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haidi: good morning and welcome to "daybreak: australia." i am haidi stroud-watts in sydney. annabelle: i am annabelle droulers in hong kong. we are counting down to asia as a major market opens. shery: that evening. from -- good evening. from bloomberg's world headquarters in new york, i am shery ahn. the top stories this hour -- >> jay powell says the u.s. economy is in strong shape and can avert recession. the task is getting tougher. >> the path back to 2% inflation while still retaining a strong labor market, we believe we can do that. there is no guarantee we can do that, it is officially something that will be quite challenging, and i would also say that the events of the last few month have made it significantly more challenging. shery: stops swearing and treasuries rise as bond traders

up there bets on the recession, eventually reversing the tightening cycle. u.s. futures are unchanged in the opening session. hard to find any direction in today's trading. the s&p 500, swinging between gains and losses, finishing unchanged. we have a lot to digest, central bank speak,, no to mention concerns about a slowdown in the economy. we had crude prices even in the asian session under pressure. because we had some bullish reports out of the u.s. at the same time, an and seasonal slowdown in gasoline demand. the summer driving season was not enough to push up demand for gasoline. we have the 10-year yield falling towards the 3% level. first quarter consumer spending data coming in weaker and slowing down to a rate we have not seen since the pandemic

recovery, not to mention the first quarter gdp in the u.s. was revised down. . so we have recession fears all around. will the fed listen to that? perhaps not. take a look at this chart on the bloomberg, front -end real rates are still low. we continue with volatility across the markets as recession and inflation fears are felt across markets. annabelle: that's. as you said, we had muted moves in the wall street session. that is providing little direction for where we will go in asia today. asx 200 futures are looking flat. what could move the needle is the economic data we have coming out. we have japanese and korea industrial production numbers. but recession fears are the overarching theme here. a big drag in the materials sector in australia, the electronics sector in japan. it has also been prompting more

demand for the dollar. that dollar-yen has been a proxy for where treasury yields are heading since the tightening cycle. our strategists now say it is unlikely to reach the 140 level. it is the quarter-end, and also the month end. the weakness is a boost for japanese stocks. they have not lost the same as we have seen in other markets. the biggest outflows are in the kospi, down 14% this quarter alone. a lot of foreign selling. it is feeding into the weakness we are seeing in the won. haidi: you talk about the recession risk, this is also where we are seeing bond traders at the biggest banks in the world now slashing risks. we are seeing some investors trapped in these trades at a time when we know that redemption requests are very high. the bond market volatility has

come at a bad time. it has spooked a lot of traders, including the likes of deutsche, goldman sachs, citigroup and jp morgan. market participants have been cutting back in the dead market. pockets of the market are essentially grinding to a halt, shery. the chief investment officer for global high yield at early-onset is saying that it is taking several weeks for them to exit out of liquid positions, an unusual situation. shery: yes, especially at a time when you are talking about spooked bond traders. when there is not a lot of certainty. we heard from chair powell and from christine lagarde and andrew bailey, all talking about the concerns of uncertainty surrounding inflation. also about the imperfections of existing economic models like the phillips curve, that led them to underestimate the supply-side shocks to prices. chair powell, saying the u.s.

economy is well-positioned to withstand tighter monetary policy, but of course, markets are still very worried. they would have to reduce inflation to 2% while maintaining a solid labor market, which chair powell said he could do. he spoke with bloomberg's francine lacqua at the electro-cardiogram panel. >> so the you see the economy is in good shape. you look back a year, the u.s. economy grew five and a half percent. it was the big reopening year. we expected this year that the growth with moderate to a sustainable path. we also of course are raising interest rates and the aim is to slow rates down. we hope growth can still remain positive. if you look at the strength of the economy, households are in very strong shape, still got a lot of excess savings from -- forced savings from not being

able to travel and things like that, and also from fiscal transfers. so households are overall -- not every household, but overall in good strength. same for businesses, very low rates of default and lots of cash on the balance sheet. the labor market is tremendously strong, still averaging very high job growth per month. so overall, the u.s. economy is well-positioned to withstand monetary policy tightening. haidi: fed chair jay powell speaking at a panel that was moderated by bloomberg's francine lacqua. traders had a hard time finding direction in the u.s. session, assessing comments from the central bank chiefs about the outlook for the economy, interest rates, and the fate of the economy. let's get more from our chief rates correspondent for asia and mliv contributor, garfield reynolds. the struggle for direction is really what is characteristic of this market at the moment.

garfield: the day-to-day struggle for direction is absolutely difficult. if you step back and say that we are just about at the end of the second quarter, global stocks are down 15%, that is far and away the biggest drop since the first quarter of 2020 when covid was an issue. so you twin that with bonds that have had a tough quarter but are coming back recently, and that is elevated inflation that means central banks are hiking like nobody's business. and that is putting a real, making for a real graham economic outlook. you have yields coming back down from recent peaks. some thought that the fed might slow the pace of tightening in the not-too-distant future.

meanwhile, not a lot of good news for equities, as the best they can manage is hoping that they have hit the bottom. hoping that this is about as bad as it gets. and even if -- and then the question becomes, how robust can you be about a bounceback for equities, bonds are rallying because of recession. shery: yes, the s&p 500 is headed for the worst quarter since march of 2020. garfield reynolds, chief correspondent for rates in asia. nato has agreed to upgrade its military presence in europe, redrawing the continent's security in response to russia's invasion of ukraine. bloomberg's political news director jodi schneider joins us with more. what do we know about this agreement so far, and how

impactful will it be for the region? >> the leaders who are meeting in madrid, they called it the largest and most significant upgrade, military upgrade, since the end of the cold war. so it is a significant move. of course, mostly in response to russia's invasion of ukraine. this really brought together the nato countries, the french president just a few years ago was calling it a brain-dead institution. now, president biden said that this was a history making agreement. some of the elements of it are that there are more than 300,000 troops who will be put on high alert in europe. they will also purchase sweden and finland joining nato, now that turkey has decided not to veto that. that will really bolster them in

the exposed boat took region. we are also going to see expanded air power in europe. and poland will become a permanent headquarters facilities efforts in europe. so it really is an expansion in terms of numbers, and significance. haidi: a lot of that time was spent discussing the pressure, and that is the context of the increased militarization feeding. was there anything said about china? jodi: they were called the most direct and significant threat to europe. but we did hear from the first time, china was mentioned in this strategic outlook, as nato calls it, saying that there were systemic challenges from china. this had been a hotly debated inclusion. the countries were talking about this for months. some countries, including

germany, which has very strong economic ties with china, did not necessarily what that language added, but in the end, it was decided that china was enough of a concern and something that nato wanted to signal that they were worried about in the future. we will see what we hear back from china on this. most of the talk, as you know, language about it being the most significant and direct threat that it was certainly something that the leaders had discussed throughout the summit. haidi: bloomberg political news director jodi schneider there with the latest. let's get vonnie quinn with the headlines. vonnie: u.s. president joe biden has met leaders of south korea and japan on the sidelines of the summit in madrid. the three leaders focused on dealing with north korea. joe biden is trying to help improve frosty ties between the two major u.s. allies, after the

pair had a rare conversation on tuesday, hosted by the king of spain. the cleveland fed president says central bankers should act forcefully to curb rising price pressures. in remarks at the you see the forum in portugal, she said central banks should not be complacent about increases in long-term inflation expectations. she says the fed is just at the beginning of raising interest rates. president xi jinping says covid zero remains the most economic and effective policy for china. during a visit to wuhan, the city where the virus first emerged, he said strategies like herd immunity would risk many lives and lead to unimaginable consequences. the covid zero policy is connected to the communist party's nature and purposes, his words. 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, we will speak to the queensland treasurer and minister for trade and investment cameron dick on his efforts to drive investment across the state later this hour. next hear why victoria greene of g squared private wealth thinks the fed will continue to hike rates even after peak inflation, and what that means for equities. this is bloomberg. ♪

>> i think we now understand better, how little we understand about inflation. [laughter] honestly, this was unpredicted.

>> i think the forces that have been released as a result of the pandemic, as a result of this massive geopolitical shock we are facing now. >> if we see a greater persistence of inflation, there will act more forcefully. >> the path back to 2% inflation while still retaining and sustaining a strong labor market, we believe we can do that. >> as the uncertainty will clear, on various accounts, we will have to certainly be less gradual. >> it is quite clear that as we respond to this shock, we want to have options on the table. >> i think the bigger mistake to me, let's put it that way, would be to fail to restore price stability. shery: central bankers on a panel with bloomberg's francine lacqua in central portugal. let's bring in our next guest, who warns not to fight a hawkish fed. with us is victoria greene, cio at g squared private wealth.

always good to see you. does this mean you will go on the defensive? and how much uglier could get? victoria: we are two-thirds of the way there. everybody looking for the fed to step in and provide a pu tot the market, you are underestimating what they are supposed to do. the fed wants inflation lower and full employment. they have made it clear they are similarly focused on inflation. they will go 75 in july and keep hiking until something changes or breaks. and the only way something breaks is most likely the labor market, or liquidity in the bond and money markets. if the labor market starts to break, that is typically a sign of recession. so if there is some other reason for the fed to step back other than the fact that the market is dropping, i do think you're going to change. shery: the fed is being aggressive to tame

inflation, but that could lead to a recession. this takes me to our mliv question. is a recession or information the bigger risk for equities? victoria: they go hand-in-hand. you will have a recession brought on by inflation. recession is a bigger risk right now. inflation is high, people are adjusting their budgets. but recession would turn the market over because people are starting to change their habits. job losses in the tech sector. still and equitably tight job market, still more positions than we have workers in the u.s. , but when people stop spending money, -- the u.s. economy lives and dies on the consumer, and the consumer is hurting. you have gasoline prices that we are excited now that we are at $4.86 a gallon. we have food prices and rent still rising. god you have to travel anywhere now, because airplane tickets are so expensive.

we saw a moderation in june, but look at the chart, gas prices are still up in june. so do we really think inflation is coming back down right now? no. that will tip us into recession. postop spending money, that is bad for the economy. haidi: pockets of the markets are starting to see liberty pressure. how important is maintaining a level of personal liquidity, and how do you navigate the volatility and still not miss out on the opportunities? victoria: panich is the worst investment strategy. you need to find it within yourself to override that primal fight or flight. nobody likes to see their stocks go down. badr corps turn it over investing is to purchase low and sell high -- but the core tenet of investing is to purchase low and sell high. ask yourself, is the reason i am selling other than i am scared

it is going to get worse? make sure you have a layer of defense, cash on hand. some income-producing assets to help offset. but make sure you don't fall into the trap of, i know it is going to get worse. we all know the market is going to get worse. typically that is the best time to buy the market. we are not buyers of the dip, but i always cautioned people. we don't have a cristobal. the market is always surprising -- we don't have a crystal ball. the market is always surprising. you are not going to want to purchase the market because you are fairly certain that the world will end. you think back to march 2020 it was a horrible time in the country and in the world, but it was the best time to buy. so find the courage to invest through a bear market. haidi: even if the world and is, it seems that you think people will still go to cosco, it is

one of your top stock picks. you also like names across energy and value, tech as well. talk us through those. victoria: alike things that have resilient earnings. we are testing our energy positions, since it is in demand destruction. but right now energy companies, they are printing cash and giving it to shareholders and not putting it back in the ground, not increasing a lot of drilling, only a slight increase in the current last week, i think we went up to 754 rigs. energy companies are saying, thank you, shareholders, here is our free cash flow. they are giving dividends and buybacks. so why not? at least you are getting paid to wait. you may see some price volatility in the stocks, that the permian basin energy stocks, they have a lot of breakeven. and we like value tech. i have always been a fan of ibm. the last couple of years, i feel like it was a misunderstood, turnaround story. and they are doing great.

you have to spend money as a company on your i.t. infrastructure. you can't afford to not have somebody to help you when your server goes down, or help you with the cloud and make sure services are connected, and the software, so we think the revenues ibm has are sustainable and will grow. and who does not love costco? i feel sorry for anybody who hasn't been to a cosco. but it is a discount store, right? and consumers will be looking for embarking. you don't have to buy 50 pounds of goldfish crackers, but you can. so hey, if you have it on the budget, you are going to purchase in bulk! [laughter] haidi: i was just saying that if the world ends, i know my parents will

shery: crypto hedge fund three ares capital has been ordered into liquidation record in the british virgin islands. it has appointed partners from a consulting firm to help handle the liquidation. it will oversee talks with additional buyers interested in the company's remaining holdings such as tokens or equity stakes in crypto startups. the u.s. will purchase 105 million doses of mrna covid-19 vaccines from pfizer and biontech. the vaccine partners are set to receive $3.2 billion when the government receives its first order. u.s. government contracts made

about 25% of pfizer's revenue in the four quarters that ended in december of last year. one of europe's biggest automakers says the car market could collapse if electric vehicles do not get cheaper. salon takes was responding -- stellantis was responding to a deal to phase out combustion engines by 2035. the maker of jeep, fiat and peugeot cars says unless the cost of making evs is cut by 40%, demand will be crushed. u.s. futures right now are not doing much, this after we lacked clear direction in the u.s. session. the s&p 500 swinging between gains and losses, a little bit under pressure when it closed. the quarterly portfolio rebalancing, not to mention plenty of central bank speak today just for the markets, including chair powell saying he is committed to bringing inflation down, but also adding that the process is likely to cause some pain.

so you are seeing not a lot of movement, especially at a time when oil prices are holding steady, low $110 a barrel. coming up, xi jinping says it on herd immunity would lead to unimaginable consequences for china. we will have more on what he said, and how china stacks up against other countries, in bloomberg's final covid resilience ranking. that is next. this is bloomberg. ♪ psst. girl. you can do better. ok. wow. i'm right here. and you can do better, too. at least with your big name wireless carrier. with xfinity mobile, you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year

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shery: chinese president xi jinping is set to visit hong kong on july 1 as the city marks a quarter-century since its handover from british to chinese rule. bloomberg's guest takes a look at what has changed, and what lies ahead. ♪ >> vincenzo and mindy came to hong kong, the same year as the handover in 1997. 25 years on, they are leaving, as a strict covid policies have left this melting pot of the city isolated. >> we were holding onto the last straws, as hard as we could, but we couldn't do it anymore. >> we love hong kong, but we had to say goodbye. >> it has been a tumultuous 25 years for hong kong, punctuated not only by harsh covid curbs and quarantines, but also, antigovernment protests against china's rising influence. the chill remains. there have been 130 thousand net

departures from hong kong this year, mostly from when the covid fifth wave crippled the city. >> in the past year or so, we have been seeing a mass exodus of talent from hong kong. the longer that we stay in this restrictive and uncertain mode, the more likely people will turn it into permanent. >> the outgoing chief executive admits her own quarantine policies have weakened hong kong as an international city, but neither she, nor her successor have been an exit plan. >> if you look around, why most of the other governments have opened up, i think they now realize that they could no longer tolerate the sort of isolation. >> we must expand our international connectivity, establish a more favorable business environment and increase our overall competitiveness. >> but with other global cities opening up and clamoring for

talent, is the damage already done? >> hong kong is and remains our regional headquarters, without the shadow of a doubt. >> i have been through this in '97, in the asian financial crisis, and people left, and a year or two later, things go back to normal and people start coming back. everybody is here because of china. >> it is tragic that so many good, decent, honest people have left hong kong. i want hong kong to be the great, wonderful, open, free city it was not just for the very rich, but for everyone. ♪ >> for this couple, it simply became too tough to plan a future here. >> it has taken a battering, hong kong. but it is such a vigilant place. it always bounces back. it has just been long this time, the bit different? >> much like on that stormy day in 1997 at the actual handover,

there is still an air of uncertainty hanging over hong kong as we cross the halfway point in the 50-year experiment known as the one country, two systems. stephen engle, bloomberg news, hong kong. haidi: you can go to bloomberg.com for more extensive coverage of hong kong's 35th anniversary of its return to chinese rule, and the outlook for the city's future. chinese president xi jinping says covid zero is most economical and effective and the country is capable of achieving, quote, "final victory with that policy." as we see the gradual rolling back of restrictions and stamping out of a lot of these infections across different parts of the country, it seems there is no fundamental shift from the policy that they are approaching. emma: yeah, i think that is a common misconception now particularly in the markets, which rallied on the day that

they eased the quarantine policy , reducing it by half. we are not seeing a traditional pandemic exodus by china, they are not exiting the pandemic the way that other countries have. this sticking, reinforcing that very symbolic address in wuhan, the place where the virus first emerged, they are looking to keep the covid zero target, to stamp out the virus where they can, but then tweaking it around the edges so that the economic hit is not as significant, and the hit on the population is not as well. that is why you are seeing the adaptation around the edges. still at its core, they are targeting eliminating the virus, which is very different to other parts of the world. shery: and of course, we have had now four -- for

months, the bloomberg resilience covid ranking. this is the final installment. what were the biggest takeaways for you? emma: it has been a long journey, we have been doing the covid resilience ranking of the best and worst places to be in the pandemic since november of 2020. and a lot has changed since then. we had the first very uncertain year of the pandemic hallmarked by lockdowns, then vaccines, now we are moving into this more permanent stage where most of the world, with the exception of china and hong kong, are learning to live alongside the virus. one of the biggest lessons from the resilience rankings so consistently over those two or so years has been that societal cohesion and bringing the population along with your public health policy and what you are trying to do is really key. you have seen that in the consistent top performers, if

june paula: #1, south korea and norway -- june's number one, south korea and norway. they performed well in keeping covid out. china and others have fallen down as the rest of the world has opened up, because they remain isolated. haidi: emma o'brien there with the latest. with the final ranking, australia had the biggest rise of the 53 nations assessed, ending up in ninth position. let's look at how australia's second-largest state is handling the transition out of the pandemic. cameron dick joins us now, the treasurer. emerging out of the pandemic, which had unprecedented challenges for the state, what are the biggest challenges and opportunities for queensland right now? emma:. >> what we. >> demonstrated, and we're so pleased to see the improvement

in the resilience ranking, what we demonstrated is that if you get the health response to covid right, you get economic rebound. we are now leading the nation when it comes to economic growth and also jobs creation, creating as many jobs in our state as new south wales and victoria, the two biggest states in australia combined. we are restoring fiscal strength, delivering a budget surplus this year. that sets us up perfectly as a place for investment, as a place for growth. all of those factors show that we are at a really solid place as we charge towards the olympics in 2032. so, we welcome investment. we look to continue to grow our state and provide opportunities for people. haidi: i am glad you mentioned job creation, as well as the budget surplus. to the surplus, given that the books are looking good at the

moment, does this give the opportunity for queensland to find a feasible way out of being reliant on fossil fuels? we know that the political impetus has changed? cameron: that's right, and we think we can do that for our state and our nation in a very controlled and stable fashion in the future. we know what happens when power systems become unstable. we have the levers of large government-owned assets when it comes to electricity generation, distribution, transmission, and supply, but at the same time, one of the first things we did when we became a government was to say we will move to 50% renewable power by 2030. that has stimulated investment. 50 large-scale renewable energy projects. a great thing for jobs and for investment. as we do a smooth transition, we will be able to control that for consumers and families and for business, to make sure we have a stable power supply that is

affordable. we can deliver that in queensland. . in many ways, we are leading the nation, including overinvestment for more hydro supply so we can lock in the gains of renewable energy generation, into large hydro dams that we are building. haidi: the state's finances are underpinned by coal royalties. additionally, you have the tailwind of the fortuitous commodities boom at the moment. are you worried about her disorderly transition away from that? cameron: coal royalties play a big role, but they are not the only revenue source of the state. the property market has helped as well. but you still pay as a citizen in our state, about $630 less a year in taxation than in other parts of the country. we will manage that very carefully in the future. shery: do you have a target when it comes to closing some of those big coal plants in queensland? cameron: we will do that in a

careful and controlled fashion. we are ramping up renewable energy generation now and storage. we are very focused on that at the moment. but as time goes past, we will look at the mix going forward. but it is important that we provide stability and security in power generation for our people, our businesses, and for investors. that is my primary focus as minister for investment and treasurer, and we want that to continue. shery: let's talk the inflation situation in queensland. what can the queensland government do in order to help people that impacted by soaring prices, but at the same time, not fall into a downward spiral where you continue to stoke inflationary pressures? cameron: we will let the big central banks do their job. we will look at the supply side, how do we improve the supply chains for our economy?

but also, direct investment and support for families. we have a very big concessions package, up 10%, almost $6.8 billion going back to families and consumers. keeping the housing pipeline open and widening the housing pipeline, to make sure we have greater housing supply coming into the community. and then, a direct rebate to families, $175 off their power bills. so the rich support for individuals, but also looking at the supply side and doing what we can is a government to support that. haidi: interstate migration has been good for queensland. you talk about job creation being your hope. is there a concern that there will not be enough to fill the jobs? the skill shortage is the topic for every government leader that we speak to. cameron: that is a good point.

notwithstanding our growth in labor force participation, we have continued to grow the labor market. in the closing financial year, we are going to have the greatest employment growth in our state for 15 years. . we have participation up, jobs creation up, at the skills mix is very important that we have skills. we are now developing a workforce strategy and that will link to the national program that the federal government will be hosting. all jurisdictions working together can help solve the skills challenge for our nation. haidi: treasurer, great to have you with us and we appreciate your time. queensland minister and minister for trade and industry, cameron dick there in new zealand, we are watching the rbnz chief later speaking on a conference on housing. home prices are on the agenda also in australia. the market is about to sink. what we are not seeing alignment on is how big the slide will be in the $7 trillion property

sector, and it's dragon the wider economy. a bloomberg survey on economists says there is an 8.6% gain in the housing sector you're on your. shery: coming up next, the fed chair jay powell says he is committed to getting inflation down to 2%, while also sustaining a strong labor market. more on his comments from an you see the panel, straight ahead. this is bloomberg. -- more on his comments from an ecb panel, straight ahead. this is bloomberg. ♪

>> you're watching databricks "daybreak: australia." nato members have signed up for a deal for the biggest upgrade of its military presence in europe since the cold war. at the summit in madrid they agreed to put up to 300,000 troops on high alert. it ends months of negotiations over how the alliance should position itself after russia's invasion of ukraine. for the first time nato has also acknowledged china's military presence increasing as a challenge. senate democrats are said to be working on cutting the tax increases in president biden's economic package, part of a bid to make a deal with senator joe manchin and get it passed in the coming weeks. the changes under consideration would cut tax measures passed by the house last year, and could

mean both corporations and wealthier households and up with smaller tax increases. a new survey shows that negative views of china remain at all-time highs. nearly seven out of 10 respondents in 19 countries say they have an unfavorable view of china, citing its human rights record. perceptions of china are the worst in the u.s., japan, south korea, australia, and sweden. beijing has faced mounting criticism for its treatment of minority groups, especially in xinjiang. former rmb star r. kelly has been sentenced to 30 years in prison for using his fame to sexually abuse young fans. he was convicted last year of racketeering and sex trafficking. the judge imposed the sentence after hearing from survivors. kelly did not address the court, and he plans to appeal the conviction. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg.

haidi: fed chair jay powell says the u.s. economy is in strong shape, and the fed can reduce inflation while maintaining a solid labor market. he spoke at an you see the forum in portugal where he started by outlining risks to global growth. >> what we see, for example, is that we division of the world into competing geopolitical and economic camps in a reversal of globalization, that sounds like lower productivity and growth. you see aging demographics, so a shrinking workforce. then we see economies that are growing more slowly. those workforces are not expanding. that is certainly a possible outcome. and to some extent, a likely outcome. >> in the shorter term, can the u.s. economy actually deal with a possible onslaught of interest rate hikes?

>> the u.s. economy is actually in strong shape. if you look back a year, the u.s. economy grew more than 5.5%. it was the big reopening year. we had expected this year that growth with moderate. we also are raising interest rates. the aim is to slow growth down so that supply will have a chance to catch up. we hope growth can still remain positive. if you look at the strength of the economy, households are in very strong financial shape, still got a lot of excess savings from forced savings from not being able to travel and things like that, and also from fiscal transfers. not every household, and not the ones at the lower end of the spectrum, but overall. same is true for businesses, very low rates of default and things like that on the balance sheet. the labor market is tremendously strong, still managing very high job growth per month. so overall, the u.s. economy is

well-positioned to withstand tightening monetary policy. >> is it automatically a trade-off between fighting inflation, or taking care of the economy? how far are you willing to go with interest rate hikes? >> our aim is to have growth moderate. it is a necessary adjustment that needs to happen so that supply can catch up. it could be supply of workers, time for the supply chains to improve. the sense is that right now, supply and demand are out of balance, the labor market being a big example of that. we need to get them balanced so that inflation can come down. that is the aim. we don't have precision tools. monetary policy is famously a blunt tool. our intention, we think there are pathways to achieve the path back to 2% inflation while still retaining a strong labor market. we believe we can do that. there is no guarantee we can do

that, it will be challenging, and i would also say that the events of the last few months have made it significantly more challenging. thinking particularly of the war in ukraine, which has added tremendously to inflationary pressures around food and energy commodities, industrial chemicals, things like that. the pathways have gotten narrower. nevertheless, that is our aim and we believe there are pathways to achieve that. shery: fed chair jay powell is with bloomberg's francine lacqua. annabelle is following the latest from j.p. morgan that says policymakers could soon care more about growth risks? annabelle: that's right, we have the expectation that we could see cuts from the fed as soon as next year. but as i said, j.p. morgan is expecting that, but not confident it could happen. the timing of that is when we see the moves in the policy rates. the fed is expected to be at 3%,

the you see the at 2%, and the boe at 1% before we see that happen. j.p. morgan is uncertain about this. the reason is how the central banks and up -- central banks end up responding. j.p. morgan is suggesting that the language we are hearing from jerome powell and his colleagues also suggests that the bank needs to engineer a rise in the u.s. unemployment rate. the aggressive actions we are seeing from the fed and other central banks means that we could see a tightening in financial conditions sharper than what was expected here. the concern for jp morgan is that it ends up being too heavy a load for the private sector, that they say is otherwise in a healthy position. so that could lead to a u.s. or global recession, which j.p. morgan defines when we see the employment rate rising by 14%

-- as when we see the unemployment rate rising by one percentage point. and they are expecting a rebound from china. haidi: take a look at bitcoin. it is heading towards the $30,000 range. annabelle: some technical indicators saying that we could see a drop down to $12,500. bitcoin not moving to the upside in the past few sessions. one guest runs a crypto hedge fund and he actually was investing in bitcoin before people in wall street. but the collapse in prices, he says, has helped expose the leverage in the system. these lenders, they have really found themselves in hot water lately. the latest one has been forced to liquidate. he says we will probably see more industry sharks coming in the next month or two and each

bankrupt entity leads issues for the sector. shery: we have even seen nfts, super trendy, they have recently fallen to the lowest level in about a year or so when it comes to the sales volumes. look at what is happening in crypto assets right now, all those concerns that annabelle talked about, bitcoin is around the 20,000 level, at one point dropping the 20 k level for the first time in a week. ethereum also losing ground for a fourth consecutive session. and the defi tokens, solano and others under pressure. plenty more to come. this is bloomberg. ♪

>> asian markets are set for a pretty meandering start, as we saw a direction-less session for wall street. investors weighing comments from central bank chiefs on tackling persistent price pressures without recession. look how flat sydney futures are trading at the moment. it is looking like we will see little change at the open. also a pretty steady picture when it comes to trading in japan futures as well. dollar-yen, holding above 136. this is bloomberg. ♪