haidi: you are watching daybreak asia. annabelle: we are counting down to asia's major market opens. shery: asian risk assets facing a true copy start to trade as higher oil prices fuel inflation fears. the oecd follows the world bank and slashing growth forecasts, warning the world will pay a hefty price for the war in ukraine. chinese adr is gain for a third day but some analysts think the tech relief rally is premature. though it is one of the few sectors ending ground is the regular session in the u.s. s&p 500 following for the first time in three sessions. seeing a rebound with the u.s. futures in the early asian session, but this of course after we had meme stocks under pressure, as we had the sec coming out and previewing some of the market overhauls were going to carry out given the

wild trading rally we saw last year. we also had chipmakers under pressure. intel warning they are doing that great this quarter. energy was the only sector to actually gain ground in the regular session. oil continued to rally and we continue to see a rally behind -- above the $122 a barrel level. we continue to see tight supplies here in the u.s. annabelle: certainly inflation fears. a major focus as we look ahead to the open in japan, australia and korea. ahead of that we are seeing the aussie and new zealand bond level against the moves we saw and treasuries. the new zealand tenure at a 2015 high. 395 is the next level we are watching. the aussie 10 year some moves we saw in treasuries. japan bond enemy to highlight policy divergence we are seeing with the fed. flipping the board, the yield

gap we are seeing between japan and the u.s. is what has been driving the yen weakness as well. 135 is the next level we are watching for. strategists say there could be technical resistance to reaching that level. that has been helping sentiment as well and japanese stocks. four straight days of gains for japan. we could see a fifth, though overall the inflation growth, oil rally, that is setting up for risk off across much of asia. haidi: we get more dire economic warnings. this time it is the oecd say in the war in ukraine taking a heavy toll on the global economy , possibly lasting damage to supply chains. kathleen hays is here. they also talked about the potential for a global food crisis on the back of stagflation warnings from the world bank as well. what is the picture here? kathleen: the picture is dark. the picture is that the war in ukraine threw a whole other

element of weight on the economy, of supply chains not working, just one the world was pulling out of the pandemic. higher prices means higher inflation and big costs and slowdowns to consumers, businesses, and economies. they don't see a recession at the oecd. the global inflation forecast doubled though to 8%. australia's inflation is well above 5%. look at germany, can you imagine germans tolerating 7.2% from 2.8%. that was the forecast from 2021 going into 2022. and this idea too is that the supply chain blockages are not going to go away anytime soon. when you talk about food crisis, well, you talk about famine, you talk about it hitting italy said africa hard, cereal prices are surging.

it is incredible when you think russia and ukraine make up 30% of wheat exports, 20% of corn, fertilizers, and natural gas. when there output is so constrained, when their economies are so weak, it's definitely something not only hitting the rest of the world, it is hitting the poorest parts of the world the most. shery: a lot of that supply also supposed to go to europe. given he tightening concerns we continue to see inflation numbers surging. how hawkish can we expect the ecb to be? kathleen: that is the big question. at the very least traders are geared up for a pivotal moment from the european central bank. they have not raised their key rate sense 2011. the june meeting is where they are expected to signal definitely a rate hike is coming in july. the only question is how big it will be. christine lagarde, the census is argue for a 25 point hike. what the hawks who say you cannot be too soft, you need to make an impression. so the 50 basis point hike is

what they are looking for. i think it is also interesting that the press conference, we will get so much on the policy statement, but the press conference on christine lagarde has to answer all these questions, that will surely be one of the biggest ones. they have also signaled they will announce this month is the end of their asset purchase program. there is concern there about the spreads between the bonds of germany's, about the highest rated sovereign bonds, and countries like italy. the spreads are widening out, if that got too extreme it could cause fragmentation. will christine lagarde and her colleagues hint at something like that? certainly, she is going to be asked questions about that. it is another big issue, not at the top of the list, but definitely important. shery: the euro racing for that press conference. kathleen hays here in new york, and adding to those inflation fears, oil continuing to gain

ground in the asian session. we had data showing a drop in u.s. crude inventories and gasoline stockpiles. let's bring in garfield reynolds. all of this concern about inflation really having traders at both extremes whether it is bearish or bullish on u.s. treasury yields peaking 4%, yields dropping to 225. what do you make of all this volatility? garfield: well, i think it is a tribute to the way that on the one hand you have all these inflation concerns and on the other hand you have session concerns. you have what i call the fear factors helping to hold yields down. you simply look at inflation, which is expected to stay above 8%, you look at crude, $120 plus and climbing towards 2008 highs, you look at understandable expectations the fed will hike rates aggressively and keep doing so for some time.

then you look at your screen and see a 3% yield and you say, why is it so low? but the why is because you look at how badly stocks are doing and other assets, at least 3% is something. or maybe you want to buy a to year bond at 2.7%, 2.8%. that gives you at least some sort of return. distinct from stocks at the moment, which seem to have some limited upside and some very potential nasty downside still. certainly have caused a lot of pain year to date. then you add in the potential that this high inflation and the fed's response creates a rich hessian and the fed will end up cutting rates next year or the following year. and you can see exactly why you would get a sticky 3% yield. haidi: we saw u.s. listed

chinese stocks rallying for a third day on these new game approvals, may be the official stance is softening. are they almost emerging as a place to hide amid higher inflation in the u.s. garfield: i don't know about a place to hide, but there are not a lot of assets out there that look particularly attractive. in an environment where everything has been beaten down and you are scrambling around for something that can offer you decent returns, often investors will gravitate towards stocks or other assets that have fallen more than most, and that seem potentially to be hitting bottom. china tech stocks tick those boxes very much. they have come down so far, it is hard to see them going too much further, and there's the potential for strong gains if they get back to even where they were a couple months ago. add in also some signs that china may have decided to be a

bit softer on the sector, and also the potential for the chinese economy to turn around now that there's some prospect of the covid lockdown sending. and you can see why people are piling back in. they just have to hope that the authorities do not turn around and a couple of months and decide to crack down on something else. haidi: always that policy risk for china. bloomberg chief rates correspondent for asia, garfield reynolds. let's get you to su keenan with the first word headlines. su: we start with the sec which has previewed sweeping changes to rules underpinning the u.s. stock market including payment for order flow. the commission chair says retail investors deserve a better deal, and it appears to be the agency's most direct response yet to last year's while the trading in so-called meme stocks. any revamp would set up a clash with major names and equities

trading, including citadel and robin hood. >> right now, there's not a level playing field amongst the different parts of the markets. the wholesalers, the dark polls, the lid exchanges. it is not clear with such market segmentation and concentration, and yes, with an uneven playing field, that our current national market system is as fair and ask additive as possible for investors. su: meanwhile, treasury secretary janet yellen says the u.s. is looking to reconfigured tariffs on chinese goods to make them more should you check. she said some of the existing tariffs inherited from the trump administration have hurt american consumers and businesses. she did not give a timeline on the potential changes or the duties, beyond saying that they may take place in coming weeks. australian's treasury secretary stephen kennedy warned inflation is likely to hit 6% and could go

well beyond that. kennedy told a group of business economists that significant pressure in the wholesale electricity market is presenting a new upside risk. australian's inflation is currently around 5.1%. price pressures prompted the rba to make a surprise half-point hike earlier this week. 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 su keenan. this is bloomberg. shery: still ahead, commonwealth bank tells us why japan's current position will have greater influence on the yen's direction than interest-rate diversions. but first, a look into where opportunities lie amid all these inflation concerns. sgmc capital joins us next. this is bloomberg. ♪

>> as i have said many times, we think the greater risk by far is deflation. deflation cyclically. i'm talking about now, because

this inventory issue highlights the cyclical reason we think inflation will unravel. the secular deflation story is very powerful. haidi: cathie wood speaking exclusively with ed ludlow. let's take a look at australia and new zealand. bonds, we saw kiwi bonds, yields at the highest since 2015. the next level to watch is around 3.95%. above that would be an eight year high. the last time we saw anything above 4% was back in 2014. as we had the rbnz flagging they would start selling debt. also watching australia extending the drop we saw on wednesday, close to topping its april high. potentially beyond that, looking at 80 are highs as well.

with heard from barclays, they are expecting the australian bonds selloff to ease and peak in the third quarter with this frontloading, or at least a race to neutral underway with a supersized hike from the rba. our next guest is allocating back to fixed income. ceo and founder of sgmc capital. great to have you with us. we are seeing more of this willingness to go back to fixed income. where do you find opportunities at the moment? >> we are looking at fixed income. starting to get absolute returns and yields term becoming quite attractive. of course you have to be extremely specific where value is. we like the low investment

rate, looking at corporate bonds, and looking at the belly of the curve seven to eight years. a lot of the interest rate move has happened. the credit spread widening, a lot of it has happened. you are looking to get yields of anything between 5% to 7% depending on the names and geographies you look at. these kinds of returns and yields are very interesting. of course you are entering into names which have had a beating down since the beginning of the year. haidi: we have to talk about the yen which continues to be the big mover in the fx space. you see further weaken or's. how does this lend itself to further opportunities? >> in this environment you are basically looking for an asset class which is extremely liquid in which can be performing. the fx asset class is exactly

that. there are a lot of opportunities in the fx market because we are seeing big structural and geopolitical changes. when that happens, it is going to reflect big moves in the fx market. one of that is the japanese yen. we have seen a massive depreciation since the beginning of the year but if you look at the last 12 months, what is even more important is when you look at the narrative from the central bank and the governments, japan does not seem to be worried with depreciation. continue pledging accommodative stance going forward, which is extremely contrasting with what the fed is doing, with the ecb estate -- ecb is starting to speak about. you are very likely to see the yen depreciation going forward and keeping ongoing, and of course that is an opportunity for global investors looking at the fx space. shery: you mentioned the ecb. we are setting up for the central bank to wind down trillions of asset purchases,

setting the ground for the first rate hike. how do you position in european assets? massimiliano: in european assets, definitely fixed income is not the time. talking about dollar-denominated. here the interest rate move has not happened yet. of course longer-term rates have moved higher but there is more to run. in europe we are still in negative rates. there is still quite a lot of room to go. we are likely to go to zero, mainly slightly positive for the end of the year. definitely what you see in the u.s. in terms of asset impact because of central-bank changes in their policy you're likely to see you are maybe at a slightly lower magnitude but it will likely be repeated before stay away from long-term fixed income which are euro denominated. maybe take a little off of financial exposures in the equity space and expect pressure to come on the back of the euro stocks once its stance has

changed. shery: one consensus call seems to be positive sentiment across commodities at this point. is that also what you feel these days? which commodities will perform best and worst throughout the year? massimiliano: commodities are very likely to remain supported because demand is still strong. we have an issue with supply and there is huge geopolitical tensions heaping the prices up. weather from these levels we see a big further upside, we are little skeptical. support will remain, but we do not see a further big rally in the level of commodities overall from e.m. on the other hand, there are commodities projected to do better and worse. to answer your second question, probably in terms of one of the commodities which unfortunately if you want is going to likely keep doing better.

anything related to food, most because of the geopolitical tensions we are seeing with respect to ukraine. that is unlikely to abate in the short-term, so we see the price of food continuing to remain high and that will have repercussions socially and globally. in terms of the commodity which maybe will do worse, you can look at some of the less efficient energy commodities, for example cool, which have rallied a lot, but could correct. shery: mass bondurri, it was great to have all of your calls. coming up next, after warning of a second-quarter loss, credit suisse is weighing up a fresh round of job cuts to slash costs. we have the details. this is bloomberg. ♪

shery: take a look at state street and credit suisse. they fell in the u.s. session after the asset manager made no comment that it could be making a bid for the swiss investment bank. we also heard credit suisse is weighing a fresh round of job cuts as part of a renewed push to slash cuts. investment reporter joins us with more on these two stories. let's start with state street's bid. how likely will this go through? >> there is very little information at the moment. basically where this came from was a report on a blog in switzerland. but shares of both companies have reacted and neither company put out a statement out right denying that this would happen. however, they said they would

not comment on the news that was put out. whether this would make sense for state street, it is kind of a hard fit. many analysts said in the wake of the announcement, they did not see how such an arrangement could really make sense for state street. haidi: if an outright deal does not make sense, does it make more sense when you think about potentially just an acquisition of the asset management business? annie: that's right. many analysts looking at this potential news said ok, perhaps it does not make sense. however, both companies have asset management physicist and we have seen in the past state street at least has options lit into its own asset management business. there have been reports of talks

with investco and ubs. if this had held talks with credit suisse it would be of a piece with that conversation. that was the response from analysts trying to parse what exactly was going on with this merger idea. haidi: let's get you a quick check of the latest headlines. qantas is asking head office staff to step in and help overworked ground crew. in an internal email, staff were asked to assist during july with operations in melbourne, sydney and brisbane the most rushed. qantas is struggling to cope with the rebound and travel. twitter's top lawyer is said to have reassured staff the sale to elon musk is still progressing. our sources say staff is told

the company is -- separately, the washington post says twitter's board hopes to comply with musk's demands. shery: we continue to see the global bond spread off continue -- we had seen new zealand's 10 year yield rise to that seven-year high. this tracking the losses we saw and treasuries. 10 year yield just topped 3%. inflation concerns of course continue. treasury secretary in australia saying psst. girl. you can do better. ok. wow. i'm right here. and you can do better, too. at least with your big name wireless carrier. with xfinity mobile, you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year

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>> were watching "bloomberg daybreak: asia." we are checking at a market opens. the focus is on the moves indicated and getting further weakness we could see. we are looking at important levels, starting with the u.s. lf, 135 is the next level but 150 could be possible and technical indicators suggesting that is increasingly likely. the euro under the focus with the ecb meeting today they could lay the groundwork for the rate hike in july. now at a seven year high. flipping the board to look at housing, the yen selling against its peers, the relative strength index, the reading below 30 indicates they were in overselling territory, particularly in current -- important for currency important in this region. pulling up the terminal to focus

in on the offshore yuan against the yen, at last reached this level in april. china and japan are facing similar issues, they are major asian exporters and net importers of oil. we did get that reading or that level rather back in april, that did prompt further devaluation of the you one against the greenback to make its exports more attractive. a lot of ripple effects to consider. shery: let's discuss those with our next guest to says for the japanese yen the current account position will have a greater influence. let's bring in a senior associate for international economics. good to have you with us. with energy prices continuing to rise, we are going to see

continued weakness in the yen. >> yes, definitely. the dollar-yen has been the focus of the markets over the past two or so months, and looking forward, looking at the japanese current account balance instead of the u.s.-japan interest rate differential, the outlook for that dollar-yen, a lot of participants have been focusing on the widening differential. looking at the future path of dollar-yen, that is understandable. u.s. treasury yields have been on the rise given the start of the interest rate tightening cycle in march. the bank of japan has been [indiscernible] in its

messaging. dollar-yen good -- given the widening interest rate differential. the current account remains in surplus. it has been falling. shery: what is the level you weren't looking at? you were talking about interest rate differentials given that we could see a current account deficit. are we talking a past? how far could he go before officials at the finance ministry might step in? >> bank of japan officials have been very focused on the dollar-yet recently -- dollar -yen recently. given what oil prices have created over the last few months , japan's trade deficit would widen even further.

dollar-yen could possibly trade higher 2136 based upon our model, and that is possible if we see japan's current account move into a deficit. haidi: we are seeing the 10 year bond skilled in australia rising to the highest since 2014. we did not see the aussie dollar have much of a reaction given the supersized moves or potential rate hikes from the rba in the next two or three meetings. is that if they of recessionary conditions that could set in? >> august see the rba today 50 basis point hike on tuesday, and the supersized rate hike corresponded to the expectations of analysts. the higher aussie bonds yield

would be supportive of the aussie dollar in the near term. looking at market pricing the markets have priced in a high peak of 5%. the on the near term i think markets will adjust expectations for rba and revise the peak. we have seen weakening, interest rates rise and we could see more cooling in economic data given more interest rate hikes from the rba. the interest rate differential is a less important influence on the aussie dollar in our view. global factors such as the fed will play a role in driving the aussie dollar from here. haidi: hoping that 50 hits 25

when it comes to the ecb. how much obviousness -- hawkish this -- hawkishness could be expect? >> it is definitely crucial. christine lagarde has laid out normalizing monetary policy. more gradual monetary policy globalization. we have seen other ecb mandates being more hawkish, so some of them open to the possibility of a bigger 50 basis point hike in july. the ecb will have a hawkish pivot today. if we do see christine lagarde

leaning toward a 50 basis point i can july that will be supportive of the euro-dollar. shery: what about the yuan-dollar given we have export numbers and more data and more fiscal measures to support the economy as well? >> forecasting dollar-cnh is basically forecasting when the chinese lockdown will ease. we have already seen signs of easing lockdown restrictions in china. that will be very supportive of the yuan, and we have seen chinese officials coming up -- coming out to talk up the chinese economy and rollout policy easing measures. one is infrastructure, not only will that be very supportive of

the chinese yuan to push of chinese economic momentum, but if infrastructure spending will ramp up that will be commodity intensive and that will bode well for outcome and the aussie dollar. haidi: carol:, great to have you with us. dated do in the next few hours will give a good indication of economic data after shanghai's lockdowns pommel trade numbers in data. let's get a preview with stephen engle. what would you be watching out for? >> we will be watching commodities carol just talked about. the overall numbers were obviously dismal in april, and those numbers invariably will likely go up because of manufacturing starting again in late may, so those numbers

probably increase. it is a pivotal set of numbers. as you can see in april in u.s. dollar terms experts -- exports was 3.9%. imports, in u.s. dollar terms flat growth for the last two months, and contraction in you want terms -- yuan terms. we will be looking at the commodities space in terms of whether they start to import more commodities as factories get going. the external demand picture is mixed. south korea had a good set of numbers for exports. the u.s., very mixed picture. the u.s. national retail association is warning u.s. ports expect a surge in demand as china does come out from its lockdown.

u.s. retailers like walmart and target have the second highest on record level of inventory as they stocked up because of the supply chain problems. we will have to see if the potential of a recession in the united states zaps the demand of the consumer in the united states. carol talked about policy measures, someone at the state council talking up support for the foreign trade environment in china. shery: carol also talked about the commodity demand. >> absolutely, we are not going to get the numbers for individual countries until later in june, but essentially we will be looking at western import numbers from oil from russia and generally as the chinese economy gets out of its lockdown situation and supply chains get going again and manufacturing picks up, what is going to be the oil demand. that is one reason we have seen

a higher level of oil prices on increased expectations of chinese demand. we will be looking at aluminum, shipments out of china jump to the second-highest of the record in april fueled by shortages globally and sanctions against russia. iron ore, carol talked about this. any increase will play part and parcel with the infrastructure pushed by president xi jinping and food shortages. we have got to look at agricultural exports. like to look at today. shery: and you keep us updated on all of that, stephen with what to expect. let's get the vonnie quinn. vonnie: most of the assessor's outlook for global growth to 3% following 4.5% predictions in december. the organizations of the world economy will pay a hefty price for the were in ukraine with weaker growth, stronger

inflation, and potentially long-lasting damage to supply chains. chief economist says that governments must take immediate steps to avoid a crisis. >> we have healthy growth and high inflation. remove some accommodation. it cannot address supply shortages but signals we will targeted. in those countries where there is biggest demand monetary policy should be tighter. vonnie: accompany says investigation is underway after a fire broke out its export terminal in texas. a company spokesperson says the place has been brought under control and there are no injuries, no risks to the surrounding community. the facility is one of seven terminals that exports u.s. capitol gas by sea.

china's central bank is signaling an interest -- an increase in its interest rate. the bank since it is the right timing for a gradual policy normalization with headline inflation expected to increase. this decision policymakers voted to keep rates at a record low 0.5%. a man arrested outside of u.s. supreme court justice las vegas brett kavanaugh's home while allegedly armed with a pistol and a knife is facing federal attempted murder charges. the 26-year-old from california told detectives he wants to kill cavanaugh and believe the justice will vote to loosen gun control in a recent supreme court decision. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. haidi: lots more to come on

"bloomberg daybreak: asia." this is bloomberg. ♪

haidi: we are tracking the follow-up of the global supply chain crisis. until dragged down chip stocks after the ceo said a weaker

economy will hurt financial performance. the company get already given a disappointing forecast for second quarter. i ceo says the goal would be to ease the incoming battery shortage by supplementing suppliers with its own production. degrees use of -- and chart's production industry is expected wrap up as the nation ends its pandemic you're in. extended declines after the biggest drop in two decades earlier this week. shery: take a look at the commodities space, we continued to see wti rising indication session above $122 a barrel as natural gas was under pressure after we saw the fire in texas, under control now but one of seven boards that lead to

natural gas being sent abroad. copper gained as well, base metals supported by chinese manufacturing demand improving. bloomberg users get read more about the stories online. as the world grapples with the fast-moving spread of covid, in early 2020 the singapore airlines executive realized bold action was needed the carrier to survive. the ceo told us exclusively about the difficult decision that had to be made. >> unprecedented for the airline industry and singapore airlines given that we have no domestic market. just to give statistics in january of 2020 we were carrying

three point 4 million people. by april we were only carrying 11,000 people, a huge drop, and our capacity was reduced to 3% of pre-covid. it was a very tough time, because i said airline we still need to maintain our planes, pay our staff and all of that. it was about $300 million to $400 million a month. >> what has been the biggest challenge over the last two years? >> i would say two things. right at the beginning it was to ensure we have enough cash to survive. high certainly do not want to see singapore airlines to go bankrupt. fortunately we were able to address the quite early and provide confidence by the

financial markets in general. the second thing, which i would say is the most painful decision i would have to make is about letting go of our people. we had to let go almost 2000 of our people. we tried to delay as much as possible. we reduce the number as much as possible. shery: the singapore airlines ceo speaking with haslinda almond -- amin. catch that only on bloomberg television. we have seen the pandemic, pretty harsh on -- as well not only because he could not travel budget because cities have become more expensive for everyone. we just have the latest report cost-of-living survey showing hong kong is the most expensive city for ex-pats in the world.

i also lived in tokyo so i lived in three out of the five cities that are the most expensive and pricey to be in. haidi: it surprised me about hong kong. even though we talk about this exodus of talent, cover the restrictions that created a lot of difficulty for being able to enjoy life we are still seeing these cost pricing. i moved from hong kong to sydney, which is up there when it comes to affordability. in this part of the world is very much about property prices in the same way as it is in hong kong. really interesting particularly as you see the likes of tokyo as well as number five. i am wondering how the weaker

yen is going to come into play as well. shery: much more to come on "bloomberg daybreak: asia." this is bloomberg. ♪

shery: live pictures in los angeles, you are watching president biden reading --

briefing the argentinian president. this is the first time it is being held in the united states since its inaugural meeting back in 1994. the argentinian president has played hardball with the u.s. calling for all countries to be invited. we noticed one of the notable absences is the mexican president. the arch in tinian president did finally end up coming to the u.s.. we have seen mexico's president to be absent from the summit as a snob -- snub to president biden facing skepticism for his plans to the latin american region as he greets the heads of 20 states from latin america and the caribbean. haidi: major market opens today, top three informs facing covid

zero strategy and higher tariffs begin to outweigh the benefits of doing business there. let's get some details. what he was seeing here? >> it is interesting, you have seen a lot of companies talk about leaving china or throw it out there. it reports that they are looking to move manufacturing to vietnam, but 3m company seem to be the vanguard of actually moving operations were deemphasizing the chinese market despite it still being quite lucrative and the biggest market for consumers. some of the examples we have seen, the big department store giant is basically moved everything out of china really deemphasizing things they are in focusing more broadly on asia, a cosmetics company that used to rely heavily on china where it had a lot of success is down a lot of it storefronts and

looking to have a more limited online presence. shery: coming up on "bloomberg daybreak: asia." sure why maura remains optimistic on china. ahead of china's latest trade data a company downloads it latest forecast. their chief economist explains that call. the market opens in sydney, seoul, and tokyo are next. this is bloomberg. ♪

shery: this is "bloomberg daybreak: asia." we are counting down to asia budget is major market opens. we continue to see concerns about the state of the global economy, oecd cutting the rate forecast following world bank. he will get more insight about the extent of external demand from china trade numbers today. haidi: these inflation-stagflation fears continue, upside when it comes to the chinese economy, we are watching details on commodities demand. let's get you to annabelle. >> steadily setting up for a fairly choppy obit bit when we get to the start of trade with japan, south korea, and australia in just a few moments. cash treasury markets opening now, so holding above the 3% level following a fairly soft

option for 10 year treasury. the yield differential we are continuing to see between the u.s. and japan playing into yen weakness, i off that 135 level, some economists indicating that one of 50 could also be bottomless now. nikkei225 snapping a four day win streak. yet weakness playing into the strength. korea, we are keeping an eye on kospi trading below -- 20% below its 50 week i, samsung major focus of the open. we had the focus -- morning out from intel. local media reporting samsung is cutting production in india, brazil, it vietnam. the korean won under the watch, we are seeing weakness, merrick security sink the biggest driver is global uncertainty. turning onto westerly, asx 200, staggered start, a few minutes to come online. inflation fears a major factor

of markets this morning, the australian government saying inflation could breed 6% or possibly beyond that as well. aussie and kiwi bonds 11 up to treasury yields, kiwi added 10 year high. shery: our next guest says is your growth prospects are better than those of the west end is increasing exposure into the region. let's bring in the head of research jim mccafferty. you are still downgrading korea to neutral. is that you do with external exposure? what exactly do you mean? >> i am in singapore right now it we have been hosting our annual conference. we have had analysts, corporates , so we are in quite a good position to determine what is

going on. economics is one thing and stockmarkets are another. if you think about south korea it is very much geared toward exports and the stock market reflects that. big companies like samsung, lg, these are major exporters. if you look at china, the composition of the stock market is made up of big domestic companies which have very limited exposure to the export orchid, so actually when you are navigating these equity market sometimes what is happening in the economy can be quite an ingles, but what is going on in the stock at what we are detecting right now is that a lot of international investors have got money that they need to put the work. doing nothing is not an option. given where valuations are right now and given where china is at the peak of negativity at the economic cycle, people are starting to look at china right now under the markets, especially japan. shery: good thing you mentioned

japan. when you talk about exports they also have big exporters and a weaker yen would help. wouldn't that apply to the likes of korea and taiwan as well? >> yes it does come these countries are very much export dominated and there stockmarkets reflected that. tmc, samsung electronics. china is domestic consumer stocks. going back to japan, one of the things we see there, companies in japan, companies are beneficiaries of the waek -- weak yen because of export exposure and they are getting back from europe and u.s., that money coming back to japan translated into yen is putting a drop of balance -- a drop on the

balance sheet. it is at a 10 year high right now. haidi: we are seeing that start to drive when it comes to chinese equity markets particularly when it comes to internet platforms and tech. is this a real rebound? it feels like we have been here before. regulatory seems to be softening. >> we have been here before, but we have been through covid over the last couple of years, many international investors know how to navigate covid. initial sectors have got some sort of immunity from covid. if you look at the composition of msci china, which is a benchmark, it is like the chinese nasdaq, it is made up of internet names. those internet names are all chinese domestic exposure. if you think of how like amazon perform during covid then

tencent and alibaba should perform in a similar way. what excites us is a growing macro, inc. about with the country is to big itself. all of these big names, these companies are buying back their own shares, and that in itself is a confidence indicator of what management are thinking. haidi: we will be looking at the commodity aspects of trade numbers from china keenly as well. what is your make of the latest leg of the commodities rally? do you think that will continue along with inflationary pressures and do you continue investing along that theme? >> it was one of the things that came up at our conference yesterday. countries like indonesia, malaysia have been the beneficiaries of this commodities run, and i think valuations are catching up with that theme. we would tend to favor with

going to out-of-favor sectors, moving away from commodities, going back to sectors which will benefit from more inflation in the system. one thing we are seeing in japan with the weakness of the exchange rate is pressure on inflation. money will start to flow and consumption figures will grow up -- go up. haidi: jim mccafferty, let's get to vonnie quinn. vonnie: the hearing exchange commission has -- including payments. the commissioner says rita what investors deserve a better deal. it appears that the agency's most direct response you to last year's while trading in meme stocks.

>> right now there is not a level playing field. the wholesalers, the dark exchanges. it is not clear with market concentration. with an uneven playing field in our current national system is as fair and competitive as possible for investors. vonnie: treasury secretary janet yellen says the u.s. is looking to reconfigure tariffs on chinese goods to make them more of what she called strategic. janet yellen says some of the existing tariffs have hurt american consumers and businesses. she did not give a time of potential changes beyond same that they may in the coming weeks. i treasury secretary has warned that inflation is likely due at 6% and could go well beyond that. kennedy told a group of

businesses economist at significant pressure in the wholesale electricity market is presenting a new upside risk. australia's inflation is currently around 1.5%. pressures to the rba to make a hike earlier this week. i central-bank is signaling an increase in its benchmark rate after keeping policy unchanged. the bike -- bank of thailand said it will -- in his decision policymakers vendor to keep rates at a record low 0.5%. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. haidi: let's look at some of the stocks that may be moving at the moment. >> checking in on major chip names, we had to intel ceo speaking at a conference basically saying the weaker

economy that they are seeing is going to be feeding into their outlook moving forward but that is something that will also be spreading across other major chipmakers, so we are clearly seeing that reflected another makers. shery: a call when it comes to shipping, what are we seeing on the socks in asia? >> so this one is from j.p. morgan committed to the healthy economy, and j.p. morgan are basically saying u.s. consumers have held up these rate rates we have been seeing since the start of covid. j.p. morgan saying it expects a slowdown in freight traffic, and that will weigh on the sector in the u.s. we are seeing drops particularly in japanese names at the open here as well. shery: a senior economist joins us to discuss china's slowing growth as we look ahead. oecd sounding the alarm on the

food crisis caused by the war in ukraine. we will have more on how that is playing into global inflation worries next. this is bloomberg. ♪

>> we have seen low employment

and high inflation. remove monetary policy accommodation. it will signal they will target this, and in those countries where there is obvious demand monetary policy should be tighter. shery: the oecd chief economist and director on monetary policy tightening. we heard from the world bank, we have been seeing stronger inflation as well, all of those calls really being felt the market, the nikkei giving up earlier gains. energy, one sector reeling in those gains with higher energy prices. tech leading those declines. with guilds spiking across the region we continue to see downside pressure on those

overvalued stocks, asx 200 down .7 of 1%. let's turn to that oecd call because they are seeing the war in a grain taking a heavy toll on the global economy that will stop short of associative but will hurt the poorest countries. kathleen hays is here with the latest. helen with the pain be? kathleen: that is one of the big surprises, we have seen since the war in ukraine started the roping supply chains, bottlenecks would not just be short-lived but would start getting better, but the war in ukraine changed all of that. what we see with the oecd talking about this creating a humanitarian disaster, millions forced from their homes, they go on to say coupled with china's zero covid policy, very important.

we have not seen this since the 1970. gdp cut substantially, not the level that shows recession, the u.s. goes down 2.5%. japan does see some growth. this thing about the cost of living crisis, famine, prices surging, inflation doubling for the world. russia and ukraine make up 30% of wheat exports, 20% of corn. that is one reason there is this alarm being wrong about the humanitarian crisis could hit africa and the middle east the hardest. other international organizations making a call for development -- developed nations to being ready to help. haidi: hoping for 25 for the ecb

is they lay the groundwork. given the search you are seeing just how hawkish are we expecting ecb and christine lagarde to be? >> the question is they may be disappointed because this will be the first rate hike they do. they will signal that they are going to move in july. this will be the first rate hike since 2011 and the doves that consensus around 25 basis points. the press conference, christine lagarde will be grilled, every question reporters can ask. are you possibly leading toward 50 basis points, ecb is hoping to say this is the end of their asset purchase program.

people are concerned about fragmentation, bond yields widening. for indebted countries like italy versus germany, if that could lead to the type of financial crisis worries, that will be another issue on the table. haidi: caffeine is looking ahead to the ecb decision and looking ahead to the start of trading in europe in this critical session as well give out pitiful the ecb meeting is and the drumbeat leading up to a. euro stocks futures, we saw potentially in the previous session. already worries about high inflation, slowing growth, the potential for recession in the area. msci europe down about .7 of 1%. the euro is holding steady.

it has been lacking the upside. let's get more on how the ecb decision, our guest joins us now. this is being seen as a game changer. i cannot remember the last time we were this excited about ecb policy meeting. >> it has some potential. in terms of main g jim banks ecb is one of the final ones that as a hawkish stance. particularly because the backdrop this week, we had the rba that surprise markets for the second time in a row by being hawkish. a 50 basis point i's 50-50, a coin toss. if they signal it is on the card

you expect to see interest rates pushing higher. that will kick off and take global rates higher them. shery: what will this do to dollar-euro and dollar-yen given that we have no seen a 20 year high? >> because of interest rate differentials being a key driver in dollar-yen and euro-yen is positive for those currency pairs particularly because the bank of japan is sticking to its accommodative stance. as guilds bushfire you are looking for dollar-yen to push through this 2015 hi and markets way to 140 and euro-yen, 149.78 were moved with that level.

if the differential keeps expanding it going to be positive for currencies against the yen. haidi: when it comes to euro-yen were to be see that trading? where do we see the direction for broader euro if we get a less hawkish messaging? >> that may surprise the markets and disappoint them, and you would expect we this to happen as a result. the key thing is even though it disappoints they are looking for the long-term as well. if the ecb says we are doing 25 next month but after that we will leave on the table 50, 50, 50, that changes the dynamics. it is not how much they signal next month, it is about the projection that will be the key thing. as projections disappoint market expectations, which are getting more hawkish we will see a

yuan-yen selloff and euro-dollar weaken as well. shery: we have plenty more to come on "bloomberg daybreak: asia." stay with us. this is bloomberg. ♪

shery: a trick of the latest business flash headlines, a company dropped the most in three months after the bank declined to comment on a report that it was looking to acquire credit suisse. it declined by 1% at the close. state street could make a bid for credit suisse. it has a pending deal. head office staff will step in and help overworked ground crew at its low cost jet style carrier. staff have been asked to assist

during the peak july holiday period with operations in melbourne, sydney, and brisbane. want us -- qantas is struggling to cope. the company is acquired more than 50,000 shares since may 23, marking a reversal. purchase comes after tesla fell 2% from november high, assets down more than 50% this year. >> if you look at our performance from the low end covid to the beacon 2021 that was a 360% increase. innovation solves problems. we were rewarded accordingly.

down 75%? why, inflation and interest rates. haidi: let's take a look at them a reversal when it comes to the tech space in the japanese session, softbank seeing a big jump coming off earlier highest by as much as 5.1% on the back of big gains we saw in alibaba in the overnight session. capping a three day client i made more easing regulations. as the world grapples with the fast spread of covid in 2020 a singapore airlines executive realized bold action was needed for the carrier to survive. the ceo told us exclusively about difficult decisions that had to be made.

>> it was unprecedented for the airline industry and singapore airlines especially given that we have no domestic market. just to give statistics, in january of 2020 we were carrying 3.4 million people. by the time we reached april we were only carrying 11,000 people, huge drop, and our capacity was reduced rate covid. it was a very tough time, because as an airline we still need to maintain airplanes, they are staff and all of that. it was about 300 million 400 million a month. haslinda: what has been the single biggest challenge for singapore airlines? >> i would say two things.

and sure we have enough cash to survive. it is eight survival issue, and i certainly did not want to see singapore airlines declaring to go bankrupt. fortunately we were able to address that quite early and provide a confidence by the financial markets in general. the second thing, which i would say is the most painful decision i would make is about letting go of our people. we had to let go of 2000 of our people. we tried to delay as much as possible. shery: dad! a dinosaur! it's just a movie. no dad, a real dinosaur! show doorbell camera.

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shery: we are getting breaking

news to the china, should not's district will lockdown on saturday morning for mass covid testing. again, the district in shanghai will be under lockdown for mass covid testing. shanghai reported five local asymptomatic cases in the last reporting day. no infection found outside the guarantee -- quarantine. he will be watching this very closely with virus restrictions having a big impact on markets. >> does affect sediment at the start of the trading session about one hour, but overall we have seen rebounds started to come back to the chinese market. if you look at this chart you can see you on turnover for the last three sessions. we have seen positive sentiment coming from investors including

foreign funds with combined for the past eight sessions, the longest streak that we have seen since december. we will see i we go. living the board to see the rest of the markets in asia, nikkei imagining to cling onto its fifth straight day of gains held by that weakness in the end we have been keeping a watch on all morning. fairly dumpy throughout the rest of the concession, inflation fears, oil continuing to trade higher into its third straight day of gains. shery: adding to inflationary fears. let's get diwali quinn -- vonnie quinn. vonnie: oecd assessors: but look . at the organization says the world economy will pay a hefty price of the were in ukraine with weaker growth, stronger inflation, and potentially long-lasting damage to supply chains. a chief economist said: it is must take immediate steps to avoid a food crisis.

lng says investigation is underway after the fire broke out in its export terminal indexes. a company spokesperson says the place has been brought under control under no injuries were risk to this running committee. divisively is one of seven terminals that export natural gas by sea and you could have an impact on global supplies of the field. i'm interested outside of your supreme court justice's brett kavanaugh some will allegedly armed with a pistol a knife is facing federal attempted murder charges. a court finding says the 26 you're from california told detectives he wanted to kill brett kavanaugh and believed the justice would vote to losing gun control is independent decision. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. haidi: john's trade data coming in, export growth has rebounded from the earlier year base but

our next guest remains concerned the growth trajectory will slow. she is a senior china economists , always good to have you with us. you are concerned that we are going to see an l shaped recovery. >> i think l shaped recovery is the best scenario. quite a few factors, so that is we have recently downloaded china 2023 cdp growth forecast. this year's gdp forecast, quite a consensus call. haidi: where are the spots of weakness going to come from? it feels like at the moment there is a bit of optimism, parts of the country emerging out of lockdown, fiscal policy

starting to come through, the big investment push. you do not see that being effective? >> well, if you're talking about this year we still think about 5% is achievable. we understand the attention to secure the growth start -- growth target at 5% is quite secure. the package has already been lunch last week. it impacts the economy together with the post-covid rebound later in the year. shery: how are authorities seeing this? >> for this year is factored in terms of offset coming in from chinese lockdowns. one lockdown will cost 0.4

percentage points of china's gdp. it will be impacted to remove that part of the impact. china will need to finance that stimulus and also to have deteriorating fiscal conditions. we need to watch for any long-term it affects coming up from this covid lockdown. shery: what are you expecting for trade numbers today and in terms of external demand and how the asian region is holding up? >> specifically, we do think there will be some improvement compared with those numbers in april. it is not realistic to expect a meaningful rebound given shanghai was still in lockdown in march with limited activity controlling covid transmission

locally. any meaningful rebound can only be impacted from june onward. external demand compared with last year when janet registered more than 30% year on year growth for exports, this year we might see growth slowing down, and we expect to see single-digit growth the most because of semiconductors will be slowing down this year, and because the global economic momentum might be slowing down toward the end of this year. haidi: sherry was asking you about all the government would fund the stimulus. this is a return to the old ibook of stimulating the economy. what is that leave the deleveraging campaign and the pile of debt at the end of this? >> exactly, this is one factor

that concerns us. what is likely to happen next year or what we have seen happen in the past is china will need to do a return to structural reforms. at the same time, he's -- ease this covid situation, if it cannot be controlled in a proper way this could pose a bigger challenge to china, china's economic and technological linkage to the rest of the world will be at risk. shery: that is betty wang. south korean firms are retreating from china. beijing's covid zero strategy and higher tariffs from the u.s. trade war start to weigh the benefits from doing business there. michelle joins us with the latest.

china as always been a gold mine for foreign businesses. what does it mean that south korea is retreating? >> china is much less desirable than it was two or three years ago because of the way that it is approaching the coronavirus. they are trying to get cases down to zero. we are seeing many mitigation measures, lockdowns another measures to control the virus that are gripping consumer spending, reduction, manufacturing, and that is having ramifications for companies looking to profit from china. we see it significantly with south korean companies talking about how many of these companies are pulling out of china because they are no longer getting the kind of profits that they used to. china at one point, 3 billion people, and area viewed as the wild west, and area to reap this

bounty, because the government's been so strict with its coronavirus curbs they are not getting the kind of returns they expected. haidi: is it likely we will see a turnaround in terms of companies going back into the country? >> we are hearing from south korean companies that is unlikely to happen. once you put all of this time and effort into building something up and it has not been doubt that they are staying out of it. the story we were talking about today about how we are seeing this big wave of companies from south korea leaving china, they are saying more than 80% of them are actually looking to roll back in china. part of that is because of geopolitical tensions as well. south korea has allowed the united states diplomatic measures on missiles into the country, so we have seen

pushback from china. it looks like there is some weakening of the relationship between south korea and china, and that is playing out in the future and were because of the coronavirus -- worsened because of the coronavirus. haidi: we do have more to come. this is bloomberg. ♪

haidi: starting off with oil were we continue to see a three month five, indications that u.s. stockpiles are tightening, the lowest feasible level since 2013. uae saying oil prices are nowhere near the peak and that chinese demand will continue to strain the market. we are watching other commodities trading, very interesting story when it comes to aluminum, this industry conference in north america, a survey seeing 87 zero producers, traders and buyers seeing aluminum prices will plummet 20% to december. we are watching upward price implications of that. copper continuing to see gains as we see chinese manufacturing recovery. we get more indications from resilience of that rebound with chinese trade numbers out today. shery: staying with metals,

aluminum traders rushing to sell their holdings. let's get the latest from su keenan, allegations of over pledging? su: these allegations spooking the market, what this means, i am a traitor, i might have a stockpile of metal that i have used several times to get loans where there is only one file, and this is a's use of warrants, also fraud and it is prompting sweeping oil checks and a plunge in confidence. market participants are morning they might face issues, offloading the metal litter on so they are raising to sell it off. there either selling get a discount or shipping to the

customer yard. the steepest discounts to futures since last up over. last week's allegations were focused on a single facility, a warehouse widely used in the industry to prove ownership and is a collateral for loans. there were several traders who alleged they had lent out $75 million only to find out that the actual inventories were worth much less. this has caused a problem. you will note aluminum supplies are a decade lows and get the selling is taking place because of these concerns. haidi: there is a growing view that when it comes to aluminum the west days could be behind it. su: that is surprising. commodity prices have been on a tare and we saw the bloomberg

commodity index it -- hit another record. the growing view of the hundreds of producers, traders, and buyers is that the best days could be behind them. one of the notable forecasts came from a researcher, they warned the cardigans the price of aluminum could plunged by 20% in december. they are think this could happen as your mind ebbs and supply shortages and issues add. consumers cannot sustain the level of goods, aluminum prices were up 40% last year alone. cannot continue? there is a view that when you take all of the rest of the situations into comprehension it does not look good. there is a bearish view.

haidi: after that 40% surge it is to come done at some point. su keenan with the latest. let's get you a check of business flash headlines. the ceo of australia's largest natural gas exporter says the price of oil, natural gas, and diesel answers this year with demand increasing after the pandemic in russia's invasion of ukraine. the ceo tells bloomberg the company expects prices to eventually come off current highs. >> we do expect oil prices were -- will come off the size but near-term factors are tight and supplies continue to be tight. one of the things that will challenge the industry as we have been under investing for the past two years. we need to continue with investment. it will take more time. haidi: a company is in talks to

sell a 49% stake in a terminal operator. the transaction is to devalue the company at two big and dollars. it was founded as a subsidiary more than 45 years ago. it has operations in oakland and jacksonville florida. someone warned that a weaker economy would impact performance. they told bank of america conference it will impact not only the semiconductor industry but corporations globally. it already given the disappointing second quarter sales and profit forecast bakken oil. a top lawyer is said to reassure staff that a sale is still progressing. our sources say staff was told the company was waiting to approve it stocks separately. the washington post says the

board plans to comply with elon musk's demands. shery: still ahead, the search in china tech -- surge in cha ---- china tech stocks. the rebound next. this is bloomberg. ♪

shery: alibaba let another rally in chinese tech given a renewed hope that the rebound can be sustained. bloomberg's executive editor for asian markets, with u.s. tech stocks under pressure with potentially higher rates could chinese tech stocks be the answer here? >> that is one thing, but fact that the rest of the world is looking as an awkward or difficult place to invest. a number of things all at once from lockdowns, the strict crackdown on tech platform companies and kind of starting to build optimism after what has been a pretty tough start to the

year as well, right? if you are looking for an alternative to u.s. tech stocks, and have a look at china's markets. haidi: it is interesting how likely the tide turns and the perception of chinese equities can change from week to week or day today. we are watching again, because this led to remarkable lows, undeterred when it comes to policy makers are being able to do anything. what is the reaction to equities? >> i am not sure you can say it is being deterred by policymakers because they are not pushing back that hard. they are saying things they have said in the past that is not prevented week is in the yen. they are holding the door open for it, and that is why we have seen such rapid moves to.

if you have not been short yet, then you are probably kicking myself at the moment at some of the trades that have been there. i think now people are going to start thinking about is there going to be a backlash? is there going to be pushed back? look at that the chinese yuan against the japanese yen. if you look at the korean won, strongest levels against again since 2015. people might get upset about that. there might be saber rattling from policymakers and the market might take fright. while you were expecting the yen to continue to weaken especially against the dollar you have got to be careful of sudden corrections that can disrupt things in some of those other currencies. shery: let's talk about the chinese yuan. we saw some moves a couple of weeks back.

where do we stand there and the policy diversions we are seeing the pboc, how does that set up for stock market trading as well? >> i think the yuan is interesting, we have been debating internally quite a lot about much higher levels of realized volatility, it is assigned that is being allowed to flow more freely or in reflection of overall market volatility. we are at these levels against again, for fx traders that will be a worry. we might see another correction in the yen and chinese yuan lower. if you are an equity fester -- investor there is nothing told

you back. haidi: getting china trade numbers at some point eminently this morning. that will give us more insight into how the economy is coming along. phil dobson there, let's take a look at some of the stories we will be watching. asia semiconductor shares could track lower as we had the intel seeing a weaker economy will affect demand and hurt their performance. micro electronics and other groups as well. we are watching shipping stocks. shery: especially after we had that call from j.p. morgan saying it expects a slowdown in freight traffic to weigh on the sector in the u.s. we are keeping an eye on shipping and china's emergent energy. really under pressure. take a look at futures, not much

happening at the moment. chinese futures ended slightly higher. we continue to watch dollar action against the yuan as well as it is weakening against the level 671. it is about the fx currency space as we talk about the japanese yen close to 135 point 15 level, the historic high. coming up, our guest gives us their outlook for fed rate hikes in june and july as the world continues to grapple with rising inflation. here why growing investments will seize opportunities intranet's growing market. -- china's growing market. this is bloomberg. ♪

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