shery: you are watching "daybreak: asia" coming to you live from washington, d.c. and hong kong. annabelle: we are counting down to asia's major market opens. yvonne: indian stocks are facing analysis -- losses on renewed worries of inflation. the nasdaq sinking 3%. fed officials playing down the risk of a u.s. contraction. mary daly saying they are only tapping the brakes and will not go over the handlebars. morgan stanley upgraded its china gdp forecast after beijing made its biggest shift yet in its covidi zero policy we are looking for a down session here in asia. annabelle: nikkei futures are muted but they did close lower in the previous session. asx 200 is pointing to a big lost. we are watching how brent crude

comes online in the next hour. also, metals prices. wti is fairly steady at the start of trade. month-end rebalancing is another factor. in australia we have the likes of certain companies being we could see a move from portfolio investors into undervalued stocks. recession fears have also been weighing on the dollar, pushed up the most in a recent week. we have the yen and changed that, but we could be in a wait-and-see mode because we had consumer confidence numbers from the u.s.. we also have lots of numbers still to come. gdp data, construction spending, and also manufacture sentiment. shery: yes, but at least today, investors seem focused on the consumer confidence number, sinking to a 16-month low. home price growth decelerating. almost no rebound for u.s.

futures at the moment after we saw the rare sighting in the s&p 500, the three-percentage point reversal, only the 11th time since 1990 that has happened. we have a lot of optimism with china cutting the quarantine period. big wall street banks boosting their dividends. but it was the recession fears, not to mention tech, weighing heavily on the markets. oil prices losing a bit of steam in the asia trading session, still above $111 a barrel. but with very tight supply, we are talking outages in libya and ecuador. the g7 also looking into a price cap for russian oil and demand increasingly potentially from china, ivanka. yvonne: and there is a question about whether the bull case is still there for oil. let's get the latest from our mliv strategist, mark rant--filled, and our global

economics and policy editor, kathleen hays. mark, it seems like we have reach a peak, do you think? mark: probably not. we have been disappointed so many times with people saying that uscp i in particular is going to peek. and then it doesn't. and then people have to scramble again. we also have the ecb coming on line pretty hawkish. yesterday we got a glimpse of what is happening in the emerging market where hungary hiked rates nearly 200 basis points. it adds to the kinds of things we are seeing in brazil and mexico. it is pretty much a global situation, people try to get ahead of the inflation story. and then obviously the transmission mechanism for emerging market, the difficulties in the currency. as long as the u.s. dollar stays very strong, it is a big problem for the emerging market world,

including asia, because so much borrowing is done through the dollar markets. the weaker their currencies get, it adds to the problems they have in china keeping inflation under control and keeping money supplier tight. as long as the dollar stays strong and global interest rates are higher, it will be a real hit for emerging markets and it will also play out in equities as well, plus the commodity space. shery: yes, the equity space is headed for the worst first-half performance in 24 years or so. kathleen, two fed officials are still betting on a soft landing. why? kathleen: because they think they can hiked rates enough to fight inflation and do whatever it takes. but they will not have to do so much that they pushed the economy into recession. mary daly is the president of the reserve bank of san francisco. yvonne, you mentioned her great interview on linked in, her metaphor when asked about

recession. "ics tapping on the brakes, rather than slamming on the brakes, going over the handlebars and having a proverbial recession." this is what she thinks this will mean for the economy. kathleen: i would not be surprised, and is actually in my forecast, that growth will slip below 2%. but it will not actually give it down into negative territory. kathleen: lets go into another optimistic view. john williams is president of the new york fed. in an interview on cnbc, he says that he sees the fed raising the rate by 50-75 basis points at the next meeting. another aggressive hike that will cause the growth slow but the unemployment richie torres. but he said, that is not a recession. in other words, slowing the economy to 1%. it is a slowdown that we need to see in order to reduce the inflationary pressures that we

have and bring inflation down. so doing it fast, having an impact on expectations, helping the supply chains to heal, they think this will slow the labor market, cooled things off for a while, but not cause a recession. yvonne: we are hearing from the fed, and also christine lagarde later on today. we heard some comments today from lagarde talking about the new board approaches tool. they have a lot of work cut out for them. what is the purpose of the tool? will that work? kathleen: the purpose is that if they start raising interest rates, that they will not put undue pressure on the more vulnerable nations like italy which are already highly indebted. they are talking about using reinvestments from their pandemic bond purchase fund which they are stopping as well, so the money that they get, if they need to, they can buy

italian bonds, greek bonds. she says it is aiming at curbing turmoil in government bond markets. she also made it clear that they are looking at a 25-basis-point rate hike in july. then if needed, they would do an even higher-sized rate in september. she is putting it on the table that there are 25 basis points to start and it could get more aggressive. and italian bond yields actually rallied a little bit today. we will see what happens there. shery: mark, on the point about emerging markets and the downside pressure we have been seeing in stocks, what could turn that around? mark: really, not until we see a peak in interest rate cycle. that is what people are waiting for. it is so important for the emerging market world to get their currencies back on a growth path.

we need to see people getting more confident that the fed is coming towards the end of its cycle, the u.s. dollar peaking, then we can get a tailwind for asian currencies and emerging-market currencies in general. typically you need to see traction in the currency world before stocks get supported in the emerging markets world. so it will be extreme or difficult for emerging markets to have a bullish scenario if the u.s. dollar is strong. yvonne: and we will see if the china story of cutting down quarantine times, if it will help things as well. stay with bloomberg tv for live coverage of the forum in portugal. we have francine lacqua moderating a panel with jay powell and others, catch it live on wednesday at 9:00 p.m. hong kong time, 9:00 a.m. in new york. let's get to vonnie quinn. vonnie: china has reduced quarantine times for inbound

travelers by half. travelers now need to spend seven days in quarantine facilities, plus three days self-monitoring at home, down from 14 days in many parts of the country and as many as 21 in the past. but officials say the new rule does not signal a change in policy. hong kong's incoming government is said to be considering easing the city's quarantine rules. they may allow incoming travelers to quarantine for five days in a hotel followed by two days at home isolation, as opposed to current rules which require seven days of hotel quarantine. we are told a final decision is yet to be made. hong kong's incoming chief executive will be sworn in on friday. finland and sweden are closer to joining nato after turkey drop its opposition to their bids. the two countries pledged to address ankara's security concerns. membership for the two previously neutral countries will take many months, but it

marks a big shift in europe's security landscape. nato says it sends a clear message to russia's vladimir putin. bloomberg says goldman sachs is seeing losses at its consumer unit at celebrity this year to more than $1.2 billion. sources that may group if the sour economy forces goldman to take more positions. it is more than a loss for 2020 which goldman sachs had said would be the low point for the market venture. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, the hurdle that businesses still need to overcome. jonathan song will join us for that little bit later. but first, our next guest says the biggest risk of emerging markets that is yet to take hold is that of a stronger u.s.

dollar. the global head of severance at fitch, james mccormack, has more on that. this is bloomberg. ♪

shery: look at how currencies are trading at the moment. we are seeing the u.s. dollar holding steady, this after climbing in the new york session. we saw a recession fears really taking hold and that has really led to the greenback gaining ground. not a lot of movement, the

aussie is holding at the 69 set level. it rose after china cut its mandatory quarantine period and that led to risk-on sentiment. the japanese yen at the moment, stabilizing around the 136 level. this as we continue to see the yen trading at a tight range. u.s. feels stabilizing, helping with the incredible weakness we have seen recently. our next guest says the next risk for the emerging markets yet to take hold is that of a stronger u.s. dollar. james mccormack, head of xi variant's at -- head of sovereigns at fitch. why could this be a threat for these developing nations? james: well, a stronger dollar is the biggest threat to emerging markets but it always has been and are probably our lives will be as long as there

is borrowing in current currency primarily dominated in the u.s. dollar. we have seen the emergence of local currency debt markets in ems, but the temptation to borrow the dollar at lower interest rate is always there. that exposes balance sheets currency depreciations. a strong dollar is something we have seen this year, but not against emerging-market currencies. it is unusual to see that. the primary reason is that em central banks had gotten out ahead of the fed in terms of raising interest rates and protecting those currencies. so we have not seen the kind of em depreciations we would expect to see when the dollar is strengthening and global conditions are tightening. so that is unusual. butterworth not suggest that this time is different and that we should not prepare for em currency depreciation ahead.

shery: we have seen the resilience of the chinese yuan, despite the fact that that pboc is going in a completely different direction. tell us a little bit what the easing of these measures means for what their debt is now. james: it is a marginal improvement for their growth outlook. we don't think china will get anywhere close to the 5.5 percent gdp growth target this year. the last number we had in terms of the forecast was 3.7%. that could be a little bit stronger if the quarantine restrictions are lifted, which they are going to be, in the stimulus which will also help, but our view is that they will not get close to the 5.5%. they seem to be doubling down on it in terms of official announcements for growth trajectory, but we don't think they are going to get there, basically. yvonne: your forecast for world

gdp, 2.9 percent, revised down from three point 5%. does that factor in a possible recession for the u.s.? natasha: we don't think a recession risk for the u.s. is the story this year, it is a story for next year. you look at the u.s. economy this year, first growth quarter numbers were weak, second quarter may not be that much stronger, but fundamentally, the household balance sheet is still strong, employment growth is still strong and wage growth is still strong. it is hard to see recession in the u.s. when the employment rate is growing. but the fed is moving rates higher in that will be affecting growth moving forward. so the recession risk in the u.s. is probably for the back half of 2023. our quarter-on-quarter growth forecasts there are pretty close to zero. it will not take much to tip of the u.s. into recession, but it

is definitely a 2023 risk as opposed to a 2022 risk. yvonne: you mentioned the strong u.s. dollar and how the worst is yet to come for a lot of these em currencies. yes, we have seen it may be latin america and other parts of em frontload their hikes before the fed. asia, the has been quite patient. what does that mean for -- are we set for a currency war as many of these economies try to fight against this stronger dollar story? james: it is interesting, asia may be different in terms of how we think about the stronger dollar story. asian economies are export-oriented. weaker currencies are not necessarily that bad from an asian perspective. current account positions here are generally a bit stronger. export orientation means currency depreciation is not such a big issue from a growth perspective.

asia -- emerging asia has been, you could say, behind the curve in terms of raising interest rates. latin america, many banks have been out front where inflation issues have historically been of much more important so they felt they had to raise interest rates more quickly. . we have not seen that in emerging asia. there have been a couple of hikes in taiwan and south korea, but not elsewhere. . the currency focus in this region is a little bit different. yvonne: james, thank you so much for your perspective, fitch global head of sovereigns and ratings. crossing the bloomberg right now star entertainment has named a new ceo, robbie cooke. .

that stock had been under pressure this year, down some 76%. you can get all your news on daybreak on dayb , and also available on your mobile on the bloomberg anywhere at. you can customize your settings so you only get the news on the industries and assets that you care about. this is bloomberg. ♪

>> the export controls work is something that takes a little bit more time to have an impact. we will continue to work in a multilateral fashion, working with our partners around the globe. 36 different nations have joined us in exposing -- opposing these export controls and that is having a meaningful impact on russia right now. shery: the u.s. deputy secretary of commerce john graves speaking with us. we are tracking the fallout of the supply chain. trade representative katherine tai says the u.s. must face

serious vulnerabilities in its supply and update tools that government global trade. improving trade facilitation has become a key focus of the biden administration's indo-pacific economic framework. vehicle sales in the u.s. are expected to follow 17% this year, the lowest in a decade, as semiconductor shortages and other supply-chain problems and prep production. one researcher lowered its forecast to 14.4 million vehicles, citing production constraints. the world's largest lithium producer albemarle is urging the u.s. government to cut red tape and accelerate a buildout of the domestic supply chain. it would reduce american dependence on china. the port of los angeles has recently enlisted help from the white house to clear a backlog of country --

containers. as of monday, two-thirds of the containers had been waiting to be picked up for nine days or more. bloomberg terminal users can read more about those stories in our newsletter, "supply lines." yvonne: a quick check of the latest headlines, tesla said to lay off hundreds of its workers as the electric vehicle makers shuts down a california facility. sources say employees were notified on tuesday. 200 workers were let go, many of the staff were data annotation specialists. and an influential analyst says qualcomm will remain a key 5g supplier for apple's iphone. that push the chipmaker to its biggest gain on the nasdaq. he said that apple's development of its own modern chip has failed. that means qualcomm will stay as the exclusive supplier for those

chips through 2023. the pinterest ceo is stepping down. during his decade-long run at the top job, he saw pinterest's growth pass 430 million users, with a revenue of 2.5 billion dollars. he will move to a newly created role as executive chairman and keep his word seat. shery: take a look at how futures are trading. we are seeing a rebound, this after the s&p 500 saw a lot of volatility in the new york session. we are talking a three-percentage point reversal. there was optimism about china cutting its travel period. but that was not sustained. we had the really huge tech rout leading to the losses. although in the asian session, we are seeing a bit of upside. we continue to watch all those fears of a recession about inflation really being felt across markets.

yvonne: it seems to be the big thing, inflation trade being done. a lot of it is data dependent. it seems like we are still going to see some pretty nasty prints in the next few months or so. it is the recession talk building once again. s&p futures are down 1%, so it could be a tough session. new zealand is down. nikkei futures are flat. a lot of focus has been on china and how the cutting down of quarantine, is that going to help sentiment over all in asia? shery: especially when it comes to the bond is. we have seen it recession fears weighing down on treasury yields. the 10-year yield fall into 3.2 percent, especially after the week data in the u.s. consumer confidence sank to the 16-month

low. hong kong growth decelerating for the first time since 2021. we are following the bond space. the 10-year yield in australian bonds rising slightly, around 3.78%. but it is a bit of a mixed picture, because we are waiting to see how the japanese government bonds, online. not much of a change with that, really coming close to the upper limit for the boj. yvonne: and can you still purchase bonds in this environment, given the u.s. 10-year yield has not broken no 3% for some time now? coming up, china is cutting its quarantine period for travelers. we will talk about that and what else to look out for a of

>> i think shallow, i think the

duration is still very much in question. i say shallow because you don't have a deleveraging cycle on top of a recession. that's very different from how we entered the financial crisis. >> morgan stanley's chief u.s. economy ellen settler on the possible debt of a u.s. recession. we also spoke to rockefeller's cio who believes we are currently in a bear market, and probably heading into recession. she spoke exclusively with the cochairmen and cofounder david rubenstein, about the impact of rising prices and chances of a recession. take a listen. >> i originally thought it was going to be short-term because of the whole cobit and supply issues and all of that, but then you have ukraine, you have the fed, you have inflation that i thought was temporary, but now i think it's very much a long-term

thing, and i do think we are in a bear market, which makes me manage a portfolio very differently than if we were in a bull market. anyone could make money in that. but this is going to be a harder time to generate returns for rockefeller. >> for rockefeller and many other nonprofit organizations, they had a spectacular year last year. they had returns of 40%, 50%, 60% of annualized returns. do you think the returns will come back because of the venture funds they were in having lower valuations? paula: i was just on a committee for rockefeller university. one of the questions are what are the real marks on these private investments? private investments are lagged and valuations. i think it's going to be this gradual wiped down of these assets. i do think -- i still believe in alternative markets, and i think

there is going to be two problems. one, a lot of endowments used a smoothing rule for their spending. they used a 12 quarter moving average. you are having all these great quarters, so if you use that, take 5% on the 12 quarter moving average, you will be overspending. in the last couple of years i have been telling the president and the board and the investment community, which they have been very attuned to, not to build permanent programs on these big returns. they be put a reserve aside or things like that. the other problem is going to be asset allocations. as the public market goes down and the private alternative assets aren't mark to market, you will be way overweight in your private and that brings up liquidity issues as well. so right now, i think institutions need to be very prudent, focusing on liquidity, dry powder. it's a time to protect capital to get some great return.

right now i do think we are going into a recession, and that's a totally different playbook. david: it's have some optimism, is there anything good about the economy? paula: i believe into the in entrepreneurship and creativity of america, i think there is some wonderful creativity that you have young people who are concerned about the environment, and they are working on different things. i do think that eventually, i believe in capital markets and i believe in equities for the long run, and i do believe that they're going to be some things that way overshoot and they're going to be opportunities for skilled investors. i also think that, as warren buffett says when the tide goes down, you see who has bathing suits on, i think we are going to see a lot of that, but there are going to be great opportunities, but you have to be patient and you also have to think creatively, i think.

>> you can watch more of that exclusive interview with america's leading endowment investment. let's get a check on markets now. annabelle: we are 30 minutes away from the open in korea, japan and australia. nikkei futures coming online in singapore to the downside, tracking the moves we are seeing in the asx 200. weak u.s. consumer confidence -- confidence is setting a tone for trading in asia. we are watching particularly, the tech sector because we had the 3% drop in the nasdaq in the previous section, energy is the other focus as well because we will be watching to see if we can eke out a second day of rally in the metal sector in particular. this is with pets that we could see a rebound in the chinese economy. changes in the travel rules. if you could change and now, you could see how it setting up for trading on the csi 300. futures are pointing to a slightly weaker side.

csi 300 is set to enter bull market territory in the shanghai composite. also against his 200 moving day average. yvonne: we will see if it continues out of choose. china cutting quarantine time for incoming travelers does not indicate the end of covid zero. authority say it's more in line with a shorter incubation time for omicron. nonetheless, stocks have jumped, the economic outlook has gone higher as well as the news broke. stephen engle is watching all of this, how should we read this move? stephen: i think it will be a process of digesting the further moves it further moves come down the pike. including in hong kong. we'll talk about that if they relax further, but it's obviously the first real relaxation under the covid zero policies for the last two and half years. so it was seen by the markets as we saw midday, mid afternoon yesterday positively, obviously. we are also getting upgrades of morgan stanley increasing their conviction of an exit from covid zero by the turn of this year.

that's pretty optimistic that we had that news just yesterday. speculation that covid zero policies could be in place for five years. however, morgan stanley gdp saying the rebound is 2.7% in the third quarter, 4.7% in the fourth quarter. we saw that, the hang seng jumping when that news broke mid afternoon, right around 2:00 p.m. yesterday. seven days isolation is what people arriving in china will have, and essentially, three days of self-monitoring at home, so a total of 10 days. it was 14 days previously, and it was 21 days earlier like we had here in hong kong. 21 days at one point last year. china reported just 22 cases nationwide on monday, including 78 -- not including, plus 78 from inbound travelers. and more importantly, zero local infections in shanghai, zero local infections in beijing. but as you said, it's up there.

chinese officials click to emphasize, and we have a quote from the national health commission that this is not a sign of reopening. i mean, it's a positive sign for economists and for the markets initially, but not a sign of reopening and based on the solar incubation time of omicron and this is with the national health commission said they were quick to emphasize this while acknowledging the situation improved on the covid front, it's absolutely not loosening up. absolutely not loosening up but are more scientific and target an approach. shery: a big question not only for business leaders, but people like myself who have been dying to see you guys, what happens with hong kong? stephen: when the news broke yesterday the first thing i thought was, if china is making the move first, hong kong needs to follow suit, or could potentially open the door for hong kong to follow suit, and there has been a lot of rumblings, including when the new incoming health secretary under the administration, when

they get sworn in on friday, said in a commercial radio interview last week that he's considering lowering hong kong's hotel quarantine from seven days down to five. other media has been saying that it's going to potentially be five days, plus a couple of days of home quarantine or home isolation after that. but any move, according to sources telling bloomberg news, would not happen until after that inauguration, if you will, of the swearing in on friday of john lee, and that the decision is not final yet but is being considered. business

people clamoring for a relaxation saying hong kong has been isolated for the rest of the world. particular lake fred who, the primavera chairman, former goldman sachs banker is telling us that hong kong is falling behind. regional rivals like singapore and figure rivals globally for international hubs like new york and london because of that 70 quarantine. this as xi xiping will likely -- it was confirmed yesterday, will be here tomorrow and on friday, especially -- essentially putting beijing stamp over hong kong. even though cases remain relatively high. new cases were at 1600 plus. stephen engle -- shery: stephen engle, our chief the north asian correspondent. it has been a difficult past two years with the pandemic. bella, especially not with only business leaders being able to enter the city, but also tourism just completely dying for the city. >> hong kong so dependent on the chinese tourists wallet. we have seen that slump and retail skills. been affected by the domestic factors. so rising covid cases and rainy weather impacting retail sales. so certainly any relaxation that we do get would be a massive win for the retailers in hong kong and we did have the likes of them saying that these covid --

covid travel changes in china could mean more mobility between the mainland and hong kong. but there's also another factor as well that investors are watching for as well. we do have that major issue that could change the terminal. hong kong has seen a massive exodus of its population, not just from the covid zero restrictions, that also starting back in the protests time as well. that is also another imperative thing for the hong kong government to consider relaxing as quarantine policies to try to bring back x packs and others into the city. yvonne: we have to see, slowly climbing back. you see it in the chart but certainly far from what we have seen. a lot of fears for the exit is not just in hong kong, but also in china. in the meantime we have vonnie quinn with the first word news. vonnie: fed officials tip into recession as rates rise. new york's fed president john

williams and san francisco's mary daly both insisted that a tough landing is still possible despite inflation in 40 years. the fed raised rates by 75 basis points and could consider a similar hike next month. south korean consumers -- are more than a year has inflation and higher rates tickets old. the bank of korea's compensate consumer sentiment index drop below 100, that indicates pessimistic views outnumber optimistic ones. south korea's one of the most vulnerable as a relies heavily on imports for energy and other commodities. a former white house a has offered a vivid portrayal of donald trump's per trail of jet -- donald trump's capital six riot. he knew his supporters were armed when he told them to march. she was told trump tried to take the presidential limousine and lunged at a secret service agent when he wasn't allowed to travel to the u.s. capitol.

ghislaine maxwell has been sentenced to 20 years in prison for sex trafficking and other charges related to helping jeffrey epstein sexually abuse underage girls and sometimes participating. prosecutors are seeking a sentence of 30 to 55 years saying maxwell is indispensable to his crime. the jury found her guilty on five counts, including crime trafficking. epstein killed himself while awaiting trial. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn, this is bloomberg. shery: helsinki and budapest are being targeted with the push into europe. we speak exclusively about the airport hospitality group expansion plans in our generation x series. this is bloomberg. ♪

avon: the airport hospitality premium group open new lounges in frankfurt, helsinki and edinburgh as it looks to make the most of its uptake and travel with a push into europe. the group has me and assist in places like hong kong where it already has an established presence. i'm bringing in the director of

development in one of the second-generation striving the firm through this pandemic. he speaks to us exclusively through generation x. obviously the world of emerging post-covid, i'm wondering how are you seeing the travel industry recover now? what are you most excited about at this point? >> good morning, first of all, good morning from dubai. certainly, i definitely do see that the industry is going through a very turbulent time because of covid-19. before in the past, two years ago, it was where demand suddenly dropped by almost 90% across the world in terms of the air traffic, and there was more supply than there was demand. but the current problem we are seeing today now faced, and you can see this in airports in europe or even in the u.s., is where now demand is now outweighing the supply, that there is an enough labor, there

is challenges on the inflationary wages, so on and so forth. restart the challenge to pull forward. this is one of the challenges facing the entire travel industry, as well as our industry today in today's environment. yvonne: how are they capturing and creating demand for travel, especially lee search -- leisure travel? that's taking time to recover. jonathan: in the past there was this is travel and leisure travel. gone are the days of business and leisure as two separate categories. speaking to a few aviation experts and airline industry experts, there is a category called leisure. there's a lot of people out there who want to experience those new experiences and they

may not necessarily be able to spend. so there is a rise of a category of what we call affordable luxury, and that's exactly where we come in. if our business, regardless of if it's our lounges, if it's our meet and greet services, where have you, so long as you are willing to pay a certain fee, you can enjoy all forms of services throughout our hospitality portfolio. shery: where do you see the most demand for that type of service? especially given that you operate in so mean different countries, where do you see the most potential at this point? jonathan: of course, we currently operate in over 70 international airports were 250 outlets worldwide. the location where we find the most opportunity, especially in the major transit hubs. nowadays, when people say, where would be the most demand coming in, it's actually the transit hubs. now with airlines coming in, air

customers have a plethora of choices when they choose their respective hub. why would you choose a certain airliner certain hub is because they have good facilities, good transit experiences, and that's why you see airports like singapore, you see airports such as london's heathrow, dubai, and so many out there who are investing and spending lots of those resources to attract those transit passengers coming over. that's exactly where our business will fly, especially those looking for a good transit experience, they are looking for lounges, hotels and what have you. shery: do you see a shift in what those transit hubs are those days? quarantine rules may be easing soon, but that has not been the case. is that one of the reasons why you are looking for more growth opportunities, perhaps year and in the u.s., and in areas that

were not necessarily your field? jonathan: exactly, that's exactly what has happened. covid-19 acted as a catalyst for a group such as ourselves, to really think internally, to really diversify away from our core. our core was more focused on independent airport lounges under the brand name. it was mainly focused within asia-pacific, but with the onset of covid-19, travel recovery has been a little slower in the asia-pacific region. so we set our sights overseas so we are looking into expanding into europe, expanding into the americas and in other parts of the world. and we also look at, we have to diversify because it's not just focusing on our own independent airport lounges, we have also looked into exactly what you mentioned, railway lounges. in mainland china we opened up three high-speed railway lounges

throughout our network, so we are not only looking within the air, but within the land as well, even potentially even the sea. we end up becoming an airport hospitality company at a transport hospitality company altogether. yvonne: we spoke to your sister -- i know it was last year about the future of the business, can you walk us through what you've already learned through the first generation, from your dad, for example, of how to take the business to the next level? what is the key take away? jonathan: as a family business, we grew up -- my sister and myself grew up into the business , we live and breathe the business from a young age. we are definitely very grateful for the foundation that we have had together with our parents. i think it is our responsibility as second-generation's to take this to the next step. we have to bring in new

perspectives. new perspectives from diversification, through partnership, through digitalization and that's exactly where we are coming in from, to bring it to the next level, to enhance the travel experience, to do everything that wasn't just into the airport lounge scheme as well. >> really good to have your insights into the travel industry. plaza premium director of global business development. breaking news out of japan, we are getting the latest retail sales numbers, it's acceleration in terms of growth year on year of 3.6% for the month of may, and month-to-month it's a growth of 0.6%. both numbers are surprising to the downside, a economist had expected a bigger boost to come in retail sales through may, so even if you look at the department store, supermarket sales, there you see the

strength of 8.5% growth in may, but overall, the headline number is still disappointing economist forecast, perhaps that rebound, not as strong as expected. year on year 3.6% growth for the month of may. this is bloomberg. ♪

shery: now to a bloomberg exclusive, the push by goldman

sachs into mainstream has not worked out with its consumer unit expected to lose more than 101 point -- more than $1.2 billion this year. bloomberg su keenan joins us with the latest. su: sources close to the matter telus 1.2 billion lost for the year was completely unexpected and that's what's important. this is a novelty mainstream business that was expected to break even this year and not see accelerated losses when goldman sachs set out to lure investors in 2020 they had a promising outlook. they said the unit would go from money stocks and 2022. there may be financial jargon, but if you look at the j curve chart back in 2022, it's a chart that shows losses in its initial year before breaking even in 2022, and then going profitably after that. but it's not happening as

planned. sources close to the matter tell bloomberg and shows the consumer business accelerating to more than a 1.2 billion loss this year with a second-quarter burn rate in line. but if the economy gets worse they say the losses could accelerate. again, this is the kind of business that would boost the stock depreciation but it has been a bit of a drag at the moment. yvonne: coming up in the next hour, hong kong considering shortening quarantine for inbound travelers. discussing what that means for businesses in the city. ♪

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shery: this is "daybreak asia", we are counting down to asia's major market open, and we will be watching this see if we get that rally that we saw earlier in the asian session where china reducing its mandatory quarantine travel time. we did not see that rally continues here in the u.s., so it will really be interesting to see what could happen in the asian session today. yvonne: it seems that the trigger was the consumer confidence number in the u.s., but tech stocks lower when it comes to tech, but maybe we will see that policy diversions trade layout here in asia. annabelle: their trading direction for treasury as well because we saw the pullback and treasuries ending little change from the previous session, but we are approaching the open and japan, korea and australia were treasuries coming online for the 10-year yelled coming online like this. but we do have, as well as the

rest of the region, setting the tone as u.s. consumer confidence numbers. we are yen, a little bit of a wait mode with more u.s. economic data, seeing how much faster the american economy is slowing down here. but we have seen that weakness building into be a supportive factor for japanese export in the previous sessions. but this morning we are seeing the nikkei trading below that key 27,000 level. if you change the board now and take a look at the open in korea, we have the kospi gaining over the past three sessions, but this morning we are seeing it pullback from the two week high. that takes the month losses to around the 10% range. korean consumers are feeling the pinch of higher prices. we do have new data out from the bank of korea this morning saying that consumers are turning more pessimistic now for the first time in more than a year. of course we have that risk of outside rate hikes with some chance of a 50 basis point move

from the bank of korea at the next meeting in july. the korean won also trading like this. we could see a really consolidating upside potential here really capping for the currency. we are seeing that weakness in the morning session. changing to the open that we have and australia, just checking oil online. it's higher at the start of trade here, but that could be a boost for the biggest energy name and australia that helped to really boost the asx 200 over the past two sessions. then again, weakness at the start of trade. we are watching those and we could continue to see any strength coming out of the chinese market. our next guest is the most bullish and chinese markets. let's bring in our strategist. good to have you with us. the csi 300 almost in a bowl market again, but this of course as we continue to see overbought levels across the board. is there still more room for upside?

you will see consolidation along the way, but the key thing to note is that the china cycle is extremely different from whatever else is happening in the rest of the world. and that includes the rest of asia. that index can feel like they are going together. but china has been in it cycle the last 18 months, this is working in its favor. you mention policy easing going in china's favor at this point, but china is also being much more resilient to the kind of outflows and pressures we are seeing in the rest of the world. in all of this puts together china and a very good place, keeping in mind the chinese equity market is still cheap valuations compared to the rest of the world. are there any parts of the market you would prefer given we have seen regulatory crackdowns in the property sector in the tech sector in the education

sector there. do you think potentially most of those measures are done with? >> the other thing happening in global markets is, i would say, early may. there is a significant rotation in terms of some -- in terms of styles. the value has underperformed in growth has started without, and you could see this across markets, across stoxx. in the convergence we are seeing right now is -- and we do think it will be this way the near future. from the china markets perspective it's something that's really light in the internet has an agreed ecosystem, health care starts. all of these are very strong growth proxies, and also they fall in the bucket of policy. which is also something we like as a reflection of resilience in these challenging markets. yvonne: it seems like there's so much talk about recession,

whether we reached the peak inflation, can i start factoring in that pipit for the second half? >> we are all getting here. it's my guess versus someone else's versus your guests, who knows what all is thinking. to the point that he has not made up his mind because the data essentially changes month to month. we do not expect inflation to rise, so that throws a wrench in the way it comes down. but our current focus, u.s. inflation at the adjusted rate falls from 8% to 7% in 2q. but of course the 2% by -- it's expected to slow quite a lot. so there could be room for the fed to start in being less hawkish. and again, this is something

that we've noticed in early may as well, for the first time the fomc is in check. it's by the market, which is is 75 basis point hike. but again, the inflation data does change a little bit. you just came up with their second-half report, may be in a few minutes you can highlight what the key takeaway is. you mention china is a standout and remains constructive around asia. what is that mean? >> i think we are about 80%, so that is really the key message. it's really global markets. china is the least unviable market at this point, so investors are looking at challenges and all the markets, china really stands out that's a resilience and safe haven for many of the risks. the second thing is about the style rotation and at this point we invite quality, growth and

parts of value. everything is extremely crowded and over positioned in a also think that the kind of correlation that we saw on march and april and may will lead to a reversal in trend performance, a momentum. the last thing to note is, we do like countryside exposure. we also like dual track exposure to energy with the ecosystem. >> how painful could get for developing nations across asia as we see a stronger u.s. dollar, and do you envision a scenario like that? >> i would say that's probably the biggest to asian equities outside of china, and this is something we are seeing, that asia inflation is now catching up to what's happening in the markets, and it will be expected in the second half an asian

central banks will catch up with the lack that's happening and develop markets. the key thing to keep in mind is that so far we have not seen that much. some of that will come only in 2023, so it's a bit of a waiting game to see how that turns out. great debt -- >> great to have you. jp morgan asia equity strategist. annabelle: we are starting to see some signs and impact here from the economic slowdown in the u.s.. the first one coming from lg energysolutions. we are now hearing reports or text message confirmation from the company that they are reviewing plans for a plan in arizona. we had heard reporting back in march and they said they were planning to build a plant in arizona to supply cylinder type batteries dev start ups. construction was supposed to start in the second quarter, but they are reconsidering a given the economic uncertainty we see in the outlook in the u.s..

toshiba is another name and focus with the side of trade. this is a report from the financial times, essentially what we are hearing is that kkr could be stepping back from a potential bidding war for toshiba that citing people familiar with the matter from the financial times. blackstone, we heard they were considering teaming up with kkr on a joint bid for the company that now seems to be a little bit in doubt. finally keeping an eye on carmakers and automakers in korea, they are dropping sharply at the start of trade and soul, that have been reports that offices of both of those automakers have been rated by german prosecutors, the prospect of them facing an air pollution probe. possibly wanting to see devices in the car to mark harmful emissions. shery: let's now gets a vonnie quinn with the first word headlines. vonnie: a former white house

aide has offered a vivid portrait of president donald trump's behavior during the january 6 capital riots. kassidy hutchinson said trump knew some of his supporters were armed when he told them to march on the building. she said she was told trump tried to take the -- of the presidential limousine and lunged at a secret service agent when he was not allowed to travel to the u.s. capitol during the attack. british socialite ghislaine maxwell has been sentenced to 20 years in prison for sex trafficking and other charges related to helping jeffrey epstein sexually abuse under age girls and sometimes participating. prosecutors were looking for a sentence of 30 to 55 years after saying maxwell is indispensable to the crime. a jury found her guilty in december of five counts including theft, trafficking. epstein killed himself all awaiting trial. china has reduced quarantine times for inbound travelers by have in the biggest change to the current -- quarantine policy. they will need to spend seven

days less three days of self-monitoring at home. that's down from 14 days in many parts of the country and as many as 21 in the past. officials say the new rule does not -- a loosening of policy. hong kong's incoming government louise quarantine rules. bloomberg says officials may allow incoming travelers to quarantine for five days in hotels, followed by two days of home isolation. that's a set of current rules that required seven days of hotel quarantine. the final decision has yet to be made. hong kong's incoming chief executive will be sworn in on friday. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. shery: still ahead, the latest hong kong survey finds businesses are generally optimistic about the future. we hear more from the chairman later at this hour. but first, christine lagarde

confirms plans for a july rate hike to fight rising inflation. more on that next. this is bloomberg. ♪

yvonne: the u.s. session was

down from 3%. the growth concerns, once again, even fed officials like mary daly, talking about and playing down the impact of the u.s. heading into a recession seems to be not really helping in terms of sentiment. we will see how the china reopening story will impact the rest of the region, although it seems like it could just be a china story. u.s. futures are at least positive. we have seen the stabilization when it comes to u.s. futures. we are a 10th of 1% higher across the board and we are watching the dollar. we did see one of the biggest gains in about a week or so, but that also has teetered out a bit here as well. shery: concerns of the recession repelling the greenback higher, but top federal reserve officials continuing to play down that risk, and this is following the most aggressive rate hike since 1994. they don't think this will push the u.s. into recession. that's get more from our global

economics and policy editor, kathleen hays. why do they still think that a soft landing as possible? we have heard so much to the contrary at this point. >> they admit that there is risk, i think there is concern. but they figure if they hit the rate hikes hard, if they stop inflation expectations from rising, they can, even with a growth slowdown, it won't cause a recession. mary daly speaking at a linkedin event said say answer the question about avoiding recession, it's tapping on the brinks -- breaks rather than slamming on the brakes, going over the handlebars and having a proverbial recession. this is what she things it means for the economy. >> i wouldn't be surprised. in my forecast the growth will slip below 2%. but it won't actually pivot down into negative territory. kathleen: john williams said he

does expect another fairly aggressive rate hike at the july 27 meeting, 50 basis points in maybe 75 basis points and he sees the economy slowing down to 1% to 1.5% growth, that's below potential, but that is not recession, he said. it's a slow down that we need to see in our economy, reducing pressures and bring inflation down. again, slower growth, higher unemployment, and a recession, that's his call. yvonne: we heard from christine lagarde at their conference in portugal about this new bond buying tool the ecb is launching this week, what can it actually do? kathleen: it will prevent fragmentation as they referred to it in the euro area because of the ecb starts raising rates or the concern of the more indebted nations are going to draw upon selling, people are going to say they may be cannot meet these higher costs, etc., countries like italy.

that's what christine lagarde said, that this is going to curb any turmoil in government bond market. that's what they are trying to present. of course it's in the context of they are getting ready to start hiking rates for the first time in 10 years in july. christine lagarde reiterating you know probably be 25 basis points, but she said they could take it to a higher level faster. that is why they are preparing the markets for this, they will take the pandemic bond emergency program and are holding a lot of bonds as those rolloff, the idea is they could use the proceeds to buy bonds as needed, when and where certain countries -- where their government bond markets need to be. it's a very important part of their plan to start a more aggressive inflation fight. i should say start their inflation fight. yvonne: stay with us on bloomberg tv for the live coverage from the ecb forum in

ventura. francine laquan manor chairing a panel. you don't want to miss that. catch a live on wednesday at 9:00 hong kong time. 9:00 a.m. in new york. shery: staying in europe, we have breaking news at the moment, we are hearing eu countries are backing the push for a 2035 combustion engine band. they are endorsing this push to eliminate carbon emissions from new cars by 2035. this as italy gave up demands for a five-year delay. italy is home to ferrari, lamborghini, so this would effectively herald the end of the error for the internal combustion engine and europe. europe of course at the same time really dealing with a surge in energy prices. look at oil, crude is extending the gains after the g7 leaders agreed to look at a price cap on russia. oil we are talking about $112 a barrel. this after we had this session

already. those gains being extended. let's bring in our energy reporter for more on this. the gains we are seeing right now, not only because of the russian news, but also given that perhaps more demand coming from china as well. >> there is that expectation that now that china is removing restrictions on when you arrive in the country, some of the covid restrictions, there is an expectation that chinese folks will travel more and if they are traveling more they are using more gasoline. more people coming into the country. more demand for oil and oil products that are exported abroad. there is a more bullish attitude based on lot on what the chinese government has been saying. i think there was a fear that covid zero would keep the country shut for good and reduce oil demand for the rest of the year. now we see there are pockets of

demand opening up in china, and that setting some support to privates already in a pretty tight market globally. yvonne: opec-plus said to me, it's interesting because they just came out saying oil output is basically half a billion barrels behind on their supply deal. can we rely on the cartel to balance this market? >> i think that's the big question right now because, while they are expected to rubberstamp a gradual increase for august in their meeting this week, a lot of folks are saying, can they hit that because they have not been doing a great job hitting their commitments. and you had earlier this week, you had french president micron saying, when he was talking to biden on the buy life of the g7, that he was told by uae that the uae and saudi arabia were two countries that were expected to be able to pull a production, and they are basically already pumping at capacity. so there is this fear in the

market that because as oil has to get balance, it won't be able to do that for the opec-plus meeting -- members. yvonne: plenty more to come on daybreak asia, this is bloomberg. ♪

shery: the push by goldman sachs into mainstream has not worked out as planned. internal projections shows losses accelerating to more than $1.2 billion. su keenan has the latest on this and there was a lot of excitement when this happened just a couple of years ago, so at happens? >> the projections were off. this is a novelty consumer business unit that was presented

as one that would frontload some losses that would soon take off the profitability and breakeven by 2022. goldman exec set out to learn and 2020 they actually presented the j curve that showed the burner rate heavy in the beginning had a loss initially, but that it would level out in 2022. they showed the projectionist now for a much deeper initial loss. so the picture you are looking at is one that hasn't really panned out. sources close to the matter tell bloomberg accelerating more than 1.2 billion this year, there is good news and there, they have exceeded most of the other metrics and secured 13 million

customers in they've grown to more than 100 billion in added credit card tie-ins. the losses stem from the addition of new business lines, the pandemic and excessive expenses. again, new accounting rules add to the glasses but is also the warning from those inside the worsening economy that could celery the losses of it further. yvonne: it seems like there's an internal debate about what it will take to win investors. in terms of the growth of this unit, how critical is it? su: it was viewed as a diversification factor. the stock is down from 30% from the peak. goldman sachs stock and to the whole idea of launching this thing was, hey, let's find a new revenue stream apart from trading and banking. wells fargo's banking analyst says the hope and expectation right now is that goldman holds the managers feet to the fire in

this consumer unit so that it doesn't leave more cash than is as anticipated at this point. he points out this is the kind of venture where you could find a new revenue stream for your bank or get your head handed to you. goldman at this point is not commenting on the numbers or the issue, but they do see it as a necessary investment to grow any business. yvonne: a quick check on the latest business flash headlines. focusing on star entertainment. that broke a few hours ago. robby cook, head ceo as australia's casino operator attempts to recover from an inquiry. cook previously had a tax group and is managing director of the fintech director. he uncovered a litany of wrongdoing from money-laundering to tax cheating. shanghai disneyland is said to reopen this week with limited capacity and enhanced health protocols after a month-long covert shutdown.

the majority of attractions rise and show. it will resume operations on june 30 as china cuts travel times by half. >> they are reusing their quarantine times and we will discuss. 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.

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annabelle: this is daybreak asia. check on markets 30 minutes into the trading session for japan, australia and korea. 30 minutes into the trading session. oil continuing to see brent crude move higher. we do have signs that crude stockpiles are tightening. above that $112 a barrel level. also in the commodities complex, we did have those weak u.s. consumer confidence data overnight and that's leading to a pullback in what we see in their contract. biggest moves in the previous session in chicago. that is with signs of improving demands. we do have egypt and jordan launching to buy wheat. you see moving the energy complex across asia.

gains for the biggest energy sectors in japan and australia. a lot of the focus here is what we see from china where it could help with the energy demand. if you change the board it could change where jp morgan is seeing on the back of travel changes. they are saying that it won't move the needle, but certainly the timing of this is the surprising could be a directional signal. top sector picks. they are echoing this. the length of the quarantine would still be the terror for tourism. perhaps not enough something that could really be a positive for the macau casino. chinese airlines are more likely to benefit here. yvonne: china has reduced times for inbound travelers by have. the biggest shift yeah and the covid-19 policy that has left the world's second-largest economy isolated.

let's broke -- let's bring in bloomberg's economic economist onset for more through the new -- do the new rules move the needle for growth? >> to be honest, we think that the move itself influence to the economy is limited. but people see a more positive future from now on because people are thinking the government could open restrictions in the near future, especially when it comes to --. it's a good signal. people are happy with that in the market is also happy. shery: i wonder how much of a signal it is if you continue to see this start and stop reopening. is that why the outside could be limited? >> it's hard to say, anything

can happen in those short-term. we think that the government may lead to observe the influence from this move and then defy the next steps. by the way, i think that is one of the good news to the markets of the past several months. yvonne: morgan stanley is saying this might be the part of war when it comes to restrictions, but they are thinking covert zero by the turn of this year. is that still optimistic? >> i agree with that for 90%. people have been waiting for this for such a long time and finally we got good signals. yvonne: is it a sign for services to rebound, because that continues to be a drag. >> we look more into the domestic requirements for the

quarantine or the containment risk measures. but this over is not directly related to that. but anyway, with this we can expect more in the future. in the near future we think the sector is under pressure by going forward with more expected relaxation we figure we'll will get more boosted. i think the most potentially beneficial one is the airline company, and that is something good. yvonne: the take on the top stories in this morning. there is now some chatter that may be even hong kong could be next.

five plus two seems to be the model that they are looking at. hong kong's reputation remains at risk as long as they are in place and travel. let's discuss the sentiment and bringing the chairman. joseph, thank you for joining as the countdown to the 25th anniversary of the handover. there has been a lot of chatter about quarantine being cut down, are you hopeful that at least these restrictions could be cut down or scrapped? >> good morning, absolutely hopeful. our chamber and our members, and myself included in that, have really been looking forward to a move forward from hong kong to see how they would open up hong kong in terms of connectivity. frankly, the quarantine restriction in the covid policies over the last two years have been the biggest weight in

terms of sentiment for the chamber. many of our members are very optimistic and positive about the benefits of hong kong, but it's not being able to travel and losing that connectivity has made it hard. so this is welcome news to this morning to have a cut down the five days. there frankly, our chambers are really pushing and hoping we could go further than that. we could be on par with some of the cities that we have seen throughout the world and asia where there is no quarantine restrictions anymore. it has opened up more to international business travel. yvonne: when people talk about a corporate exodus, how real is that? are your members really seriously considering moving people, their offices permanently away from hong kong? what is the scale of the shift? >> it's kind of a mixed bag. we don't track specifically the number of companies that are in and out. then don't check in with us.

but in the beginning of the year when we did our survey, it's about one and 25% indicated that they would move out of hong kong or are likely to relocate out of hong kong. however, from what we've seen in the recent months, it's been more about companies downsizing or relocating employees and centers of employees to other areas of cross asia. and really it's about the ability to conduct business and have, through your travel in and out of countries. more importantly, what we have seen more of his ex-pats and senior managers and executives have been leaving hong kong on a temporary basis and settling down in a temporary location so that they are able to travel more free. and the return to hong kong is left open. they are getting a one-way ticket out, and having the ability to conduct their

business, go see customers and go about international travel and make it back to hong kong with the hopes that there quarantine restrictions are reduced. >> as a brennan outreach about what they can do in order to make things easier for foreign businesses? >> is it still a little bit early for that that we have made in contact with the hong kong government and throughout the year, this is something that has changed. in the beginning of the year our sentiment survey showed that many of our members felt that the hong kong government wasn't caring enough. that has changed. we see more outreach with the hong kong government. we are looking forward to the new government coming in and being able to continue dialogue with them and to express our concerns for our members. so far what we've seen, the steps taken, whether it's reduction in quarantine and some

of the restrictions easing for pilots with our trans care professionals, this is all welcome news and we want to see it continue and we look forward to working with the new government coming into be able to have those conversations. shery: some of the key factors that have made hong kong -- in the past is traditional independence are being threatened. what are you hearing from members about that? >> you see what's happening in the news, and our members are greatly concerned. on i say this sentiment is a little bit of a mixed bag, there's optimism and strengths that hong kong offers. but at the same time, seeing their current environment with the rule of law and what's happening with the judiciary environment, it has expressed concern that many of our members are watching. we have a lot of innovation and tech companies that are members. this is an area where it

transparency and a free flow of information and use of the internet will be critical. shery: thank you very much for your time today, and to continue that handover we are focusing on the flows of people in and out of the city we have seen since the handover in the recent disruption. our coanchor david ingles and his market seem has been looking at this very closely. >> i was going to say that maybe just building on what was said, having to go through multiple hours at the airport just to get to where he is. hopefully breaking free by the weekend. but on a more serious note, we talked about the importance, particularly right now, given the context of 25 years since the handover. just the buildup in visitors

from the chinese mainland and he could see it extremely close and co-related to just the buildup in the retail sector here. retailers have -- at least comparatively from last year -- have seen a bit of a recovery, but certainly nowhere near the levels of the glory days of 2014 and 2015. a lot will be contingent on when the borders reopen. yvonne: our bloomberg markets coanchor. look forward to coming out of quarantine so we can see you. plenty more to come on "daybreak asia". this is bloomberg. ♪

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vonnie: this is "daybreak asia". federal reserve officials are playing down there is that the u.s. economy will tip into recession as rates rise. new york's fed president and san francisco's mary daly had a soft landing saying it was still possible despite the efforts to fight the hottest inflation in 40 years. the fed raise rates by 75 basis points and could consider a similar hike next month. a texas judge temporarily sided with abortion rights activists who challenge the banning of procedures. the ruling allows abortions up to six weeks of pregnancy to resume.

it's the reserve -- the third order from implementing those that criminalize or restrict abortion access. this after the supreme court overturned roe v. wade. they are closer to joining nato after they chop the opposition. the two countries pledged to address security concerns, especially around kurdish groups that turkey considers terrorist. memberships will still take many months, but more for security landscape. serena williams may have played at wimbledon for the last time after her first round comeback loss. the 40-year-old has an eight -- played for 306 to four days after injuries forced her out of last years tournament. the 23 time grand slam winner went down in three cents to 115 strengths. when asked if this may have been her last match, they said, who knows.

bloomberg has learned that goldman sachs as a consumer unit accelerating a more than $1.2 billion. our sources say that number may grow as the economy forces them to have more lending loss provisions. it's also greater than the roughly $1 billion hit goldman estimated for 2020, which it said would be the low point for the market. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn, this is bloomberg. yvonne: black rocks vice chairman says we have reached peak inflation, but that the cost of bringing it down will still be very high. they told us exclusively that price pressures are mainly supply-side driven putting policymakers in a tough spot. click central bankers say it's a very difficult set of choices and they could bring inflation down but at a very heavy cost to the real economy. they have crushed demand and raise interest rates very much

to get inflation anywhere near the 2%, are they could accept that that cost is too high and tolerate higher inflation. the only good news is that i do believe we have reached peak inflation. inflation will start to come down as financial conditions tightening as they normalize rates. but we won't get to 2% without significant damage to the real economy. >> that reminds me of what was said, central banks usually stop hiking and start the cutting project not necessarily when inflation gets to 2%, but when the trend is lower. if we have reached the peak in inflation, does that mean a cutting cycle might be sooner than markets then many people are expecting? >> i think we are a long way away from that. at some point they pivoted tolerating higher inflation for some time. for many decades we have left in wet ben bernanke has coined the great moderation. essentially if you brought

inflation down, everything else would be fine. bringing effect on her 2% is now very high. i believe that's going to become more apparent, at which point we will see the central bank facing this difficult choice. dani: 5% on a playmate for five years like larry summers says? >> i think it will be in a deep recession territory if you wanted to get inflation back to the price stability deprivation we have seen back to 2%. the cost of that will prove to be extremely high. and that is the new kind of world we live in. it's a very new era where you can get everything right if you stabilize inflation. there was determine economics called divine coincidence that if you can stabilize inflation everything else would work out just fine. i don't think we live in that world anymore. the reason for it is that this inflation regime is driven largely by the supply-side. is driven by the production side

of the economy, not by excessive demand. shery: black rocks vice chairman speaking exclusively with bloomberg's dani burger. and here's a quick check of the latest business flash headlines, the lg energy solution falling in trading after confirming its plans for a 1.3 billion dollar plant in arizona. this as searching materials prices inflate costs for the company. world's second-largest electric car battery makers sites precedent economic conditions with the u.s. and had planned to build a plant supply cylinder battery freebies with production slated to begin in 2024. tesla is said to have laid off hundreds of workers on its autopilot team as the electric vehicle makers shutters the california facility. sources say invested employees were notified tuesday in about 200 workers will echo. many of the staff of the san mateo office were data

specialists. pinterest's ceo is stepping down and handing the role to bill o'reilly. during the decade long run, he saw pinterest grow past 430 million users with an annual revenue of more than $2.5 billion. you will move to a newly created role as executive chairman and keep his board seat. yvonne: one of china's top tech investors believe the sector is turning a corner after the route that wiped out $2 trillion with a value during more on that in a moment. this is bloomberg. ♪

>> i think this could be the beginning of a new era for china tech. there are some leaders in china that it may be globally. there is panic. yvonne: primavera capital founder on his battered tech sector there. let's get more on the outlook what's expected is china open. tech stocks as we count down to the china market open today in

china. as bring in the asia stocks managing editor. it seems like all the bullish voices are there right now talking about how a new era dashers he said, what are the risks investing in this sector right now? >> i think two things that are really attractive to all investors, basically one is evaluation, the other is regulatory direction. in terms of risks, i think the near term is really the insider selling down. you see the tencent shareholders saying that they have an unlimited program to sell down all of their tencent shares and that's really pressuring $.10 rally. and also, we have heard from local media that the founder of jd.com who is cashing out $1 billion worth of jd stocks, and jd did not do well either. so i think we could potentially see incremental news of more

insiders, instead of cashing out thursday, calling a little bit of a peak before this rally and that's not good for this sector. shery: what about a peak for chinese markets, like mainland stocks just rallying? the cost of a bull market at the same time it was there so many times. we do have better news when it comes to covid restrictions and mandatory quarantine, but will this last? >> i think most of the people that we have spoken to are saying that this is incremental positive news. it doesn't really change the needle in terms of getting people out, getting people in, beijing still has the strictest quarantine rule in the world. i don't think a lot of people are rushing to get tickets right now. but i think it does bode well for one sector, for sure, the reopening sector. we are talking about all the

airlines in the big stock listed in china. we're seeing earnings upgrade. at least to that sector there may be a lift in the near term. shery: tell us a little bit more about the different sectors we should be watching. we talk about the regulatory pressures in china, but is there any more understanding of what the policies are coming from beijing there could support specific births -- specific parts of this market? >> we did a relatively big story talking about how the center is getting a boost from all the subsidies, all the tax breaks, and other stimulus measures on the sector. there still seems to be a little bit left in the rally. the others sector is the biggest victim in this policy, the banking sector.

and people are saying with the yield coming down because of the stimulus, that that's really impacting their name. shery: asia stock managing editor. we continue to see this downside to broader asian stock markets. we are talking about the nikkei being led lower by tech, health care, not to mention a kospi is moving around for the first time in the sessions. we have seen u.s. stocks really see a huge reversal in the new york trading session. u.s. futures are now under pressure. that's it from daybreak asia. our markets coverage continues as we look ahead to the start of trade in hong kong, shanghai and shenzhen. standby for bloomberg markets china open. this is bloomberg. ♪

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>> institutions need to be very prudent, focusing on liquidity. it is time to prayer -- to