, institutional investors are looking to divest old grade a commercial assets and redeploy that capital into logistics and data centers fueled by the rapid rise of e-commerce, we think the ability to be able to bring both

logos in esr together along with the perpetual capital really positions the company incredibly well for the future. >> how has the uprise of the delta variant had an impact on your business? >> it is an unfortunate series of events but from a business perspective, it continues to act as an excel rent for what we think is one of the biggest secular trends in asia which is the rise of e-commerce. with the continued growth not only in our logistics real estate business, the need for modern warehousing, the need for cold storage, also, the data transformation going on. obviously we are using zoom today. certainly, the continued growth of that and the need for data centers to store all of this data. that is going into the cloud. to have a platform that can

deliver on that at scale across the asia-pacific with number one or number two positions across every market in asia-pacific gives us a great opportunity. we continue to grow through this pandemic with even more coming out of it. >> esr has been focused on the china, japan, south korean markets. is there a risk if we continue to see geopolitical tensions? >> we have quite a diversified business. i do highlight the big three of china, japan and south korea. that has been roughly two thirds of our a um. we acquired the milestone portfolio from blackstone and australia. australia has become a big market. with the addition of ara, the enlarged group gives us exposure

through logos in southeast asia in a much bigger way. we have a population of 650 million people and growing very rapidly. e-commerce is still very nascent. we expect that to grow significantly going forward. we think the diversification geographically across asia is very strong. even in markets like japan and australia, you look at e-commerce and it is only about 10% of total retail sales. that means we have a lot of growth ahead, coming from those markets in addition to the more emerging markets. >> we have seen china tightening government control on different sectors of the economy. we have seen new property projects as well. is that a risk you are considering at all? >> we are always mindful of the

regulatory environment but we think we are very much going with government policy. the government is looking to continue to grow the need for modern infrastructure, including logistics. we think we are positioned squarely in the middle of the need for that. to put it in perspective, there is more modern warehousing in the state of california that all of china. there is a big opportunity. the government understands and appreciates that. you have to understand and acknowledge it is quite decentralized, local government across china understand this need and are very supportive of this sector. >> jeffrey, you're still obviously in the rapid growth phase. when do you see returning to shareholders? >> it is a great question and this is the exciting part of the transaction. we are combining the two largest

and most fast-growing in asia and globally. the ability to play the growth which we think is still in the early innings of both logistics and data centers, essentially the landgrab phase but combined that with the perpetual capital, over 50% of the a um comes from perpetual and core capital vehicles. that gives resiliency of earnings and the enhanced capacity on the dividend side. we think the ability to return capital back to shareholders now post transaction with having the fastest growth profile of any listed global real estate manager is a very powerful combination. >> great to have you with us. thank you very much. coming up next, global press freedom is under intense pressure. our investors ignoring the associated risks?

we discussed. this is bloomberg. ♪

>> global press freedom is under pressure. more journalists than ever were jailed last year. the number of media workers were killed. more than 2019. give us an update on the state

of global press freedom today. >> it is grim. there are more journalists in jail, a record number in jail last year. we now have 274 journalists across the world in prison. the number of media workers killed across the last year also rose by a third. 66 killed last year. roughly half of those were in asia. particularly south asia, afghanistan, pakistan and india count for the bulk of those. other than that, particularly in asia, to the situation in hong kong where we saw the apple daily close, in general, there is a general sense of pressure coming down on sources of information and journalists working across the media sector. >> that is a treasure picture

you're painting but when it comes to the markets, how much do investors actually care about press freedom and should they? >> it is in open debate and our reporting in this conversation lays that out. in a lot of ways, the press is a canary in the coal mine. in hong kong, that is the case you have seen, the crackdown spreading from media, putting politics into the media and then you will see companies come under pressure. more questions raised about the freedoms. not just the people to protest but also whether these moves are going to come down and impact other aspects of the financial market in terms of access to information, access to information on company directors. when one thing starts to go, it starts to pushover. a lot of people say fraud, money

laundering, corruption, all these things increase when independent money goes. >> that was ian. that is it from daybreak asia. our market coverage continues as we look at shanghai and shenzhen. standby for bloomberg markets china open. this is bloomberg. ♪

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>> this is my kitchen table and it is also my filing system. over the much of the past three decades, i have been an investor, the highest calling of mankind. then i started interviewing. i have learned from doing my interviews how leaders make it to the top. >> i asked him how much he wanted. i did not negotiate with him. i did no due diligence. i have something they want to sell and now they stay there.