paul: you are watching "daybreak: asia," coming to you live from hong kong, sydney, and new york. shery: the top stories this hour, inbounds in u.s. stocks sets a positive tone for asia while longer maturities leave treasuries lower. the fed chief is calling for rate hikes as fast as possible. elon musk tells bloomberg that the u.s. is likely to face near-term recession. we get exclusive insight from the qatar economic forum. and the yang 6824 year low against the greenback as investors -- and the yen six to 824 year low against the greenback -- and the yen sinks to a 24 year low against the greenback. we saw equities gains in new york. we are also following the gasoline futures market.

in the new york session we saw the bounce higher. we just learned president biden will be asking congress for a federal gas tax holiday. there had been criticism that perhaps it could affect revenue, but the president defended this earlier today, saying that this would not affect roadbuilding projects. he is seeking a pause in the $.18 per gallon tax. we will have to see what happens in congress. meantime, u.s. futures are muted in the early session, but we had seen the s&p 500 rarely in the new york session. energy leading gains. . also consumer discretionary stocks. more positive sentiment when it came to recession fears, even president biden saying that is not necessarily inevitable here. annabelle: but still, also some concerns and how solid the rebound is really on.

we are pointing to a higher start across asiam one hour from the opens in japan, korea and australiam new zealand also online to the cap state. wells fargo is one of the strategists saying that the sector is still a buying opportunity. the yen is trading lower, we are moving toward the 140 level. nothing stopping the yen in its path to that. the boj is going to be forced to act. a lot of speculation building and cba is weighing in, saying that the case for tightening is building in japan, paul, but we are not. -- we are not there yet. paul: the world's richest person is joining a growing list of leaders speaking of recessionary

risks. speaking at the qatar economic forum, elon musk said the economy is headed towards a recession in the near future. >> a recession is inevitable at some point. as to whether there is a recession in the near term, that is more likely than not. it certainly is not a certainty, but it appears more likely than not. paul: let's get over to our chief rates correspondent for asia and mliv contributor garfield reynolds. sentiment is improving. but is the sustainability of this rebound we are seeing in doubt. garfield: it is definitely in doubt. one of the concerning signs when it comes to how likely this will extend is that there were a lot of gains for the most shorted stocks. there was plenty of hedge fund shorting activity seen last week amid the big drop. so you come in after a holiday,

you get a bounce, that typically leads to a short squeeze. there were also some option expirings last friday, and triple witching also. those option expirings this week, which meant that that set off a spur for buying in general to square out those positions. there is a lot of internal technicals but not a huge amount in the way of the mentals or really knew news to give us confidence that -- not in the way of fundamentals or new news news that the bounce will be sustained. jay powell and plenty of other fed speakers are more likely to emphasize the need as they recently did, for stronger rate hikes. shery: to your point, the

richmond fed president announced that the fed should hike as fast as it can. take a listen. >> we are in a situation where inflation is high, it is broad-based, it is persistent, and rates are still below normal. the spirit is you want to get back to where you want to go as fast as you can, without breaking anything. shery: how much of this is already priced into the markets? garfield: a fair bit of it is already priced into the market. if you look at what rates traders are expecting when it comes to the fed through the end of this year, it is something like at least two percentage points of hikes, possibly more. that jails with the idea that next month will bring -- that

gels with the idea that next month will bring 75 basis points again. unless there is some softening in the data, it looks like we will have 75 basis points fully priced in. it is close to fully priced in now for the next meeting. in that situation, given everything that is going on economically in financial markets, it will be very hard for the fed to not go 75 basis points and risk that that would cause more pain than the 75 basis points wood. 75 would get us back up close to what has been flagged as neutral. the concern is that the fed is likely to take a path where it starts to restrict economic activity. paul: we will talk about the yen. it is below and passed is 24 year low. nouriel rabbinic has been

speaking to us as well, he is flagging 140 for the year and as a trigger for the boj to change. take a listen. >> if you go above 140, the boj will have to change policy, and the first change would be to change the yield control curve. so i think another 10% fall in the yen would imply changing policy. paul: 140 for the yen. is that a credible proposition? garfield: the yen is already in territory where it could act as a trigger already, you would think. there is not a lot on the charts that give you a solid stop point . the boj managed to control yields last week, but it brought up almost 1% of the bond market to do so. at some stage it is going to buy bonds and there is not going to be anybody who is actually capable of selling to them.

so it does not look sustainable. although the boj governor has shown quite a stylish -- quite an estimate she willingness to continue doing what is possible. 140 is around number, we love round numbers. it is a trigger point that people will be focusing on in the markets. that in and of itself will add to the pressure. if the yen goes to 140 and the boj does nothing, more and more people will parlay the bets that the boj will do something. shery: garfield reynolds, thank you. let's turn to vonnie quinn with the first word headlines. vonnie: chinese premier li keqiang has called for ensuring food security as the war in ukraine threatens global supplies. he visited a food farm in the province of neighboring beijing, stressing the importance of this year's harvest. earlier this month, china's state stockpiling company but newly harvested wheat for

national reserves at record prices. torrential monsoon rains in parts of india have caused deadly floods and landslides, killing 300 people and displacing millions. the monsoon arrived in india at the end of may and is set to last until september. it is also one of the most important seasons for farmers in a country that is dependent on agriculture. bipartisan negotiators in the senate have reached an agreement on new gun legislation, lawmakers now discussing their timing for releasing the text of the deal. senators restarted talks on gun safety in the wake of the school shooting in texas last month. regulations will include tighter background checks, and safety at schools. a top russian official is starting to retaliate in a growing standoff with the european union, after lithuania blocked the transitive sanctioned goods to the baltic territory of kaliningrad.

the secretary of russia's security council says his country will respond to hostile actions, and warned lithuania of serious negative impact. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, a venture-capital firm's founder tells us exclusively why he is excited by the opportunities in new enterprise software services that aid companies' digital transactions. and some rotation ideas for treating stagflation. a discussion on that next. this is bloomberg. ♪

>> a recession is inevitable at some point. >> it is almost unavoidable. >> the odds are there is going to be a recession. >> seeing a cooling of the economy is something we believe is appropriate. >> as to whether there is a recession in the near term, i think that is more likely than not. >> we will have a tough period. >> over economists as you noted this morning have increased the odds of a recession this year, but really focused into next

year. >> if we can stabilize the energy market, i believe, and the fed does their job, we will have inflation under control. >> inflation is not going to cure itself. >> there will be more surprises and more shocks coming from central banks. >> inflation is quite bad, it is intransigent, not transitory, and the consequence will be a recession. shery: our tv guests on recession risks at the qatar economic forum. nouriel roubini was telling us his base case for the u.s. economy is a hard landing, but our next guest has some rotation ideas to trade in a stagflationary bear market. joining us is ben emons. good to see you in person again. ben: good to see you again. shery: what is your base case when it comes to risks of inflation and recession continuing to get worse? ben: i was watching germany closely. there was music today that gas supplies continue to be cut off

from russia, they continue to have to ration supplies. that puts the german economy in the real risk for contraction. if that happens, the eurozone goes into recession. that is our scenario to what we may face at some point. so are we closer to recession? no. . but in europe there is a bigger risk. so that is something we are carefully watching. shery: you mentioned gas in europe. does it make you more optimistic about the commodities side and whether or not we could see prices rising in the energy sector, or do you get defensive given that stagflationary bear market? ben: i want to stay constructive on energy prices. in the end, it is a tight market, it will not solve itself through recession even. it is a matter of structural issues that have to be resolved over time. commodities and energy is part of that basket, that stagflationary basket. on the other hand, if we managed to get through a shallow recession, it would be extremely

attractive. you have stagflation risk. this is where, last week particularly, markets were struggling. you have to think about being overweight energy, maintaining a highly liquid portfolio in order to weather the stagflation. shery: there is a strong dollar concern? ben: it is never a free lunch about the strong dollar. if it gets too strong, markets get hurt, family costs go up. but there is one benefit to it if it gets really strong, it will take out the big froth -- foods, agricultural will probably decline in price. that may help our inflation here, because it is driven by food and agricultural prices. but a strong dollar is not a good scenario, a too strong dollar will cause friction in the markets. paul: as we have rates writing, what are your expectations

around the potential for corporate defaults? ben: corporate defaults are still low. that has to do with companies having built up really solid balance sheets. they have built up a fair amount of liquidity. there is not a risk in the corporate bond sector, but we do have a corporate bond evaluation that is still deteriorating. the value of corporate bonds has declined dramatically. so if you are getting a really strong dollar and pressure on funding markets, then you also are getting limited ability to find the corporate bond markets. so there is risk around corporate bonds, it is just that the risk at the moment is still low. corporate balance sheets have been strong. paul: we are expecting another supersized rate hike from the fed. neel kashkari may be seeing the funds rate below 4% by year -

e butn in the broad sweep of history, rates ared still low. do we need to keep some perspective here? ben: to some extent. but we also don't have the inflation we had in the 1980's where you had 14%, 20% inflation. we are still about half of that. i am not suggesting we should be at that high of a rate. we have much more sophisticated financial system today. going down tore through percent means a lot of tightening we are going -- going down to 3%, means a lot of tightening we will get ahead of that. obviously, there is a huge amount of attention to having to lift rates to get price stability. that is some way to go. shery: given the rate differentials, we are now seeing the yen at the 24-year low and you recently called for

the 135 level to be broken easily. what is the next level we should watch? ben: the 140 level. there is tension on japanese officials on that number. you will probably see a pickup between 140 and 145 and the ministry. shery: of finance will pay a lot of attention to that. shery: we will have you back when that happens. good to have you back, ben emons. coming more from our exclusive conversation with elon musk as the, world's richest men lays out his plans for both tesla and twitter,. this is bloomberg. ♪

paul: musk says a u.s. recession is probable, more likely in the near term.

bloomberg editor-in-chief john micklethwait spoke explosively with him and also asked for updates on his twitter takeover plan. >> with respect to the twitter transaction, there is a limit to what i can say publicly, given that it's somewhat of a sensitive matter. [laughs] i want to be measured in my responses here. such is not to generate incremental lawsuits. [laughs] john: that seems to be a risk you somehow managed to overcome. [laughter] >> yes, deposition minimization is important. [laughter] >> have twitter given you enough information? >> well, there are still a few unresolved matters. you have read the question as to whether the number of fake and spare him users on the system is less than 5%, as twitter claims, which i think is probably not most people's experience when

using twitter. we are still awaiting resolution on that matter and that is a very significant matter. so we are awaiting resolution on that. and then of course, there is the question of, will the debt portion, together question mark and then we'll the shareholders vote in favor? those are the three things that stand in the way -- that need to be resolved before the transaction can be complete. john: what about the general state of the economy? does that weight on you? y described it as, you have a super bad feeling about the economy. as i said earlier, joe biden has just come out and said that a recession in america is not inevitable. how do you feel about the economy? >> a recession is inevitable at

some point. as to whether there is a recession in the near term, i think that is more likely than not. it certainly is not a certainty, but it appears more likely than not. what do you think? [laughter] john: i am with you. i agree with you. i think it is more likely. can i ask you one particular thing to do with the twitter bid , you are one of the biggest and fastest-growing investors in china. tesla, you have talked about it being one-third of your sales going forward. you are now buying twitter, a public forum for free speech. the chinese historically don't tend to be enthusiastic about free speech. are you worried about whether you can keep those two particular horses running? is buying twitter going to get you in trouble with the chinese? >> twitter does not operate in china. so, and i think china does not

attempt to interfere with free speech or freedom of the press in the u.s., as far as i know. i assume you are not under pressure at bloomberg from china. so i think that is not going to be an issue. john: in terms generally of that issue of freedom of speech on twitter, you have talked about making twitter even more freer and letting more people into it. is there a limit to who you think should be allowed on twitter? >> my aspiration for twitter or in general for a digital town square, would be that it is as inclusive in the broader sense of the word, as possible. that it is an appealing system to use.

ideally, i would like to get 80% of north america and perhaps, i don't know, half the world or something, ultimately, on twitter in one form or another. that means that it must be appealing to people. it cannot be a place where they feel uncomfortable or harassed or they will simply not use it. shery: elon musk speaking with bloomberg's editor-in-chief john micklethwait at the qatar , economic forum in doha. we are counting down to the start of trading in tokyo and seoul. in korea, the central bank will be releasing its biannual financial stability report to the national assembly. and we are watching the markets there because korean shares are near in 19-month low, one metric is suggesting the worst could be over. the korea national investment association reporting that a percentage of short-term margin

positions rose to the highest level since march of 2015. also, deal flows in asia's primary dollar bond market picked up, with yield premium straightening. korean western power and energy usa pricing in the dollar bonds. and the boj will be releasing minutes of its latest meeting, as its ultra-loose monetary policy decision continues to weigh on the yen. and the company sumitomo mitsui is prepared to take a stake in sbi holdings. coming up, we will be discussing the japanese yen at a 24-year low against the dollar. where as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network

with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music)

>> this is "daybreak asia". 30 minutes out from the open now in japan, australia and korea. they're focusing on the boj's recent bond buying to defend its yield cap. we have seen it really struggling the central bank here to keep the 10 year yield from breaching that band of .25 percent. up arrange there. that is despite buying bc across maturity. we still have within a week left in this month, but already we see the boj buying more jgb's for 25% more than i any jgb in any month on record. so flipping the terminal, that takes us to a place we have never been before. that is the boj owning 50% of the jgb market. probably something they never even dreamed of when they started the program of qe back in 2001. you can see that this ballooning balance sheet risk. what effectively that means is that the boj really is crossing

here into uncharted territory. it's really hard to understand the market implications of the boj owning more than half of the market and what that means for existing holders of jgb. whether it's people that are domestic or international investors. that markets live team points out on the blog, it means that perhaps we could see people being less comfortable with such a lopsided ownership market structure. >> as you mentioned, the yen following -- paul: as you mentioned, the yen falling 14649. they say a further 10% will force the bank of japan to change its policy. he spoke with bloomberg's manus cranny at the economic forum. >> if it keeps falling, it will keep falling more than the boj falling. at some point, inflation will become a problem for the boj, and then they will have the zero policy rate and then try to

control the yield on the 10 year jgb. so the 10% with changing policy. >> was so trigger point on yen for a switch? >> well above 140. manus: do you think they could trade 140 and break the yield curve control this year? >> yes. if you go well above 140, boj would have to change policy in the first change of policy would be to change the yield control curve policy and go above that and allow it. manus: from a global perspective, there was a hint we could've had she to intervention on the yen, usn bank of japan. do you think that's what we might get? do think there's a risk of concerted intervention on the trade of 140? >> they change monetary policy by the boj, it will stop the

fall on the end. so you need a combination of intervention for changing policy. it won't make much of an effect. if there's not a change of policy by the boj. shery: the associates german speaking with bloomberg at the qatar economic forum in doha. let's get more on the japanese currency in the boj's potential response for bloomberg's mark cranfield. is that potential of intervention whether it's the boj? we continue to see traders bet on the yen really strengthening. we are talking about one month dollar-yen putting options higher than calls. >> i think they cnn game coming pretty soon in japan. that's partly why the implied options are very expensive now for their meeting of the bank of japan. that's also going to be when they announce a new forecast, so

there could be a time when they seriously consider changing yield curve control. the bank of japan is about to come to 50% of the japanese bond market, which is historic. nobody else in the g10 space that's even close to that. you could see that the spread between the yield in the u.s. and japan is just weakening the yen continuously. i think you will see more pressure -- we had an attack last week that push japanese futures. oh -- they would have to establish more than 1830 of bonds to stabilize the market. this can't go on much longer. this is the kind of situation where you have the market against the central bank and at some point something has to give. the bank of japan would be getting nervous right now. it can't afford to keep buying jgb's and crushes participation in the market for the private sector.

partly going towards the equity market. so the market can sense that something is coming to a head. they could push dollar-yen towards 140, and that could be the trigger that makes the bank of japan change policy. paul: what with the policy change look like? there are so many unknowns. could there be a disorderly unraveling? >> there certainly could. there's a high risk of that. but i suggest that the way the bank of japan has operated in the past, it would be some kind of gradualism. so probably the first step would be that they shift the yield curve control. the target is 0.25 percent. maybe they would widen that up to 0.5%. that would give quite a lot of room of bonds to reestablish some equilibrium. the yield curve steepen and people to come down. but that wouldn't be enough in the longer run. they need to get off of the negative yield curve policy. they need to raise rates.

as much as the world is doing above zero. but you would probably see them doing it. but at least, if they shift yield curve control, that would be a message that the yen has become too weak, that they are concerned about a bond market and japanese assets in general. so we would probably get one thing after another. but in the end, it depends if it gets itself away from the negative rate policy. paul: bloomberg's mark cranfield. let's get to vonnie quinn for a check of the first word headlines. vonnie: right now they are saying it's naive to think the fed raising interest rates will make things better. he argues that while tightening may reduce inflation, it would squeeze consumer buying power. he added that it would shrink with the government deficit in the fed containing inflation could only create economic weakness. richmond's fed president says the fed should raise rates as fast as it cans without causing harm to the market or the

economy. he doesn't vote on monetary policy this year, but says he supports the central bank 75 basis point hike earlier this month. he said the fed may need to raise rates beyond neutral and intra-restrictive territory. >> here in a situation where inflation is high, broad-based, it's persistent and rates are below normal. so i think this spirit is, you want to get back to where you want to go as fast as you can without breaking anything. >> the u.s. military is banning the use of anti-personnel landmines. they have a stockpile of about 3 million minds it will work to destroy. exception is being made to south korea which uses them. the white house as mines have a disproportionate impact on civilians, including children. human rights watch calls the move good but not good enough. australia's research body is closing its physical office in shanghai. high tariffs have made business unviable and what was once the most prized market for

winemakers. back in 2020, worsening relations led to beijing imposing import duties more than 200 percent on australian products. exports plummeted by 97% in 2021. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn, this is bloomberg. >> the founder of vc firm as 28 capital says why he's excited to get new enterprise software services to a the transition of brick-and-mortar companies to digital. that's coming up in our generation next segment. this is bloomberg. ♪

if you wake up thinking about the market and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity.

paul: new opportunities and software businesses. companies like salesforce or zoom, the general partner comes from a line of business leaders. the chairman of send town news, one of home -- one of hong kong's oldest newspapers. his great-grandfather ran a printing press in shanghai before setting up hong kong tobacco in the post years. we spoke exclusively to stephen engle about what he learned from them in his approach to finding investment opportunities. >> we believe the foundation of

both traditional brick-and-mortar businesses transition to digital businesses are really built on top of using these enterprise services. soldiers all types of things from cybersecurity and workflow software, productivity with collaboration tools, customer service tools, marketing tools are all delivered over the cloud. so that is the opportunity that i think we are well aware of. and that the markets recognize. we see a long-term opportunity to continue to invest in them here. >> what are your key metrics for identifying the right metrics? >> i think the two things that it always comes down to, especially early stage investors are the people. the founders and entrepreneurs building their companies. i think entrepreneurship is really, it's one of the most challenging things that people can go through in terms of the ups and downs, so you need some buddy with extreme intensity,

grit, being able to power through anything. but it's also about execution. it's being able to take limited amounts of information and being able to decide and decide quickly and move forward, and if you're wrong, change. >> is at the business plan or the person you are investing in? >> i would say it's the person first and then the market is the second thing. so it's not just the business, it's the market opportunity in the product that you choose. so why say people first is because not everyone gets it right. there are plenty of examples of founders who have built great companies, but the first iteration of their company was not what they intended. so you can look at something like a slack, which was started as a gaming business, and eventually pivoted into collaboration messaging platforms. but it does take that founders ability to be able to navigate and be able to iterate and be

able to make the decision to change. the second piece of it again is, a lot of people talk about big markets, they do top-down analysis and they say it's 100 billion or something. but the reality is, you do have to pick big markets. so pick markets that matter, but really understand the nuances of the market. stephen: how select are you or is there a shotgun approach and what kind of assets do you have at your management? >> we have a couple hundred million under management and so i think it is important to have a portfolio because again, it's not business where every company you invest in works, but that said, i think it is important to have high conviction. for us as a firm when we invest in companies, we go in very early. how much ownership we have from the business is important. we will write checks very early to have high conviction and an opportunity. but the key thing is is that the

venture capital business is all about the power law. it is not about averages. it's about investing in a handful of companies that will be massively large, right, right, to basically help normalize and change the returns. stephen: if we are headed towards a recession in the united states, what's that going to do to valuations, and how will that impact money and how selective they are? >> there's no question i think valuations are being impacted. the question is by how much and where. and when you look at the stage of companies. i think in response it's to manage cash tightly, but if you have a great product, then keep your heads down, build product and continue to grow your cells. and so, why am excited about that is that if you're companies are strong and stable in this

type of environment, this is when you can kind of really dig in and build. you can hire talent. if you are strong you can attract the right people and really focus on product, and then when things start to get better in the market, you can handle the merchant more strong. stephen: what did you take away most from what your father did? you really gained -- she really came from a father venture printers. your great-grandfather set up hong kong tobacco way back when. your father was the chairman of the newspaper, very different business and what you are in now. so how did that entrepreneurial spirit of your family help you, give you your springboard? >> both my father and my great-grandfather have been inspirational in the entrepreneurial side. it has been well ingrained in me, to always be curious and be adventurous. so, even as i was graduating from college, i did my first job

at goldman sachs, but all of the conversations with my father growing up have always been about do what you want to do. he always encouraged me to explore different things. stephen: he didn't want you to run the presses and work in the news? >> i'm always happy to help family when it's needed, but i think first and foremost, it was always encouraged to kind of explore, and to look at different things. so even growing up my dad used to take me on all of the business meetings. i have memories as a child tied into all of these different business meetings. so i've always had these exposure to different ideas and much of that helped me from when i was very young and has translated into the things i'm working on today. stephen: what was it about your father that made him the entrepreneur that he was? what was the defining characteristic of your father?

>> i think not being shy to express his viewpoints. but i think i have a lot of respect for the viewpoints that he had because they think he drew experience from both the u.s. in the u.s. market, as well as here. stephen: what was it about your great-grandfather? >> i have met him and i did spend time with him and i was growing up in hong kong, when i would visit. but i think he has a tremendous story, like many who have and shanghai of having to restart and re-create themselves. and i think again, not being afraid to take risks, not being afraid to invest in two things was really important. so those things were still the things that are kind of ingrained in me. paul: that was the s 28 capital founders speaking with stephen engle. you can catch more in our latest season of generation x every wednesday at 7:40 a.m. in hong

kong. that's 9:40 a.m. in sydney. let's get a quick check now of the latest business headlines. elon musk says there are still unresolved matters regarding his proposed $44 billion takeover of twitter. he told bloomberg there's a question over whether the next portion of the deal comes together and when the shareholders vote in favor of the plan. he said fake accounts on twitter remains a major sticking point. >> there are still a few unresolved matters that you probably read about the question as to whether it has been used on the system and is less than 5%, which i think is probably not what most people have experienced when using twitter. so we are still waiting on that matter, and that is a very significant matter. paul: he is said to be preparing

to take a stake in spi holdings. sources say japan second largest banking group plans a hold as much is 10% of the sbi to have value $443 million. in 2020 the two companies agreed to collaborate in the strategic and capital alliance with the units would cooperate in digital and other fields. kellogg's flips into three independent companies. units will focus on local snacking, north american serials and plant-based foods. the breakup will happen through to tax-free spinoffs. the move will give each business greater autonomy and room to growth. their shares jumped as much as 5.5% tuesdays session. shery: we will get in-depth analysis from the daybreak seemed broadcasting live from our studio in hong kong. plenty more ahead, stay with us.

♪

shery: is this easing that led the bank of japan to have

problems and keep yield cap that .25% -- capped at .25%. they double down on another policy meeting about keeping it which has overtaken the japanese yen to a 24 year low. the japanese yen watching what's happening with those boj minutes were one boj member already said that the central bank needs to continue without powerful easing . we continue to see great differentials across the currency space. you can see the japanese yen is at the 24 year low. 136 is the level. many economists and analysts saying 140 is the level to watch. perhaps we could see the boj really changing of the finance mistry also coming to intervene in the markets. you are seeing it against every other currency pair how the

japanese yen is losing 94 around the u.s. as the aussie dollar in the japanese yen, that 143 level as we continue to watch turmoil not only in the markets, but also in the bond markets as boj chai's to control yields and continues to purchase jgb's owning almost half of the market. paul: it is extraordinary to see this central-bank owning that much of the markets and we were discussing this with mark cranfield earlier, exactly how does the boj dismount this without creating too much of disruption. we have a couple more minutes coming in now. the challenge is to not curb inflation according to one boj member. in this really is being viewed in a way, once in a generation opportunity to focus on inflation in japan. one boj member making note of

that, saying the challenges is not to curb inflation as the boj needs to continue its powerful easing as we mentioned earlier. but that yen, continuing to depreciate. 136.34. interesting to see where the bottom of that might be. shery: 140 is the level that you have to touch for any sort of changing policy from the boj or the finance ministry. you mentioned of course inflation as well. we have seen inflation in japan really add 2% target for the boj. but the problem is that this is proof that inflation is not necessarily demand driven, which is what they want to see. of course you are looking at the five year yield, the 10 year yield. we see the turmoil in the bond markets play out because we saw the five-year government debt earlier this week. more than two years. that was really a huge test of investor sentiment, and now we are seeing that that negative

market impact, because of the boj's huge presence in the market, is very, very obvious. and of course we continue to watch what the boj does, if it steps back from the brink, and eases up on its bond buying. of course that has completely different repercussions as well. coming up in the next hour, the ocbc wealth management manager will give us the rundown on the biggest tail risks for asian markets. we have market opens in sydney, solon tokyo. this is bloomberg. ♪

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 on your wireless bill, over t-mobile, at&t and verizon. wow. i can do better. yes, you can. i can do better, too. break free from the big three and switch to xfinity mobile.

shery: this is daybreak asia, counting down asia's major market open. will we see the follow-through on the risk on session we had a new york. across asia, that push the japanese yen to a 24 year low against the u.s. dollar and that april meeting from the boj confirming they want to continue that powerful easing. paul: moving in the other direction, the rba expected to tighten, potentially by 50 basis points the next meeting, which is in days time to get inflation under control. looks like there's going to be a risk on day locally. annabelle: we could continue to see markets continuing to rise with the gains we saw on the u.s. session overnight. dust a few seconds away from the opening japan, south korea and australia. we will be watching an open of cash treasury markets. we've got the 10 year yield looking like this. as you mentioned, we did get those boj april meeting minutes out just a few minutes ago.

certainly confirming that the bank of japan is prepared to ease further if necessary and without hesitation here. that puts a lot of pressure on what we see in the japanese 10 year bond as well. we all -- we are already seeing your preaching at .25% range over the past two sessions. where that leaves the yen, that is certainly also the focus. that yield differential we get between the japanese in the u.s. bond. saxo bank saying if we see the treasury reach 3.5% in the pressure on the yen will hit unbearable levels, but this morning we are seeing a trading like this, moving towards that 140 level. that is also the level at which the boj could be forced to tweak and we hear lots of voices on that, including overnight as well. meanwhile, how that's affecting trading for stocks. we've got the nikkei 225 coming online to the upside here this morning. big moves in the energy sector.

that's what we are watching. particularly what we saw on the u.s. overnight, the changing to the opening korea as well. we are seeing bargain hunters really coming back into the market this morning. the kospi still trading higher, but around a 19 month low. that's 2400 level is the key one to watch. the korean won trading like this. moving now to the open in australia, similar to that focus we are having in japan this morning. the energy focus -- sector and focus with the big minus as well. investors are really betting that rising inflation can power commodities higher. we are also seeing the aussie dollar trading in a narrow range. investors really waiting for powell's testimony for the beijing committee later today. shery: we are getting more lines from the boj policy meeting back in april. one member saying that speculations over the ten-year jgb yield have risen, that it will be effective to clarify the boj's fixed-rate operations.

we have seen the boj already buying over 25% more jgb's in the month of june than in any previous month. already, they are very near to owning half of the jgb market. for more analysis, let's bring in the executive director and investment strategist at oh cb bank ross management. let me start with what's happening in japan. given how big of a market play it is now. the boj is in the domestic jgb market. what does this mean for the equity space and for the bond space when you have such a big player? we have never seen it with any other central banks. >> you are right. typically, monetary easing, which is what the boj is doing, and trying to do, it should be the japanese stock market. what's happening to the japanese yen is it's getting timid. it is come off significantly, a 20 year low. i think that's not the best piece of news for the japanese equity market because it

diminishes the attractiveness of the japanese equity. so we are actually neutral. we are underway in neutral. but given what's happening at japan, given the fact that they have different calls from other central banks, it doesn't look like a very pretty picture. shery: we are hearing that excessive effects moves increase business uncertainties, that they must communicate their aim of their policy clearly. given the weakness of the japanese yen, you mentioned the challenges for japanese equities. what about for other expert economies that also compete against japan? does that have any bigger implication when it comes to some of those exporters, whether in china or south korea? >> yes, the currency market in asia has weakened because of the very strong u.s. dollar. that activity should be wealth

and exports in asia, to some extent, more competitive. on the flipside, what's happening is the weaker currencies is resulting in greater, important inflation. it is not wet asian central banks want to see at this juncture. they are likely to tighten even further going ahead, given the higher inflation opportunities in asia. and again, it's not a very pretty picture for asia or asian equities. so we are cautious on asian equities. paul: just taking a look at these boj minutes, it seems that the intent here is to seize the opportunity to get inflation going to japan. is inflation in japan something you are thinking about question market feels like something we haven't talked about in a long time in terms of getting higher? >> you are right, inflation in japan has been lower. at the same time, the inflation numbers have been picking up.

inflation is a global phenomenon, it has not picked up in japan as much as elsewhere. and i think what is worrying, as i watch the programs earlier, one of the commenters said, what the boj really wants to see is demand push inflation. instead what you are seeing is the cost push inflation happening. and that's not the ideal situation for the japanese economy or the stock market. paul: i just want to ask you a question we are putting to a lot of our guests, what you think is the biggest tail risk for the markets in the second half of the year? >> in terms of risk for the market, the second half of this year, essentially, on china, recession, i think it will impact the markets the second half of this year. recession is still playing out.

the risk of recession is still looming in the voices of the session are getting louder and louder. i we probably see it has gone up from 15% at the beginning of the year to almost 20% right now. so i think recession is the biggest risk at this juncture and does not stop at this. i think the markets could actually see further downside impact in the coming months. paul: from ocbc bank and wealth management, thanks so much for joining us. that's get over to annabelle for a look at what's moving. you are watching energy, what's the latest. -- latest? annabelle: we are seeing pullback as we get into trade and japan, australia and korea. we do see the s&p 500 energy index rising more than 5%, but over the past couple of sessions we have seen steep gains with a

little bit of breathing room for investors. still, wells fargo still has a buying opportunity. we can also take a look at asian food related stocks because we did have commodity prices coming online in the u.s. we saw commodity prices pullback for corn, dropping 5%. soybeans at their lowest level since february and we dropping down to $10 a bushel. the lowest level since april. this morning we are seeing the move in the energy for these top two ones here. manufacturers are the bottom two and they are makers over in japan. shery: let's now get to vonnie quinn with the first word headlines. vonnie: the world's richest person says the u.s. economy is headed for a recession in the near future. elon musk joins business leaders warning rising risks. the systems at odds with president biden who says a recession is not unavoidable.

moscow speaking to bloomberg's editor in chief at the qatar economic performance or. -- performance in doha. >> is whether there is a recession in the near term, i think that is more likely than not and is not a certainty. it appears more likely than not. vonnie: just to continue, they are saying it's naive to think the fed raising interest rates will make things better. he argues that while tightening may reduce inflation, it will squeeze consumer buying power. he added that private credit will open up due to the fed selling debt. concluding that payment inflation can only contain economic weakness. the chinese premier has called for food security as the war in ukraine threatens global supply. the neighbor in beijing stressing the importance of this year's harvest as worries linger

over food security. earlier this month china's stockpiling company bought new at record prices. torrential monsoon rains and parts of india cause deadly slides -- deadly landslides killing 300 people and displacing millions. the monsoon arrived at the end of may and is expected to last through september. contributed to the deaths of hundreds of people in india every year. it's one of the most important season for farmers in a country that is dependent on agriculture. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. shery: still ahead, after a sharp drop, bitcoin continues to stabilize near $21,000. we will look at digital currency in the crypto winter may have passed. up next, elon musk says the recession is inevitable. it's more likely in the near term.

more on that in our exclusive interview next. this is bloomberg. ♪

>> i can find many situations where they find two buses. >> is there anything you would like to apologize for to the hong kong people? >> no. paul: richmond's fed president says the fed should raise rates

as fast as i can without causing undue harm to markets or the economy. >> we are in a situation where inflation is high, it's broad-based, it's persistent, and rates are still well below normal. so i think this. is you want to get back to where you want to go, as fast as you can without breaking anything. paul: we are joined by our chief asia economic correspondent. what was the main message there? >> pretty hawkish message. he actually said he's willing to push interest rates into restrictive territory. in that point beyond the neutral where interest rates really do go by consumers and households and businesses in making the point they have to go hard to bring inflation down. he wasn't committal on the 50 versus 75 basis points but he was saying that he was quite

comfortable with chairman powell's guidance, which is that if they could go by 75 if they have to. the key takeaway i would say from him was that he thinks it rates have to go higher much faster, but he did say that he doesn't want to cause any undue harm to the economy and markets. he wants to move fast instead of breaking things. the big question is whether the fed can do that, raise rates and bring down inflation without tipping their economy over into her recession. shery: a tricky balancing act. we are watching the fed in japan because we are getting the april policy meeting minutes and one member saying that the yen's depreciation has had a positive impact, but of course we know that the jgb market has been very lopsided because of all of these efforts by the bank of japan, which have weakened the yen. what does he mean taff of the jgb markets?

>> this is what we are going to find out. from a colleague of ours and he was calculating that the bank of japan could pass owning 50% or half of japan's bond market. such has been the pace they are buying to try to keep a lid on gilts. we have to see how it does play out. you have such a large holding on security. the question is whether or not they will change anytime soon. the yen continues to be under pressure followed by 1% and a new 20 year low. we see political pressure there as well and we think the government should be doing more about the impact of the weekend. but on the flipside you have the bank of japan saying we have to stick with this because the economy is in no state to ship i interest rates. the inflation they are seeing is important. it is not demand driven inflation. this could be a very tricky balancing act for the bank of

japan. i would say there are other warnings from australia. they put in a report saying how difficult it is to nyc see, how difficult it is to pull out. we have to be sure they are watching markets. shery: to your point on the political pressure, we are headed to japan's upper house election and the prime minister has to defend the weak yen. the boj's policy during that televised debate. and now we are hearing from the boj meeting minutes as well, the effect of the yen slides very -- very among businesses. tell us about the pros and cons of that week and cheap yen on the japanese economy. enda: there's no surprise that there's a political foot in there, because the opposition were making the point in the debate and they understand that there's not much you can do for high energy prices. but what can you do to alleviate the weekend? this is where you get back into

how japan locked into this policy out doing as much as the economy and that's why the central bank is doing what it's doing. and that's why the yen is weak. in terms of the pros and cons, obviously there are some pros for certain parts of the economy. but the interesting thing is the idea that it's no longer the export dividend that it once was. because the loss of japanese production is the bank of japan into other countries, the kind of simple one-on-one formula of cheaper currency means we will have stronger exports isn't necessarily holding true to form like it once did. the point is that it's weakening at a pace that is actually destabilizing and un-circling business investment. that's a bigger concern at the moment. of course exporters will benefit, but the bigger concern is the pace and the level of the currents at the end is causing more harm than good at the moment, and that's a tricky balancing act with the government and the bank of japan of trying to navigate.

ever now there doesn't seem to be a hint of a change in the policy. shery: our chief asia economic correspondent in. we see the yen at a multiyear low. the euro as well. look at futures trading. a little bit of a mixed picture after stocks gained for a third consecutive session in europe. we are seeing a little bit more positive sentiment, especially given cheaper valuations. also a little bit of a rebound following last week's worst drop since march. we will continue to follow the markets, let's turn to elon musk, paul. paul: elon musk saying a recession is inevitable at some point, and it will be more likely to happen in the near term. bloomberg's editor-in-chief spoke exclusively with musk at the qatar economic forum in doha. he also asked for an update on his twitter takeover plan. >> with respect to the twitter transaction, there is a limit to what i can say publicly, given that it is somewhat of a

sensitive matter. so i would like to be measured in my responses here such as not to generate incremental lawsuits. >> that seems to be a risk you somehow managed to overcome. >> i think it is important. >> has twitter given you enough information? elong: -- elon: there are a few matters. you probably read about the questions with the number of fake users in the system that is less than 5%, which i think is probably not the experience when using twitter for most users. you're still awaiting resolution on that matter, and that is a very significant matter. so, we are awaiting resolution on that. and then of course there is the

question of, will the that portion of the rounds come together, and then will it convert in favor. i think those are the three things that need to be resolved before the transaction is complete. john: what about the general state of the economy, does that weigh on you when you think about this? you described it as you have a super bad feeling about the economy. are you still in that position? you said joe biden has just come out and said that a recession is not inevitable, how do you feel about the economy? elon: i think a recession is inevitable at some point. as to whether there is a recession in the near term, i think that is more likely than not. assuming it's not a certainty, but it appears more likely than not. what do you think?

john: i'm with you. i agree with you. i thickets more likely. can i ask you one particular thing to do with the trip -- with the twitter bid. you are one of the biggest and fastest growing investors in china. tesla, you've talked about it being a third of your sales going forward. you are now buying twitter, the kind of public forum for free speech. the chinese, historically, tend to be very -- don't tend to be enthusiastic about free speech. are you worried about whether you can keep those two particular horses running? is buying twitter going to get you in trouble with the chinese? elon: twitter does not operate in china. so i think china does not have the view with the free speech of the press and the u.s., as far as i know.

as far as i know you are not under pressure to bloomberg to -- bloomberg from china. so i don't think there's going to be an issue. john: in terms generally about the issue of freedom of speech on twitter, you've talked about twitter making it even freer, electing more people onto it. is there a limit at all to who you think should be allowed onto twitter? elon: my aspiration for twitter, or the digital town square would be that it is as inclusive as possible, that it is appealing for years. so ideally i would get 80% of north america and perhaps half the world or something ultimately on twitter and the one form or another.

and that means it must be something that is appealing to people. where they feel uncomfortable or harass, or they will simply not use it. shery: elon musk speaking out the qatar economic forum in doha. we are planning more to come, this -- this is bloomberg. ♪

paul: let's get a quick check of the latest business flash headlines. volvo is going public with a blank check merger. the spacs as it expects to close the deal on thursday with this

stock to start trading on friday and the transaction should raise at least $850 million to help fund future models. kellogg says it will split into three independent companies. the units will focus on global snacking, north american serials and plant-based foods. the breakup will happen through to tax break spinouts. it will give the business greater autonomy and room for growth. kellogg shares jumped as much as 5.5% in tuesday's session. the chairman is said to be preparing to take a stake in the fbi holding. sources say japan second banking group plans to hold as much is 10% of sbi that is valued at about $443 million. in 2020, the two companies have agreed to collaborate in the strategic and capital alliance where the units will cooperate in digital and other fields. shery: take a look at the asx 200 trading. we are seeing that half-and-half

look for utilities and energy gaining ground. remember, oil actually climbed in the new york session with broad risk on sentiment. perhaps being weighed down by a consumer discretionary and tech stocks. oil also losing ground in the asian session. now at around 108 dollar level. this as we continue to watch the latest on the rba with governor lowe saying that interest rates are likely to rise by 50 basis points at most in july. the markets across asia are mixed. the nikkei is up, the kospi is down. we will continue to watch for the trade is headed. coming up next, we take a look at lingering concerns over food security in china as officials try to balance output while try to balance output while -hi, i'm smokey bear and i made an assistant to help you out. because only you can prevent wildfires. -hey assistant smokey bear, call me papa bear because i'm "grrr-illing" up dinner. haha, do you get it? -yes. good job. -so, what should i do with all of these coals?

-don't just toss them out. put them in a metal container because those embers can start a wildfire. -i understand, the stakes are high. assistant smokey vo: ha-ha, ha-ha. -see, smokey think's im funny!

paul: just wanted take a look at

the west bank leading index for australia. this is the gauge of growth for the next six to nine months coming in as .06 of a percent. basically flat. we were expecting we saw a bigger decline than that back in april, this index looks at a number of economic indicators, nine from house prices to stock and commodity prices, consumer confidence, interest rate spreads, but the gauge, instead of turning negative last month, looking a little bit flat. this is despite commentary from the reserve bank of ausdrill you. we could see inflation hitting 7% in the final three months of the year and another 50 basis points hike looking likely at the rba's next meeting in just under two weeks time. seeing the aussie dollar they're hovering below $.70 at u.s., and modest gains today for the asx. let's get a closer look at markets and go to annabelle droulers and hong kong. annabelle: we are checking in on

how they yen and jgb are trading this morning after we had both geo j meeting -- boj meetings out. the key take away here is that the boj members agree that they are ready tact and have more easing if needed. off the back of that, we are seeing the yen story little bit in the rally, but is still trading around that one-week resistance level and at a one -- 24 year low. one boj member said curving inflation, it is certainly not the challenge for this economy, unlike its other major peers. that's without 2% inflation target still quite a ways off. that weakness we are seeing this broadly in the yen is also telling us about the underlying risks we are seeing in the japanese economy because it's really their pressure valve for the actions that's happening in the boj action and the bond market. so the boj owning more than half of jgb's that are in circulation. that's something that has never

happen for any major central bank. in terms of crosses this morning, we are seeing the yuan trade at 20 against the yen. that is a three decade low and then they aussie yen, we see it at 94 level. but a proxy here for risk appetite on the region. let's go to the board on how equities are trading. looking fairly mixed. not quite the fed move we saw in the u.s. big gains in the s&p 500. a little bit more muted this morning. we are seeing the kospi pullback below the key 2400 level. perhaps a sign that we are just ship seat -- we are seeing risk off go back into the market. >> a little bit of a mixed picture. i'm not sure where we are headed. let's bring a mark cranfield. i wanted to ask about the mixed picture today, but specifically what's happening with japan. earlier, what we have a conversation on how the boj might be backed against the corner, given the pressures that we are seeing in the jgb market, the weakness of the yen, you

mentioned that perhaps we could see a tweet that many traders are bending on this. there's a reason the boj wants this, that they want to stimulate the economy. if they move, and then they change something with the yield curve control, what happens to their efforts? mark: it's not so much about the concern about the economy, it's about assets, what the japanese investors hold. they know that if they make a change to the yield curve and jgb, that a number of fund managers are going to lose a lot of money. banks are going to lose a lot of money. the holdings of japanese bonds are extremely high within the japanese community and equities are not being held as widely as they should be. so this is the big problem. not to mention that the bank of japan themselves own close to 50% of the jgb market. so the shock in terms of prices

lost from the jgb market that will become a bit disorderly if they change yield curve control, could be very expensive in terms of markets and market, possibly in terms of realize profits and losses to a japanese institution. that's the big concern for japan. of course they also want to be very sure that when they change policies the japanese economy is strong enough to withhold it. but if you see the way inflation is starting to rise, it's becoming a bit of concern. the longer they hold back, the yen gets weaker and hopes to drive up inflation. they are in a no-win situation. some have to take a tough decision, much like other central banks around the world having to do. you cannot have it working both ways. eventually you have to decide whether you want inflation to come under control and use monetary policy, or whether or not you will allow it to go into any direction at once, which could be very damaging to the economy as well. and this is probably the discussion the boj is having.

eventually they are going to have to move to shift interest rates slightly higher in japan. it's about the only thing left for them to do. otherwise they will end up owning 100% of the japanese yen market. paul: that sounds healthy. that's sucked about equities. we are seeing a flat session for the nikkei at the moment. but u.s. equities performed reasonably well. but when you consider all the headwinds that are out there. how durable does this rebound look? >> everything looks pretty fragile right now. i think some of the rebound you are seeing is because we are coming towards the end of june, which is the end of the first half of the year during a significant counting time for fund managers. they also want to make sure their portfolios look as tidy as possible. so if they have short covering and global equities, considering it's been a rough have to the year. they also have some people that think that the fed pricing is pretty much in the markets are

ready. that they can anticipate the fed won't go much higher than something like 4%, and they can already put them into their protection. we are seeing an improvement in china. that's important for the asian markets. it looks as though the chinese authorities have toughened their stance. hoping money comes back into the chinese market is good for everybody. but everything looks fragile. the next time cryptocurrencies take a diver dollar-yen shifts higher, it could all unwind quickly. but it's possible it could go through to the end of june without any major disruption. but once we get into the third quarter, people will have clean sheets in the whole picture could look quite differently. >> mliv strategist mark cranfield there, thanks for joining us, you can follow more on the story and all of the trading on our markets lived blog. you can find it in the terminal and you could get a market run down a one click. commentary and analysis from bloomberg's expert editors.

you can find out what's affecting your investments right now. and right now, let's get to vonnie quinn for a check of the first word headlines. vonnie: richmond's fed president said the fed should raise rates as fast as it can without causing undue harm to markets or the economy. he does not vote on monetary policy but said he supported the central bank 75 basis point hike earlier this month. he said the fed may need to raise rates beyond neutral and into restrictive territory. bipartisan negotiations in the senate have reached an agreement while new gun legislation as they discussed the timing for releasing the text of the deal. senators restarted talks on gun safety in the wake of the school shooting in uvalde, texas. the new measures would include better background checks, crisis intervention programs and safety at schools. an official is threatening to retaliate in a growing standoff with the european union. that's after with the wednesday a block the transitive sanctions goods.

the secretary of russia security council says his country will respond to the actions and warned lithuania have serious negative impacts. australia's marketing and research body is closing its physical office in shanghai. high tariffs have made business unviable and what was once the most priced market for aussie winemakers. back in 2020, worsening relations led to import duties of more than 200 and australian products. exports to mainland china plummeted by 19% and 2021. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. shery: chinese -- the chinese premier is underscoring the chinese premier is underscoring that governments concern about food security as he visits a wheat farm to encouraged harvest. this as the war in ukraine and severe weather in china wreak havoc on food supply. for more spring in our chief north asia correspondent stephen engle. steve, food security is so

important for china. they have included it in their biggest political manifestoes. what is the premier calling for now? stephen: with the premier going to a wheat farm, that in itself is not necessarily global news. that's more for the domestic audience, but it's the back story in the food shortages potentially this summer in china. energy shortages as well as more people use the factories and homes use air conditioning. he emphasized food security, energy security as we head into the summer time. obviously the war in ukraine is affecting wheat supply and food security globally. in that bad weather we are seeing in eastern and central china in the region since july, where temperatures have range between 35 to 40 degrees, it drives up the soil and they have not been able to plant as much. obviously, in a very politically charged here and china, they have obviously needed to make

sure that people are fed, and that there's not necessarily food price inflation. because food input is a large component. so his visit to that wheat farm just outside of beijing is emblematic of the amount of importance that the government is putting on food security. paul: chief north asia correspondent stephen engle there. former treasury secretary steven mnuchin has been speaking to bloomberg about u.s.-china ties, and sticking points for the future of taiwan. he told erik schatzker at the economic form that the taiwan issue should be likened to the one in ukraine. >> a lot of people talk about taiwan in ukraine and try to make the analogy. i don't think there's an analogy between the two. taiwan is a complicated subject that multiple administrations,

since henry kissinger, around, i guess what you would call the one china policy strategic ambiguity. so, i think that's a very different situation then ukraine. but again, i spent a lot of time going back and forth to china, i'm proud of the trade deal we did with them, there's a lot more work that needs to be done. i think the tariffs were affected in getting china to the negotiating table. we need to rebalance the trading relationship between china and the u.s., and china and other areas. again, i think there needs to be important diplomatic discussions between the u.s. and china and on the of mutual cooperation and again, i believe the chinese have to be a part of the equation and telling president putin that we need to stop these hostilities. >> are you suggesting that in no way ukraine is an analog for the

kind of response that a taiwanese situation may require? >> again, i think -- i know a lot of people are concerned and want to equate china going to attack taiwan. my own opinion is, i don't see that occurring in the near term. i think it's a different situation. and obviously, the long-term situation in taiwan, the independence of taiwan, the security agreement that the u.s. has given to them are all very, very important issues, but i don't see it as the same analogy. i will say, one of the lessons for the u.s. and others, we are way too dependent on taiwan for semiconductors. i'm encouraged by the bipartisan agreement to encourage development to semiconductors in the u.s. i think we've learned -- and covid in other situations, from an economic standpoint we have

to diversify supply chains. shery: former u.s. treasury secretary steven mnuchin speaking to erik schatzker at the qatar economic form. coming up next, after that sharp drop that we saw with bitcoin. as the cryptocurrency continues to stabilize, the crypto winter may have passed. this is bloomberg. ♪

>> in terms of opec countries or producing countries, we are committed -- as kuwait, we are committed to make the investments necessary to ensure that we can meet the increasing demand on hydrocarbons going into the future. anytime you look at an energy transition you have to recognize, it's a transition and not a switch. paul: that's the kuwait's petroleum corporation -- on boosting supply on energy transition. let's look at commodities trading right now. start off with oil, still coming off the peaks, but still historically high. west texas at the moment is 10 807. iron ore prices easing. still stocks just continue to grow from china. cobalt is the commodity we don't

often talk about, but an interesting story. 13% off the may peak. this is a key ingredient. so important for electric vehicles and phones, china's recent lockdowns has disrupted the cobalt market in china accounts for 70% of global demands. we are seeing ongoing demands for that material. we prices are recovering, but we have seen prices easing there as well. the production forecast for the northern hemisphere is looking pretty good. the forecast spring increase there. the recession whisked -- recession risk is also weighing. we have signs that may be the peak in global food prices has passed and potentially could be easing as well. the world's largest independent oil trader says prices are unlikely to drop as markets battle supply issues. the ceo spoke to bloomberg's haslinda almond at the qatar economic forum in doha. >> we've had a very tough q2

from a lockdown perspective. so there's quite a bit of growth to bounce back. obviously the speed of which outcomes is under concern. we finally get back to them being held back a little bit, product exports have been held back, so they can look at -- look after their own supply and demand after this difficult situation. with both covid and the international supply picture. i think we expect demand to increase by at least one billion barrels a day in china. that will be supported -- supporting international prices. haslinda: we have expectations that have a slow in both economies? >> i think the real concern and europe will be around diesel this winter. as we move away from russian diesel, where are we going to find adequate diesel supplies?

so, the market has time to adjust and move supplies from other continents towards europe. but i think that's one of the things that's really driving prices, the concerns around diesel. shery: let's turn to crypto trading now, because we are seeing pressure now, but really nothing compared to what we've seen in the last few weeks. they will be charging back, encouraging buying unflagging the next rally. bloomberg's su keenan joins us now. there are some views that crypto winter may be over. su: certainly seeing bitcoin stabilize and it's back above that -- or was back about the 21,000 level and the recent hours. they were rallying. dogecoin, that gave the bulls a lot of confidence. there's a bit of red on the screen right now as some gains have been given back. but there is a few to drop into the bloomberg that 20,000 is the

key level of support for bitcoin, and certainly held after that plunged almost 17,000. in this comeback has had the crypto bulls urging investors to buy the dip, keep the faith. many of the tweets going out play on fear of missing out. if you don't buy, you missed the rally. bitcoin and other crypto assets have been up as much as 14% from sunday. they have had a bumpy ride, but mostly a comeback. not everyone is willing to call the bottom. if you remember, micro strategies michael seiler back in 2021, urged everyone to mortgage their house and by bitcoin. he says, if you had actually done that, just put a thousand into bitcoin back in 2021. it would be worth about 375 now, that's a big ouch, and that explains why there is still a lot of caution. paul: we do have something for

the crypto bases well. bitcoin has got further default. su: there is now a way that investors can profit from the big decline in crypto. proshares out with an etf, b.i. ti. with crypto down from 20%, at least with crypto, there's a lot of interest in this. this is the same period shares that brought you the long etf back in 2021. we are now looking at the two companies that ftx trading has helped to provide credit lines two. the head of the crypto lender blocked by tweedy confirmation they signed a sheet for 250 million. last week voyager dilute -- voyager digital got a similar 200 million dollar loan as the wave of liquidation is taking place, this billionaire has

become in the view of one collie, the new jp morgan, bailing out crypto markets, the same way the original jp morgan did back in 1907 during the banking crisis. paul: bloomberg su keenan there on the crypto space. still to come, signs of contagion emerging in china's market. how far is this your going to spread? we will discuss that in a moment. this is bloomberg. ♪

paul: signs of contagion emerging in china's markets. industrial firm saw their offshore debt fly after an earlier route on macau casino operators. dollar bonds on track for record declines. let's bring in our china credit editor rebecca wilkins for more on this. rebecca, why are investors so worried about the losses that are stemming from this? >> we have seen this really dramatic repricing of risk across the dollar bonds, they are at record lows, below $.50 on the dollar for a lot of the curve. essentially it's worry over liquidity, a tight liquidity for

consideration about the ability to repay imminent cash. part of the fear, i think, is that concerned that the conglomerate it is so complicated. there is a worry investors may not have a lot of visibility into precisely how the firm itself is operating more broadly, and add to that very fresh and investors minds is the selloff that we have seen in property bonds and many, many surprises when it came to property firms defaulting. shery: do i stare ask if we will see contagion? rebecca: we are already seeing signs of contagion. it is not a property firm, but moody's, when it discussed placing review for a possible downgrade, cited concerns around property exposure. we are seeing other industrial name selling off on the back of concerns about -- and it really

is an indicator that we are moving into a very different state of stress for china's financial markets, beyond just the crisis that began in the property sector as we see that ripple to effect on industrials, on the construction center and well beyond. shery: china credit editor rebecca wilkins as we continue to watch the latest on those chinese developers, we are now hearing from shanghai security news that they will be meeting financial institutions in late july to discuss measures to lift them out of difficulties citing a notice from the industry group china real estate association. coming up in the next hour, deutsche private bank tells us why they are bullish on china. plus, talking about chinese asia strategies. this is bloomberg. ♪ generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered.

on-premise and in the cloud. you can run things the way you want —your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with comcast business. powering possibilities.™

so many people are overweight now and asking themselves, "why can't i lose weight?" for most, the reason is insulin resistance, and they don't even know they have it. conventional starvation diets don't address insulin resistance. that's why they don't work. now, there's golo. golo helps with insulin resistance, getting rid of sugar cravings, helps control stress and emotional eating, and losing weight. go to golo.com and see how golo can change your life. that's g-o-l-o.com.