♪

paul: you are watching daybreak area coming to you live from new york, sydney, and hong kong. annabelle: we are counting down to asia's major market opens. shery: the top stories this hour, agent investors hoping for a goldilocks friday. the yen and commodity prices stabilize. jay powell says his commitment to curbing inflation is as conditional, as another federal official backs a 75-basis point hike in july. and wall street's biggest banks based their annual stress tests, paving the way for billions of dollars in shareholder payouts. we are seeing oil prices rebounded in the early asia trading session. we had seen a lot of pressure for crude prices, not to mention the broader community space, given the recession fears. oil near the 200-day moving average. a bit more upside in the early session in asia. this, of course as the treasury

yield on the 10-year note fell a little bit. we continue to hear fed talk turning hawkish, and concern about potential recession. we had u.s. stocks rebounding in the new york session, but right now, those gains are not being held in the futures trading space. we had weaker than expected economic numbers in the u.s., including jobless claims, near a five-week high. not to mention manufacturing and services numbers cooling in june. we might see a mixed picture in asia. right now we are not getting that clear direction that we were hoping for after the wall street close. annabelle: you have to say that, because we have the aussie 10 year reflecting the moves in treasuries now it could be a supportive factor for equities across the board. but we still have futures for austria pointed to the downside. you did say about the fears

about pullback in demand for commodities, particularly important for the asx 200. bernstein said iron ore shipments could decline in the second quarter. in japan, nikkei futures are coming online flat. inflation data from japan is a major focus for this hour. cpi is rising further above the boj's 2% target anyway. bloomberg economics is seeing a rise of 2%. the result is they say because of higher food prices. it is cost-pushed inflation, not the study limit demand-inflation that the fed is seeking. paul: thanks, annabella. fed chairman jerome powell is calling his commitment to curb inflation unconditional. let's take a listen. >> it's unconditional, our commitment is. the reason is, in a particular situation, we have a labor market that is unsustainably

hot. we are very far from our inflation target. we need to restore price stability, get inflation back under 2% because without that we will not be able to have a sustained period of maximum employment. paul: fed governor michelle bowman also backing a 75-basis-point rate hike again next month. for more, let's cross to bloomberg's fed reporter. janelle, what does this mean for interest rates? janelle: what we're hearing from powell and others is a more hawkish tone, sending a strong message that they are committed to bringing inflation down and that means higher interest rates. what powell said last week in the press conference that we could see either a 50 basis point or 75 basis point increase in july, had a few fed officials come out and say that they support the increase or they are at least considering another

rate increase in july. the message here is that they want rates to go up there they want demand to come down and inflation to become a little bit more under control. sheri: this was a great opportunity for lawmakers to make their case in congress by asking those questions. how did they take what chair powell had to say? jonnelle: we heard from democrats, skepticism about whether higher interest rates can bring inflation down and what they are concerned about how that might affect the labor market. from republicans, we heard more support for higher interest rates. and of course, everyone was just talking about how it affects their constituents. shery: bloomberg's fed reporter jonnelle marte there with the latest on fed chair powell's testimony in the house. concerns for recession are big for wall

street's biggest banks. they paved the way for billions of dollars for shareholder payouts. let's bring in bloomberg's su keenan for more on this. they really aced those tests. su: all the 30 banks tested got a passing rate. that means they can withstand a severe recession. very important, given the current market environment, and as mentioned, it gives them the green light to spend billions on stock buybacks and dividends. what is different in this round of the test that the fed put these banks through, they announced these hypothetical scenarios in february, well before inflation was at a 40-year high. so they scenarios were not quite as far-fetched when you look at them today, and that is, how could they handle a massive surge in unemployment, widening corporate spreads, collapsing asset prices, and higher market

volatility. and it turns out that all firms in search of scenario, stayed above the fed's minimum capital requirements and basically have enough cash on hand to handle whatever crisis may come their way. they would withstand more than $600 million in losses. major firms such as jp morgan, morgan stanley, and goldman sachs, or given the additional hypothetical shock to test whether their trading operations could withstand major situations. they also passed. typically receive these stocks light out in the green. we'll see that in tomorrow's session and now that banks have been given the go-ahead to announce buyback plans as early as monday. paul: at the same time, we have banks bracing for billion-dollar losses due to bariatric data. what is going on there? su: it has to do with the m&a

frenzy that drove the investment bank stocks higher in the past year. they used a lot of high-risk corporate debt to finance the deals. during the market turmoil, the value of those has limited. let's go into the bloomberg so that you can see the reality check and what it looks like for the banks. what you have now is a u.s. and european banks bracing for losses on big-ticket buyouts as they struggle to offload that risky corporate debt, you are looking at triple c there. . the biggest heat according to sources close to the situation could amount to $1 billion, from a deal to take the citrix company private. that included a group of lenders led by bank of america, credit suisse, and goldman sachs. each of these three banks could lose in excess of $100 million. stay tuned. paul: alright, bloomberg's su keenan there.

investors are reassessing the fed's rate hike path amid escalating recession fears. yields continue to plunge across the board. let's bring in mliv strategist mark groenefeld for more. have we seen the peak in yields now? mark: there is a chance that particularly for the 10-year and 30-year sector, a good chance we are seeing the highs in the cycle. cameron crise, wakoli in new york, was writing about a bottom -- our colleague in new york, was writing about a bottom for the bond market. the markets are very forward-looking, especially in the rates market. the yield curve is starting to project for when the fed cuts rates in the middle of next year, so we are already seeing an inversion in the futures curve which shows rates will probably peak close to the end of this year and start to come down. even to the extent to where they are starting to price in the

first fed rate cut in mid-quarter of 2023. what a significant change as people look for recession risks to get higher. you are seeing more people search for the word "recession" on bloomberg. and analysts now seem to be raising the possibility of a hard landing in the united states. jerome powell himself said it is difficult to achieve a soft landing. so they are suggesting that a policy error is a risk here. shery: how helpful would a kept in yields be for the boj especially an idyllic today when we had those cpa numbers? mark: this is a great result for the bank of japan. if the spread between the u.s. yields and japanese yields narrow. we have written over the, past few months so much of the direction of the dollar-yen is driven by the change in yields between the u.s. and japan, and mostly driven by the american side. just a week ago, the bank of

japan met and recommitted themselves to the easing policy, cap yield controls in place. japanese yields are close to zero and will not be changing in the near term, and yet, american yields have been moving quite a bit, treasury yields about 3%. if we see a softening on the treasury side, than obviously there is a narrowing difference, and that is partly why we are seeing dollar-yen coming back from 1.36 to 1.34. shery: mliv strategist mark groenefeld there. . you can follow more on this story and more on today's trading on the markets live blog on bloomberg at mliv . there is commentary and analysis from bloomberg's expert editors like mark cranfield so you can find out what is affecting your investments right now. let's get to vonnie quinn with the first word headlines. vonnie: european union leaders have granted ukraine candidate

status, an historic step on the path to membership which can last more than a decade. kyiv applied shortly after the russian invasion in february. it will have to make changes. brussels also granted candidate status to moldova. >> of course, the countries all have to do homework before moving to the next stage of the accession process. but i am convinced that they will all move as swiftly as possible and work as hard as possible to implement the necessary reforms. vonnie: leaders of the brics nations say they oppose green barriers that could restrict global trade. brazil, russia, china, india, and south africa slammed trade measures that placed the burden of addressing climate change on developing countries. in their joint declaration after the virtual summit hosted by beijing, the group also called for reforms to international bodies like the wto and the imf. new york's transportation authority says it is drafting

rules to keep weapons off mass transit, this after the supreme court struck down a state law limiting who can carry a handgun in public. the landmark 6-3 ruling is could mean more guns on the streets of all american cities. it comes as a u.s. senators are moving towards approving new gun safety measures after recent mass shootings in new york and texas. hong kong's incoming health chief says he is to cut quarantine for incoming travelers to five days from the current seven days. but he told local media that the city will stick to its dynamic zero approach to the pandemic. the report did not mention with whether travelers would be allowed to quarantine at home, rather than in hotels, as currently required. 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. shery: still ahead, apple workers have voted to join a union, as workers across the tax base come together to demand fair pay and labor rates.

a discussion on that later. but first, hear why then and there maitre from bny mellon has been turning more defensive, end where he sees opportunities in china. this is bloomberg.

>> inflation is happening everywhere now. moreover inflation is from

demand, and we have tools to deal with demand. our tools are blunt, but they are the right tools to deal with broad, good demand. our intent is to bring inflation down to 2%. inflation back down to 2%. it is unconditional, our commitment is. that path has gotten more and more challenging thanks to the effects on oil prices and food prices. people do expect inflation to come down to levels that are consistent with our price stability mandate. without that, we will not have a sustained period of maximum employment. paul: that is fed chair jerome powell testifying in congress. our next guest says his strategies have become more defensive in recent months. aninda mitra is head of macro investment strategy at bny mellon. becoming more defensive, where exactly are you putting your money to work at this moment in this environment?

aninda: we are still at defensive sectors, looking at value overgrowth, high dividend, low-pe parts of the market which have albeit not done terribly well in the last month or so, but have still outperformed riskier parts of the market where the p/e ratio is still high and the discount factor from real rates has risen rapidly and continues to put pressure on risk assets. go ahead. paul: please continue. aninda: i was going to say that we have started reducing fixed income, given that rates -- other people you have interviewed this morning have also pointed out the inversion of the flat part of the curve which has materialized in the last few sessions. paul: yes, indeed. jay powell becoming increasingly in the majority with his view that recession is not

inevitable. i know you are what are one of the people that think inflation is more likely than not. how deep do you think it would be? anida: clearly, the risk has risen. financial conditions are tightening. the cost-of-living crisis, if you will, is particularly hitting europe and the u.k. quite hard and it is showing up in the u.s. as well. but all said and done, it is not inevitable just yet. that being said, again, there will be our expressing overview is by continuing to be defensive even while understanding that you don't have a situation of a sell-off in equities and a sell-off in rates for one or two quarters in a row, something has to give, which is where we are suggesting reducing underweights in the rates space at the moment, but not quite going long duration yet. as you were highlighting, jay

powell is still pointing out that inflation is hardening. the work we have done internally at bny mellon shows that after that 8.6 percent inflation. we saw recently, 40% of that was demand-driven. that goes to show that demand-side inflation is a serious problem and that is what i think jay powell is highlighting as well. so we are not convinced it is time to go long duration yet. shery: when it comes to turning defensive, it doesn't necessarily include china, though you seem to be liking or at least disliking it less, the chinese equity space. what does turning neutral mean for you? are you long in the space? aninda: we are suggesting being neutral with a tilt in specific areas such as technology, consumer staples and agriculture, the key areas which will benefit the most from

sequential improvement in growth in china in the coming one or two quarters. the reason we are not long equities get into china space is because structurally, the zero corporate strategy still persists, and the property market continues to place a downward pressure on the market. if you look around the world, which other major economy is going to give you positive growth in the next one or two quarters, a pickup and growth? i cannot see too many other places besides china, which is why we are suggesting turning less bearish on china and going mutual, focusing on tech -- somebody has to employ all the graduates coming out of universities in the next few weeks. restrictions on tech are easing, and you can see that play out. and consumer staples, at some point when the restrictions or the lockdown skis, we are already seeing some pickup in consumption spending.

shery: so you are seeing the economic momentum shifting from the u.s. towards china, where you are actually expecting some sort of growth. does that mean that all the economies and markets heavily dependent on china also have more potential for upside? aninda: yes, which is where we are more constructive on southeast asia in particular. the asean five countries barring singapore, are a bit more linked, they have gotten more linked to china over the years. so insofar as you get a china upturn and a reduction of upset inflation pressure, even seeing producer prices,, the prices of metals, copper and so on have come down a bit. that may alleviate some of the pricing pressures. at the same time you're seeing a sequential pickup in demand in china, which helps the rest of the region out.

shery: aninda mitra from bny mellon, with his take on the global markets. you can get a round up of the stories you need to know to get your day going on this edition of "daybreak." terminal subscribers, you can go to dayb . this is bloomberg. ♪

paul: let's get a quick check of the latest business flash headlines. netflix has laid off another 300 employees as the streaming giant seeks to bring costs under control under uneven subscriber growth. the job losses represent 3% of the total workforce, will mostly

affect workers based in the u.s. the streaming giant is retooling operations after losing 200,000 subscribers during the first quarter. bloomberg learned that tesla is taking steps to ramp up output at its factory in shanghai. it will partly suspend manufacturing at various points through early august so that it can upgrade production lines. sources say the upgrades will push teslas output in china to more than one million cars a year from the previous capacity of 450,000. billionaire ken griffin is moving citadel headquarters from chicago to miami. the relocation will affect both the hedge fund and citadel securities, the market-making business. the firm says it expects a few hundred people to be based in miami next year. the move comes after griffing became extremely critical of chicago's crime rate and political leadership in illinois. fedex shares jumped after

forecast beat analyst expectations. it benefited from higher prices and resolving some operating snags tied to a labor shortage. fedex says it also gained from surcharges related to rising fuel costs. but it's unit was hurt by china lockdowns that showed demand for air freight. shery: we are counting down to the trading in tokyo. japan will lend international financing for coal-fired power plant projects as it aims to phaseout the fuel. japan accounted for more than half of the g7 nations' support for quote/unquote in 2019, according to bloombergnef -- support for coal in 2019, according to bloombergnef. the recent findings showed that toyota owned many shares of uber last year. and bloomberg economics expects a pickup in core cpi in japan,

above the boj's 2% target. and of course, the weekend yen has helped support prices of imported goods, which is helped take cpi numbers a little higher. take a look at the japanese yen at the moment, holding at the 134 level, slightly stronger against the u.s. dollar after two sessions of gains. this in the broader context of things, after falling out two the 24-year low to the u.s. dollar given increasing policy isolation around the world. you are seeing nikkei futures unchanged at the moment. at the bottom of the hour, we will be breaking down the japan cp

♪ shery: we are getting inflation numbers out of japan for the

core cpi numbers, which is what we follow given the be a guy's 2% target. we are giving 2.1% acceleration for the month of may, coming in line with estimates and also at the same level of growth we saw in april, the first time when core cpi actually surpassed that doj inflation target. the headline inflation number without excluding fresh food, coming in at 2.5% growth for the month of may. we are following core core cpi numbers that exclude energy and that would be growth of 0.8%, again in line with expectations. we have seen high food prices push cpi numbers higher, but this tends to be more cost-push inflation, which the be lj is worried about. they want to see steady, demand-driven price gains which

the be oj doesn't think this is, which is why they are still pinning the right around 0%. this, as we continue to see a weaker japanese yen training at the 134.91 level, which supports the price of imported goods and pushes inflation higher. paul: for more, let's ring in bloomberg politics reporter isabel reynolds in tokyo. we have inflation moving higher in japan, the yen at levels not seen in a generation. what are the implications for the prime minister? isabel: this is coming at an awkward time for prime minister casita. he has an election on july the 10th. that is going to be key for him going forward. because if he manages a good result, he may not base another election for three years, a long time for japan. japan is known for frequent

elections. so, this is a vital time for him. at we had been seeing, until april and may, reaching record levels since he took over in october. people were really appreciative of the policies he put in place regarding the virus. they approved of his attitude on the war in ukraine and support for ukraine. but now, we have the economy coming back to the forefront. it is very much pocket book issues what people are talking about now, during the campaign. the opposition are attacking him on the weak yen and on inflation. even though headline rates are low compared to other countries, i think this is going to be a very difficult couple weeks or him. shery: which begs the question, how supportive is the prime minister of the doj's kurod --

be oj's -- boj's governor? >> the prime minister is someone who prides himself on knowing the problems people face at all levels of society. the governor said he thought people were supportive of iron prices, and that was a blow that damaged his support. looking at headline inflation right now, it is not really that high. so, i think it would be hard for him to change direction just based on this. we will have to wait and see, but i haven't seen any sign of weakening support on kishida's support for mr. kuroda. let's look at the broader markets, japanese assets also trading. >> those inflation numbers really set the stage for further

easing from the bl j -- boj. looking at how that influences foreign investors in the market, there is concern that the difference between the boj and the fed could hurt corporate earnings. because of that, foreign investors moving away from japanese stocks, nearly $7 billion sold this month. that is the most since march 2020. some say the focus is on whether the u.s. economy can withstand outside rate hikes. let's pull up the other chart and look at which other markets in the region are feeling the pinch from this. south korea and taiwan could be the first victims of a u.s. recession scare. the reason is this index that they share in common that is highly correlated with moves we have seen in the u.s. market, also very tech heavy. in korea, similar to japan, a

lot of foreign selling in the market. very happy today. justin 2022, we are looking at $11 billion leaving the market. the tech sector is bearing the brunt of this, samsung accounting for half of the losses we have seen this year. other large outputs and recent ipos from communication giants, but for outflows here could continue if we continue to see weakness in the yuan. shery: we are getting the latest liens from the south korean finance minister, saying in a meeting that the tax on oil products will be lowered from july 1, that korea will seek a stations lower product prices and that south korea will try to manage water and other public charges very carefully. i spoke to him last night. he was talking about how commodity prices could weigh on

the economy and told me fighting inflation would be the top priority. >> durable energy and raw material prices are soaring and inflation across major countries is 8%, nine percent. south korea's rate has been lower, five point 4% in may. but we have reliance on outside sources for energy and crops that is having a negative impact on exports. i expect the prices will continue for some time, so we are making tackling inflation our priority. we lowered fuel taxes to 37% and are looking to lower customs tariffs on major items. shery: we could've -- we continue to see incredible weakness in the south korean yuan. >> the recent dollar-yuan is due to the fastest monetary

tightening globally due to inflation. it is due to external factors. impasse currency prices, there were not big prices with south korean economic fundamentals. rather, they were due to global factors. however, in the currency markets, one-sided herd behavior, we are working on policies to alleviate that and also supply and demand imbalances in markets. shery: we continue to see weakness in the japanese yen, japan a competitor with south korean when it comes to some of these exports. >> when it comes to the current import-export situation, there is indeed a current account deficit impacted by currency flow issues but largely also by field and crop -- fuel and crop prices. we see this trend continuing but we see south korean exports as competitive. shery: we continue to see aggressive tightening from the federal reserve here in the u.s. how does korea look at this?

at what is south korea doing what it comes to capital flows and the negative impact it could see? >> due to the faster pace of global monetary policy tightening, the south korean policy rate has risen. the current administration is aware of potential risks from higher rates. we are monitoring them closely so the financial and currency market volatility isn't amplified. in the bond markets, if there are bigger responses, the government will implement emergency buyback and the bank of korea should buy government bonds at the right time. shery: you downgraded your growth forecast, tell us about what challenges you foresee. >> and south korea, our reliance on exports is bigger than other countries, standing at 70%. external factors are indeed having a negative impact on the economy. and with supply-chain

disruptions, it did have a negative impact on exports and investments. however, with covid stabilizing, we expect spending to rebound. shery: talk a little more about supply chain disruptions and how that is affecting your exports, especially in the tech sector, which is so important for south korea. >> the supply chain disruption triggered by the pandemic led to competition among nations and has impacted our economy. we are looking to diversify imports for certain products and i can say that we have overcome this challenge in a short time. paul: that is the south korean vice finance minister speaking exclusively with shery. let's get to vonnie quinn with headlines. vonnie: the most-watched u.s. oil report will not be out this week because of energy issues. this status report is one of several affected by a power problem. bia says it is working to

resolve the issues. it's natural gas inventory is not affected by the outages. the january 6 committee investigating the attack on the u.s. capitol has her first-hand accounts about how donald trump pressured top justice department officials to support his claim of election fraud. some doj officials say the then president relented only when warned of mass resignation. an indian billionaire has pledged close to eight billion dollars for global causes to mark his birthday. the donation will be used for bolstering health care, education and skill development. adani is asia's richest person and added $15 billion to his wealth this year, making of the biggest wealth again or globally. the australian mining sector has uncovered dozens of cases of sexual harassment and abuse of

women in the industry. the report calls it horrific and cites failures by the industry and the government. the investigation recommend compensation for some workers. 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. ♪ paul: plenty more to come on daybreak asia. this is bloomberg. ♪

♪ shery: tech workers in the u.s. are embracing the labor movement. successful union elections show a breakthrough for activists. apple workers is the latest where workers voted to human eyes. starbucks employees are also pushing for labor rights. for this week's equality foundation, we are joined by steven greenhouse, senior fellow at the century foundation. good to have you with us. how different do you see this movement for unionization compared to the past? steven this movement is different. in the past american history, we

think of factory workers, steelworkers, farmworkers unionizing. this is very much in the tech sector and service sector, second, it is different because of young workers, often college-educated workers who are unionizing at amazon at the apple store in maryland, a lot of newspaper reporters with college educational unionizing, museum workers are unionizing, 160 starbucks stores in the u.s. are unionizing. it has been decades since there has been so much energy and attention paid to unionization efforts. a big difference is that, five is ago, 10 use ago if you asked people in the u.s., could you ever unionized and amazon warehouse, unionize and apple retail store? people would say no way. but the pandemic has upset a lot of of workers who felt they weren't treated well enough. they see corporate profits soaring. apple humongously profitable,

workers say we deserve more. a lot of them are facing huge tensions during the pandemic. i think they feel that something is broken and there is too much income inequality, and we want a larger voice at work. shery: we have seen though, some of those companies accused of unionbusting. what sort of pushback and we expect? steven: pushback from the companies? companies are fighting very hard against unionization. amazon is extremely antiunion. it has lawyers going around the plants and antiunion consultants paid $2200 a week speaking to workers saying that they don't need a union. starbucks has hired this big law firm that has sent a lot of workers into buffalo, arizona and other places to urge workers not to vote to unionize.

amazon workers say several dozen workers have been fired since they support a union. it is illegal to fire anyone for supporting a union. i am sorry, starbucks. starbucks says that is not true, we find these people for breaking girls. there is a tug of war -- breaking rules. there is a tug-of-war right now, the company is pushing very hard to stop the union. in the u.s., companies have access to workers 24 75 to campaign against unions. in waste of the playing field is tilted against unions because they can prohibit union organizers from setting foot on company property. that is why many workers say it is too hard to unionize, it is much harder in the u.s. to unionize than in japan or south korea or many other countries. paul: there is one other important difference this time, the extremely tight labor market to what degree is this going to assist unions in getting the demands they want? steven: great point.

unemployment in the u.s. is 2.6%. typically, workers are often scared to try to form a union. scared that if i try to unionize, i make it five, my factory might close, i might lose my job. but with unemployment so low, whether you are a warehouse worker or retail worker, you think, if i lose my job because of unionization efforts, i could find another job at a fast food restaurant. labor advocates are saying that unions need to push hard now because they are scared unemployment will go up quickly now that the fed has raised rates and the u.s. might face recession. many people feel this is a once-in-a-lifetime moment for unions to unionize thousands or millions of workers and unions have to get out there and help these young workers unionize. paul: give us a sense of demands

they might be looking for. wage pressures are a key concern, but one of the things? steven: basically, a lot of workers say we want a greater voice at work. for instance, amazon, a lot of workers complain the pace of work is very past -- very fast, stressful, that they are monitored all the time. workers complain they don't have enough time to go to the bathroom even. or if they have a problem at work, they can't talk to human resources. it is often an app. i think they want more voice to make their jobs better. apple come i think people are happy with work conditions, but they say we are experts at what we do, $20 an hour isn't enough, we want more, apple is making a gazillion dollars a year. they say it is not right for management to make all the decisions, we have put our lives on the line during the pandemic

and should have more to say about working conditions to ensure safety. a lot of workers complain there was a shortage of workers during the pandemic, so staffing was crazy and people were required to work 60 or 70 hours a week or told at the last minute to coming to work. -- to come in to work. another thing they want is for workers to have a stronger voice on scheduling. paul: thanks for joining us, steven greenhouse, senior fellow at the century foundation. let's check business/for u.s. regulators have ordered juul to quit selling e-cigarettes, a huge blow to a company that was once a favorite among silicon valley investors. the fda says juul must remove all its products that are on the market. teenage use of vaping products prompted the agency to

review the e-cigarettes. this company will face questions after $34 billion loss in market value and the past year, softbank, to boost share prices. shareholders are expected to attend the softbank meeting in tokyo. reports say british rock band pink floyd is seeking $500 million for its misa portfolio. it is said to be one of the largest music sales in history. interested parties included warning or -- warner music and sony. shery: we got analysis from the daybreak team broadcasting live from our studio in hong kong. you can also listen on bloomberg radio.com. stay with us. ♪

♪ >> intervention is generally very difficult unless it is done when markets are in a kind of crisis mode. but intervention shouldn't be eliminated. >> if we go well above 40, boj

is going to have to change policy. >> if this is the way we bring down inflation, so be it. paul: earlier guests speaking on japan's policy path going forward. the yen performing right now 134.89, so it is backing away from quarter-century lowe's earlier in the week. interesting to hear those comments from the former head of foreign-exchange at the finance ministry. so, perhaps we are seeing the early signs of drawl burning on the yen and signs of intervention to come. purely speculating here, but it was interesting to hear him brought out to make remarks. cpi numbers we had a short time ago, two point 5% national cpi for the month of may, 2.1% excluding fresh food, those were very much in line with expectations. but inflation is still running hot in japan, the yen still very

weak, feels like something is going to give. shery: especially as we get ppi services numbers out of japan, year on year growth 1.8%, slightly higher and accelerating at a faster pace than expected for may. we continue to watch inflation numbers across the world, not only japan, but given we continue to seek global yields under pressure, that is perhaps a little relief for the japanese bond markets, for the boj as well be at look at the aussie 10-year yield headed toward 3.7%, the three-year yield losing ground at the moment. a new zealand is closed on holiday. we will continue to watch the bond space as we have seen the 10-year yield in the u.s. treasuries base dropping more than 20 basis points since tuesday. these are some stocks we will be watching when trade opens in japan and south korea.

mitsui has agreed to take a 10% stake in top online broker sbi. this company will raise the prices of seasoning products by 12% in october. concerns of an economic recession are worsening for korean trade dynamic companies like samsung, who are bracing for a drop in demand for products including smartphones. coming up, we get the nikko asset management take on inflation numbers and the central bank rate hike. market opens and cindy and tokyo -- sydney and tokyo are next. this is bloomberg. ♪

♪

shery: this is daybreak asia, counting down to asia's market opens. fed chair jay powell not talking about commitment to bringing down prices at a time when we already have japan cpi numbers, and we have more numbers coming from leica -- from melee ship. -- from melee shop. paul: 134.4 of the young, pressure piling up. could be political implications in japan. >> we have seen foreign investors leaving the market over concerns of weakness of the yen and also the moves in for in settling here. we are a few seconds away from the market open in japan and australia, treasury markets just coming online. watching the 10-year yield. the move lower could be positive for equity sentiment in the region today. the monetary space, another

major focus for us. i will bring up gmn to see how we are trading. at the nikkei coming online to the upside. the yen, off the 135 level. we could see further strength in the currency. we are also moving to focus on korea, the cost be -- kospi coming online, plenty of selling pressure in this market as well as the past few sessions bid we continue to see that today, the kospi coming online 1% to the downside. heavy selling pressure in the tech index, the likes of samsung in particular. we have the government pledging to intervene in the fx market if needed, the korean yuan still sitting at 1300, lowest level since 2009. the kospi now moving to the

upside, .6% higher in early trading. moving to the open in australia, they are two factors here at play. we are seeing moves and lower in the yield. but still we have moves in the commodities space. there is concern now that demand could be waning for key metals, particularly iron ore, the likes of bernstein saying we could see iron ore shipments drop in the second quarter of the year. that is a headwind facing the biggest mining company. a sx 200 fractional he in the bed at the start of trade -- asx 200, fractionally in the red at the start of trade. paul: fed chair jerome powell is calling his commitment to curbing inflation unconditional. governor michelle bowman backing a 75 basis point rate hike again

next month. >> it is unconditional, our commitment. the reason is that in a particular situation, we have a labor market that is unsustainably hot and we are far from our inflation target. we really need to restore price stability, get inflation back down to 2%. without that, we are not going to have a sustained period of maximum employment. paul: let's get to bloomberg's u.s. economy reporter steve matthews. what does this mean for interest rates? steve: unconditional, a number of wall street economists were parsing words and took meaning by the fact chair powell didn't use the u-word yesterday. in the monetary policy report last week, the fed said it had

an unconditional pledge to reduce inflation. what they mean by that, and the way people read it on wall street was, they would be willing to push the economy into recession if necessary, if that is what it takes to bring inflation down. unconditional sounds like there is definitely a tilt toward doing something about inflation, as opposed to the mandate. he used that word today. he seemed very determined. you had mickey bowman making the same point and we are clearly going to get 75 basis points in july. shery: how much of it was perhaps playing to the audience? rising prices is a key political issue. steve: that is right. in fact, there was a lot of blaming going on. nobody wanted to blame powell. powell came out of it unscathed.

the democrats wanted to point out all this is related to covid, related to the war in ukraine. one of them went through a long list of countries that had higher inflation than the u.s.. and powell agreed it is an international problem. the republicans wanted to cite the fact there was a big stimulus package passed early in the biden administration and wanted to blame biden because we have midterm elections coming up, and there is a lot of politicking already going on. shery: bloomberg's steve matthews with the latest on chair powell's commentary, and the use of the word unconditional when it comes to the commitment to bring down prices. our next guest is not as cautious as before on global commodities. john vail is chief asset manager

at nikko asset management. you're not worried about tightening by the fed and other central banks as well? john: well, we think equities will be fairly flat in the third quarter. but we don't see a recession. we think we will narrowly avoid it such that inflation will remain high, but it will start to come down. the fact that commodity prices sank last night is a relief for the fed. of course, the pmi's were weak in the eurozone of the u.s. contributed to that, but the central bank policy is definitely curtailing commodity investments and in other areas right now. and that is why the long-bond yield fell so much. shery: all of the macro environment right now the hands differently when it comes to japanese assets, the boj pinning

down rates at the moment. what do you think of japan and its drive to keep easing, and the weakness we are seeing in the yen, and the portfolio side of things with japanese assets? john: we are positive on japan and other markets for the third quarter but yes, a strange situation be japan is a unique country and its inflationary backdrop is much less troublesome than the rest of the g3. its labor costs are not rising yet. a weaker yen, which is pushing up modded prices and the cpi, the headline came out as expected, above the target rate that the bank of japan has out there. but the new core measure which subtracts fresh food and energy

is still stuck at 0.8%. so that leaves a lot of space for the bank of japan to continue to stimulate the economy. the last thing they want to do is hike rates right before some sort of major slowdown in the world. it got blamed for doing that in 2007, and it is still hearing about it as a mistake and definitely does not want to repeat that. paul: john, headline writers around the world have been having fun with this fact, the bank of japan now owning half of the market, the jgb's. would you still short tenure jgb's? how attractive is that? john: it is dangerous to go against the bank of japan. they call it the widow maker trade, shorting the 10-year.

the term has been around for two decades or so. and bank of japan especially led by the current governor, kuroda, is determined that will not be shaken by speculators or even a little political pressure. although the administration has come out at kuroda on this. but the yen rebounding and strengthening due to interest rates coming down in the state and the bond yield coming down is a huge relief for both the bank governor and the prime minister with the elections coming up. paul: john vail, chief global strategist at nikko asset management, thanks for joining us. annabelle is keeping an eye on the markets. annabelle: we are looking at as he moto - asimoto, a major

producer of products in japan. they said they are raising products for in seasoning and other major products by as much as 12% by october. it plays into the inflation we are saying. we had inflation and cpi numbers about a half-hour ago showing food prices were contributing the most so that. it was announced yesterday would be raising the prices of snacks and cereals by up to 20% from september. rising food prices are a continuing concern across japan. the energy sector in australia, we did see the bloomberg commodities index closing down 3% overnight. recession fears are the major focus for investors, and concerneds gas concerns we could see a peak of demand or a supply lot in copper and iron aura. most of the miners are now moving to the downside. the ai sex 200 -- a.s. act --

asx 200, energy stocks declining. vonnie: european union leaders have granted ukraine status as a candidate, a historic step on a path to membership which can take more than a decade. kyiv applied shortly after the russian invasion in february and will have to make decisions on the rule of law, justice and anticorruption. eu leaders also granted candidate status to moldova. >> the countries all have to do homework before the next stage of the acceptance process. but i am convinced they will move as swiftly as possible and work as hard as possible to implement necessary reforms. vonnie: leaders of the brics say they oppose green berries that could restrict global trade. brazil, russia, india, china and south africa slammed trade measures aimed at addressing

climate change in developing countries. the group also called for international bodies -- the most-watched oil report won't be out this week because of technical issues. the energy information administration report is read by oil traders around the world that was affected by a power problem. eia says it is working to solve the issues. it's natural gas report is the only publication not affected by the outage. the south african finance minister said commodity prices will weigh on the deficit for the foreseeable future. deficits have been ballooning as the weaker yuan and the russian war in ukraine drive up costs. we are told tackling inflation remain a priority. >> as we rely on outside sources for energy and crops, it has

been having a negative impact on experts. i expect outward pressure on prices will continue for some time. vonnie: global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ paul: thanks. still to come, radhika rao of dbs bank joins us to tell us why the bank of indonesia is showing little inclination to change policy. this is bloomberg. ♪

♪ shery: wall street's they kissed banks based the fed stress test, paving the way for billions of dollars in shareholder payout. soaking in joins us, more than 30 lenders examined with a cocktail of problems. su: all of them passed the test. that means the green lights are paying out the big evidence, but in the words of the fed, it shows all 30 banks could withstand a very severe recession. that is important given the macroenvironment right now. and the latest round, the fed tested the largest banks against a mock crisis.

the test was laid out back in february before inflation hiked to 40-year pies -- hih highs, it was that -- highs, it was a far-fetched scenario, but not now. much more market volatility and a collapse in market prices, in this an reo, a 55% drop in stock prices. but all the banks stayed above the fed's minimum, showing they have enough money on hand to handle a crisis. bank stocks after sessions are still in the red and this may be reflected in the friday u.s. trade. typically come of these bank stocks move higher because they have the go-ahead to now pay out aliens -- pay out billions, an estimated combined total of $80

billion in stock buybacks and dividends. j.p. morgan, morgan stanley face an additional -- faced an additional made upmarket market shock that tested the resilience of their trading operations and all of those again passed the test. positive result again for the banks. paul: at the same time, we have banks bracing for billion-dollar losses related to sinking by out debt. su: it relates to the party that was going on in m&a, a lot of mergers and acquisitions. but risky corporate debt that is often used to make those deals has sunk. let's go to the bloomberg to take a look at the reality check these banks now face. we have investment bankers in the u.s. and europe bracing or potentially billions of dollars in losses as they try to offload risky corporate debt that has sunk in value. sources close to the metal site

-- matter say apollo global's buyout of tenneco auto parts maker says it is just one example of a challenging transaction. some of the biggest losses good amount about $1 billion from a deal that took sisters -- took citrus systems private. the banks each could face a loss near $100 billion according to a source close to the matter. paul: bloomberg's sue keenan. deutsche bank is in a spot about some of its people using what's apt to communicate -- what's app to communicate. regulators are concerned about the use of what's app because some of these conversations

cannot be archived. shery: we continue to see more regulatory scrutiny over these banks including goldman sachs, hsbc being probed by u.s. regulators. deutsche bank's ceo himself at one point used what's app to communicate on issues related to the bank, so we continue to see scrutiny about these private messages. hsbc fired a trader in london after scrutinizing mobile phone messages by some of the step eight this is something banks will continue to keep an eye on. paul: let's check futures in europe opening, stocks 50 futures at the moment. they are moving like this, msci europe futures also talking lower at the moment and futures for the dax in positive territory, up 1/5 of 1%.

shery: coming up, china calls for the building of a more open and resilient economy. more on what chinese president xi jinping said, next. this is bloomberg. ♪

♪ paul: chinese president jean jinping is calling for it -- chinese president xi jinping calling for the building of a more open and resilient economy in an address to the brics nations. our china senior executive jon luther joins us. -- john liu. >> xi jinping made this call for

pooled collaboration in response to what he sees as a threat to global security, and in which he described the country, unnamed, it the u.s., forming blocks and a search for 100% security. that, in turn destabilizing the global environment. his antidote to that is that the brics nations, the developing world come a lot to work together more closely. shery: having economic strength wouldn't hurt. what is the likelihood of president xi jinping reaching the 5.5% growth target? john: it was ambitious when they announced it in march. economists we talked to believe it is getting further out of reach because of covid, because of the week property market that continues to see prices fall -- weak property market that

continues to see prices fall. the president has taken action, subsidies for electric cars, reducing regulatory overhead for companies, so going into the second half, we should expect more action. whether they get to the 5.5% out, we will have to wait and see. shery: investors are looking to potentially invest in china. what are you hearing in terms of optimism and pessimism, given we still have the covid reopening? john: the outlook for the economy remains uncertain. the outlook for covid remains tenuous with omicron the threat of more lockdowns always -- tenuous with -- tenuous with omicron. the threat of more lockdowns always. you are seeing more bullish commentary and seeing more

people getting back into the market thinking we have reached a bottom end things will improve. shery: valuations remaining really attractive. our senior china executive editor. checking business plus headlines, bloomberg learned tesla's taking steps to ramp up output at its factory in shanghai. the electric vehicle maker will boost manufacturing through early august. bloomberg sources say the upgrades will boost tesla output in china to more than one million cars per year from its previous capacity of 450,000. the sopping founder faces shareholders friday with portfolio losses hanging over the annual meeting. the company will face questions over $34 billion loss in market value, and steps to boost its stock price. 150 shareholders are expected to attend the meeting itself had quarters in tokyo.

billionaire ken griffin is moving citadel headquarters from chicago to miami. the relocation will affect the citadel hedge fund and citadel securities, the market-making business. citadel expects a few hundred people to be based in miami next year. the move comes after griffin became critical of chicago's political leadership -- of chicago's crime rate and political leadership in illinois. paul: in terms of currencies, that yen weakening, pushing back below that 135 barrier after inflation for japan came in much better than expected for may, 2.5%. the aussie dollar also posting gains after taking a beating in recent times, 69 point 06 against the greenback. we have seen commodity prices we have seen commodity prices weaken, particularly iron or seeing selling, all that waiting on the aussie dollar by showing modest gains this morning.

global commodity prices are weighing on the yuan as well, the trade deficits being pushed out for the foreseeable future. the yuan tracking lower. shery: u.s. futures, we are seeing broad downside after stockton treasuries rallied in new york. we continue to see fears of recession. and we have seen weaker than expected economic numbers, and a hawkish tone from fed officials. up next, the indonesia central bank is on its own among hawkish peers in southeast asia with a peers in southeast asia with a -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!

♪ shery: -- anabel: this is daybreak asia.

checking markets 30 minutes into the trading session for japan, australia, korea so far, a drop in yields in the previous session, treasuries now flat. but the drop providing a boost to equities in this part of the world. japan and korea are trading higher, australia is still in the red. if you put up the board come the major focus for investors is in the energy space, oil is trading higher, but still on track for its worst back-to-back loss since april. investments are building around demand outlook and whether we can see that feeding into pricing. we are seeing that reflected in contracts for iron ore and copper in london. both of those continuing to pull back in previous sessions. if we flip the board, that could be a major drag on indexes across asia this morning. we are seeing the energy index across the board pulling these indexes back from losses.

it is what is contributing most to the declines we are seeing in the asx 200 in early trading and also declines in japan and korea. paul: bank of indonesia is the outlier among southeast asia central banks, holding a 17 day rrr as peers in the region turned hawkish. the question remains, how long can the central bank resist pressure to hike? let's bring in radhika rao, senior economist at dbs bank. how long can the bank of indonesia maintain this dovish stance before reality forces a move? radhika: for bank of indonesia, there are some tailwinds they are enjoying at the moment. at this point, inflation is

still within range and unlikely to reach the upper end of the target -- and likely to reach the upper end of the target next week. other than that, from a call -- from a policy perspective, indonesia is a commodity player in the region. what you are seeing is outperforming many regional peers. in that sense, the urgency is much lower for bank of indonesia to hike rates and do so aggressively. yesterday, they did flag inflation and the need for some support, but very limited urgency highlighted in the own guidance that they are going to hike rates. paul: let's stick with commodities when it comes to indonesia, because it does subsidize fuel.

oil is priced in dollars and the dollar is strong come the oil price is strong. is something about to give? radhika: initially, market expectations were that the commonly used fuel variant [inaudible] but the government went ahead and increased the subsidy budget. at this point, bearing the burden is the state-owned enterprises in that state -- in that space as well as government books. while the government is putting aside more money for commodities, they are also [inaudible] and what they need to spend and overall remain on a fiscally consolidated space -- path.

annabelle: a different picture when it comes to the -- shery: a different picture what it comes to the philippines because their current account deficit is widening, a low we haven't seen in 16 years against the u.s. dollar. why aren't they moving faster? radhika: asean countries are in a spot. they are reopening after a very bad years. and fiscal stimulus that was put into the economy over the pandemic wasn't that big compared to western countries. understandably, they are a bit more hesitant. in the philippines, inflation has lifted and that is why we are seeing a right hiking cycle. if you see inflation projected for 2022 and 2023, they are still above target. i am not saying they are going to remain on the hiking front for much longer. shery: bank of maylasia, what

can we expect from cpi numbers today? radhika: maylasia is in the same boat. inflation is picking up. they don't have a target, so it is difficult to gauge dollar levels. but we think they are also one of the economies that will hike rates, but at a very moderate pace. in some sense, there is a divergence between the asean, some are moving faster, some are not raising interest rates but are doing fx, but it is early in the cycle, and then you have indonesia. shery: radhika rao from dbs bank , thank you. the japanese yen is off 24-year lows but weakening slightly since we got the core japanese inflation number four may remaining above the boj target.

our bloomberg reporter joins us, david, where is it going? david: the big driver is going to be the cap spread between u.s. and japanese yields which has been coming down this week. it has been weighed down by global fears of recession. if you look at the eurozone, that is a big trigger. pmi data came in worse than expected, they took u.s. yields with them and they hence between japanese and u.s. yields narrowed. moving forward in the near term, big drivers could be what that sprit dies if it widens further and also equities, if they weekend which would be showing dollar-yen negative, or actually try and rally.

paul: japan next week, anything that might change the picture? david: japan data, it is actually the u.s. and euro data, and the euro cpi data. euro yields took u.s. yields with them. cpi will be very important. also pce and isn data. pce is a buzzer -- pce is a measure of inflation. is the u.s. coming up quite strong to whether interest rates? if the economy is looking sure, yields go higher because the fed will set the economy is performing well, we have a foundation to hike rates. paul: bloomberg's david

finnerty, thanks. coming up, south korea sees global commodity prices weighing on the economy for the foreseeable future. we hear from the country's vice finance minister next. this is bloomberg. ♪

♪ shery: let's get to vonnie quinn

with first were deadlines. vonnie: federal reserve care jerome powell called his commitment to curbing inflation unconditional during testimony before congress. one of powell's colleagues, governor michelle bowman, has backed another 75 basis point rate hike in july. democrats are warning powell against triggering a recession. >> it is unconditional, our commitment. the reason is, we need to, any particular situation -- we have labor market that is unsustainably hot. we are very far from our inflation target. we need to restore price stability and get inflation down to 2% because without that, we are knocking to have a sustained period of maximum unemployment. vonnie: the hong kong incoming health chief aims to cut quarantine for five days -- to five days from the current seven. buddy told local media outlets

the city will stick to it dynamic zero approach to the pandemic. he did not mention whether travelers would be allowed to quarantine at home rather than hotels as currently required. the january 6 committee investigating the attack on the u.s. capitol heard first-hand accounts on how donald trump pressured justice department officials to support his claims of election fraud. the remarks came just days before the attack on the u.s. capitol. witnesses say trump only relented in the oval office when he was warned of mass resignations. dozens of cases of sexual harassment uncovered in the australian mining industry, the australian government citing some of those as arithmetic and blaming failure of oversight by the industry and government. rio tinto is among those mentioned in the investigation, which recommends reparations.

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. this is bloomberg. ♪ paul: thanks. let's take a look at korea. the kospi in positive territory, most major sectors higher, utilities leading the way. that sector up 4%. communications and i.t. also doing well . yuan the korean -- doing well. the korean yuan, seeing weakness, struggling with rising energy prices. we heard from vice finance minister bang ki-sun earlier and will hear more of that now about difficulties this is causing, him saying elevated commodity prices are going to weigh on the country's deficit in the future. he said fighting inflation is the government's top priority

although current price pressures are important. bang: a global energy and raw material prices are soaring, inflation across major countries, in south korea's case, slightly lower come up 5.4% in may. but as we vary reliance for outside sources on energy and cross, it has been having a negative impact on exports. i expect upward pressure on prices will continue. so, we are making tackling inflation our priority. we lowered fuel taxes to 37% and are looking to lower customs tariffs on major items. shery: we continue to see weakness in the south korean yuan, what is the government doing? bang: the recent rise of the

dollar-yuan is because of inflation. worries about economic inflation are due to external factors. in past currency crises, there were not big problems with south korean fundamentals big rather, they were due to global factors. however, the currency market's one-sided herd behavior, we are working on policies to prevent that and also alleviate supply and demand imbalances in markets. shery: a credible weakness in the japanese yen, japan a competitor to south korea, how do you see it? bang: when it comes to the current import-export situation, there is indeed an account deficit, impacted by a currency flow issues and also few and crop rises. we see the trend continuing. but fundamentally, we see south korean exports as competitive. shery: we continue to see very aggressive tightening from the federal reserve in the u.s.

how does south korea look at this and what is south korea doing when it comes to capital flows, and perhaps negative impact it could see? bang: due to the faster pace of global monetary policy tightening, the south korean policy rate has risen and the volatility in financial markets as ground. the administration is aware of potential risks from higher rates. we are monitoring closely so that financial and currency market volatility isn't amplified. in bond markets, if there are bigger responses, the government will implement emergency buyback , and the bank of korea should buy government bonds on the right time. shery: you downgraded your growth forecast. tell us what challenges you foresee. bang: our light on export is bigger than other countries, 70%. external factors are indeed having a negative impact on the

economy. and with supply chain disruptions, it could have a negative impact on experts -- exports and investments. however, with covid stabilizing here, we expect spending to rebound. shery: let's talk about supply chain disruptions and how it is affecting your exports, especially in the tech sector? bang: the supply chain disruption triggered by the pandemic has led to competition among nations and impacted our economy. we are looking to diversify imports for certain products. we have overcome this challenge in a short time. shery: south korean vice finance minister bang ki-sun speaking to us exclusively. coming up, bullish sentiment about u.s.-listed chinese stocks , with j.p. morgan doubling down. a preview of what to look for, especially as we continue to get

covid infection numbers commission jen reporting five local cases -- numbers, sheds nzhen reporting five local cases.

♪ paul: let's check business/deadlines. netflix laid off another 300 employees as it seeks to bring

costs under control and nod -- under control amid uneven growth. it will mostly face the u.s. the streaming giant lost 200,000 subscribers in the first quarter. u.s. regulators banned the sale of juul cigarettes, a huge blow for investors. the food and drug administration says the company must also remove all of its products on the market. the rise and use of teen vaping compelled the agency to remove the cigarettes. shery: asian markets, nikkei stocks up .5%. talking about health care and tech leading declines, although energy and financials are down. oil filing in new york, although it is rebounding slightly in asia, above the $105 level.

the kospi gaining ground, rising and reversing losses from the previous session. asx 200 down .1%. we stay with japan after record loss as softbank hosts this annual shareholders meeting friday. confidence may be at a breaking point. let's bring in our asia tech executive peter l stremme. -- peter ellstrom. peter: is going to be a tough shareholders meeting for the founder. he founded the company four years ago. his investors and japan have typically been his most faithful, supportive. but these have been trying times, largely the tech meltdown has taken a toll on his portfolio.

he invested aggressively in hundreds of tech startups including many money-losing startups that have been losing on the stock market. koopang in south korea was a big investment, didi in china has had a rough year, and many more that have been difficult. he reported losses for the fiscal year that just ended that of the largest ever in his history. now come investors have tough questions. paul: is this it for write-downs? could we see more down the track? peter: certainly. there is going to be a lot more write-offs if the market continues in the direction it has been handing. his publicly-held portfolio is transparent. we know what they have been doing at softbank at they have been marking those down systematically. many private companies in the portfolio are more opaque, we

haven't gotten visibility into how they are marking those valuations and how that flows through to the financial statements brits rvs going to get questions about the portfolio and the market and at the shareholders meeting today, probably questions about succession. he is 64 years old, succession has been a big issue. he founded the company and has led at the entire time and at sometime, he is going to have to have somebody take over the ceo job for him. paul: asia tech executive editor peter elstrom. j.p. morgan doubling down on chinese stocks believing attractive valuations will pay off. let's get the details from bloomberg's agent executive editor. what is j.p. morgan saying? >> j.p. morgan is saying valuations are really attractive and regulators are helping ease off on the crackdowns that have been going on over the past year

or so. that is helping them make more bullish bets in the chinese tech sector, buying j.d..com and alibaba according to their latest filings. we are seeing more investment houses and wall street banks piling into bullish bets. turning more bullish on chinese stocks, goldman sachs continuing to be bullish, that is when you need to stop and think whether the rally is overdone, as peter who appeared earlier was talking about how venture capital investors are not thinking the same, they are thinking the easing of the crackdown is maybe temporary, just because xi jinping is having a big election in the later part of the year and also, the economy is

devastated by covid right now. so, this could be a temporary pause. shery: especially when you are talking about the rally perhaps being overdone. you look at this chart on bloomberg showing the golden dragon china index performing welcome to other indexes globally. there is skepticism for me as well, the fact u.s.-china relations are not great at we have no idea where the financial audit issue will go. what are you hearing on that? >> we have not seen more clarity on the auditing front. and i think that is the number-one thing weighing on investors' minds, especially investors in the u.s.. the golden dragon index has done well. but if you look at your to date performance, the hang seng's 18% down your to date and that is in line with regional performance.

it is not necessarily an upper former. if you look from the peak last year, it is down x 2% for the hang seng index. shery: our asia stocks managing editor. casinos, in focus after all received extensions of up to six months from the macau government for gaming concessions. paul: still to come, assessing recession risks on the last trading day of the week. that is it for "bloomberg daybreak: asia," market coverage continues.

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.

yvonne: