haidi: of the morning and welcome to "daybreak: australia." haidi stroud-watts in sydney. annabelle: i am annabelle droulers in hong kong. shery: from bloomberg's world headquarters in new york, i am shery ahn. the top stories this hour. fed chair powell gives his most explicit acknowledgment that the u.s. could face recession, and a soft landing will be very challenging. haidi: u.s. stocks slump and treasuries advance as traders weigh his comment the s&p 500 facing it's worst first half since 1970. shery: and dissemination's are weaponizing the rhode economy. u.s. futures under pressure at the open in the asian session, after the s&p 500 finished lower on wall street. we had those gains earlier being. back after chair powell's comments about the reception -- being pared back after

chair powell's comments about the recession. alongside materials, we had a double to a double-check closing at the lowest level in the month. we continue to see further pressure around the $104 a barrel level. treasury yields file towards the 3.1% level. we are watching the haven assets. take a look at how gold treated in the previous session. it gained a little bit of ground. the dollar index managed to pare back earlier gains. mixed pressure across different currencies. we are watching risk assets as well. emerging market stocks at the lowest level in a month. bitcoin in the asian session supported a little bit, still below the $20,000 level. we continue to see the risk sentiment spreading, concern about inflation and recession reverberating through the markets.

annabelle: we are certainly setting up for mixed trading as well in asia. we have the asx 200 futures pointing higher. we will be watching the energy sector this morning as we have just seen the power market resume sports trading. the regulator had taken control last week. new zealand coming on line to the upside. nikkei futures, reflecting the recession risks. also have implications for yen trading. we have mizuho bank pointing to a recession risk, speeding into haven demand, a typical play for investors. scotia bank says that unless we see energy prices study, we will continue to see demand for the yen. and others saying that the yen is simply following the two-year sovereign interest rate differential. haidi: and we continue to really watch these recession fears amid soaring inflation and tighter monetary conditions.

we heard the most explicit signaling yet, the comments from fed chair jay powell, saying that interest rate hikes could tip the u.s. economy into recession, saying that it is possible and also calling a soft landing very challenging. he paints a picture of being stuck between a rock and a hard place. he says that the risk is that they don't manage to restore price stability, that they allow higher inflation to get entrenched. they cannot feel. they have to get to -- they cannot fail, they have to get to 2% target. recession fears are at the highest since the onset of the pandemic. you can see the big pop in awareness after the fed did the 75 basis point hike. it was such a surprise to most segments of the market. shery: i wonder where we are on those measures of inflation, sort of at the same level? i wonder. today we are watching the geopolitical side of things. we have the brics virtual summit

being hosted by china. and already xi jinping, not mentioning the u.s. directly, but stopping about how we could see the international community being divided into mutually exclusive zones. the president really trying to offer that alternative to western-dominated global governance. india, south africa and brazil are joining the virtual summit this week. geopolitics is so much to do with economic power. jay powell's remarks at the senate banking committee are so important to give us a measure of where we are when it comes to a potential inflation fears and recession fears. take a listen. chairman powell: it is our goal. it has been made significantly more challenging by the events of the last few months, the war, commodity prices, further problems with supply chains. the question of whether we are able to accomplish that is going

to depend on some extent on factors we don't control. shery: joining us now is the bloomberg chief u.s. economist an hour-long. i don't know how to take -- chief u.s. economist anna wong. i don't have to take these comments. this is hawkish, but considering the potential recession, is it dovish that they could change course? anna: a central banker is not going to come out and say that we think a recession is happening right now we think we are going to generate a recession in 12 months. however, if you look more closely at the summary of economic projections released by the fed at last week's meeting, he actually can see that at least seven federal reserve participants see potential recession happening next year. nobody is talking about that. but i think in between his

words, powell is basically confirming what the staff from last week is hinting. i think many of these policymakers think that their actions, the hawkish rate hikes this year are going to push the economy into recession. . haidi: he is also not going to say that the fed made a misstep in acting too late, right? is there a risk that they are behind and that the inflationary mindset has already set in? is there a risk that monetary policy will not really address the drivers of this type of inflation? anna: power cited last week that the main justification for going to 75 basis point is because they saw emerging evidence that inflation expectations in the five-year horizon are ticking up

and that is alarming. and hopefully by going more aggressively, that they could catch back up. my team actually estimates that if they do 75 bps in the next meeting, that would get them on the curve and even slightly beyond the curve. so i think overall, the aggressive action from last week is appropriate and it will likely preempt the un-anchoring of expectations. haidi: and a wall there in washington. china's president has criticized sanctions as stoking economic pain globally. xi jinping is looking to bolster elections with -- bolster relations with emerging markets. for more, let's bring in our senior national security reporter. this is consistent with the messaging from beijing within the past few years. what is he trying to get at

here, given the current geopolitical climate? guest: it is a really interesting comment. i think he is trying to do several things with these comments. obviously it is a hit at the u.s. in general and their coordinated western sanctions against russia. but there also several backing at the russian messaging about the global food and energy crisis at the moment, suggesting that this is not the result of russia's invasion of ukraine, but is in fact a result of the coordinated sanctions from the west against russia that have snarled supply chains and mixed up and caused global energy prices to spike. he is doing that, but he is also kind of trying to do what he does at least brics summits more generally, which is projected china as a natural leader of the global south. that is something that, especially at the moment with

the west united against russia and a other countries in africa, southeast asia and other places not seeing their normal flows of foodstuffs, there is confusion at the moment and a vacuum, so i think china is trying to step into that. shery: and of course, we heard from the u.s. trade representative katherine tai and we continue to hear about tariffs on china 300 billion dollars on annual imports still being taxed at the moment. any sign on one that could be lifted? iain: at the moment, the biden administration is still keeping their cards pretty close. you see a little disagreement whether it is between the trade representative or other officials like janet yellen. essentially the administration inherited these tariffs from the trump administration but cannot do much with them given the broad bipartisan push to hit china over just about everything, from tactile human

rights -- from tech to human rights. with gas prices where they are and inflation where it is, the biden administration is re-examining a lot of policies and you could see movement on the tariffs. we are already seeing movement with biden's upcoming trip to saudi arabia, a country that he used to say he was going to make a pariah. so it is causing a lot of movement across the board, so tariffs could be there as well. haidi: we are also hearing that china is approving a plan for healthy development of the cleantech sector and, ant financial is getting closer to applying for its key regulatory license. is that adding to a picture that we're getting close to where financial regulators are satisfied with the overhaul of the sector? iain: it is hard to say. china wanted to keep a lid on a lot of these companies amassing too much data, whether it was a location or financial data of

customers, to make sure that people are not kept out of the loop as these companies store and who were up all the data on more than one billion consumers in china. so i think it is one of these things where you have seen on-again, off-again regulation. i don't think necessarily you are going to see markets step back. it could be that they allow some stuff to go forward will also keeping a pretty tight lid on these things. shery: senior national security reporter iain marlow joining us from washington. let's get over to vonnie quinn with the first word headlines. vonnie: european leaders are planning to give ukraine the green light to become candidate for membership of the blah blah blah, after a campaign from -- to become a candidate for membership of the european union. it is also granting candidacy status to moldova. the formal decision will come at the e.u. summit in brussels starting thursday.

sri lanka's prime minister says the country's economy has completely collapsed, and the only path forward is an agreement with the i.m.f. he told parliament that sri lanka is unable to import fuel because of heavy debt. officials are speaking to the imf this week about support. plans are also underway for a summit with india, japan and china to help secure aid. saudi crown prince mohammad bin salman, and turkish president argan met in turkey. the two leaders agreed to which to work towards better relations in areas such as the economy and defense. prince mohammad bin salman's visited turkey is the first since relations between the two countries strained after the killing of shinto post-journalist jamal khashoggi. . officials in afghanistan say that the death toll could rise, after an earthquake destroyed thousands of homes. at least 1000 people were killed. the earthquake sets off a new humanitarian crisis in the country already facing a crumbling economy and hunger.

the taliban supreme leader made a rare public appearance to plead with the international community for aid. 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. haidi: still ahead, we take a look at what the fed can do to deliver that soft landing that jay powell himself admits will be very challenging. robertson stephens' chief economist will join us later. but first we would this as -- we will discuss how to trade and inflation risks. this is bloomberg. ♪

>> we got a deep downturn when things in the financial system degrade. credit becomes impaired. i don't expect that to happen this time. i would expect a mild recession like the one from 1994 2001, not like 1973 or 1974, or of course, the great financial crisis. >> i think we are now back into a period in which it does matter. the fundamentals of earnings, of origins, the fundamentals of interest rate, putting that together in the forms of appropriate valuation models.

that will make a big difference for investors going forward. haidi: our guests there. let's look at how u.s. features are shaping up even the talk from jay powell, acknowledging electric units of the situation that the fed finds itself in, the fact that it will be very difficult to land that soft landing. take a look at futures. s&p futures are down just about 0.1%. dell futures flat at the moment. the s&p is -- dow futures flat at the moment. the s&p is facing its worst trading since 1970. analysts believe the index could crash another 30% or so with just seven days of trading left until the end of june. of course in the previous session, we'll u.s. stocks slumping again after fed chair powell acknowledged the risks of

a u.s. recession. our next guest says she is looking to build. the current correction, and that there are worries -- there are good opportunities and good companies are being thrown out with the bad. joanne feeney joins us now. we have got the likes of william dudley talking about the type of recession as to whether we will see any type of recession. how do you trade this risk at the moment? joanne: good to see you again. very challenging, particularly because we are still in an era where uncertainty is elevated and likely to remain so, whether it is geopolitical risks, any upcoming midterm elections, there is a lot to be concerned about and that is the reason valuations are coming down so hard.

there are very complicated supply chain disruptions, plus the war in europe. i think it is risky right now in terms of the forward outlook on the global economy. recession risk has risen for a lot of reasons. margins are at peak levels and could come down. we are hearing anecdotes of firms doing less hiring. these are reasons to be concerned and one has to be careful about how to position portfolios in this environment. but there are things that we can do for client to provide some buffer to the volatility we are all experiencing. haidi: cap to me about those buffers and where you see those opportunities -- talk to me about those buffers and where you see those opportunities? we do see the economy continuing to expand because supply chains are slightly improving. we know there is more semiconductor capacity coming online in the second half of this year that should allow for more articles to be produced

and appliances. loosening restraints on the housing market. there is still a litan shortage of houses out there. one of the things we like to do for client is to build in income generation. we can do that with more appeal and the fixed income side, but also on the equity side. we can build in companies that provide insurance against recession, like financials and real estate which offered dividend yields above the market. event technology, a company like -- even technology, a company like broadcom which is exposed to the areas of the global economy that are still growing, like data centers. you can get a dividend about the market, price be positioned for growth over the longer-term. shery: what are your calls for what you are mentioning as smart cyclicals? what are those?

joanne: they are typically associated with the business cycle. hard to apply in a situation where you are still recovering from the pandemic and you have a war going on. if consumers continue switching their spending habits, going out more services and stores -- for example, t.j. maxx is something we like. it is likely to be resilient in a recession. and it does require people being willing to go out of their houses and do that treasure hunting that a marshall's and t.j. maxx are sort of famous for. and it does serve households that are trying to save money. recession comes along, you will tend to downgrade your shopping from macy's and nordstrom, and go over to t.j. maxx and marshall's. shery: how do you differentiate between financials. recession fears can hit them but at the same time, they benefit from higher rates. joanne: exactly right. the big banks, have two things going for them, higher debt

interest margins with those rate increases, plus more trading with higher uncertainty, more trading volume, we saw that with citigroup's comments recently. banks are a good place to be, plus they pay some nice dividends. another area is regionals, whether that is td bank out of canada, or first republic bank. these are companies that have a client base that is very loyal, relationship-driven. they tend to be less cyclical and will benefit from the higher margins. haidi: we saw fed chair jay powell really concerned about the intangibility of inflation expectations -- the entrench of recession expectations and that hitting the consumer. joanne: it is a tale of two consumers. that is what fed chair jay

powell was talking about. high inflation, gas, energy, food will really hurt folks living paycheck-to-paycheck and they will have to cut back on spending elsewhere. some of them are going to pull back from long vacations, for example. but they might substitute into something like a close-by trip for their kids like going to six flags. six flags had gotten hurt in the recent pullback. this one is pretty recession-resilient, if you look back at the history of the company. they tend to do well in recession, and they are able to pass on price increases. another area is williams-sonoma. they serve the higher end of the consumer market, which will be less affected by the high inflation in energy and food. and with all the houses that have been sold, a lot of folks will be out there filling up those houses with dishes and pots and pans and appliances. williams-sonoma does a good job of serving that crowd, and they are able to pass on those rate

increases. shery: always good talking to you, joanne feeney portfolio manager from advisors capital management. you can get around up of all the stories you need to know to get your day going in today's edition of "daybreak" on dayb . you can customize your settings so you only get the news and assets you care about. 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.

shery: quick check of the latest business flash headlines. tesla ceo elon musk sets new plants in germany and texas are losing billions of dollars as the automaker ramps up production. he called them gigantic many furnaces in an interview recorded in may. it offers an insight into his recent decision to cut costs at tesla by laying off employees.

the overhaul at ant group may be getting closer to satisfying financial regulators in china. bloomberg has learned that the company is poised to apply for holding licenses as soon as this month. sources tell us the pboc will accept the company's application and start a review process looking into the company's strength and business plans. haidi: next, we will hear from the new york fed president and what he sees a mild recession for the u.s. that conversation is just ahead. this is bloomberg. ♪ millions have made the switch from the big three to xfinity mobile. that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network, with the carrier rated #1 in customer satisfaction. that's a whole lot of happy campers out there.

and it's never too late to join them. get $250 off an eligible 5g phone with xfinity mobile. take the savings challenge at xfinitymobile.com/mysavings or visit your xfinity store and talk to our switch squad today.

>> and i would even say with the

right announcement of the central banks now to increase the interest rates, in a steep way, in particular when i look at the steps announced by the fed, i support those steps. i think that it is always hard to put a percentage, but i would say we have a 50% likelihood of the recession globally, but also in europe. shery: the doctor ceo christian sewing there. we are getting -- the deutsche bank ceo christian sewing there. we are getting reports from the bank of korea governor saying that the bok needs to tame inflation through preemptive policy, saying that rate hikes negatively impact on growth is limited. this comes at a time when we continue to see inflationary pressures rising in south korea,

growing at the fastest pace in 13 years for the month of may. the bok senior deputy governor saying that there is a risk of prolonged inflation in the country. inflation is also a problem in the u.s. the fed continues to p.m. price pressures and tighten policy. former new york fed president bill dudley says the u.s. economy is heading for a hard landing, but he told bloomberg he expects the recession to be a and to come within the next 12-18 months. >> that very much focus now on inflation as opposed to employment, because the labor market is too tight as opposed to not take enough. i think he will reiterate the message in his press conference last week. i think also he will not talk about a hard landing. that fed is trying to get a soft landing, and they should, the problem is that it will be difficult for them to pull this off. >> a lot of people in the market are trying to draw a distinction between a soft recession and one that is much more damaging.

what is the characteristic of the hard landing you envision. >> i think it is going to be a relatively mild recession at this point because the financial system looks like it is pretty solid. household and business balance sheets are solid. you get a deep downturn when things in the financial system did great and the ability to supply credit becomes impaired i don't expect that to happen at this time so i would expect a mild recession like in 1990 or in 2001 not a deep recession like 1973 and 1974 were, of course, the great financial crisis. >> people say that the fed doesn't have appetite because recession, and that they will eventually pivot away from raising rates as much as people expect. why do you think they will take a page from paul volcker? >> i don't think they want a recession. the problem is that if you're going to get inflation down, you need more slack in the economy. it is very hard to generate slack in the economy without

actually generating recession. so they are going for a soft landing. it is just going to be almost impossible for them to pull it off. >> is the assumption you are making that they are not going to blank even when the data transfer dramatically than we already have seen it? larry summers was talking about a 5% unemployment rate over the next five years. . where do you think your tolerance is? >> i think what larry is talking about is reasonable. they know that if they blank entered get inflation down, then they have to do even more -- if they blank and don't get inflation down, they will have to do even more. what happened in the 1970's, inflation got out of hand, and paul volcker had to put the u.s. economy through the ringer. the fed wants to do what is necessary in the rear term, so they don't have to do a lot more in the long term. >> but it is in the longer term that you see the effects of monetary policy taking shape. it operates with a lag, we

understand that. so if they are frontloading and aggressive, are they going to see it reflected in the actual data we are getting, or do they just risk moving too aggressively and then the data turns all at once? >> that is what could actually happen. right now the economy has forward momentum as the economy reopens. household balance sheets are still very solid, boosted by the fiscal stimulus that regard over the last couple of years. but beneath that, things are in trouble. haidi: bill dudley, senior advisor for bloomberg economics, and the former new york fed president, speaking with lisa abramowicz and kailey leinz. more predictions coming through on whether we will see a deep recession in the u.s.. annabelle joins us now for morning calls. whatever hearing from the anz? annabelle: they are taking the glass half-full here, saying that a social should be for some reasonable slowdown, but not

panic about it yet. yes, all cycles do and end at some point and in this case it ended in the early months of this year, but to jump from the least risky period of the economic cycle into a deep recession by the end of 2023, they say that is quite a leap. deep recession that's usually require some sort of financial exits in the system to exacerbate the effect of tightening, but anz research says the u.s. economy is strong, and corporate and household balance sheets are also healthy. he says that will help cautioned the slowdown as well. so their base case is that the u.s. economy will slow down sometime in 2023, but the silver lining is that business can operate smoothly, we will see inflation being reined back in and real wages improving, instead of fearing some sort of deep recession. shery: tell it to the markets,

right? we continue to hear the drumbeat of goldman sachs 30% probability of entering recession over the next year along with many others. do we actually see that here in the u.s.? what are we hearing about the outlook for asia? annabelle: this is a note from morgan stanley, basically looking at three factors that will determine how bad it gets for the region. the first is the extent of the slowdown that we see in developed markets, and the impact on demand. they are looking again at the healthy balance sheet that could help cautioned impacts of recession. on the flipside, we have seen people paying a lot for goods. we could see a significant payback on that. the second factor that is pivotal is the strength of the recovery that we do see in china. the timing of that is determined by when they shift away from corporate zero, two instead living with the virus -- shift away from covid zerot two instead living with the virus. and then the space that they

have for monetary and fiscal policy to respond to this. on the fiscal policy side, that is expected to play an active role. on the monetary side, we need to see oil with a $100 a barrel mark to see any meaningful response. bottom-line, a developed market recession is undoubtably going to weigh on asia, but we could see a relatively shallow downturn in this region. haidi: let's get the first word news now with vonnie quinn. vonnie: the federal reserve chair jay powell has given his most explicit acknowledgment that steve rate hikes could taper the u.s. economy into recession. he said achieving a soft landing will be very challenging. he made no direct reference to the size of future hikes, as he faced questions about recession risk. chinese president xi jinping is criticizing sanctions for stoking global economic pain. at a speech at the brics summit in beijing, he did not

explicitly mention the u.s., but said some nations are politicizing and weaponizing the u.s. economy, causing suffering. he suggested nato is responsible for antagonizing russia. u.s. trade representative katherine tai says tariffs on more than $300 billion on chinese imports provide significant leverage and are useful in negotiations. she made the comments as burden administration officials debate whether to keep the duties in place. she also said there is a limit to what can be done to ease inflation through tariff changes. >> that china tariffs are, in my view, a significant piece of leverage, and a trade negotiator ever walks away from leverage. we need to use our tools effectively, we need new tools, we need to bring an entirely new approach. vonnie: china has approved a plan to healthy development of the fintech sector.

they also backed enhancing regulation of major payment platforms. beijing has promised to unwind a sweeping crackdown on tech companies that ensnared every sector, from online education to gaming. 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. haidi: as little as 12% of australians trust the chinese government now, according to an annual survey, think tank. paul allen joins us with more from the findings. so, we know that it is a tenuous relationship between canberra and beijing over the past few years. how far has the reputation of beijing fallen? paul: according to the survey, quite a long way. this is a decent sample, more than 2000 respondents. back in 2018, it found that 52% of australians had a positive of china. that has fallen on the way down to 12%. no surprises really. in that period, austria asked

for an international inquiry into the origins of the coronavirus and china took that extremely badly, mounting trade strikes against australia including on products like wheat, barley, beef, wine, and coal. china also released a list of 14 grievances ranging from australians banning of huawei from the 5g rollout, to a request that australia stop opining on what is going on on the south china. . the full survey is not out antillean of the month, but this snapshot gives a bleak view of what australians think of china at the moment. shery: do you think that you could improve under the albanese government? paul: there is an opportunity for a reset. after he got elected, the chinese premier did send him a letter of congratulations. but then weeks elapsed before anthony albanese sent a reply, and we still don't know what the

context of the reply was. the defense ministers of australia and china met on the sidelines of the shangri-la dialogue earlier this month, in what has been described as a frank discussion. for its part, the think tank says this lull in relations is not cause for celebration, is in the interest of both countries to have a better relationship. the survey also found that support for the alliance between austria and the u.s. is now at 87%. shery: paul allen joining us from sydney. we will get more on that final result of that survey with the think tank's leader. she will join us next week when the findings are released in full. haidi: we have an update when it comes to leadership, the search for agl's new ceo. the selection process for a new chair is well advanced. this coming as we saw the energy ceo departing the

company as it abandoned its merger plans. that merger did not have sufficient support. on those decisions, we saw the ceo depart his role as chairman and also the ceo stepping down. we are now hearing from agl that the search for the new leadership is underway in the global way for the ceo. that the selection process is advanced. all of this, of course, coming back on the pressure of the activist shareholder in terms of pushing for an acceleration of the green energy transition. coming up, we get more on recession warnings from jay powell. . he admits that a soft landing will be very challenging to land , with our next guest, next. this is bloomberg. ♪

>> ongoing rate increases will be appropriate, expeditious progress towards higher rates. we have restrictive policy and that is where we are headed. the economy is very strong. >> if interest rates go to her,

too fast, it could drive us into recession? >> certainly a possibility. the other risk is that we will not be able to restore price stability and will allow high inflation to get entrenched. price stability is really the bedrock of the economy. we must restore price stability, and we will. the public should believe that we will get inflation down to 2% over time. we are strongly committed to restoring price stability. it is the thing that we need so we can get back to the labor market that we all want. shery: fed chair jerome powell testifying before the senate banking committee and the fears of potential recession have really led treasury yields to slide again. revived demand for havens, and we are seeing that reflected across asia. the australia 10-year bond yield is now dropping to the 3.84% level, 14 basis points down. also talking about their 10-year yield falling for -- also

talking about the kiwi 10-year yield falling. we heard from the rba governor that rates are likely to rise 50 basis points at most in july. we continue to see consumer confidence falling across new zealand as well, the anz index falling to a record low this week for a second quarter. let's discuss with central banks around the world, specifically with chair powell's latest comments. jeanette garretty is chief economist at robertson stephens. good to have you with us. how well does the federal reserve and chair powell understand the real economy right now when any takeaways from his comments -- what are your takeaways from his comments at the senate hearing today? jeanette: that is a good question. i haven't heard too many people ask that and that is the issue. it is a tough job, but it seems to me that the research team

that backs up what they are doing is may be struggling, trying to figure out what they are seeing in the data, do they have the data that they need to see accurately? the problem that they face is that there is a great deal of circumstantial evidence coming to the fore about some of the sectors that are slowing and changing as a result of the interest rate changing. but the fed has said they will not back off until we have proof in the data and we need a couple of months worth of proof. it really sets them up for doing what they need to do. irrespective of these criminal signs. -- of these critical signs. shery: at the same time, chair powell is acknowledging that recession is in the cards.

does the market hope that there is a fed put still in the cards? jeanette: i suppose there are some people feeling that. i am not one of them. i certainly agree with bill dudley on some of the things he said earlier. the fed has said that they need to preserve credibility. they had credibility problems earlier. they have now gotten perhaps some authority back. they need to get monetary policy appropriately tight to get inflation down. i don't see that happening may be soon. maybe late in the year they could back up from a 3.25% terminal rate. they would continue to tighten in 2023. could they back off from that a

little bit at the end? maybe. haidi: i think this goes to perhaps her first question in a sense, you say that jay powell is not an economist, but if he was, he would be a monetarist. is that relevant at this point? how much of the information we see is being driven by money supply? jeanette: it is relevant. being a monetarist lose has an element of being absolutely relevant here. i will said, i have these things i can do charter in the toolbox, the toolkit of a monetarist, but there are some things outside of it. and certainly, the basic monetary theory does not directly address supply-side issues, particularly very complicated supply-side issues exacerbated by geopolitical

events. so it is really a challenge. he knows it is a challenge. i agree, i don't think he wants a recession. but i think he increasingly appreciates that this will be very tricky. and i think the market knows this. but, you know. haidi: in the data points that you are looking at, do you think the inflationary mentality has already set in? jeanette: not really. i thought his language last week, after the fomc meeting, was very interesting what he said. he said we have to respond because we have the consumer confidence survey at the university of michigan that indicated expectations were rising. it is not the only point. he said we don't think it is happening that way. we feel they need to respond to everything like this.

quickly. prices will be higher than they expected for some time. i think we're on the cusp, i don't think it is firmly rooted and there are people now who are now beginning to think about recession. in thinking about recession, i believe that will take pressure off prices. hey dheepthika: jeanette, always great to have you with us. robertson stephens economist joining us there. coming up, casinos in sydney are getting ready to open. we will get the details on that. this is bloomberg. ♪

haidi: ground resorts finally gained permission to open its sydney casino. -- crown resorts finally gained permission to open its sydney casino. our next guest joins us now to talk about this. it has been a long wait. hairy: that's right, only a couple of weeks ago they finally got approval from many of the individual states they needed to get to this point, victoria, new south wales, and also the

federal regulator. now they got the go-ahead from the main flagship sydney facility, which is where it will all come to a head. they had to push the boat back, blackstone did, to get to this point. many were wondering how long this could take. some say it is a bit of a gamble on their part to forge ahead with the deal when they didn't have those things in hand. regulators can be slow at times, but moved through in a quick fashion. shery: so what is next for the company blackstone and its ownership? harry: approvals, with a few strings. it will change the character of the company, it will be less reliant on gaming as a revenue and it will be more of a hospitality play. the blueprint blackstone had come into this place the turnaround in facilities like the cosmopolitan in vegas.

. want to make it an entertainment district and focus more on hospitality and focus a bit less on gaming. but these approvals will be reviewed every two years. the regulators have to be very satisfied with the progress of things and its community impact as well. there will be a limit on how much people put down our tables. it will be closely-watched, and that will have an effect on the character of the company. shery: harry brumpton joining us from melbourne with an update on what is happening with crown resorts. in the next hour, we will be looking at the bank of japan's options on its altar easy military policy. ed rogers joins us next. "daybreak: asia" is coming up. this is bloomberg. ♪