haidi: welcome to daybreak australia. i'm haidi stroud watts >> in sydney. >>we are counting down to asia's major market open. shery: i'm shery ahn. the top stories this hour -- saudi arabia raises oil prices by more than expected. the u.s. may allow more a radiant oil into the market. haidi: president joe biden's commerce chief says it may make sense to -- shery: asian stocks are expected to see a cautious open after the u.s. jobs report. take a look at u.s. futures. this after the s&p 500 lost

ground for an eight week in the nine. we continue to resume those losses. we have the nasdaq 100 being dragged down, losing more than one person. it did not help that elon musk came out and said he had super bad feelings about the economy. this report after wti touched $120 a barrel. we are continuing to see that rally in the asian session. not to mention we had the saudi arabia news, raising prices for asia and we are seeing more of a demand rebound given that economies are coming back online and reopening after covid lockdowns. we are seeing treasuries extending the losses and heading toward the 3% threshold on a 10 year, psychologically important. we are watching main cpi numbers this week. that will determine what the treasury market does. we are watching the jobs report

on friday. we have those numbers topping estimates. when it came to the average hourly earnings, they rose less than expected so perhaps an indication the fed may not have to tighten so fast, so a little more optimism that we could have that coveted soft tissue landing. annabelle: that is still in debate among investors but it does seem the fed can continue with its pace of tightening, setting us up for risk off trading. fx 200 futures looking low. you mentioned those lawn -- those lunches that -- those losses on friday. fx -- the dollar trading in a tight range. we are seeing the yen hold on to the 130 level. some strategists out there are saying we won't see that 130

five handle. the aussie dollar little changed, that we have seen it on a three week rally against the greenback. the pace of trading is the rba cities -- rba decision tomorrow. haidi: very aggressive market pricing as you can see on this chart. we are looking at the third back to back rate hike from the rba in about 12 years and it comes against a difficult economic backdrop. we've seen the resiliency coming out of lockdown and at the same time, we are seeing inflation starting to pressure and wage pressures in contention, the new government pushing for a minimum wage increase to get that up and again, we do see this property market weaken. there is yet more scope and you can see it is looking very aggressive. shery: wages are very important for what the fed does in the u.s.. it did slow down from that

breakneck pace we did see during the pandemic but we are seeing a recovery when it comes to black americans participation in the labor force. these people were the most hit during the pandemic, so experiencing high rates of unemployment in the u.s.. black americans either looking for a job or employed rose to 63% of the total, which is above the level of the overall population for the first time in 50 years, so a little good news on that front. haidi: that is some great news when you dive into the data points. all lot of aussies looking for aspects they can try to leave yet. gina raimondo say it may make sense to -- >> we have decided to keep some of those tariffs because we need to protect the american workers and we need to protect our steel

industry. that's a matter of national security. there are other products, household goods, etc., and it may make sense. haidi: let's get the details from jean chan. tell us more about those comments because it comes on the back of the conversation starting about tariff removal. >> good morning. the trump era tariffs have been in focus over the last couple months. what gina raimondo is saying is it could make sense to lift some of those duties just because of inflation rising. this is one of the biggest challenges for the biden administration. some of those tariffs could help companies who rely on those

goods to manufacture different products. shery: how much will it help? we continue to see covid lockdowns across china and we see conflicting information when it comes to administration officials not committing straightaway to lift these tariffs. >> that's right. there's no real consensus yet on the issue. janet yellen, the treasury secretary said the u.s. would be open to rolling back some of the tariffs but then again, the u.s. trade representatives have said -- it depends on what the biden administration ends up deciding to do. illuminating a range of duties could cut inflation by 1.3 percentage points. shery: the latest there when it comes to those potential tariffs

being lifted. a course it does not help at the inflation picture as we see oil prices gaining ground. in the asian trading session, saudi arabia raising oil prices for asia more than expected. the u.s. may allow more irani and oil onto the global market. let's get the latest from su keenan. officials trying their best to get more oil into the markets right now. >> they believe they u.s. may allow a little oil on the market from iran even while a deal is being worked out because they need to keep this tight market well oiled, so to speak, to keep prices down. the focus is turning to saudi arabia. they are the world's biggest oil exporter, so what they do and say seriously impacts prices. they raised oil prices for asia by more than expected and this

is being done as asia eases its covid-19 restrictions, helping boost man. it also resumes a streak of price hikes that started in february. the streak was only broken when aramco cut prices a month ago. prices soaring on this, brent crude, by the way, had hit, closed below 120. so they have already soared up to their highs. over the past year, we've seen oil prices well up over 50 percent as there has been less oil on the markets because of the sanctions on russia after it invaded ukraine. there've been the restrictions that have reduced demand in asia and those are just starting to come out. there's a big focus on price and as one trader said, there's never been a wider expectation of where prices could go from

here. one top analyst saying prices remained important as energy traders have what they are calling in opec-plus hangover. there was an expectation that they would hike by a little more than expected and continued with their modest increases, so the market remained very tight. haidi: let's check in on the first word headlines this hour. at least three people were killed and 11 injured in a shooting in downtown philadelphia on saturday. multiple shooters opened up fire in a popular entertainment district. the motive remains unclear. the mayor called the shooting beyond devastating and stressed the need for stronger gun laws. north korea fired eight short range ballistic missiles on sunday, pushing to a record of 31 lunches this year. this comes after the u.s. on south korea held naval maneuvers off of okinawa.

the lunch was denounced as a violation of you and security council resolutions. it might be the biggest since kim jong-un took power a decade ago. beijing will resume public transportation in most districts on monday, allowing workers to return to offices and restaurants to restart dining services. parks and entertainment facilities will reopen with athlete tact -- capped at 75%. there have been zero community transmissions for seven days. australia says one of its surveillance planes was cut off by chinese fighter jets over the south china sea. the maneuver they say threatened the safety of the aircraft and its crew. it happened on may 26 and its latest encounter between the two countries military following another incident in february. bloomberg has learned boris

johnson expects rebel and bees to trigger a leadership vote in the coming days. the tory members may be on the cusp of getting enough to force the vote. forcing johnson to step down after reports of illegal parties on downing street during the pandemic. those are your first word headlines. shery: still ahead, australia's or -- old guard corporate directors are getting pulled on climate action as investors tend to make sweeping changes to their boardrooms. we will discuss later this hour. up next, frank rubinsky gives us insight on the risk of a u.s. recession and the path of the fed's future rate hikes. this is bloomberg. ♪

haidi: it is a massive week ahead on the eco-front. take a look at the events we are tracking -- more signs -- in the chinese data on friday. the rba set to lead a number of major policies decisions. a hike as it is trying to get ahead of its own inflation problem. looking at the ecb, they are expected to announce the end of its bond buying. the ecb president will be scrutinized on the potentially 50 basis point move. and data out of china alongside key inflation numbers.

shery: that will help clarify the key question you asked, has inflation peaked? the state of the bond market hanging on that question with the benchmark yield going back and forth in the last month. it's now flirting with that psychologically important 3% level after rising on fridays robust job numbers. here is what our earlier guest had to say about the numbers. >> these are still very strong numbers. >> the fed is going to be leading by 50 basis points for the next few meetings. >> there is nothing that's going to stop them from continuing this march of 50 basis point increases. >> you are going to see a slowdown that leads to job creation. >> this is the last solid report you're going to get for a long time. be exact amount of hikes so they can engineer a soft

landing. >> our softest landings. >> you cannot get the fed focusing on the number one priority, which is getting the inflation down. >> [indiscernible] haidi: our next guest says global centralized -- global central bank have become vocalized. he does not believe a debit fed is in the cards just yet. let's bring in the chief macro strategist, frank rubinsky. does this mean risk assets will have a hard time claiming and where do you find quality then? frank: absolutely correct. i think it is going to be challenging to get a dovish fed

pivot. he had the speakers showing the jobs number we had last week, still looking at 400,000 or so per month. you were looking at 200,000 per cycle. we have a ways for it to slow down before we can start talking about a soft landing. the inflation side, even the core, you are looking get the 6% number. the fed looks more at the core fee ce -- core pce which is still a very high number. for powell to get his clear and convincing evidence that inflation has been maintained, it's going to take a fair amount of more hikes. we think the fed will have two more 50 basis point hikes before they do 25 and we have the fed at the end of the year, already above neutral and on their way toward something more. shery: is that compelling if you have treasury yields near that

3% level? frank: for the first time in a long time, it's gone overweight duration. you are flirting with 3% at the start of the year, it was half of that. if i'm looking at what's going to be the fed policy rate, probably 1.5% to 2%, add a term premium and you are in a 2% fair value of what that should be. we are thinking it's time to use this sentiment rally we are seeing in wrist assets to rotate up and quality because it is getting late in the cycle. the fed is authorized. the only soft landing we had was and 94 and there, you had a productivity miracle that had let that happen. the fed's record at getting a soft landing is not very good. in that context and now an alternative to equities given where fixed income has moved, even high-quality investment rate is more at 4% right now.

that is where high-yield was at the start of the year. you had assets that make that quality trade given the risk we see on the macro font something you should be thinking about. haidi: given the point where we are in the cycle, how challenging is the earnings season, how much -- how good are these numbers going to need to be to impress the markets? frank: great point. what we saw last quarter was you had a pretty good quarter and ok guidance, it's not going to do very well. if you had a poor quarter, you saw the targets of the world, the stock was crushed. it is very stock-specific. who is able to hold onto margins -- they have a secret sauce they can keep pricing. it becomes more of an idiosyncratic in terms of the winter, while everyone else is being pressured, it makes it

extremely challenging. when you look forward, consensus has it close to 10% for 23. in this environment with rates where they are going, the actual price pressure, we are already seeing demand destruction. demand destruction is just starting to occur. you bring up a great point and you are going to have a lot of have a lot of have-nots and a few halves when you get to the next earnings season. haidi: what do you make of the inflation or recession hedges and the equity space? frank: someone that has pricing power, you are looking at where the shock ratio has been maximized and that is going to be in places like energy. utilities have done well. those are typically when you are going into the downturn with someone who has yield or

inflated earnings stream. we are underweight equities as a firm because we had to get more now that there is a viable alternative in fixed income. it allows you to move up the quality curve. we think on a risk-adjusted basis, just look at last month -- the s&p was roughly flat. it traded in a 12% range. you are getting massive volatility which annihilates your sharp ratio. it means you are taking a lot of risk for not much compensation, so we need to think of things in terms of the sharp ratio and risk versus the return versus that risk. haidi: great to have you with us. you can get around up of the

stories on today's edition of daybreak. you can customize those settings, get that news on the industries and assets. this is bloomberg. ♪

annabelle: here's a quick check

of the business flash headlines. elon musk says the automaker is increasing headcount after telling -- after saying he plan to reduce salary staff by 10%. he said the number of salary workers would be pretty flat while overall job numbers rise. musk was planning to cut staff because he had a super bad feeling about the economy. a drug has shown promising results -- it has found to extend the life of statement -- the life of patients with cancer for several months. women were seen to benefit from such a treatment. apple is set to hold its annual developers event on monday, ushering in new operating systems for its devices. for the future of ar are headsets is expected to overshadow other announcements.

it could give a few hints of what is eventually coming. haidi: let's take a look at the day ahead for australia and new zealand. back to back rate increases. expecting a hike of as much as 40 basis points. we are facing the monthly inflation gauge. the prime minister has arrived in jakarta for his first international trip across the region. us truly is old guard corporate directors are giving schooled on climate action. investors are attempting to make sweeping changes to their boardrooms. we will discuss that with the head of the austro australian head of --

shery: we have seen the aussie fall from a six week high. we are watching the rba decision this week to implement back-to-back interest rate increases for the first time in 12 years. as we are watching, the japanese yen holding around the 130 level. take a look at the weakness against the u.s. dollar. we are talking about being very close to the two decade low of 131 that we saw back in may. the kiwi dollar not doing that much. pretty steady against the u.s. dollar. this is bloomberg. ♪ dad! a dinosaur! it's just a movie. no dad, a real dinosaur!

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rate increases for the first time in 12 years. the european central bank is to join the monetary policy tightening furthered by record highs in inflation. we go to our economics reporter for more. what are the expectations and what are the wage price dynamics we see australia versus the rest of the world? >> the expectation is that it will raise interest rates for a second straight month and that would be enforced back -- there would be four interest rate hikes in four years. what economists are not sure about is by how much will the basis point raise? we will find that out tomorrow. haidi: 25 versus 40, what are

the different camps saying? >> the central banks are predicting 40 basis points. they think the rba should get ahead of inflation. they should try and address rising inflation and rising labor costs by frontloaded interest rates. frontloaded interest rate hikes and that is their reason of a 40 basis point increase. those who are critical are saying that wage growth is still not so alarming in australia. the last first quarter residence we had shows wage growth up to .4%. it is still felt -- very mild if you compare what is happening in the u.s. and u.k..

although australia, this is one interest rate hike. the our b.i. meets death regularly or -- the our b.i. meats more regularly than the fed. haidi: what can we expect for cpi numbers this week? >> from 5.52 5.2, when those average early earnings were 88 2% or 3% range it was high. i want to focus on what they are saying about the cpi report. it may show the inflation has not peaked yet in the u.s.. the monthly number is 0.7% in may, more than double in april. the year-over-year remained 8.3 year-over-year. it could ease to 8.9% from 6.2

because prices are beginning to soften. look at our tokyo and hong kong growth, you see that there are arguments that there are key transitory stability around the world. -- key transitory issues of building around the world. services are prices are rising. i will keep inflation -- that will keep inflation uncomfortably high. at least for the next couple of months. shery: half a dozen central banks making announcements. what are we expecting? >> rate hikes. as late as early this year, the ecb was signaling moving slowly on rate hikes. look at inflation, 8.1 percent,

that was the latest year-over-year number. you understand that they are getting off at the dime. we are just waiting to see what they signal. natural gas prices are not going to come back down. all energy, you have the hawks arguing for 50 basis point hikes . the consensus is hold on, 25 basis point hikes were enough. the reserve bank of india is raising by an outside 50 basis points. they are doing 50-4 .9%. -- 50-4.9%. inflation has started to rise a bit but the inflation is still a bit weak. they are expected to sit back and watch other central banks get going.

shery: you also have to keep the economy growing. the latest on the monetary policy decisions. let us turn to australia and go back to the rba decision. you are watching the aussie dollar? >> it could rally 11% from where we are now. into next year, $.78 i guess the greenback. they are looking at ubs saying that the u.s. economy will start to weaken. australia will look a lot more resilient with the high commodity prices. going along on the aussie dollar, a phenomenal parade. -- going long on the aussie dollar, a phenomenal trade. shery: chinese equities? >> we will see. you can see how analysts are

cutting analysts back. a 10% drop. it is starting to stabilize. this is investment management. of backers, equity is looking fairly cheap. it is a lot more government support and we are starting to see further relaxation of covid measures. beijing had the latest with the further relaxation. haidi: let us get to the first word news. i health official saying that -- a health officials think that they may allow a more radiant oil into markets without the revival of the nuclear deal. the biden administration could ease up on the flow of sanctioned oil ahead of the midterm elections. pump prices have shot up to record levels as crude prices have soared more than 50% this year.

saudi arabia has raised will prices more than expected for the biggest market of asia while keeping u.s. prices unchanged for a second month. the increased shipments to asia last month. remco will also increase oil rigs for u.s., europe, and mediterranean regions. it may make sense to raise a tariffs on some goods as the inflation continues. president biden is open to any good idea that will help american families. senior administration officials have offered differing views on what to do with donald trump's tariffs from china. steel and aluminum, we have decided to keep some of those tariffs because of the to protect american workers and protect our steel industry. there are other products,

household goods, bicycles, it may make sense. shery: while fiona dahl has announced his future is in doubt due to a nerve condition. his reliance on numbing injections to clench his french open victory, he says he is looking into new treatments but it is not clear if he will play wimbledon next month. -- won the women's final. haidi: australia is a looking at the government for corruption and government -- economic damage. hitting other businesses like the rio tinto, the casino operators in australia as well.

it is a whole new world, especially in activism. joining us while you were on vacation, we appreciate your time. what has changed because as with the election results it does feel like it is something seismic going on here. >> the environmental corporation and investors looking to decarbonize is much less hostile than it was. i think we saw that the merger blocking major shareholders including funds who came out on the record in support of the vote to say this merger does not present opportunities for long-term shareholder value creation because it does not address agl and the merged entities.

it does not risk decarbonization. -- raise decarbonization. haidi: is it going to be a successful strategy across the board? >> we have to look at entire australian landscapes. there was the ownership opportunity, for an a single shareholder to build a large -- for a single shareholder to build a large stake. we see it across all equities and certainly decarbonization, it is a priority, the new government has said it is a priority. we are not seeing the same attentiveness to decarbonization in our export footprint. we see the new government really showing up appetite to continue supporting the kind of oil and gas projects that are incompatible with a safe climate.

that is something we need to see increasing investor pressure on in the months and years ahead. the global institutional investment sector is constraining the inspection -- the expansionist activity who do plan to exploit and explore for more oil and gas reserves than the atmosphere can accommodate. shery: are you a bit more optimistic because of what labor is planning to do? they are bringing the balance of power in the upper house? >> i think that they senate composition is very exciting. labor will hold in majority in the lower half and as they held a minority in the lower have, they are surrounded by green and independence. it is an exciting time,

potentially transformative time for australia. there are so many opportunities for the australian economy to really step up and be more resilient in a decarbonize to future. -- decarbonized future. shery: cleaning up the board room? >> i think that is on the table. for directors who are not prepared to aggressively decarbonize, to take their companies to the decisions that need to be made now, to set us up for 2030. both directors or face an uncertain future and increasing -- those directors face an uncertain future and increasing pressure. companies are driving change and i expect they will see that in the next season and the one after. we will start to see process after individual directors.

investors see all of the evidence suggests they are holding back companies from aggressive decarbonization strategies. apply to a range of social issues, we have seen it play out after the destruction of the gorge heritage site. we are saying australia exercising their muscles to put accountability into the center of investor response. shery: there are so many allegations of greenwashing, a pink washing, reports of directors at companies that are not taking climate pledges seriously. does that change that? >> i think we will see increasing scrutiny from institutions, investors, from regulators and the courts. i think it is actually engaged

in federal court litigation against one of our own gas producers. the company is greenwashing. we think that is a real frontier for activist investing, using the legal and fiduciary strategies to push asg concerns were companies are unresponsive. we have seen the end up in this he said she sent debate and at the moment we need the courts to step in. haidi: thank you so much for joining us. executive director of the relation director of corporate responsibility. the u.s. may not see any new oil refineries built anytime soon despite surging gas prices. our interview with ceo and chairman of chevron, next.

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from the most innovative company. bring on today with comcast business. powering possibilities.™ shery: take a look at oil prices continuing to surge in the agent session. above $120 a barrel.

opec-plus disappointing with only a modest output hike, .4% of global demand over this summer. saudi arabia raising oil prices for asia by more than expected. we are saying a rebound in demand given the opening across the economy and we are following gasoline futures as well. the government officials saying they could allow more rating oil to flow without a deal. we see the record gasoline prices. let us go to the chevron ceo, he is seeing real strength in oil demand but the company is not in a position to pump more supply in the near term. the supply constraints and his outlook for the crude market. mike: the cycle is different than past cycles in the steps of the pandemic, the man collapsed.

activity contracted. it had to and there was no demand for incremental production. we were looking for ways to store production that we did not need. we have seen the reverse of that in the demand, economies of have largely reopened, but not completely. >> no demand destruction. mike: we are seeing strength in demand, international air travel is the strongest since before the pandemic. china has a ways to go. the man continues to be strong. the man typically in our industry, it moves faster than supply in both directions. >> in terms of supply, you are working hard in the permit, your output has increased. if i had said pump more, could you? mike: not today.

in the decisions that lead to today's activity were made two years ago. it is permitted, roads, infrastructure. it is crews, a law goes into production growth. last year was the highest rate of production in our cause -- company. we are doing our part to meet this growing demand, it requires a longer lead time in in the shorter cycle. it does not happen quickly. >> if we pretend it could, where is the biggest bottleneck? where is the problem? mike: in the u.s., in the permian basin it is all of the above. during the pandemic, operators should activity down.

the companies that support our work had to do the same. workers went to other parts of the country. rakes were stacked up, but those who were still in the field, you took parts of rigs that were in the yard. there are real constraints. we plan our work and work our plan. our plan is to continue to grow. to incrementally change that right now, there is a lot of work that has to happen and a lot of constraints that have to be solved for. >> it were not matter how long it hit a high or with the oil price was? mike: the price of the day does not influence our activity. we have a long-term view of markets, policy, that is what sets our capital spending. haidi: mike wirth speaking

exclusively with us. set tv , dive into any of the security is of the bloomberg functions we talked about to become part of the conversation, send us instant messages during our show. this is for terminal subscribers only. this is bloomberg. ♪

haidi: here is a quick check of the business flash headlines. boosting capital expenditures at year by 30% from reopening, the company says most of the funds will be for construction of residences and developmental townships. the philippine economy grew at one of the fastest rates in asia in the first quarter, expanding 8.3%. alibaba has replaced the ceo with the head of the thailand business. he was replaced by james who joined as a ceo in 2018. he will serve as an advisor to the chairman and remain on the board of directors. shery: i get a look at what

bitcoin is doing at the moment. seeing resistance at the 30,000 level. we are seeing just above it. haidi: down 55% of a record high. it has been a slew of negative years, coinbase extending as a hiring freeze that was already in place. rescinding a number of offers that have already been accepted. we are looking at bitcoin minor starting to sell tokens they have been hoarding to cover rising costs as the industry growth starts to fade. the biggest cryptocurrency showing signs of sustained rebound after the collapse in recent record highs. we saw money transferring over 195,000 coin exchanges in may.

look at the average price in may, the value of $6.3 billion for those tokens. we are seeing a mutual and technical outlook. a lot of analysts say we need to see a he above 10% -- we need to see a pop above 10%. shery: a central banks expected to hike rates -- the central banks expected to hike rates. a federal policy decision expected to run asian markets. a ceo tells us how the recruitment and staffing service provider is changing its ways to achieve business growth. daybreak: asia is next. this is bloomberg. ♪