♪ haidi: very good morning. welcome to "daybreak australia." annabelle: we are counting down to asia's major market opens. shery: jamie dimon one's investors to brace for increased economic turmoil with unprecedented challenges from russia's invasion of ukraine. >> it is a hurricane. that hurricane is right out there on the road coming our way. >> we will be speaking with the national security council senior director for europe. shery: and china orders state-owned banks to offer a

$120,000 credit line to stimulate the economy. we have the likes of big tech names leading declines. we already heard from morgan stanley, and that really sent pressured on the markets. we also had treasury yields continuing to climb with the short and really leading gains, very sensitive to policy. wti under pressure in the asian session under well. we have seen this rise but paring back gains slightly. we heard from the biden administration that they will continue to engage with oil producer saudi arabia. of course, we have in watching those economic numbers out today. take a look at this chart on the bloomberg showing you prices paid by manufacturers. starting to ease a little bit, but today's numbers work a strong. we talked about manufacturing

data meeting expectation, not to mention that job openings were pretty high. we had a little bit of a slowdown when it comes to the pace of economic growth from the fed beige book survey, though. haidi: it certainly does determine where we see the dollar going. the bloomberg dollar index rising for a second session. it certainly does put the yen in focus, particularly with a thriving treasury yield, so we are seeing that 130 level back in focus, the weakest we have seen the japanese currency in three weeks. bank of america saying we could see the 140 level soon. the aussie-yen is trading currently flat, but that cross is particularly interesting at the moment. some strategists say it is a good play and that the rally in

riskier assets will continue. flipping the board with futures coming online and we are seeing japan pointing to further gains. we did see japan close to a six-week high in the last session. estrella coming online in another hour or so. new zealand, though, coming on flat. haidi: we are also processing some of these comments from jamie dimon warning of an economic hurricane. he's talking about the bank underweight when it comes to preparedness for these challenges, saying that the -- saying it is still too soon to know how intense the storm will be but the hurricane is right there down the road coming our way we get better brace ourselves. we heard from investors back in may that he said there were storm clouds, but certainly the rhetoric over the amount of risk

in the economy right now is intensifying. shery: strategist now saying the u.s. market outlook is still positive. we are talking about the market already having absorbed and priced in aggressive fed policy. the s&p 500 remaining unchanged for this year. in a note to clients, the strategist saying that there will be no recession given the support coming from u.s. consumers with the post-covid recovery, not to mention chinese consumers. but concerns continue not only because of the state of the economy, the state of data we are getting out there, but also because we have geopolitical tensions. president biden announcing a new security assistance package for ukraine that includes longer-range rocket launchers.

russia says the move will escalate the war that is now in its fourth month. the senior director for europe and special assistant to the president amanda sloane joins us. it is great to have you with us. thank you very much for your kind. just start off by giving us an assessment of the rollout of this new system. our understanding from the pentagon is that it will take three weeks to train ukrainians, two weeks for the training on how to maintain them to continue. i guess the question is when we are already in the fourth month of war, is the package coming in a little too late? >> thank you very much for having me. as you said, the pentagon gave significant details today about the announcement of the new security systems the united states is providing to ukraine, including these higher precision, more targeted weapons systems. you are correct that these new systems require a training

period with the ukrainians, but that is not to imply that the ukrainians do not have weapons. the united states has been providing weapons to ukraine over the first year of the administration before the conflict began, and we have an actively providing them with security assistance every day since the war started. that security assistance continues to flow another country and wooding howitzers, ammunition, other types of equipment that they need to continue fighting on the battlefield. what is unique about the assistance announced today is it is an additional tool in the arsenal the ukrainians have, but it will be supplementing what they already have in place. shery: we were wondering if there is a pledge they will not be striking within russia, why not provide them with longer-range munitions that would make it easier to really counter the russian attack and invasion? >> we have been responding

throughout the crisis to the requests we have been getting from the ukrainians, including their assessment of the type of equipment they need. it is important to remember that russia has invaded ukraine. russia is prosecuting this battle on sovereign ukrainian territory, so we believe that by giving the ukrainians these types of weapons, which do have up to a 50-mile caliber, as you said, it will enable ukrainians to be more effective at pushing back russian advances, particularly as the fight has moved to the east and south of the country. haidi: what sort of request do you expect at this point in the war for ukraine? what sort of weaponry will we be looking at for this next stage? >> as you know, congress recently appropriated $40 million in supplemental funding to the administration. this is the first tranche of

security assistance coming out of this new package of assistance we got out of congress with very strong bipartisan support. given the generosity of congress as well as the american people, we now have a significant amount of funding that will enable us to continue providing ukraine with weapons and security assistance that we need. our government at multiple levels remains in constant contact with ukrainians, including the military, to get their assessment of the situation on the ground, their assessment of the type of weapons that they need, so our assessment is we will continue rolling out additional tranches of security assistance for the foreseeable future to enable ukrainians to continue defending their country against russian advances. >> we know russia is still raking in billions from commodities, energy, crude revenue, to the tune of $800 million a day, and those are still fueling their war efforts. what can be done to try to put further pressure that will be

meaningful there? >> as you know, several weeks ago, the united states took the decision to cut off russian exports of energy to the united states. that was something we were able to do here in the u.s. because of our own diversification of energy supplies. this week, we saw the european union take a decision to cut off up to percent of its import of russian energy, so this is a significant step from our european partners that will continue limiting the amount of revenue that russia is able to accrue from its sale of energy. the european union also introduced an additional tranche of sanctions as part of its package this week. the united states is continuing to review additional packages and will continue to roll further measures as we have over the last number of months since this conflict began. shery: we have seen the recent

departure of the deputy national, and sources suggest we are seeing a little more struggling within the administration as well on how to deal with these sanctions with russia. give us a sense of how much common ground there is within the administration and also in voicing what the administration wants to see from allies abroad. >> i would defuse the characterization of any letting up within the administration on sanctions. we continue to have a very robust team continuing to work actively within the united states administration as well as in close consultation with our european and g-7 partners. as i mentioned, the eu rolled out a robust sanctions package this week, which included a ban on russian energy imports, and we continue to consult mostly with our partners, both on our own sanctions efforts as well as

what we want to see the broader international community due to continue to impose cost on russia for its aggression in ukraine. shery: it was really good to have you on air. thank you very much for joining us. let's now get over to su keenan with first word headlines. su: we start with the latest. bloomberg has been told eu efforts to approve a partial ban on russian oil imports have been -- have faced obstacles. authorities may meet again in luxembourg on thursday to try to greenlight the bill. the bloc is set to ban as much as 90% of russian crude oil by years end.

the european commissioner told bloomberg that russia is currently selling oil to china at a 75% discount. >> what we are seeing, especially in this situation of russia's witnesses, china is going to take advantage of this, and it will not be very advantageous for russia. su: two china now, state-owned banks have set up a $120 billion credit line for infrastructure projects. the government is leaning on construction to help boost its economy, which has been beaten down by covid lockdowns. bloomberg's estimates china's estimate -- china's infrastructure spending last year at around $300 million.

since february, most mildly affected patients have been allowed to isolate at home. global news on the air and on bloomberg quicktake 24 hours a day powered by 2700 journalists and analysts in over 120 countries. haidi: the world's lago investment institute says recession is now the base case for the end of the year and early 2023. this is bloomberg. ♪

>> it is a hurricane. right now, things are kind of sunny. everyone thinks the fed can handle this. that hurricane is right out there down the road coming our way. we just don't know if it is a minor one or superstorm sandy or

andrew or something like that. you've got to brace yourself. haidi: jp morgan ceo jamie dimon warning of what he calls an economic hurricane to come. take a look at futures at the moment. not much of anything when it comes to s&p futures. pretty flat. we are expecting a bit of a jump in asia in the thursday session. we do have, of course, a lot of mortgage messages from corporate leaders, central banks, other big banks as well really wanting to amplify the alarm bells over inflation. let's bring in our next guest who says the base case for a recession is starting at the end of this year, and that is looking more likely. with us now, the head of global asset strategy at wells fargo investment. great to have you with us. it does really feel like a

confluence of negative factors at the moment tilting. what is most worrying to you, and how are you changing your strategy to best prepare? >> we have been hearing a lot about the strong consumer and robust data coming out. we think more importantly, investors need to keep their eyes on the high-frequency data. that is rolling over fast. consumer purchasing power is weakening. we are seeing layoffs just starting to rise. we do think that we are on the cusp of what we think is a turning point where the data is still coming in pretty strong, but the high-frequency data is

starting to roll over, so we do see a rising probability of recession in the second half of this year, potentially persisting into 2023 as the fed continues to battle inflation. haidi: of course, the other thing we are contending with which, to be fair, has been very well flagged, the balance sheet runoff. take a look at what the new york fed is expecting that to look like. they are projecting the balance sheet will fall by an average of 80 million per month. how much has this truly been priced in, or do you expect that to have an impact? >> we do think it will still have an impact. we think the expectation right now for 50-basis-point entry -- increase in june and another in july is already in markets, but the impact of quantitative tightening starting to roll off

the fed balance sheet this month is really untested and unprecedented. we did have one short period back in 2018 where the fed started rolling off its own balance sheet, but that was quickly halted, so we don't really have a good precedent for this. our guess is that it is probably not fully priced in the market. shery: with all of that uncertainty here in the u.s., where do you go globally? this chart on the bloomberg showing help global estimates have already been revised down. this morning, we heard from citi analyst that we could see some more cuts. >> that is correct. we think the worst of this downturn market correction globally is probably not over yet. if we are right and we are headed into a recession, then we could see more downside this

year before we potentially start to climb out of the downturn possibly at the end of the year. we are favoring u.s. over international, so we really are moving our assets towards those higher quality areas of the market like large caps and mid-caps within sectors like health care, energy, technology. shery: good to have you with us. wells fargo investment institute's head of global asset allocation strategy. p next, sheryl sandberg is stepping down as chief operating officer of meta. we will assess her legacy next. ♪

>> a decision i did not come too lightly, but it has been for team years. it has been 14 years. i wanted to make room to do more philosophically. make room in areas i have not done nearly as much as i want to recently. it really feels like a very important moment. shery: sheryl sandberg they're speaking exclusively to bloomberg earlier. as you just mentioned, she is stepping down after 14 years as coo of meta. throughout 14 years, her profile has grown. she is one of the most public-facing people from meta,

apart from mark zuckerberg. what will her legacy be? >> i think this kind of two parts to this. on the one hand, she built this business, right? she joined facebook will -- joined facebook in 2008 when it was a very small company, did not have any ad revenue. now it is one of the most dominant companies in the world and i think she should get a lot of reddit for that. at the same time, when you look at the issues facebook has run into over the past few years, a lot of things its business has simply struggled with are also on her plate. i see a bit of a mixed bag today. there's people who acknowledge what she has done from a business standpoint and there are people who are very critical, of course, of what that legacy is for facebook in particular. it is not super clear.

time might have to pass a little bit before we look back and know which one will stick. haidi: what else will she do after this? >> she says she wants to focus on length her lean in foundation, an advocate for different women's issues. that was something she wanted to talk about, and she has had some big moments come up in her personal life, too. she is getting married this summer. she's looking forward to having time to kind of live in the way that i think a lot of us get to that when you are coo of a company like facebook, it is such an all-consuming job, i'm not sure historically she has had as much free time for those types of things. she really does make it seem like this is a personal decision for her to spend more time to do family-related things. haidi: kurt wagner there with

the latest on mena -- meta. a new managing director has been named for the asf. we have confirmation after reports it would be announced after that four-month international. she joined in 2020 and was promoted through the ranks. we are expecting the current office holder to stay until july 2022. he intends to retire after the transition through the end of september. more to come on "daybreak australia." this is bloomberg. ♪

su: jp morgan ceo jamie dimon telling investors to prepare for an economic hurricane as the economy struggles against an unprecedented combination of challenges including tightening monetary policy and the war in ukraine. he cited the strength of the consumer, rising wages, and job growth as bright clouds, but he says the central bank is bracing for turbulence by tightening its balance sheet. >> right now it is sunny, things are doing fine, everyone thinks the fed can handle this. that hurricane is out there right down the road coming our way. we just don't know if it is a minor one or superstorm sandy or andrew or something like that, and you've got to brace yourself.

su: president biden is prepared to give ukraine missile systems. moscow has called it increased aggression. the bank of canada has raised its rate by 50 basis points for a second time. i hawkish statement indicates that policymakers are considering a faster pace of tightening. two-year notes traded near the highest since 2008. a widely watched celebrity court case has ended with a virginia jury awarding johnny depp or than $10 million in his libel lawsuit against ex-wife amber heard. jurors agreed her fabricated

claims -- jurors agreed heard fabricated claims about their relationship. heard it says she is disappointed for herself as well as for other women. i'm su keenan. this is bloomberg. haidi: bloomberg has been told that eu efforts to approve a partial ban on russian oil imports have hit an obstacle with hungry. the eu top trade official told us china will take advantage of russia's need to diversify its energy markets. >> they need to continue to support ukraine, but we need to continue to put pressure against russia to stop its aggression.

finally, there was agreement on a sanctions package. it is important, and it needs major steps like an oil embargo. at the end of the year, it will be 90% less imports of russian oil. it is a substantial package, so we need to continue this pressure to support ukraine and continue pressure against russia. >> do you have any internal calculation in terms of the economic damage it will do to russia? a lot of this is about preventing them from funding the war, to be in a position where they do not have the financial means to continue to push on the battlefield. do you have any estimate in terms of the actual impact it could have? >> indeed.

62% of russia's exports to the eu were fossil fuels. we have already banned coal imports. now we are pretty much banning all imports, so we are getting to the heart of financing putin's war machine. also, the other measures related to other russian banks, they will have a substantial impact on russia's economy. >> you mentioned coal, than oil, and the way the european union hinted is that the final step would be gas. are we going to see sanctions on gas, which is seen as the big geopolitical weapon in the russian federation? >> is the european commission has said he consistently, all options are on the table, so we are not excluding anything, but it also must be said that

regardless of sanctions, the strategic decision to move away from dependency on russian fossil fuels is already taken, and there is already a plan in place to describe how we will be doing this, including rapid phaseout of our dependency on russian gas. >> you believe this war will trigger an end as -- and end for russia hasn't -- as a global energy player. >> it is going to be the end of energy relations in this form between russia and the eu, obviously. the eu is not the only buyer in the world market, so russia will be seeking alternative markets for its energy. right now, we are seeing they

are selling their oil at some 30%, 35 percent discount. >> the market is also paying attention to that and predicting more discounts will happen after the announcement yesterday. ultimately, it is not a good deal for russia even if they turn to india or china. even if they get chinese buyers, this is not a good deal. they are going to lose money. >> of course. russia has emphasized increasing supplies to china, but what we are seeing, especially in the situation of russia's weaknesses, china is going to take good advantage of this, and it will not be very evident ageist -- very advantageous for russia. haidi: china doubling down on xi

jinping's calls for more spending, urging policy banks to lend more to projects to boost consumption. for the latest, let's bring in our chief north asian correspondent, stephen engle, from hong kong. what is being earmarked right now for roads, railways, bridges, and the like? stephen: it is the old playbook, isn't it? for a decade, they have been relying on the old playbook of loading infrastructure. that's roads, railways, bridges, airports, ports, and the like, and also because it creates jobs. when there are few other growth drivers, including the consumer, and the internet platform companies have been under regulatory pressure, go to that old playbook. a number of different meetings, and number of different leaders have been pushing for infrastructure. the latest is the state council, chaired by the premier.

he is ordering state-owned policy banks to set up an 800 billion yuan -- that's 120 billion u.s. dollars -- special line of credit and urging banks to lend, but that puts a lot of onus on these local government financing vehicles to have faster implementation of the policy push for more infrastructure spending. there was also more lip service paid to the platform economy, platform companies, encouraging them to again list locally, list overseas, but again the lack of specifics this kind of making these platform companies and the platform economy a little begun shy, given the zero covid uncertainty around the country. infrastructure is the old playbook and what the government is leaning on right now to stimulate at least short-term growth.

haidi: what does it mean if they are now under pressure to spend? does that mean deleveraging just gets kicked down the road? stephen: kicked down the road. kick that can down the road. i have seen these cycles so many times. essentially, if you are a local government official at the top of the food chain in a province, you are being given orders to stimulate, get growth, get growth, get growth right now. the premier essentially within the last week has said in the second quarter, we have to produce growth, even though most economists say the second quarter will produce a contraction because of all the lockdowns and the lack of economic activity. the latest high-frequency data indicates the slowdown continues in may, so that is a dilemma at the local government level. how do you produce growth while at the same time as well reduce

those levels of hidden debt at the local government financing vehicle, and at the same time, by the way, control covid? it is an impossible task, and that is where we heard from insiders within china say there is a bit of policy implementation paralysis. at the end of the day, you have to deliver growth. that is your main metric. shery: our chief asia correspondent stephen engle there with us. china top of mind when it comes to the growing influence across in particular the pacific region. we know that this is a key focus for the australian government that talked about kind of needing to go into damage control and makeup lost ground. given on one hand the deterioration of canberra's relationship with beijing, but also the inroads that beijing has made within an area that is

considered australia's own backyard -- to that end, we have seen the new foreign minister really within hours of being sworn in flying out to the quad to have these discussions and then flying out to the pacific to hold these talks with some of our regional partners, but we are also seeing her now do a second trip after that trip to fiji to try to counter the trip from the chinese foreign minister to pacific island countries. this is a huge issue. we saw the proposed security trade deal at least scrapped for now, suggesting canberra's influence may be changing. shery: really interesting to see how australia is reacting to china's growing influence in the region. really, the tone also set by the fact that the premier did send his congratulations to the new

government, but the response has not been on's kind. it will set the tone for the next few years -- the response has not been in kind. it will set the tone for the next few years. coming up next, we continue to watch the economy, especially with the fed starting to shrink its balance sheet. we will discuss the outlook. this is bloomberg. ♪

>> attitudes are more balanced today, but when there's euphoria , there's optimism, greed, risk tolerance, and so forth, that's a very difficult climate for the value investor to find bargains. now the prospective returns on many asset classes are higher than they were just a little while ago and again, a much better climate for the markets. shery: it is time now for morning calls ahead of the asian trading day.

another well-known investor this time seeing market opportunities. what is this about? annabelle: that's right. similar to what howard marks was saying there, the carlisle ceo also seeing less liquidity. he thinks the momentum trade, that is now gone. that means we are back to fundamentals, back to real growth. these comments did come the same day as jamie dimon warned investors to prepare for what he calls an economic hurricane, but again, the carlisle ceo is fairly upbeat, so he's looking for opportunities across the energy transition and economies around the world continue the decoupling process. carlisle has been diversifying away from what has been an historical reliance on fees to generate profit, and that set the company up in pretty good shape if we do start to see a recessionary environment, but again, the ceo nearly optimistic

. he's really saying we should not be underestimating the strength of the u.s. consumer. haidi: bank of america still also -- bank of america also still upbeat about u.s. consumers. annabelle: you are saying the u.s. consumer is resilient in the face of high inflation and rising risk. there's a couple of factors they are looking at. first is the amount that consumers have in their check hour savings accounts. this is around 15,000 dollars today, 40% higher than what it was pre-pandemic and also 8% higher on the year as well. another factor they are watching is unsecured debt. consumers pulling around $7,000 -- consumers holding around $7,000 of unsecured debt, less than it was pre-pandemic by the -- to the tune of about 13%. shery: a lot of firepower there.

annabelle with the latest couple of positive morning calls. the central bank has started to shrink its eight $9 trillion balance sheet. it comes as the beige book shows a weakening pace of growth. we continue to see the uncertainty over what happens when you have a shrinking balance sheet, and hike of interest rates, but at the same time, perhaps a little bit of a slowdown when it comes to anecdotal evidence coming from the beige book. could this signal that a pause could be on the table for the fed? >> i think it will still be quite some time before we see a pause with the fed. with the beige book showed was that there was a deceleration in growth but not a decline in growth. really, it was a second

derivative sort of thing. what i think that -- i think the fed will be encouraged by this, but it will be quite some time before you get to the point where they will feel the inflation is wrung out of the system. there's positive news in beige book as well about some softening of the pricing disputes. there's nothing in this book that will encourage the fed to make a pause any time soon. we are still looking at multiple 50-basis-point raises for some time. shery: we have the manufacturing activity data, job openings as well. how are we setting up for friday's payroll numbers? >> kind of white-knuckling that one. the tea leaves are very muddled,

if you will. in the united states, it seems there's a slowing in the rate of growth in hiring. more so in services, less so in manufacturing. we also have a lot of anecdotal evidence of companies starting to lay off workers, so that should have some effect on it, but still, the beige book is telling me we still have ongoing economic growth. it's just i think we will see them more down in the 300 level -- 300,000 level. a decline from where we were before. i think we still have some economic strength continuing. haidi: you hear about the optimism that once again the u.s. consumer is going to save the day. we are going into summertime driving season, and i'm just looking at these gasoline prices

rise and the fact that we are seeing inventory's kind of getting crushed. how much does that really impact households and their ability to keep propping up their side of the bargain? >> i think you will see households continuing to spend, but what they are -- what will change is what they will spend it on. clearly, gasoline prices like this and other fuel prices are going to take a larger share of the budget. you may see consumers taking shorter vacations or vacations closer to home. we heard staycations a few years ago as a theme. we might see more of that this year. there's definitely evidence that consumers are trading off one for the other of certain consumer goods that they were buying. they will continue to spend.

the economic effect will still be the same, but we are going to see the long-term effect on companies like the retailers, we saw the reports from walmart and target sending a signal that households are really reallocating what they are spending. haidi: you can watch us live and see our past interviews on our interactive tv function and dive into any of the security -- any of the securities in the bloomberg functions we talk about. this is bloomberg. ♪

shery: here's a quick check of the latest business flash headlines. sheryl sandberg is stepping down as chief operating officer of meta platforms. she joined facebook in 2008 and became one of the most recognized figures in start up business. she will remain on the board. >> this was a decision that i made that i did not come too lightly. it really is about how i will spend my time. i believe in the company as much as i ever did, and i really have

confidence and i think they will do a great job building the future. for a company that is a huge part of my life and a huge part of my heart. shery: the first female to lead the $16 billion equity market operator has been named to replace the current ceo, dominic stephens. lofthouse joined in 2016. she will start her new role on august 1. haidi: even as we have that real milestone for that asset, we continue to get the data that takes a look at the institutional bias, particularly across the finance industry and particularly when it comes to the appointments and elevation of women and other minorities. the latest data shows that far fewer women than men are promoted across the industry

unless they ask for it, so they need to ask for that seniority. what we see is that 76% of men were offered a promotion at least once without asking for it. 57% of women in the same situation according to the data we see from other asset managers. shery: we have seen the latest changes at agl because of its coal-fired plant, and this is reverberating across the sector, but coming up, dalton investments chairman joins us to explain why she sees japan as being a ridiculously cheap market. this is bloomberg. ♪ the next generation in global secure networking from comcast business.

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