haidi: a good morning. we are on day two of the australian conference in sydney. shery: i'm shery ahn in new york, counting down to asia's major market opens. asian stocks faced a volatile session ahead as investors await more clues on whether the fed can engineer a soft landing. china capital starts a rigorous

screening process for covid infections. the beijing lockdown ways further on the economy. plus, our exclusive interview with one of australia's biggest retail banks, anz ceo shane elliott joins us after posting and earnings beat. haidi: let's take a look at the set up when it comes to markets getting underway. china and japan are off for labor day holiday, but we are seeing a pretty good outlook when it comes to the start of trading in sydney for the next hour. futures up by about .6% and an early gain of about .5% when trading gets underway. -- as trading gets underway. the u.s. dollar weakness overnight and also the fact that the rba really rolls with just about every economist and trader out there.

and it has really continue to sell in the bond space. and watching as we get there. shery: we are seeing u.s. futures holding onto gains at .1%. gaining .2%. we have seen tech stocks underperforming in the new york session and it was a very volatile session today. at one point in the afternoon, wiping out all gains for the session before finishing in the green. we are seeing wti in the asian session rebounding slightly. that one indicates in the new york session. we see demand concerns really offsetting any supply concerns. we are watching treasuries because we have the 10 year yield slipping a little bit and falling further away from the 3% level.

let's bring in our bloomberg correspondent for asia. we are seeing markets pricing and 50 basis points. for the next three consecutive meetings, a lot of volatility across markets on that. >> part of the volatility as we had quiet going into the fed meeting. in fact, the last time we heard from the fed officials, what we heard was rate hikes, rate hikes , rate hikes. we have traders and investors very much on the lookout. jerome powell opens the door to a 75 basis point hike.

when you consider what has been going on globally, concerns about that. there is a lot of nervousness about just how hawkish the fed can get. haidi: we are talking about why when he five basis points was such a surprise and then you see the big reaction across the aussie dollar recovering as well.

>> i was looking at market expectations for the rba. something like a 4% cash rate priced in for two years from now in australia. compared with the rba's forecast, it will be something like 1.5% to 1.75% by the end of this year. the problem is, your markets are so more than willing to take the over on where the rba is going to have to go to fight inflation. they are not paying a lot of attention to what the rba is forecasting because inflation forecasts have been so out of whack with what is going on. as far as the bond markets are concerned, the sky is not even really the limit. haidi: garfield reynolds, live

contributer as well. we are hearing from the fed governors speaking in wellington saying that he is confident the new zealand financial system is resilient but that many businesses would be tested by rising costs. they have been slightly aggressive when it comes to capping inflation with that jumbo sized move to raise rates last month saying that they are ahead of rising inflation expectations. the overhead earlier saying that they will see more pain ahead when it comes to the property price low down as a result of the aggressive tightening cycle. let's get you to vonnie quinn with the first word headlines. vonnie: china's capital is tightening virus restrictions while avoiding a full lockdown as an attempt to control it out rake that's on new cases on tuesday. beijing is restricting movement in districts deemed to medium or high risk. with authorities locking down

some apartments and ordering another three rounds of mass testing. they're also suspending in-person classes for a week. covid's china growth forecast, the agency trimmed the 2022 gdp estimate to 4.3% from 4.8% as economic activity contracted sharply. they expect things to ease this month. planning referendums for ukraine to open the way for full annexation. 10 weeks into the war, the kremlin is focused on cementing political control overseas. french president emmanuel macron held a two hour call with vladimir putin asking him to allow evacuations to continue.

president biden was to enshrine abortion protections into u.s. law. democrats currently lack the votes even by a simple majority. a bill to codify road was blocked by the senate in february. global news on and don bloombergquint taken powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn and this is bloomberg. shery: we will speak with one of the biggest banks after it posted in earnings beat. we are joined exclusively to discuss that and the outlook this is bloomberg. ♪

>> wednesday, a bloomberg exclusive. jp morgan chairman jamie dimon's weeks with francine lacqua live from the jp morgan ceo summit in london only on bloomberg ev and radio. -- tv and radio. haidi: anz's tops profit estimates and the australian economy recovers from the pandemic. there is still competition for loan growth despite pressure easing when it comes to margins. joining the is shane elliott, ceo and create to have you with us. congratulations on those numbers. can i start with a broader macro question? the rba with the 25 basis point hike. what is the start of the

tightening circle mean for your business? does a change for growth and conditions? what is the rba trying to signal here? >> it changes the outlook and we have been through quite a significant point. it is quite a big pivot. we are talking about a new world of inflation. our customers, it is an extraordinary number of australian homeowners that have -- it is a significant shift in the conditions. it is good for banks and a general observation, it is generally positive for margin outlooks. but the counter to that would really be what will the positives do, what will consumer businesses do? as they contemplate a difficult decision in an already difficult rate environment. haidi: that question of what will consumers do is a big one

when it comes to loans growth. it has lagged competitors in that area. there is processing capabilities, but have you kind of miss to the window now that the tightening cycle has begun? -- missed the window now that the tightening cycle has begun? shayne: we did not forecast the boom and homeowner lap look a -- applications over the last year. i don't want to make light of it, but in this new world, rates will be rising pretty fast. i'm not so sure missing a bit of market share growth is such a bad thing. we have a large -- we have one million homeowners. we want to make sure they are in the best possible shape. 70% of them are ahead on their repayments. they have good cash balances. this will be a new world and we want to focus on what we have. a little bit of share loss is not ideal but it's not keeping

me awake much epic the moment. -- at the moment. shery: what is keeping you awake at the moment? shayne: trying to understand what will customers do. in australia, they have never lived through an inflationary period. if you are a homeowner, a trader or something, it is on you. we don't really understand the behavior. will they want to save more? we have seen extraordinary little saving over the covid period. will they put more into savings because they are worried about the future? or will they start spending more because unemployment has really lowered at the same time. to me, it will come down to this consumer behavior and how they will go and change their life. what we have seen over the last year for example is a massive shift of people moving out of deposits and putting monday -- money into cash flow in hand

because they are worried about the future. we don't know how that will change but we will keep an eye on that consumer behavior. shery: how do you hedge that when you don't know what consumers will do next in order to make those decisions on how you allocate your resources to different parts of your operation? what are the factors guiding your decision? shayne: the only thing you can do in an environment like that is stay on your toes and stay nimble. make sure you get the best possible data in real-time. we have been investing in our foundations, making sure that we have the most import thing here. are we choosing the right customers? customers are well positioned. particularly on the business side, we make sure we have real-time data to monitor what is going on. we are fortunate today, right? to some extent, you never know what you did with it.

to pay for things, we know in real time what people are doing. we can get real-time data and know how it is shifting and what it is shifting from today and yesterday. and having the agility of an organization to respond quickly with pricing and risk appetite and thinking about the customers who want to do more and in a much more agile way. haidi: what do you have planned for capital deployment? you have 3 billion aussie sitting there. what are your plans? shayne: we led the way in australia in terms of capital management. and that led to three buybacks over the last five or six years. we have given back $5.5 billion

to shareholders. and it is the most prudent around capital management. we are sitting on a little bit of excess at the moment. we spend a lot of time thinking about the best use of that capital to generate attentional. right -- potential. right now, we are thinking about opportunities and we want to be prepared for those opportunities. i can tell you it is front and center. and i also want to remind people that it is not normal for us to announce capital management at the time of our results. all of the previous buybacks, they were not announced at the time of the results. that is pretty normal. shery: behind the separate entities, the banking and nonbanking, what advantage does that give you that you can't already do at the moment? shayne: that is a great question. as you know, globally, that is

quite a normal structure. jp morgan or dps, others, they operate with that structure for quite some time. also in australia, mcquarrie operates with that structure. we want to service our customers in the future and help them find a buyer or start a small business. increasing the we we do that isn't just are taking deposits and lending money. it's the ancillary services that surround it. and a lot of those services are not banking. and frankly, it ties them up in knots and slows them right down. so what we want to do is really free up our ability. it will still be closely incentivized. you bought a company, the leading cashback provider for shoppers as people get out there

, buying cards and getting instant cashback. it is a great 1.3 million customers. it's pretty inappropriate to have it sitting and regulated like a bank. those of the sort of businesses that would make sense to sit. shery: and shane -- shayne, anz is committed to the net zero pass create any insights to where we are at when the sector needs to meet that 200 billion aussie dollars sustainable lending target? shayne: we are really excited about this because akon it is the right thing to do. and it is australia and new zealand's largest bank and we have a responsibility to help customers through that transition. being that zero and 100% renewable by 2025, it's about

what we have for customers. it's about responsibility and it is a massive opportunity for us. we are good at helping institutions raise capital, deploy capital, whether it is the short-term or long-term projects. transitioning to a new energy future, helping customers unlock the value of hydrogen, lithium, or electric vehicles, that is what we do. we are really excited about it and we are on the path to go there. we have done $81 billion in sustainable finance against our target of $50 billion. there is a really big growing opportunity. shery: shayne elliott, always great catching up with you, anz ceo. haidi: vice president kamala harris is giving remarks right now to a group supporting abortion rights. this speech was scheduled before we heard of the draft supreme court ruling to overturn roe v. wade.

this is really a spotlight moment for her. you can watch all of her remarks online. go to the bloomberg terminal. remember, this is a speech that has the potential to be a watershed moment for vice president harris. a woman and person of color, the first to hold that office. she was vocal when it came to abortion rights during the campaign. do go watch that speech right now. we have more on the abortion issue just ahead, president biden calling for more pro-choice lawmakers to be elected to enact protections to roe v. wade into u.s. law. this is bloomberg. ♪

president biden: it goes far beyond if it becomes a law and

if what is written is what remains. this was far beyond the concern of whether or not they have the right to choose. shery: president biden saying he will and try the protections of roe v. wade into u.s. law. let's get more from jodi schneider. we heard from vice president kamala harris just a while ago talking about how women's rights in america are under attack. jody: president biden did say it is quite a radical decision. it is the draft decision, if it comes to be. and he said that he will need more pro-choice senators and a pro-choice majority in the house to be able to adopt legislation that codifies roe, to pass this into law. this is easier said than done.

the democrats are expected to lose seats in the house in the upcoming midterm election. the party in power usually loses seats and high inflation and other issues have kept the approval ratings low. democrats will use the threat of it overturned to drum up fundraising and get out the vote. republicans are also going to use this issue in their fundraising. we have heard from senate majority leader chuck schumer today with remarks saying that he would try to force another vote of legislation to codify roe very soon. haidi: congressional action at this point would be necessary if roe v. wade was overturned. there's a lot of talk about filibusters today. what was the discussion and what were we hearing about this? jody: democrats have left legislation to a simple majority

and so basically in the senate, what they are trying to do because they can't get west virginia's senator joe manchin to go along is to change the 60 vote filibuster threshold for advancing such bills to make it a simple majority. but they haven't been able to do that partly because kyrsten sinema is a democrat who supports abortion rights but will not vote to change the filibuster. so representative because io cortez along with bernie sanders called on democrats to challenge cinema when she is up for reelection in 2024 saying her resistance to ending the threshold basically is what could be between that, protecting roe. it really shows how divisive and personal these politics surrounding abortion have become, even with -- sometimes within the same party.

shery: a quick check of the latest business flash headlines. the fed is facing an inquiry from the u.s. securities and exchange commission related to an ipo. the chinese ride-hailing giant says it is cooperating with the investigation but can't predict the timing, outcome, or consequences of the inquiry. elon musk is set to take twitter private and has told potential investors he may relist the social media platforms as soon as three years into acquiring it. until then, he will complete his $44 billion takeover later this year subject to conditions like approval by shareholders and regulators. airbnb has posted for sport or sales and second-quarter forecast that topped analyst estimates. the company has seen substantial demand for travel heading into the busy summer season after more than two years of covid restrictions. still ahead, we hear from the

ceo of australia possible hundred $40 billion future fund. -- australia up -- australia's $140 billion future fund. this is bloomberg. ♪

>> don't think we are >> at the peak. >>you will see 3.5%. >> concerns about recessions. >> the market is pricing 200 basis points. >> looks like the anticipation is actually tightening financial conditions. >> the fed should deliver shock

and all. >> if the fed does what he needs to do, stabilizes things, that will go a long way. probably going to be seen as a win. shery: central-bank all but certain to hike rates. let's get more. how aggressive are we expecting the fed to be? kathleen: it's interesting. think back about three months ago, we were just talking about 50 basis point hikes. 75 is on the table. what this shows is the markets

are seeing it by the end of the year. 75 would help them get there faster. number one, there is no federal reserve official who is calling for it now. the president of the st. louis fed said it could be an option if needed. in 1994 it worked well. more methodical moves sound like 50-50, they see a decent chance

because powell has been talking about a labor market that is to type, new job openings. a lot of demand for jobs and not enough workers. this is keeping pressure. one more thing about the greenspan 75 basis point hike, the hot labor market, behind the curve. alan greenspan added on 25 basis points. people say no, that's why it's not going to happen at this meeting.

if you want to click the questions, inflation. the peak of rate hikes by the end of the year. what is the neutral rate target? 2.5%? 2.8%, even 3%? a lot of people are worried because you will have to do so much, so many top economists. the fed is not going to be able to achieve this just for those reasons.

in terms of the 75 basis point rate hike, he will be asked. if he says something like we will see if it's needed or if inflation doesn't peak, but if he talks about methodical moves, most people will take that as a signal he will not rule it out but is not looking forward to doing that unless it's needed and we will have to wait and see. haidi: kathleen hays with the preview of the big fed decision. the future fund shares his outlook in an interview with bloomberg at the milken institute global conference.

>> yes, we have to look at the world. what will it mean? economies are strong in general? for us, the base case scenario is that it tips economies back in recession. things left to go slowly, economically with some level of inflation, and that's a problem for investment markets. >> has a totally change? >> the pandemic has not changed

too much but was a catalyst, the power of the emerging general -- millennial generation, gen z means we are approaching things differently, not only emergency interest rate but huge unheard of fiscal stimulus in a coordinated way and whatever populist governments to keep things moving and that's a fundamental change. >> you have spent some time studying this? >> yes, we knew it was a catalyst for change. dying the changes. change in policy and what that would make for economies in markets. we have a new investment order. we think the world has totally changed with financial models,

things we learned in business school are all based on observations of the world since world war ii, and they are wrong. we need to have a new way of thinking. >> it is something productive. >> it was tough but we are not complaining. everything we are experiencing in our professional lives, by definition everyone does not understand the world we are in and we have to look back further in history. >> practically speaking, what implication does this have for your existing portfolio? >> returns are going to be a lot lower than what we are used to and we have to get our head around that. think about everything we can do to compensate, that means more active strategies with

investment managers, taking more illiquid positions, much just leveraging private equity or real estate, but real added value strategies to grow the portfolio and wealth of the people benefiting from an investment. it's much more dynamic, so we managed to hundred 50 billion australian dollars, we have to move the portfolio to develop overlays. we need to move the portfolio around, and how can you do that? we also think geopolitics is important and it's emerging as an issue, so for us, that means a bigger focus on more domestic exposure than what we have had in the past. the free-throw -- free flow of capital. >> the portfolio is sustaining

small losses. >> is becoming much tougher to invest, we can predict things but we are confident we have the right portfolio to deliver a mandate which is inflation plus four or five, we are confident we have the portfolio to do that over a longer time period. if markets correct quickly, if there is inflation with higher interest rates, corporate earnings are under attack from more populous policies and regulation. either markets will reprice quickly in which case we will take some losses, and returns will be better, or returns will be low for a long time and that's when the active strategies and hedge fund folios , venture capital investments will come to the fore. >> when you say the future fund is going to make more illiquid

investments, i translate that as a smaller allocations for public markets. >> that is true. >> you are somewhere close to about 40% if i'm not mistaken. >> we have 30% in equities, and liquid credit strategies. >> where you see that going? >> i think that's reducing. the days are ending. for a while we have had equity strategies that took some form of the index, that's becoming much harder. i think we need to get smarter again, we need to refresh our approach and look for those businesses that will be able to make money in the new world, and that will be tough. you can't just ride economic growth or capital wave, you have to create value.

haidi: the australian government future fund ceo speaking with bloomberg in los angeles. we are getting some lines from the rbn, speaking at a press conference saying fiscal policy is important as they face challenges ahead, saying it doesn't change the outlook and the fiscal policy is declining. we heard the climate change is a risk to financial stability, talking about the risks that come through from the aggressive tightening cycle the rbn has embarked on. he has spoken previously about the risk of a synchronized global recession as we get most of the central banks starting to tighten, saying there is no urgency.

vonnie: russia has avoided a default with dollar payments trickling through to investors. clearinghouses have processed some payments in 2022 and 2042. it had become tangled up in wide-ranging sanctions after the invasion of ukraine. the biden administration is taking steps towards the review of tariffs. domestic industries have been notified as the tariffs are set to expire in july but a request cannot be made on them to stay in place. they need to examine the tariff effect. a former fed vice chair the u.s.

will probably fall into a recession as the central bank combats inflation. he was speaking on a podcast where he said it's unlikely the fed will be able to manage a soft landing given high inflation, the intensity of inflation and high unemployment levels. he said the fed should have started tightening in september. the pakistan finance minister announced [indiscernible] the government did not announce a replacement or say when his successor would be announced. he was appointed by the previous government which had been led by -- 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'm vonnie quinn. shery:shery: this is bloomberg. coming up next, bernard loney discusses the volatility in oil markets after the energy giants

perform what he calls, exceptional. this is bloomberg. ♪

haidi: we are tracking the fallout of the global supply chain crimes. u.s. manufacturers are seeing

leadtime stretching to highs, an average of 100 days, the longest on record. the world's top fertilizer maker sees supply disruptions extending beyond 2022 is the industry continues to battle. a major usb packer says be full getting more expensive grocery stores in the months ahead, the cost of ground beef is just 18%. shery: take a look at the commodities space, reversing earlier gains. investors considering what going to happen later in the week. we know u.s. planting hit a nine year low. we are watching base metals, look at that retreat for commodities given there are concerns about chinese demand, covid lockdowns.

in the asian session, we are seeing a rebound for crude prices, though here in new york we saw a retreat. we have inventory coming up on wednesday, not to mention opec-plus is meeting again on thursday. bloomberg terminal users can read more in the newsletter. delving into oil, it's been whipsawed. lockdowns and china, supply concerns. opec member countries struggling to increase output. bernard loonie spoke to bloomberg. >> the oil markets are straightforward to resolve than gas markets, oil is a more global commodity and a lot of oil is provided on seaborne

cargo. it's a less challenging problem than natural gas, but it presents challenges. what we are seeing today are about one million barrels per day of russian crude off the market, that may double this month when sanctions come into effect and that's before the sanctions we are talking about right now. we have stocks around the world that are low, low which spare capacity and uncertainty whether it's with iran, libya, the global economy, zero covid. lots of uncertainty. if you step back, all of these things lead to a lot of volatility and we can expect that to continue, and at the same time, we can expect prices to remain strong for quite some time. haidi: bernard loonie speaking

to us earlier. next, a deal to make twitter private has not been done yet, but there is talk about elon musk taking it public again. we are bringing you the latest. this is bloomberg. ♪

haidi: let's take a look at some

movers. starbucks seeing gains despite suspending guidance on uncertainty with china, u.s. sales affect inflation worries, china woes. we are watching a different story with didi global, the pressure when it comes to chinese companies with sec investigations. they are also facing scrutiny in china over the 2021 listing. they cannot predict the timing outcome or consequences of such an investigation, you can see the uncertainty playing out. advanced micro soaring after an upbeat forecast, the outlook is

better than recent forecasts from rival intel. we have seen amd decline, maybe seeing a bit of lost ground there. we are watching twitter, the roller coaster ride continues. we are to learn more about the vision, must telling potential investors he could return to the public market. this is a report from dow jones saying musk is considering staging an ipo in as little as three years. su keenan joins us with the latest installment. there is already talk about another ipo. su: this is according to dow jones and noting mosque is telling investors that he plans to possibly return twitter to a public listing, launch an ipo in

as soon as three years. $54 billion deal is expected to close later this year, we are not seeing this move moving the stock, but of course, there has been a lot of focus on the financing of the deal, and it's closing later this year which is subject to financials holding up, approval of shareholders and regulators. we are also reporting various sources indicating musk is speaking to investors and private equity firms to shore up if not share financing for twitter, perhaps putting less of his own money at risk, doing it, we know he has shared some of these views that he did not care, then we heard he had some specific ideas for investors to cut jobs, cut costs.

he is sharing an idea that twitter would be launched in another ipo within three years after taking it private. shery: talking about the financing efforts, tell us more. su: there has been analysts and investors that were concerned that he pledged about half of his own assets in this deal to take over twitter, and in fact, he had guaranteed his tesla shares against the margin loan. in a lot of these talks, we are hearing the goal is to reduce exposure, reuters has reported that they are talking about preferred equity financing. shery: su keenan the latest. market opens our next. this is bloomberg. ♪

haidi: good morning on day two of the australia conference. shery: and from new york, i am shery ahn. welcome to "daybreak asia. " taking a look at top stories, a volatile session, investors waiting on whether the fed can engineer a soft landing. haidi: beijing goes to extreme

lengths. plus, didi global is under investigation in the u.s. adding to scrutiny over its ipo at home. shery: japanese equity markets are away on holiday, but we are -- we're seeing upside, 7/10 of 1%. take a look at the kospi coming online, we have seen the korean won very weak. remember, we are talking about levels we have not seen since the global financial crisis in 2008. the cost beginning a half a percent. i am watching what we might get

from the be ok because we have the meeting minutes coming up later in the afternoon. haidi: let's take a look as we continue to look at australia, traders and economists were caught off guard from the central bank and revision of inflation expectations, taking a look at the equities picture, a quarter of 1% higher. watching for yields as well. the 10 year yield is holding pretty steady as well close to 3.5. we did see the broader fall in the dollar, it's the hawkish and us that we are watching, the aussie kiwi after the hawkish

hike given the aussie dollar a fresh impetus. taking a look at u.s. futures, we had quite a bit of volatility , twist and turns are expected to continue, to we get the jumbo-sized hike and could markets be caught unaware? watching out for commentary from jay powell in the key press conference. we're seeing some gains, the demand story from china, gold holding steady going into the fed decision. watching developments when it comes to covid strategy, encouraging signs out of shanghai, cases falling below

5000 for the first time since april 1. we are seeing the trend coming through every day. beijing reporting 36 local cases , we are seeing a hard-core playbook strategy testing for most residents, indicting -- the may day holiday being closed as well. shery: we are focused on the fed, aggressive messaging around rate hikes. you see the 50 basis points hike is pretty much baked in, what

about a more aggressive one? kathleen: to an easy place to start because every fed official has opened the door if not endorsed at the meeting. $9 trillion balance sheet run off, more details and sense of when they will start, a lot of people say mid-may. we are looking at this expectation that investors have that there could be 50 basis point hikes today and the following two meetings, 290 basis points would be well above the rate the fed sees as neutral. the tone is so important. the bloomberg economics team says -- so far, the st. louis

fed said it could be an option if needed, is not his base case, the cleveland fed wants more methodical moves, does not favor the shock and all move, the chicago fed said three 50 point hikes look good right -- we go to the press conference, jay powell is not expected to close the door. if these looking for a methodical move, he is not likely to be in favor of that. he will be asked about the inflation outlook.

something that tightens policy is going to equal some rate hikes. it's a little bit technical. shery: we will keep an eye on numbers and beijing. as we continue to watch central-bank moves and markets pricing in aggressive rate hikes , we see this trend of higher bond yields.

always good to have you with us with rising, we have seen pressure on asian equities. where are you finding comfort? >> with regards to inflation numbers, they have outperformed.

throughout this year, the most important move is to think about how to position yourself if inflation is going to pay. when that's going to happen, we will have to see. shery: what is your base case scenario? treasury yields, how much pressure are we talking about? >> i will be eager to see

momentum coming through. we have to be careful to be well-positioned for rate increases and higher inflation, we might see a rapid shift.

>> supply chains are being choked up, economies have rests. if you did look at equity markets, stock markets are not economies. what happens in sectors, consumer data, premium's asian, and consumers are willing.

shery: always good having you on. vonnie: the biden administration is taking the first step on chinese imports. industries have been notified tariffs are set to expire in july. u.s. trade representative's office will need to examine the tariffs needs an effect.

almost 10 weeks into the war, we are told the kremlin. russia has avoided its first farm default. sources tell us major clearinghouses have received and the transfer has been received. 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. . shery: a conversation. beijing is sticking to a playbook to control covid as an agency downgrades its growth forecast. more on that next, this is bloomberg.

shery: european futures are trading higher after we saw stocks managing to hold onto some gains with volatile trading sessions in europe, the fed decision coming up trying to rebound in the afternoon -- after, math of the flash crash. we will watch stocks in european futures with the euro higher. when it comes to china, we are getting yet another downgrade. this time from fitch which says

gdp growth will slow to two ongoing covid lockdowns. let's bring in stephen engle. what are the key takeaways? >> 4.3% sounds pretty good considering the extent of the lockdowns with shanghai being on lockdown for more than five weeks and beijing worried about a potential lockdown. movements are being restricted in the capital. some cities have been completely lockdown and we have seen the spillover effect, factory shut down, supply chain constraints. this is the latest of a number of banks lowering the outlook, fitch had an outlook of 4.8% growth, they cut that down to

4.3%. barclays is 4.3%. they expect disruptions will be prolonged, fitch says is good b, zero covid strategy could last until next year. they do expect more policy support in the form of infrastructure spending, we heard the call last week with rising interest rate differentials that could potentially cut too quickly and too far see further exasperation. haidi: we see case numbers coming down and shanghai.

what you see in terms of the lockdown trend? >> this is a tricky case. as we highlighted, expect strict policy throughout the rest of the year and potentially through the leadership transition or party congress, new could expect this kind of zero-tolerance and potential lockdown that restrictions of people's movements and therefore spending through the rest of this year. even 53 cases yesterday reported and beijing warrants a very strict response from authorities because they do not want a repeat of what they saw and are currently seeing and shanghai. the number of new daily cases was below 6000, so we've had four straight days below 10,000,

that's a good sign. beijing has not hit triple digit numbers on a daily basis, but they are taking a cautious approach. you have to watch a day to day, does not look like any relaxation anytime soon. the northeast wasn't lockdown for a month. -- was in lockdown for a month. haidi: coming up next. [indiscernible]

shery: gains of 5% after the

u.s. market performed, china's sales plunged given the lockdown. we're watching china which gained 1% after estimates and the omicron variant causing havoc on second-quarter results. didi global plunging 7% after an inquiry on we are also watching twitter which held onto gains after elon musk planned to list twitter again within a few years reported by the dow jones. watching was happening to the stock. thanks shares opened higher after analyst estimates we spoke with the ceo earlier who told us

about higher inflation and higher interest rates. >> hopefully it changes the outlook. let's not forget in australia for 30 years we had rates falling. we are talking about a new world of inflation. what about customers. an extraordinary number of homeowners who are having the mortgage rate go up. there is a significant shift. some of that is good for banks, generally positive for margin outlooks. how will customers behave? what will the positives to? what will small businesses to? shery: that question of what consumers do is a big one when it comes to loan growth, its leg in that area.

mortgage processing capabilities, have you missed that window? >> we wish we had our act together in terms of processing, home loan applications. i want to make light of it. but if we think about it, rates are rising, and i am not so sure missing growth is such a bad thing. we have a large homeowner base and we want to make sure they are in the best possible shape to see the exchange, 70% are ahead on repayments, good cash balances. this is going to be a new world. little bit of share losses not idea. shery: what is keeping you awake at the moment? >> trying to understand what

will customers do? it sounds flippant but as i said, they have never lived through and inflationary period. if you are a homeowner, it's all new. we haven't seen the behavior. we have seen extraordinarily live it's -- little savings. are they going to put more money into savings or start spending more, because unemployment is low. there is lots of moving parts. it will come down to consumer behavior and how they are going to change their lives and that impacts banks, because we have seen a massive shift of people moving out of deposits and putting money into where people want cash flow because they are worried about the future. i don't know how that's going to change and we will keep a close eye on consumer behavior.

shery: coming up next, we will speak exclusively with australia's fastest growing cold company from the sidelines of the australia conference. don't miss it. this is bloomb vonnie: china is g

virus restrictions while aborting a full lockdown that's all 53 new cases on tuesday. beijing is restricting movements with authorities locking down some apartments and ordering another three rounds of mass testing. schools are suspending in-person classes. china growth forecasts are cut. they trimmed gdp estimates to

4.4% with economic activity contracted sharply due to virus restrictions. they expect disruptions to use and cited persistent risk due to covid zero policies. a former fed vice chair says the u.s. will probably fall into a recession as the central bank combats inflation. he was speaking on a podcast where he said it was unlikely the fed would be able to manage a soft landing given high inflation and high unemployment levels. he said the fed should have started tightening it september. a finance minister has announced a three-year term will expire. the government did not announce a replacement or say when the successor would be announced. it comes amid an economic crisis in pakistan. he was appointed by the previous government. 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: pmi numbers out of indonesia, 51.7 in april. second consecutive month in expansion territory. take a look at indonesia, manufacturing coming in at 51.9, slight acceleration. broadly speaking we have seen asian factories numbers coming in pretty good weathering the impact on global supply chains because of lockdowns. vietnam and indonesia are in expansionary territory. shery: we continue to see oscillations and pricing

continuing to shift in the wake of the hawkish hike yesterday, we're hearing from goldman sachs seeing that cash trade at 2.6% by 2022, also seeing hikes by 50 basis points in june and july, that is in contrast with previous expectations. all the expectations are for softer levels of tightening, out the window, looking at 50 basis points in june and july after the rba surprised investors and traders by moving forward with 25 basis moves yesterday, and saying he was frankly embarrassed by saying closer to the pandemic period, they did not expect rates to move until 2024. that's clearly been a huge shift. we're seeing repricing across

the markets in terms of rba expectations. the three-year is crashing to 3% in australia for the first time in eight years. shery: monetary policy is top of mind for commodity investors, gold is swinging ahead of the fed reserve meeting. we are seeing 50 basis points, 75 is not off the table. investor sentiment is turning increasingly bearish on the hawkish fed expectations and just how aggressive they will have to be to tame inflation. let's bring in our next guest at the australia conference. he is a managing director at a mining company. like to have you with us. the changing expectations, when we spoke to you last year you said the expectation is why you are continuing to be bullish on gold. how has that changed?

>> has not changed. we are seeing increases in interest rates and also high inflation. i'm seeing a short-term issue around equity markets in terms of the medium to long-term, that should still be good looking at the historical situation. there are expectations that will be lower. i think physical demand for gold is still high, i think we need to see this watch through a little bit to see what demands look like over the next couple of months. one month ago, physical demand was still high. haidi: give us an update on the

project. what has been the progress? >> fantastic. we are looking at gold production it's a once in a generation discovery and we are excited. shery: attracting more big investors, you are partnering with other investors. >> we will be doing more marketing globally. we will be going out for

shareholders and other funds and demonstrating the quality of the project. investors drift towards quality. shery: i any other projects you are looking at when prices are high? >> we have a business development arm that looks at opportunities as opposed to mergers and acquisitions, put it that way. haidi: a long background. in your view does it feel like the start of the new super cycle? >> that's interesting. i've been talking about this, raw commodities are going to be

valued highly. whether that's agricultural products or mining products, real products are valued highly. haidi: is there enough capital raising and exploration? >> as we have seen, expectations are relatively low and we will see demand for products such as copper and nickel, physical demand for gold, that the men has to be there. mining is going to have to meet it. there will be funding. haidi: what does that change mean going into the future? >> tickets around freedom of movement of labor is probably

the biggest thing the industries need. we need to see labor moving freely so we have people available. haidi: great to catch up with you. our conversations will continue at the conference. we will round up these chats around the commodity super cycle and whether the demand and supply dynamic is going to change given what we are seeing in eastern europe and china. shery: we continue to watch market moves, the kospi up for tense of 1%. -- 4/10 of 1%.

futures trading in singapore is gaining ground. this is at a time where we are headed towards the fed rate decision, 50 points priced in, we were expecting some volatile trading with kiwi stocks up to tens of 1%. we continue to see the japanese yen weaker at the 130 level against the u.s. dollar. russia avoids a default. we will get the details next. this is bloomberg. ♪

shery: russia sidestepped its first default in a century after dipping into dollar holdings to make payments on bonds. let's bring in bruce einhorn. it seems like for now, money is getting through, but what is next? reporter: the important words there are for now. this bond payment has gone through, $600 million. there is another deadline coming up at the end of the month, more payments due then. the big question is whether those will be allowed to go forward because there is a u.s. treasury department exemption

that allows bondholders to receive payments. that expires on may 25 and then there is several more payments to -- there might be a workaround. going to be a complicated situation in the weeks ahead. haidi: the broad exemption, how was that likely to change pressure on russia? reporter: we don't know.

there is a debate going on whether it's better to allow russia to make payments in dollars that would then drain foreign currency reserves or not allow it and potential force russia into a default which would have long-range implications. it's unclear. we will have to see. haidi: let's take a look at what we are seeing when it comes to oil, the dynamic when it comes to supply and demand is challenged by lockdowns in china, we heard beijing closing subway stations from wednesday onwards as they take these.

let's get more on energy markets, elizabeth, watching these measures. >> in the near term, the oil market, we are looking at a small rebound. just to take a look at where we are, oil is heavily influenced

by russia at the moment. the u.s. and u.k. are banning russian crude. especially after they cut off gas supplies. definitely more pressure right now. we are seeing increasing evidence that traders are avoiding russian oil. that is going to have a major impact on fruit. -- food. shery: sophie: any help coming from opec-plus? >> it's going to be interesting. we are seeing more evidence that the opec cartel is feeling to increase up -- output, we have seen a substantial boost while libya and nigeria have flatlined

in saudi arabia has not hiked as much as permitted. i think the expectation is there will be an established plan which is increasing oil markets it seems. shery: the bp ceo spoke to bloomberg about the volatility after what he called exceptional results. >> the oil markets are more straightforward than the gas markets. oil is a global commodity and those cargoes of oil provide seaborne cargo. it's a less challenging problem the natural gas but nonetheless presents challenges.

what we have seen are about one million barrels per day of russian crude off the market, that may double this month when sanctions come into effect, that's before the sanctions we are talking about right now. we have got low-ish stocks around the world, capacity, and a lot of uncertainty in the market quite frankly, whether it's with iran, libya, the global economy, zero covid. lots of uncertainty. if you step back and say all of these things lead to a lot of volatility, we can expect that volatility to continue, and as the same time, expect prices to remain strong for quite some time. haidi: coming up next, hong kong restrictions weighing on the city's economy.

the details and outlook next, this is bloomberg. ♪

haidi: quick check of the latest business flash headlines. demand for allied boom amid a sharp run-up in share prices. net profit surged $1.3 billion beating analyst estimates. the company announced each share has a face value of 10 rupees will be split into 10. airbnb has posted first quarter sales and a second quarter forecast. the company see substantial demand. second-quarter revenue is forecast at $2 billion. starbucks missed estimates. rising inflation and china covid

measures. starbucks is focusing on its u.s. business. estee lauder shares slumped and slash their forecast for the year. it's also cut its expectations. one analyst described it as catastrophic. shery: hong kong economy contracted last quarter for the first time in more than a year as local restrictions to curb covid head activity and the mainland outbreak disrupted trade. sophia joins us now. despite gdp numbers, which are backward looking, we have seen markets continue to hold onto

gains a little bit with the hang seng. what are we expecting today? >> the gdp print was far worse than expected. 4% contraction is pretty severe. it does explain the pivot, we had an announcement yesterday from carrie lam that some internal restrictions will be softer than expected. it's a city that realizes when tour is consumer spending -- we are seeing gains in hong kong, the sec investigation may have an impact on sentiment, but it's not a surprise. this company faced a lawsuit from investors that said the company misled them.

an investigation into the ipo and preceding is not a surprise, this is a company that is under investigation on the chinese side which is where the concern is. haidi: lots of complications when it comes to the listing. what does this mean in terms of broader implications when we get the reopening of trade, particular for china tech? there is no alleviation yet. >> there is still some confusion over exactly what regulators plan to do. it was announced last week that we saw the huge gain on friday. it's a likes of alibaba, tencent, jd.com, these big firms

will play a significant role in boosting economic growth this year. this should be read positively, we need to see a follow-through. what does this mean? there have been some reports that some regulators will meet with top executives from the sector this week. we still do not have any details. it's all about details. haidi: time to get a look at the stocks that are moving. we're watching chip.com, hsbc and focus after plans for a stock buyback. some of these touristy names are in focus as well as we look at the impact of those gdp numbers, given we have seen a lack of

tourism, the reopening story could be at play after we see the announcement of more covid restrictions on thursday. watching some of those, for example. ♪

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>> the more issues there are four people, that is beneficial. i focus on controlling the things that i can. david: mark is a champion in investing and basketball. mark: when you are investing, you control a lot more things. on a basque well court you cannot control whether someone is going to make a shot. you have to get lucky.