haidi: you are watching

bloomberg daybreak: asia. shery: investors weigh economic data, signaling a more assertive policies, inflation lingers, inflation along the you and yield curve shows inflation -- recession concerns. boris johnson's prospects look bleak as more resign. >> it is to keep going! shery: accusing a wash and terrorism as u.s. is limiting chipmaking resources to its rival. haidi: south korea current account balance coming through now, this is what we are seeing

for the goods trade falling to 2.7 in surplus. it is moving to a surplus of 3.8 6 billion there. this is as we continue to see further impetus for south korean central banks to make bold moves to get inflation under control. pretty big moves when it comes to the korean won. sliding to the 13 year low. as were a sufficient risk of starting to rise for some of these emerging markets and asian currencies. >> checking in on how we are looking for asian markets, we are watching bond trading across the curve here. we are seeing a fall, in treasuries and yields moving higher following the fed minutes

where officials underscored their commitment to fighting inflation. 90 mentions of inflation i'd the minutes, but not one mention of -- in the minutes, but not one mention of recession. how that sets us up for trading and equity is a debate among traders. whether the fed minutes are changing on the string and it looking for equity markets as well in this region. we are seeing some modest gains particularly for all the stocks. meanwhile kiwi stocks are coming online, a little bit to the outside and the currency space as well, the aussie dollar is sliding below the 68% level. technical indicators suggest we could be more downside -- should be seeing more downside pressure on this currency. the bloomberg commodity spot index is down 20% from the june peak. haidi: we see the declines with

oil prices down in the asian session. deeper below the $100 a barrel level. we continue to get the recession concerns about where global demand is heading. we are seeing u.s. futures higher by .1%. paring back some of the earlier gains and we have the s&p gaining for the third consecutive session. we are getting below energy and the yen is leading the losses. it is deeper in inversions seen today. levels we have not seen since april. already going towards the mid june drop. we watch what treasuries are doing with the two year yield jumping when we got those that minutes. let us welcome bloomberg's policy editor kathleen hays and a senior editor john. let us start with the fed's

minutes. what did they show? >> three weeks ago, not just three weeks ago, right now, the federal reserve is determined to bring down inflation. they admitted or acknowledged that there is a risk to growth. a risk to the downside and their policy could make the downside risk bigger. the way about the chance that inflation expectations could become the -- de-anchored. and they recognize it as a possibility the even more restrict stance on interest rates could be appropriated if inflation pressures were to persist. what they are telling us here is that they are not just going to neutral. you have to get into restrictive territory. this is a every three months

reading -- meeting. they are thinking that next year the rates will get up, woke up around three point 4%, one fed official looking for 3.9% and next year above 4%. the fed sees the need to hit it hard. they mentioned -- they did not budget recession at all. they are going to do bigger than normal hikes. it is important that the uber economics argument here, 75 basis points is on the table. -- that the bloomberg economics argument is here, 75 basis points is on the table. consumer demand has slowed down. you are talking about falling oil prices. if expectations are expected to be pretty bad, may be they will opt for a 58.

a less hawkish fed, jerome powell since last week at the ecb conference, the worst mistake the fed can make is not pushing the economy into recession. it is not raising rates enough to bring down inflation, that would have to cause death turmoil in the economy -- that would cause more turmoil in the economy. they are pretty hawkish now. haidi: market participants are just as confused. you called this the first -- reverse? >> one of the favorite tabloid editors used to say turnaround your trousers when there was a biggest were and if the big story closed to deadline approved an eight be true he would see reverse. the journalists would rush to their typewriters before the

paper went out. what i would describe in the markets is this brief crescendo of fear about inflation following the truly awful make cpi data followed instantly -- may cpi made it with the fear that the fed is crushing the life out of the economy. i think both the original move and the response has been exaggerated. i think the move today has been exaggerated as well. i agree with kathleen's. analysis this shows that the fed has learned from the 1970's. be more scared of resisting too early rather than too late.

it stopped before they had really conquered inflation. obviously the has gone down in history as a mistake. that is what they are most concerned about doing. i do not think this is surprising today. given where market sentiment had reached, given the scale of volatility we have seen, it is not surprising we have seen two year yield to get up to 3% again. shery: we have seen a market reaction to the doe's markedness -- hawkishness. >> margaret thatcher had eight -- a major sterling crisis.

it does not have to do with the extraordinary events in westminster. i do not think the markets are terribly concerned about boris johnson going. i do not think they are terribly excited by any of the potential candidates to replace him. that said, he is going for broke. he is going to cut taxes. that would probably put yet more pressure on bond yields. haidi: the big headlines, let us get you the rest of the news. beijing residents are required to show proof of vaccination to enter public places beginning next week. this is the first time that china has imposed a vaccine mandate. authorities are hoping to boost

the vaccination rate. 80% are vaccinated in beijing, hong kong warned that the virus outbreak is worsening. the cases are comping at 2000 new cases a day -- coming in at 2000 new cases a day. the u.s. and allies are said to be discussing capping the price of russian oil while attempting to minimize the impact on their own economies. a more specific threshold depends on market conditions. the u.s. is weighing its tools including secondary sanctions and a measure of last resort. china is blasting u.s. for telling its allies to stop selling china chipmaking

technology. this is after bloomberg reported on efforts directed -- to restrict sales to beijing. it would stop key technology to chinese chipmakers. shery: we get samsung's preliminary earnings. immediate reaction from securities. bond markets in a frenzy as investors balance the fed's next move to risks true growth. this is bloomberg. ♪

>> the bigger mistake to make would be to fail to restore price stability. >> make sure that the recovery takes hold and they are signaling through our monetary policy also saying -- outsourcing. >> uncertainty about the outlook. with the option to act decisively. >> downward pressure to the recovery process, is which of monetary policy would be an appropriate -- switching monetary policy it would be

inappropriate. >> i do not think we are going to go back. >> we should be moving to inflation higher than the midpoint of our target. >> we are seeing it go forward. shery: speaking about the global inflation fight. look at bonds across asia following with yields above 3.5%. we are talking about the first day of gains for the yields in eight sessions -- aussie yields in eight sessions. two year yield jumped on the release of the fed minutes. the 10 year yield also above that 2.9% hike.

haidi: risk of a u.s. recession is high, but it could be avoided. let us bring in a cio. market headspace going on in terms of the uncertainty of how much confidence there is in the global central banks. how are you positioning when it comes to risk exposure? >> we have been very close to our strategic allocation weight. we do not have a high conviction around fixed income right now. we are looking for the diversifiers that could protect the portfolio against stocks. we are also holding a fair amount of cash because there will be better entry points as we get into the late part of the summer. haidi: how much cash are you holding at the moment? >> we usually have a zero

strategic allocation, we are allocating between 4% and 6%. we have put a bit of the into equities to reduce our underweight. most of our focus is china -- trying to find diversification and better entry opportunities and being able to take advantage of as relative evaluation opportunities. shery: you do not think that a recession is a base case scenario. you are trying to find opportunities, where are you going? >> we have been seeing more attractive opportunities in more quality oriented securities. we are slightly overweight. they smaller cap sectors we think have a bit more resilience , think about travel and leisure and the services economy which has continued to benefit from consumers transitioning from covid and pandemic behaviorist to marketing out there and have experiences again. we are seeing interesting

opportunities in places like europe which may be a bit, imperative -- counterintuitive. shery: does that affect some of your portfolio allocations? >> places like real estate are places where we have been participating. we are quite underweight from our relocation. we also think that there are some other places where higher interest rates will not be quite as meaningful. we like utilities because we do not think long-term yields are going to get untethered here. if anything, we are fans of the fed's recent posture. we think they need to stave off this inflation building process which we saw in the weight price spiral. haidi: you spoke about the shipped across asset classes to favorite commodities. we are seeing commodities entering a bear market, oil

below, copper below. on chinese related commodities and equities are under massive selling pressure. does that change how appealing the sector is now? >> i think there is no more pure play to the inflationary pressures than the commodity complex. it is one we think it is important because it has the benefit of providing the diversification when you do not have any place else to hide. we try to be a bit more diversified there, playing in gold, looking at the broad commodity complex. making sure that we retain dry powder in our cash position. shery: always good catching up with you. remember, bloomberg users can interact with the chart short on air using day tv .

catch up on key analysis and state ready for future analysis as well. this is bloomberg. ♪

shery: the markets are in a volatile period due to geopolitical risks, the owner of the boston celtics sat down with bloomberg of the annual conference in sun valley, idaho. >> we are in a very volatile. period. there has been a breakdown in democracy, policy, which came out of a period of growth and global trade benefiting people all over the world. there were winners and losers

and we have seen tribal movements of people who were left out of that and the political system has been in an upheaval in many countries. people are looking for answers. it is causing this location and almost a breakdown of what we were before. i think the social issues are very important. the younger generation, they recognize that and they are concerned. >> what are some of the specific issues? >> specifically in fighting in extreme political views rather than trying to get things done for the good of the country. a short-term approach of trying to get elected by not making change or working on the environment or really pushing social justice board as we should.

as a balancing factor is this generation, i see it in every walk has bought into the fact we need to change policies for global warming and have social justice in the world. i am optimistic we have can overcome that. this has been a tough period. you over light covid and the -- you overlay covid and the ukraine were and it is a perfect storm we have to get through. >> you look at all corners of the market, the public market volatility, what is your assessment of that? do you see parallels with the . com bubble? >> i think it is different. stock markets gone up and down. it seems like every generation that has not been burned has an

irrational exuberance when it comes to growth and new technology. you see an overheated period followed by a crash. they get back up over the next 5-10 years. it is a correction because values were way too high. we stayed a lot -- away from ill of the companies, thank goodness, losing hundreds of millions of dollars a year and you had to bring in a 20 year trajectory to make profits. the market and environment caught up with that. that was exacerbated by the effect of the u.k. -- ukraine war. there was a correction, in technology for sure. >> you have been looking at sports. you placed a bit, you are not successful. todd boley had this idea that leading the premier league is undervalued. do you agree with that assessment? >> there is a lot of growth in

major football/soccer leagues. you see the global investment and what has happened if you step back is companies like google, apple, microsoft, amazon, they want people to use their system. they want eyeballs. sports has been a great investment for people who want to get eyeballs. the fox television network was based on an nfl contract. it is the most compelling programming. specifically soccer and football and basketball were on invested, they have real upsides because they are global sports. shery: counting down to the start of trading. two and seal -- tokyo, raising inflation projections for 2022

to reflect rising energy costs and a weaker yen. investing in funds and a 30 year sale, it will test investor appetite in volatility in the bond market. in korea, we get you a sense of how inflation is hitting demand. elegy energy and electronics earnings guidance for the period. we are watching how the korean won praise at the open -- trades at the open. plenty more to come on daybreak. this is bloomberg. ♪

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shery: p are the first word headlines. boris johnson is bearing down an unprecedented revolt within his

party and government. he intends to fill empty positions following more than 30 resignations. his team says he will make a major economic speech next week. however, observers say he could face a fresh confidence vote. >> the job of a prime minister is to keep going. shery: the indian central bank -- the ruby hits record lows. measures include doubling borrowing limits and temporarily lifting any interest rate for banks trying to deposit from nonresidents. the philippines may grow at a slower pace this year.

the economy is contending with quickening inflation. a ballcarrier that seems trended off the coast of sydney for three days. the rescue team came after several failed attempts. the vessel was carrying about 1000 tons of fuel. thousands of residents are under the threat of flooding. those are your first word headlines. haidi: shanghai bureau chief joins us now for more.

it's fascinating because covid zero has been in place for so long. restrictions have been heightened. lots of other parts of the world have vaccine mandates. what is behind the reasoning we are seeing in china? guest: this is a major one. it does not market an immediate shift to the covid zero policy. if you remember, he said covid zero is still a strategy.

that is making it reluctant to open up the border. we will start to see if more cities will follow suit. at the moment, the dynamic is covid zero. shery: what is happening in shanghai right now? reporter: shanghai reported 1000 cases in response to mass testing. there was one yesterday and there will be another round tomorrow.

the local authorities are super cautious about the latest outbreak around the hugely important china economy. financial institutions have asked employees to work from home. shery: the shanghai bureau chief with the latest on infections across china. the pandemic does not help the global demand picture when it

comes to oil. let's take a deeper dive into the plunge and bring in su keenan. both brent crude and wti are trading below $100 per barrel. let's going on? su: concerns about a global slowdown outweighing clear signs of what we have in terms of market tightness and supply disruptions. you're looking at brent crude managing to hold $100 despite dropping as low as $98. let's take a look at the bloomberg. breaking technical support, the five-day price chart is where you can see the pullback where oil has settled below $100 for a second day in a row. you can see brent's dipping below $100. nymex traded oil was above $120. the outlook for oil demand is rapidly changing. let's take a listen. >> we are thinking in our base case that oil will go down to $85. that's looking at a supply basis. there is no evidence we will see

the summer search. the price is too high, the demand simply is not there. i expect we will see further downward revisions to demand. su: we know the opec producers are meeting problems. the latest signs out of china show there is rising demand. consumption was almost 90% of june 2019 levels according to bloomberg. >> meanwhile, the u.s. and allies are talking about the caps on on oil prices. su: the g7 nations have discussed capping prices between $40 and $60. this is done in a manner that sanctions russia and limits sales while also minimizing

economies because market tightness remains a concern. the u.s. playing some enforcement tools. the bear market affecting everything, soft commodities impacted when you look at the pullback in just the past month. june is a very tough month for commodities, july turning out to be the same. this has a lot to do with the surging dollar. dropping the bloomberg one more time. the outlook on a technical basis is this is a necessary correction, with $85 being key support and resistance now at $115. shery: we continue to talk about the broad commodity selloff. looking at prices, we saw them

swing between gains and losses. ending slightly higher, 4/10 of 1%. we are also following gold futures, this after the price dropped to a nine-month low. we continue to see a selloff in gold. the strong dollar narrative across the states, we're talking about a dollar at the strongest level in more than two years. gold was on pace for its biggest weekly loss since june of 2021. copper continued to deepen the selloff after touching a 19 month low. base metals are hurt, even battery metals like nickel feeling the downside. be sure to read today's story about the tycoon who broke the mikell market and how he is walking away a billionaire. that has been published on the bloomberg terminal.

we continue to watch euro-dollar parity. >> picking up what you are saying about recession fears playing out in commodities markets, taking a look at how that sets up in the fx space. the euro is eyeing that parity against the dollar. the concern is around commodities as well. one of them is russia could cut off gas supplies to europe, plunging the region into recession. the aussie dollar as well, technical indicators suggesting we could see more bearish moves ahead. the pound, we are eyeing what was once unthinkable for the currency, reaching 1.05 against the greenback. we have never seen that. recession fears. the flipside is the strength in the dollar as well. let's take a look at how that is setting us up in the em currencies base.

the dollar is hitting currencies across the region. the philippine peso slumping to a 17 year low. we continue to monitor what we see in the korean won. taking a look at the longer term horizon. this has been broad-based. the em currency index is sliding, 4.5% on the year. that is the biggest such record we are seeing for this time period. it has been broad-based, all 23 currencies attract have dropped this year. certainly, a lot of headwinds facing this asset class. shery: we were expecting a

little bit of weaker demand when it came to samsung. inflation biting into the ec smart home sales, raw materials prices rising. sales are coming in weaker than expected. it is still growth of 21% year on year for second-quarter sales , and 11% year on year growth for operating profit. of course, we are talking about a stock that has lost so much this year. 28% year to date. valuations are sinking. reflecting some concerns. we continue to watch the stock at a historic low, 1.2 times

book value. our next guest has lowered his price for samsung 277,001. what do you think of that results? guest: thanks for having me on your program. results are not that bad. it's only slightly lower consensus. it's likely to have drove around semiconductors. on the other hand, we think the profit is likely to have low expectations due to weak demand

from customers. smartphone shipments came in around 61 million units, that is down 16%. shery: you have lowered your target price. what was behind the call and how much do inflationary concerns play into your target price? guest: we lowered the target price because we see weak earnings momentum. it's likely demand for memory chips is likely to see some headwinds, as a result, pricing is likely to come under pressure. consistency earnings are likely to go down further. on the smart phone side, that's where the supply chain disruptions are impacting production and is likely to

continue for the time being. we think the value is likely to compressed in the near term. haidi: do you see a recovery in the short or medium term for the smart term business? -- smartphone business? guest: in the second half, we could see some incremental recovery, china, the month of may, things improved somewhat sequentially. it was down 25 to 30% on a year on year basis.

as lockdowns eased over the course of the year, we will expect demand to come back, that's likely to help overall shipments. we think the first half there is a small demand. the second half have an outlook in the second half. haidi: are we going to see broader downside when it comes to pricing?

guest: [indiscernible] given the customer inventories are relatively high, they are pushing back on building further inventory. asking for price cuts. haidi: when it comes to discipline, with all of these headwinds, do you consider cuts again? guest: i think it's likely. micron talked about what we saw in early 2019, next year we

expect better demand as a whole, tightness of supply comes back. shery: we are getting the latest headlines when it comes to covid cases and shanghai. we are seeing 54 local cases for wednesday and two new cases outside quarantine. we have seen mass testing across shanghai. there is concern the city might be going back into a lockdown. what are we seeing in terms of demand?

guest: big customers of samsung. definitely in a lockdown. [indiscernible] haidi: great to have you with us. just reacting to that breaking news. south korea missing estimates, the slowest growth in two years

as inflation is hitting consumer demand as well. we have plenty more to come. this is bloomberg.

haidi: british airways is canceling flights for the peak summer traveling season.

only short-haul routes are affected. we are told the firm ends a month long drought for offering. sources tell us there is a [indiscernible] worth about $1 billion. shares have more than doubled giving evaluation of $2.6 billion. any revival would be a 10% -- be sure to turn into bloomberg

radio and get in-depth analysis. broadcasting live. much more ahead. this is bloomberg. ♪

shery: beijing case numbers

coming in. 54 local cases for wednesday. we continue to watch the spread especially with the subvariant found in beijing as well. we will be watching the reopening trades when markets are trading. those related to samsung reported its lowest profit growth and more than two years after rising material costs and lukewarm consumer demands squeeze margins. watching for semiconductor shares, tokyo electric. samsung operating profit missed estimates coming in at $10.7 billion. it will be interesting to see the market reaction in the kospi. samsung lost about your today.

this is bloomberg. ♪

shery: this is daybreak asia. it could be a mixed picture. what does this mean? haidi: samsung, we saw profit growth slowing. price pressures on both ends starting to bite. let's get you to the market open. >> we will have samsung coming online in a few seconds. we are watching the 10 year yield. we saw that move yesterday with the fed meeting minutes underscoring the fight against inflation.

inflation this something the bank of japan is looking for. we have local media reporting the bank of japan may raise its inflation forecast to about 2%, that would be a reflection of above energy costs that could change the yen. this morning, looking pretty flat. the nikkei is showing its third day of gains. let's check the open in korea. mentioning those numbers we had for samsung. we are seeing modest gains even though we saw profit missing in the second quarter. we saw surplus in may, but it was smaller than we saw in

previous months. we are continuing to keep an eye on the korean won trading near the 1300 level. let's change to the start of australia, we have the asx coming online to the upside. we are seeing moves and treasuries, the bond tracking the moves we saw in the u.s. overnight. the aussie dollar is likely to come under pressure as we continue what we are seeing in brent crude prices coming to the downside. shery: our next guest sees the outlook for asian economies remaining encouraging including for china. let's bring in our chief. great to have you back. at the same time, i have to wonder if we see these recession concerns materializing, in the u.s. or europe, consequently

china and other asian export juggernauts. reporter: it's a fair point. if you look at the exposure for some economies such as taiwan, malaysia, they are all exposed to the u.s. and european economies. the reopening theme we are starting to see across asia, from the perspective, the ability to reopen will provide additional support, despite the fact there are concerns with exports. shery: does that also mean you are focusing more?

>> hussey on and china have declined. from that perspective, even from a longer-term perspective, southeast asia, china and india, there are multiple reasons why we should be focused on asia. haidi: is that the rising interest rates, pressure we are seeing as well as the possibility of a global recession? reporter: most currencies have depreciated relative to sterling, they have been more resilient.

from that perspective, interest rates will provide some support. if you look at asian economies, pretty resilient, that provides quite a bit of support for the currency as well. there is a strong dollar bias, staying hawkish, the currency impact is manageable. haidi: we saw the nasdaq falling 6%. that's not great for mainland china and hong kong. has the news flow and optimism started to fade? most of the news, when it comes to renew lockdowns, some of the tech stuff is looking bearish. reporter: i think the initial phase of the recovery is perhaps

done. first of all, the question of how china continues to manage policy, beijing is making vaccination mandatory. that potentially could help to contain the outbreaks. we have still yet to get some encouraging macro data out of china. we got strong pmi numbers for june. financing and consumption, these numbers are going to rebound back to the pre-lockdown levels. that is also an important catalyst for the market. haidi: our chief asian strategist. take a look at samsung. in just the first six minutes or so, we have inflationary pressure really playing out for

the bottom-line. they are missing when it comes to profit. growth is the slowest, profit rising to $10.7 billion. let's get some more from our asia stocks reporter. does this mean the downside for the stock could be limited? reporter: good morning. what the results mean is the bottom may be near for samsung. analysts have lowered expectations of quarterly results ahead of thursday.

still, samsung has reported slightly lower than expected operating income results for the second quarter, even after analysts have downgraded the outlook on samsung. the biggest reason as you mentioned, consumer electronics, smartphones. growing inflationary pressure that prompted -- shery: with this outcome inevitable? is just an industry challenge, porch -- or for samsung itself? reporter: samsung is the biggest

economy in south korea. it is property of the global trade and test of global demand. it's not alone. for are likely to see a similar outcome later this year. the company also has a diverse range of businesses that gets affected not only by the global demand but membership prices that affect the semiconductor business. we have not seen the recovery earlier this year, and now analysts are delaying that may not happen in the fall. they have been putting it back to later this year. not just the global demand issue

. shery: annabelle is looking at some asian stocks 20 comes to copper. >> checking in on some of the biggest copper names. we saw copper sliding to a 19 month low. it rebounded. we're seeing it mixed picture in reaction to that. we're seeing energy dragging down. flipping the board, had key commodities. we are seeing copper climbing above that key level, adding more than 1%. iron ore is higher and we are

continuing to monitor those recession fears coming into markets. there are some concerns about export hurdles that can be emerging in the black sea. shery: let's get to the first word headlines. boris johnson is steering down an unprecedented revolt within his party. he says he will fill vacant positions. johnson's team says he will make a major economics each next week. -- speech next week. beijing residents will be required to show proof of vaccination. it's the first time china has imposed a vaccine mandate to stamp out the latest outbreak. authorities are hoping to boost the vaccination rate among

people over 60. u.s. and its allies are attempting to minimize impact on their own economies. the u.s. is weighing enforcement tools as a measure of last result. china has slammed the u.s. for pushing allies to stop selling chipmaking technologies. the foreign ministry accused washington of technological terrorism after bloomberg reported on plans to restrict sales. sources say the u.s. is lobbying the netherlands and japan to stop shipping key technology to chinese chipmakers. those are your first word headlines. still ahead, the rapid tightening cycle is threatening

emerging-market currencies. we will have more on that later. but first, more on the political debacle in the u.k.. boris johnson telling his cabinet he will not step down. the details. this is bloomberg. ♪

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real luxury, real thrill. feel the rush of performance at the lexus golden opportunity sales event. haidi: boris johnson is

remaining defiant, refusing to reside despite a revolt from his party. here is what he told the parliamentary committee. >> it is the job of the prime minister, to allow people with mandates to go on. shery: david is here, we are seeing the british pound. what will the reaction be? >> [indiscernible]

it's become so incredible. not a question of if or more. that's the real political uncertainty. the end of december 2024. given the present popularity of the conservative party, not calling that any soon. the markets are unaware of that. [indiscernible] they remove that risk. markets are more focused on economic data coming out. haidi: what are those data points? putting politics aside, it is still back to the economy. >> there are several pieces and

economic data. arguably, the most important factor is key data. monthly gdp data, that is [indiscernible] for april, it showed a negative output. if you see the same trend again, it's not looking like a good second quarter. particularly given that 15 month low, consumer confidence is at a record low. with these fears going on, it's -- haidi: taking a look political chaos still playing out in the u.k.. let's take a look at how equity

futures are opening up. extending the rebound rally. the msc is up pretty robust. futures are up one quarter of 1%. lowest level since january of 2021. investors are waiting back in ahead of corporate earnings season. some of the biggest names since about june. the previous session was the precipice of a bear market. energy was the underperformer. we will watch out with wti sitting under $100. shery: we are seeing the energy sector, the worst performer on the nikkei, the second worst performer on the asx 200.

we see oil prices down. you are seeing those stocks traded under pressure. energy is gaining about half a percent. this is coming at a time when wti, brent is around the $100 level after it fell below the level. let's take a deeper dive and bring in su keenan. su: it is the second day of strong declines. recession fears outweighing everything from supply shortages to output woes. west texas intermediate down 9% in one week. brent crude lost 10%.

ed morse is saying a lot of analysts are taking outlook lower. let's take a listen to what he had to say. [no audio] >> we are thinking oil will go down to $85. there is no evidence we are going to see the summer surge in driving or demand. the demand is not there. i expect we will see further downward divisions and demand. su: fundamentals are still strong. rising demand in china, inventory data out thursday morning. haidi: we are hearing more developments when it comes to russian oil prices.

su: this is a follow-up from the g7 meeting. the u.s. adding on, it's a commodities bear market. everything from corn, wheat, soybeans had a rough ride. if we drop into the bloomberg one more time, on a technical basis, it's in mann with base case. key support and resistance at $115. back to you. haidi: su keenan the latest. coming up next, a $40 billion revaluation is dealing a blow to softbank. we get the latest on that, next.

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shery: take a look at softbank shares, rebounding from yesterday, we are talking about highs we have not seen in a week but still not a lot of strength when it comes to the broader space as we continue to see japanese stocks gaining ground. we are paying closer attention. the company that invests in the tech companies, greenfield bank, we have a great column right now talking about how the reputation might be damaged. we are seeing fintech raising

$650 million, mostly from existing investors. this would just be a fraction. haidi: it seems like softbank always manages to hold the worst play out over the last few years. unless you are softbank, you look at two years ago, we had the fund manager slashing we were valuation from $47 billion in 2019 to $2.9 billion.

the dollar amount is much smaller. as you say, the reputational risk is incremental, it perhaps could be valued at a lot more. you can read more about this, you can find all of the opinion views on the bloomberg terminal. lots of great reads there. let's get you a check at the headlines. we are getting divisional results later. apple has introduced a security tool for the iphone and other devices to prevent cyberattacks for high profile users.

it offers protection against spyware attacks. the news feature will be part of the upcoming hour. gamestop jumped in after hours trading after announcing a stock split in the form of the dividend. the poster child for meme stocks . moves as each stock will have a lower price tag. coming up next, the authorities take new measures to curb an outbreak in the capitol. details, just ahead. ♪

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>> this is daybreak asia. 30 minutes into the trading

session for japan, korea and australia. the index posting some modest gains. we have the fed meeting minutes underscoring inflation. traders are betting equally that the economic fundamentals, perhaps, we are seeing consumer discretionary holding up this morning. that underscores the rotation we are seeing the biggest tech names. in terms of was declining, we are seeing losses for the consumer discretionary sector, energy as well, really speaks to the fears we are seeing, continuing to monitor that drop. the lockdown fears that are

resurfacing, speaking of china, that correlation we see between the csi and s&p 500 on a 52 week basis entering negative territory for the first time. the reason for that, we see that drop in u.s. stocks. the same time china has risen with this policy report. the question is, how long can we expect that to continue because the pboc could be looking to withdraw liquidity. the other factor is we are seeing covid outbreak. haidi: lots of those bearers headlines. beijing residents, it's one thing to enter proof of vaccination starting monday. this is the first time china has

deployed a vaccine mandate. is this the start of a shift when it comes to the covid zero strategy? >> if you asked me if that means an immediate shift to the covid zero policy, the trip to you -- wuhan last week, covid zero is going to save lives. doesn't mean china is going to abandon the covid zero policy, it's an important step.

if more cities adopt the policy, probably that would mark the beginning of a shift of policy. low vaccination rate among the elderly is one of the reasons why china is not choosing to live with the virus. shery: how is shanghai doing? we are seeing concerns of a renewed lockdown there. reporter: concerns of a new wave or a new round of lockdowns are definitely increasing here. after the city reported a sharp increase in new cases over the past two days, they just reported more than 50 cases for yesterday, more than a dozen, two dozen the day before yesterday. there was a new round of testing

, starting the day before yesterday. some financial institutions are telling employees to work from home. people are getting increasingly concerned about the virus. the government does not want to see a new citywide lockdown in the near future. that is why they are ripping up testing. investors are getting concerned. shery: looking forward to the market opens. let's get to the worst first word headlines. conditions have caused widespread flooding. the rescue came after several failed attempts.

india central bank is seeking an exchange as the rupee hit record lows. temporarily lifting any interest rates for banks. the rbis is easing rules for foreigners to invest in local currency governments and corporate debt. the philippines may grow at a slower pace this year with the administration facing a rather challenges. the finance strategy -- malaysia central bank has raised interest

rates for a second meeting to tame inflation. future moves will be gradual. malaysia increased the policy rate by 25 basis points to 2.25%. those are your first word headlines. haidi: 30 years after new zealand pioneered inflation targeting, it's cutting attract. let's get more from our chief asian correspondent. what are we watching from the rbn? reporter: a lot of people are watching new zealand's economy. new zealand was among the first developed economy to start withdrawing emergency policy last year.

we are seeing a big slump in business confidence, prices coming up quite sharply. the other interesting thing is they are expected to go 50 basis points. that will probably there is a feeling the policy cycle might pay for the rest of the world. start slowing down the rate hikes. others have followed. going back to the legacy, people

are keeping an eye on was going on. shery: keeping an eye on pakistan and sri lanka. what are we expecting? reporter: inflation continues to surge, they are going to raise interest rates. sri lanka is more complicated. they are expected to stay even though inflation is surging. they are trying to keep a lid on debt servicing costs. all of that might lend itself toward central bank raising interest rates, they have to take pressure. that is why they are expected to keep rates on hold.

shery: we will have an exclusive conversation with the sri lanka central bank governor later. coming up next, emerging markets are getting squeezed. we will get the outlook from deutsche bank head of em on how central banks will manage the situation. this is bloomberg. ♪

shery: as global assets are rocked, bloomberg intelligence says emerging markets could provide much-needed upside. always great to have you with us. you are saying 900 basis points overweight? that sounds like a lot. >> absolutely. the way we think about is global equities. europe does not provide the same kind of risk reward. in europe, it's underestimating inflation. in em, the latest valuations for

double-digit compounding. both china healing a little bit. you have a lot of issues. little bit behind. in india, it's a story of structural reforms. we expect to compounded over 20%. we see great momentum. the arguments based on our analysis, india is not overvalued.

the other conventional wisdom, based on the analysis we do not, it is one of the reese correlated -- least correlated markets. infrastructure, reopening in places like thailand. countries like vietnam. lots of good things are happening. these constitute 75% of emerging markets. haidi: what about the twin threat when it comes to the fed more aggressive, the global recession? reporter: it's going to be challenging for any risk assets. on a relative basis, emerging markets value the equity

spectrum. emerging markets benefit from higher rates and emerging markets are a little bit ahead of the curve. we heard about the indian central bank thinking about getting foreign deposits, lifting the curbs to the maximum rate allowed for foreign indians to put money back in india. some of the central banks are getting ahead of the curve and are managing quite proactively. it's a bit of a value asset, commodities holding on. in other segments were commodities are a headwind, they are in will positions. haidi: the latest when it comes to the assessment for emerging market opportunities. let's take a look at the fx side of things.

the dollar-one sitting off to tenths of 1%, not much change when it comes to the taiwan dollar. we are watching dollar china when we see these more bearish headlines. the capacity for the pboc to continue easing and doubling down of the covid zero strategy. the decoupling we see from u.s. and chinese stocks. watching not just the indonesian rupee but the indian rupee, given historically these have been two of the weaker currencies in the wake of fed tightening. we see emerging-market currencies tumbling as we see funds selling off the riskiest currencies, and a lot of them are not in asia, currencies like the colombian currency and hungarian currency, some of the top traits being dumped at the moment. let's bring in our next guest who says asia is priced for

longer. the global head of emerging markets at deutsche bank. great to have you with us. let me start the destruction when it comes to asian really yields. we see the inflation fears were. take a look at the chart on the bloomberg which shows asian emerging market and nations, being really squeezed as we see these concerns over recession continue to play out. you see those really yields plunging below zero. you say the fear's asian economies will be forced to continue tightening, even in the face of a global slowdown. guest: yes. that is the big risk. let's put it in and emerging-market context. the one good thing in this cycle has been they have been ahead of the fed in tightening.

started a lot earlier, i think the key thing is the entire cycle has been later, more delayed. then they got hit with the supply shock, commodity price shock. not necessarily [indiscernible] certainly one is policy rates being lower than they are in other parts of emerging markets.

they are doing so over the next three quarters in an environment where growth is slowing down in which the region is sensitive. haidi: the dominance of king dollar is not forgiving. where do you see resilience this time around within the emerging-market complex? guest: the problem is one form or the other. not just energy but much wider increases etc.. on the other hand, growth slowdowns, potentially recessions in developing economies, also on some risk sentiment. relatively few safe ports in

asia. whether it becomes more range bound, a lot of it depends -- what is not clear is how quickly it's rebounding, and what is the risk of lockdowns? shery: we are hearing concerns when it comes to china's debt level. they have to go completely to the opposite direction. talking about emerging-market investors putting so much hope on the stimulus to come from beijing, debt levels are incredible compared to the gdp. how much risk does this bring to the economy? guest: you can see asset classes

and china, a large number of incremental steps to boost growth, the market response has been guarded. whether china can afford the approach which raises the leverage again after not being able to go down over the last few years. i think china is limited in terms of the quantity of response. there are several points in the toolkit which can help. shery: what geopolitical developments are you watching?

guest: geopolitics matters. it impacts energy prices. china and the rest of the region. china having a big deal of political developments, to that extent the noise would be critical to watch. the relationship between the u.s. and china. something to be looking out for. shery: good to have you with us. we have plenty more to come. this is bloomberg. ♪

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check out angi.com today. angi... and done. haidi: quick check of the latest business flash headlines. a crypto broker has filed for chapter 11. the latest and the growing list of casualties. the firm cites volatility and collapse of the hedge fund. last month, they secured a $400 million credit line. sources tell us a company raised

billions of dollars after listing at the top of the range. we are told the firm sold shares. it is the city's largest share sale this year and ends a month long drought for offerings. sources tell us -- a 39% stake is worth about $1 billion on tuesdays closing price. shares have more than doubled this year, giving it a valuation of $2.6 billion. any revival would mark the third attempts. british airways is canceling another 10,300 flights through the peak summer travel season. adding to earlier cancellations, that means the airline canceled 13% of the schedule.

shery: take a look at movers when it comes to trading. samsung gaining a to point out, second-quarter earnings missing expectations, shares gaining after the net income beat estimates of ¥43 billion and we are seeing trading for the first time after the earnings call. that's it. our market coverage continues. the china open is next. this is bloomberg. ♪

david: this is my kitchen table and also my filing system. over much of the past three decades, i have been