>> a very good morning and welcome today break astride you. i'm already stressant sydney. -- and welcome to "daybreak australia." i'm heidi strauss in sydney. the biggest weekly stories since january, a brutal route in asia. >> and credit tightening, copper

is headed for the worst week in two months. we are aligned with the fed governor about what lies ahead after the central bank's decision to hold rates. we are seeing u.s. futures at the open, managing to barely hold onto those gains with a very volatile session. stocks swing between gains and losses and it is disappointing on job numbers the less than expected delta variant, we have tightening concerns. the u.s. dollar is the highest level in nine months. they are also seeing that for six consecutive sessions.

that is when the pandemic got started. iron ore also slumped with a pledge to curb steel reduction. we see a little bit of upside in the session right now. we have goldman sachs cutting this forecast for the u.s.. and it is affecting information.

>> amazon had to stock up 11% over the last 14 days. amazon saying jeff visas rockets to space -- jeff bezos rockets to space and the stock comes back down. they still recommend clients buying that stock. and issuing corrections in a matter of days. >> it is a positive for the company and can help chinese stocks, but not right now. we saw another video of the nasdaq golden index out the lowest level in three months. and we continue to see the china internet outflows for three consecutive days. this is where we continue to see those regulatory moves coming from china. this is also the livestreaming industry.

>> as we had to wear the final day of trading, we have the systemic risk of companies and that tax implication as well in the mix. they would fully comply with these regulatory requirements. we know the regulators basically told them to fix things up when it comes to that debt crisis. this is the breaking news crossing the bloomberg right now. we are hearing when it comes to the vice president,, harris will be addressing regional issues when it comes to this. and we do the offices as well on august 25. , harris says she will be pushing for free and open index

decisions for conditions during that troop. the u.s. officials saying that they are seeking that relationship. let's get back to markets. it does feel relentless right now. we are talking about the selloff in mainland china. it doesn't feel like we are trying to catch that right now. >> indeed, there is just so many uncertainty in terms of the chinese regulation environment. in some of the chinese tech companies, these are the policies that they are looking forward to in the future. and the ceo needs to divest. there is a supply sense as well

that is costly. china is assuming the goal of common personality and asks for wall street companies to contribute to sacrifice in the interest of the shareholders. this is not the best policy from an investor's perspective. >> and a china credit tightening cycle cannot be helping matters either. >> indeed. historically, we have the commodity markets. and this would be coming down quite sharply. we have seen reaction in the commodity markets. plus we have the ongoing coronavirus impacting the loss of places in the world. this is opposed to the market

that is reactive to those changes. >> when it comes to china telecom, will this revive the end of the market when it comes to china? >> if anything, adding the supply to market, probably a small downside. the strategy has been trying to promote that market as opposed to solid bank things. and the return of the china telecom is consistent with the government's goal to try to encourage those to return home.

the logic is why was it left to the companies to oversee that? local chinese people don't have the pockets. >> let's get over to vonnie quinn with the first word headlines. vonnie: covid-19 patients are dying at levels not seen since february. this intensive care unit overflows in parts of the self. the federal department of health as alabama has run out of places. georgia, mississippi, and texas are above 90% for their icu beds. president biden says a booster shot for all americans, the who

says the rollout and healthy nations makes a mockery of vaccine exiting. high income countries have already on average administered more than 103 vaccine doses for 100 people. that's in comparison to just six. singapore and free travel lanes next month. starting with an arrival for germany. it would be used for the coming weeks. the government says it will no longer pursue. the ftc has filed a revised suit against facebook. the social network has the strategy to buy or very rivals. it asks the court to unwind the acquisitions of instagram.

a federal judge dismissed the landmark case filed by the sec. global news 24 hours a day on air, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> the country was put into a covid-19 lockdown and we will be speaking on the plans going forward. coming up next, we have markets. this is bloomberg. ♪

>> here is a quick check of the latest headlines. resolving the debt problems and stop spreading false information.

the issue a joint statement developers bonds and shares lower. this includes stakes and units to endorse the cash front. the private equity firm says close to $3 billion for a small operator. the commitment for commercial management brings the total fundraising side to about $6 billion. the company was seeking to raise half of that amount ahead of the ipo later this year. a worsening chip shortage is forcing a 40% cut in toyotas production plan. the automakers looking to expand output across japanese plans next month and used car shortages resulted in the spread of covid in southeast asia. the market says the global chip shortage will cut global auto production by as many as 7.1 million vehicles this year.

this would be stabilizing and the second quarter next year. >> there is the final trading day of the weekend is the picture when it comes to new zealand. this is just about half of a percent. this is as we look ahead to japan's cpi inflation as well as the crime rate in china. >> this is despite the futures being on the upside and we see a huge selloff. this is paper by the federal reserve. whatever the reason, this chart shows that there are more bears than bulls in the market. our next guest says the traders are getting tired.

hilary kramer joins us. great to have you back. can you blame them? it seems the positive news is behind them with earnings ready done. we do have jackson hole next week. what is the next catalyst? >> the catalyst is that the delta variant of covid is significantly more serious than anyone is pricing into the market. right now, it is technical and they can keep holding. it started with march 9. everyone is getting tired. retail sales were strong. that news in afghanistan is not big news here.

there is a lot of concern here in the u.s. with china and the chinese stocks. there is also concern, look at the russell 2000. it is down more than 10% and really in fear territory. the stocks are driving so much of this. on amazon, it's important with 14% in a month. that is telling us something. we knew it was something when jeff bezos started going to outer space. >> let me follow up on your point with the chinese uncertainty because that is hitting the commodity spaces on the bloomberg. in your note, you say the top conviction is still materials. why?

>> $1.5 trillion in infrastructure spending, there is another 400 billion being spent. we have already seen these large-scale and for structure projects start. that is why companies like vulcan materials, copper, all of these companies. they are suddenly very important players and will continue to be so. where is the money being spent? it is spent on infrastructure, and very fresh here. on the table, a lot of these hard-core material infrastructures have educational buildings. it is not going to be technology.

>> you talk about the decoupling from the chinese economy and it has been off-limits. does that mean you will continue to avoid a given the regulatory issues? >> right now, it makes sense to be very careful, to tread carefully. it is a reason why there is nervousness going on because the chinese markets and chinese stocks will have fast and hot traders out there. for fundamentals, it is really a macro story. china, of course, is still and always will be the big roadster. everything is in relative terms. overall, there is concern and trepidation on the stateside in

terms of the chinese stocks, the chinese market, and what it could mean for a new contagion. >> hilary, great to have you with us. coming up next, conversations with the fed government on the decision to delay the rate hike and the outlooks of the new zealand economy. that is coming up and you don't want to miss that conversation. this is bloomberg. ♪

>> we want to welcome television and radio listeners from all over the world.

it has been kind of a crazy week. they plan the final plans for the decision on wednesday. there is an outbreak of cases that night. you guys get up in the morning and sit down and realize that we can't do the rate hike now even though the labor market, demand, everything warrants it. does this mean that you can't move ahead with rate hikes? it until the cases are back under control? >> i think the question is, when would that be? we have to focus on the business which is inflation and climate mandates that we have. absolutely, this week was not the best timing to reduce the

monetary stimulus, i should say. time is on our hands. the capacity constraints. we had supply disruption and we are above the maximum. the underlying situation remains the same. >> we talked about the needs of the central bank managing its way through a virus environment. does that mean that you could potentially hike the key rate maybe even in october. even if there are still instances of outbreaks.

there is this largest lesson. it is impactful to manage this. it is the household balance sheets. and so that puts monetary policy . and we need to just to be true to our mandate. and this is a mutual interest rate. the demand that we have learned

through time is that income remains strong. and these lockdowns will continue in a while. that remains focused on the median target. >> i hope all those investors and traders that have been controlling the market expectations are listening closely. they have been much higher, maybe close to 100 down to 59%. maybe because of the surge an outbreak. and also because it's not going to be a monetary policy statement meeting where you would typically make a change. you announced the end of your long-term security asset purchases. are you then saying that it

would have anything to do with any of this? >> we remain and we retain to make sure that it is necessary. it is how we see inflation. of course, that cost, we would have to be buried on the supply side -- varied on the supply side. and the demand side, there was a significant turnaround. and that means the policy is not doing its job. >> looking through to july next

year, you can see rate markets are pricing in 100 basis points. is that something that gives you confidence in terms of how the recovery plays out? or do you think given the uncertainty of delta, that is the critical step to be making? >> all we can say, how we see demand, that's a little more certain. given that very strong situation , given how we see consumption snapback. supply is being constrained. and when you are in the next situation, that is inflationary. we are comfortable with the economy and that monetary stimulus. that is 1.75% above where we are.

we are not putting the brakes on it, we are simply reducing the accelerant. is it a big win? i don't know. >> how much pressure or the need comes from the market? this is something that the rba is struggling with his well. and i know you had the very pointed exchange with lawmakers yesterday. and is that still need to be on them macro side? >> i think it needs to be on the supply and housing. we can muck around on the edges of demand. financial stability measures are very stable. the systems will capitalize and they are very diversified. there is no financial stability issue. it is no other housing supply issue. we need to have the consumer

cross and inflation. we need to see a supply response. and what i have been saying yesterday is that they are not reflecting that very strong slight. and that activity, with record highs, we say that house prices are unsustainable. given the demand and constraints, we see that not because of macro credentials, but because of underlying economic fundamentals. >> a lot of people were saying that there would be inflation situation. is the economy being deterred by lockdowns too many times? >> without a doubt, the single worst thing that could happen for what central bank is has

inflation expectations and they become the midpoint of the target. it is very confident. they expect central blanks -- banks to have the confidence to do our job. to make sure the value of the money is >> challenge is the monetary and fiscal policy coordination. we know we are in a good situation with the government. >> i want to look ahead to the kansas city fed's symposium in jackson hole next week. we have done a couple of great interviews out there. we both know what an amazing event it is. in terms of the market's expectation that fed chair powell may give a more explicit statement on bonds tapering, i want to step back from that and ask you how important is that

step by the federal reserve to other central banks, other bond markets around the world? >> without doubt, the u.s. is the big person in the room even the sheer size and volume of trading that goes in u.s. dollar assets. any signals from there are important. i would probably like to emphasize really how dissimilar across the globe the economic environment is and how different a single global shot new zealand has a few months ahead. lessie disruption to date. there is a general desire to be able to re-normalize monetary policy across the globe and you know, there is nervousness around tantrums, stepping back or doing something too soon. it has to be put in today's context, not the context of

2015. kathleen: you have been out there so there's always a lot of chatter and conversation on the sidelines. this is particularly important for the reserve bank of new zealand because it was the first to adopt inflation targeting. 2% is the target. now, the european central bank, the federal reserve, are moving away from an explicit inflation target to average inflation targeting. as someone who has been involved in this and done central banking throughout, how do you assess that part of what is going on now and the conversations that might be had around that issue in jackson hole? adrian: i'm very pleased to see these conversations happening. we had to be so extreme back in the 1990's and 2000's because inflation expectations were unanchored. had to be a single focus to really drive inflation credibility, low inflation

credibility high. we are able to use some of those dividends. expectations are better anchored and that allows people to be more flexible through time. remember, central banks have been nothing but accused of undershooting their inflation targets for so long to the reserve bank of new zealand. a couple quarters, we had higher than midpoint inflation targets and everyone is getting concerned on the others. is there an inflation credibility dividend? let's use it sensibly. it always has a lot. haidi: the last tightening cycle in 2014 of course, there had to be a reversal of policy within that year. how much, i guess, of an extra element of pressure is there that once you start, you want to be able to stay the course? adrian: fortunately, i'm old enough to have made every policy

mistake known. i have been accused of being too slow, too fast. too aggressive, too timid. i don't think, looking back at whatever the last policy challenge was -- which is why we have been using the framework around that. at the beginning of the crisis, the least regret we wanted was to be accused of not having done enough soon enough. we are talking about our regret now is having not moved soon enough around inflation expectations. it is about the balance of risks. it will always be the unknowns, the hindsight genius that we need to continue to move. we cannot wait for certainty. that does not exist. >> how concerned would you be about the impact of the exchange rate if and when you do go? the rbnz will be the first or one of the first to start that tightening cycle and it is

really interesting. it is almost a canary in the coal mine scenario where the eyes of other central banks are very much focused on the rbnz right now. adrian: i would not do that far in a small open economy in the south pacific. but it is really straightforward why we are having to do what we are doing because our economy has been growing strongly. inflation pressures are rising and we are at maximum sustainable employment. not rocket science. what could happen to the exchange rate to date given the nature of the global shock. it has not been a relative difference between countries. it's been all countries. i don't see that changing at all. safe to say i appreciate the exchange rate. the overarching uncertainty of this pandemic has certainly been keeping exchange markets pretty

contained, so the more the exchange rate does the work, the less the interest rates so we can observe. we cannot control. kathleen: one advantage of the fed announcing a tapering or tightening with governor or would be the dollar might keep strengthening and that might take a little pressure off your currency should you decide to go ahead and make that rate hike in october. one final question. if you move in october, is it possible you are moving at the end of november? a lot of people looking for two more hikes next year, giving up higher than that and closer to that 2% neutral rate that you stress at the press conference. you want people to know that that is what they should be planning on at some point in the future. adrian: why wouldn't you plan on returning to some level of mutual through time? it's always the main reversion.

i have been getting very worried that people lose sight of the big navigation stars ahead of us . the number one star of course is what is a mutual interest rate and if it is 2% nominal, it is an incredibly historically low nominal interest rate but it is well above where we are at the moment so we have got a lot of work to do just to get back to neutral. if you have taken on a lot of debt where you cannot sustain something like that, you are probably overexposed. it is a health warning to people to stop thinking about at the margin, sink around the big navigation stars. haidi: we will have to leave it there but thank you so much for joining us. we appreciate your time with us as always. governor of the reserve bank of new zealand, adrian orr. adrian: thank you. haidi: first word news with vonnie quinn. vonnie: hong kong is seeking a new life in the u.k., forced to

leave behind their entire savings. scores have been denied access to money. china withdrew recognition. the u.k. expects more than 300 thousand residents will use the passport to leave hong kong, putting billions of dollars at risk. china's appetite for u.s. farm products is a rare bright spot for commodities markets battered by a resurgence of cobit infections and stronger dollar. soybean sales with the highest since january for the week ending august 12 with china purchasing more than 1.1 million tons while total sales were 2.2 million tons. beijing also boosted its u.s. wheat and cotton purchases. the biden administration says it is appropriate for extended unemployment benefits to expire as scheduled on september 6. however, the treasury and labor secretaries say it could be

extended in those states hard-hit by the delta variant. many republicans have argued that they discouraged americans from returning to work. 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: three u.s. senator sasse positive for covid-19 despite being vaccinated. the u.s. hospital death toll climbed to levels last seen in february. let's get more details from carol wessel. what is the situation around the u.s.? >> in certain parts of the country where there has been lower vaccination rates like mississippi, missouri, texas, situations are pretty dire in places where 90% of bags are filled so it is a continuation of the delta variant resurgence. hospitals are reporting most of those are unvaccinated cases so

the areas that are trailing in the vaccinations that are getting hit the hardest. haidi: what are we hearing about math mandates around the country as we have the return to school question art i'm hearing anecdotally of so many cases amongst children who have been back at school for a few days. kara: it is a real pressure point play now in a lot of difference will districts across the country. florida is a big case where the governor a prohibited mask mandates but some counties are fighting with him to get those enacted. hillsborough county in tampa, one of the largest gold districts in the country, has several thousand kids who are quarantining. back to school is picking up across the country. it will be in new york. every district is taking it a different way but it could be really chaotic and we are already seeing some of that unfold. the ramifications of that play out in terms of companies trying to get workers back to the office. that is difficult to do if your

kids are quarantining or stuck at home. back to school is already showing itself to be a bit of a tricky time. shery: we have a new study about vaccine hesitancy and where it all went wrong. what do we know? kara: i cannot speak much to that study. in the u.s., there has been this big divide and it is kind of growing and a lot of that is along political lines and many are hesitant to get the vaccines and that is what we are seeing playing out in terms of searching cases and hospitalizations. haidi: our san francisco bureau chief. we have another when it comes to earnings coming out of sydney airport given that there is almost no airport traffic at the moment not internationally going in and out of sydney. to me airport declaring a first-half interim distribution per share of zero.

total passengers when it comes to july year on year contraction of 68%. international passengers, 21 percent pure domestic down 75%. overall, that means the first half net loss of 108 point $7 million. despite that, banking on vaccinations and the return to normal for a resumption of travel and we are still hearing that sydney airport saying it is prepared to continue holding discussions over that takeover offer of more than $16.8 billion . earlier this week, it said it is open to engaging with those bidders. that deal potentially still on foot bed. let's stick with international travel in an age of covid. this is a familiar refrain. the famous getting special treatment or seem to be getting special treatment when it comes to these pandemic restrictions,

quarantine restrictions when they are traveling. i'm talking about nicole kidman going to film a project in hong kong. shery: she has been exempted from those 21 day quarantine rules that apply to everyone in hong kong and that is really a controversy. media is raging about why she has been given the green light to go out and about around the city, busy filming seen for a new television series and it has also shown the light on the policy flip-flops we have seen in hong kong as well. we continue to track the biggest vaccination campaign in history with over 4.7 billion doses given across 183 countries so far. check out bloomberg's vaccine tracker on the terminal and bloomberg.com. this is bloomberg. ♪

haidi: almost every major automaker in the world has been affected by the chip shortage. he says he believes the worst is over. he spoke with bloomberg earlier. >> we have been also impacted by the chip shortages. probably less than our competitors but also having the same type of situation, meaning

we have limited if any visibility on what is going to happen. we believe that the worst is passed and we have seen shortages of somewhere between 5%, 10%, to 20% maximum production compared to our initial plans, but we think, come september, the situation will get slightly better and better, and our q4 projection is quite a strong so far. >> it seems like it is really difficult at the moment to be an automaker. i don't know if i'm supposed to have sympathy for you. you have the chip shortage, really interesting dynamic between used-car and new vehicle market and now rising commodity prices. what is it that keeps you awake at night? what is it that is bothering you right now? jose: it is an opportunity time. in our company, we always see the challenging times as an opportunity to do better and all i can tell you is that i have

learned to differentiate the supply and the demand and in the time of uncertainty, the most important is to focus on the demand so we are monitoring our search by our customers and it is coming at an all-time record levels. as long as you have good demand out there, surely or later, you will realize the good results. what keeps me awake at night is the fact that you need to apply 100% flexibility on a daily basis. you literally don't know which components you will receive to produce on a certain day. overnight, we have to check and based on that, you have to adjust your production plan so in the past, it is a thing you would do on a monthly basis and now you have to do it daily. the good thing is the demand is there. the margins are quite good for the dealers. dealers are making more money

than ever before. but consumers want to get access to the new product and a new way to sell products has developed. we tried to support our dealers so they can sell not only what they got on inventory but also the pipeline. matt: hyundai really came into my world when you brought out the genesis in 2008, 2009 or so, and it was the pinnacle of affordable luxury. they are not cheap. they start at $70,000 or $80,000 what is your pricing power like in this market? jose: let me tell you, we have been growing a lot. genesis, 178%. which is very, very solid for us as we launch them. so if you look at the price

evolution, we have been steadily closing the pricing gap to our competitors by focusing on the quality of our products and the features and the design of the product, so we see a lot of opportunity. i can tell you that the evolution of the genesis brand is going well. if, related to the profitability , they are selling genesis. quite possibly from that end. shery: global chief operating officer jose munoz speaking to matt miller and ed ludlow. you can get around up of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪

shery: the e-commerce giant shares have eased around to hunt at 67 billion dollars in value recently but all d5 analysts that rate the stock are positive and recommend clients buy amazon. there was news earlier that the company plans to open several large retail stores around the u.s. for more insight, we have retail analyst --

let me start with amazon's physical retail stores. why invest more in bricks and mortar when we are in the middle of a pandemic and when many other retailers are trying to double up on e-commerce? >> because amazon already controls the e-commerce landscape and to get more distribution points where they can help fulfill their orders and get customers to get their last-minute needs, they need to expand into the brick-and-mortar space. so if you think about where amazon -- >> continue. >> anything about where amazon is today, amazon has a large online presence but when you look at its brick-and-mortar presence, it is less than 100 stores if you exclude whole foods, despite all the different tests it has been doing for the last five years. haidi: i'm wondering if this will inject some positivity,

more conviction, given what we have seen. just a really significant double-digit correction in just a matter of days. poonam: i think it is still very early. if you think about the rollout of amazon stores over the past five years, it has been slow. so i don't expect the company to be able to meaningfully scale their discretionary presence overnight. it could take multiple years before they actually get to a point where it would move the needle or do anything really. shery: bank of america data today showing the credit and debit card spending continues to ease this month. is this one of the reasons we are seeing so much pressure on the amazon stock, just bad retail numbers, consumption sentiment slumping? poonam: i think it is a mixture of things. consumer spending was very elevated earlier this year. part of it driven in the u.s. by stimulus payments that were distributed. as consumer spend moves more

towards travel, leisure, going out, that will take away from product base spending so that is what we are seeing happen from q2 to q3. for amazon and that you giants alike, last year were really great numbers due to covid-19 and you are facing tougher comparisons. we are just going back to normalizing the landscape a little more. >> when you take a look at the plethora of analysts for amazon, they were all positive. what is driving that conviction? poonam: there's a lot of things happening at amazon. e-commerce still has more legs but the opportunities in their cloud business, which generates the bulk of their profit and it is still in very early stages. also, they are branching out more into advertising and media which is another opportunity to grow a higher-margin business.

amazon, as big as it is, if you break it apart, it is not the largest in every industry that it competes in. haidi: senior analyst poonam goyal. let's get you a quick check of the latest business flash headlines. u.s. antitrust officials refiled their monopoly lawsuit against facebook, seeking to salvage the landmark case that a judge throughout in june. the federal trade commission now edges facebook violated antitrust laws by buying instagraming whatsapp to a limit -- instagram and whatsapp to eliminate them as competitors. they have now provided more details to bolster their claim. sources tell bloomberg softbank is offering $2.2 billion of its stake in doordash in a block trade. it nearly tripled to $14 billion last quarter and it comes after doordash signaled declines in new customers. johnson & johnson has named --

as its new ceo. he will be taking up the role on january 3 after serving as the vice chairman since 2018. he will also have a seat on the board. he replaces alex gorsky, who said he was stepping aside due to family reasons. shery: let's get a quick check of the markets. kiwi stocks trading like this. they are down about .2%. this of course as we continue to watch the rbnz. governor are coming on the show and talking about their decision to keep wrench marks on hold but also bringing forecasts for higher interest rates. sydney futures at the moment looking higher. this on the back of the longest losing streak since october. nikkei futures unchanged. we saw a slight gain on the s&p 500 in the new york session. coming up in the next hour, we

speak to emily wise of state street for her market strategy plus bloomberg equality, focusing on the future of women in afghanistan. we will be speaking with an associate professor. this is bloomberg. ♪

haidi: very good morning. i am haidi stroud-watts in sydney. we are counting down to asia's major market opens. shery: i am shery ahn in new york. welcome to "daybreak asia." a choppy wall street session. the virus and taper talk way on the economic outlook. commodities feel the pain of china's credit tightening. copper heading for its worst week in two months. adrian orr tells