haidi: >> after president biden's high-stakes trip to saudi arabia. higher at the asian open after we saw the s&p 500 rallying friday, following a whole week of use -- of losing ground for u.s. markets. a bit of sentiment rebound,

including traders paring back some of those aggressive fed rate hikes, banks led they gains with the index rallying the most since january of 2021. we saw the 10 year yield falling toward 2.9% and we have oil prices losing ground for a second consecutive week, given recession fears. we were following saudi arabia very closely. this chart showing how saudi arabia is spare capacity has been falling dramatically in recent years. this comes at a time when we saw that awkward fist bump with president biden and the saudi prince. we did not see any commitments for more oil output but we are following those development closely to see what is going to lead prices higher or lower. right now, it seems to be the recession narrative is what

markets are paying attention to this week. we will see earnings from goldman sachs, tesla, that will give us some indication about where the economy is headed. >> markets not so much focused on what we see in the fundamentals but more oil is key to bringing down inflation. we did get the pullback in gasoline prices over the last few weeks and things seem to be working, which is a positive. this tracks consumer expectation over the longer term. we can see the result here, expecting cry it expecting prices to rise 2.8% dan had been expected. the latest survey coming in at 51.1, up from the record low of 50 in the prime. it is a major boost that could

lead us into the trading week. the dollar trading at a fairly high range. keeping a close eye and where the yen is heading, we did get some comments from the japanese finance minister in a meeting with other central bankers and says he's watching fx markets closely. equity-wise, looking higher for sydney plus future, new zealand coming in on the upside. and we also have headlines from the imf. haidi: they are set to cut global growth and their outlook for global growth substantially at their next review. this as we see in incredible amount of anxiety over this idea of a u.s. and potentially global recession. take a look at the chart where we see the mention of recession hitting the highest levels we've seen since the onset of the pandemic. the international monetary fund

grappling with a shrinking list of options on how to counter the worsening recession risks. still an ongoing pandemic as well as a slowdown in the risks in china. shock aftershock aftershock according to the imf director for strategy, policy, and review. at the same time it comes as the g20 manages the central bank and they weren't even able to come to an agreement when it comes to the war in the ukraine -- the war in ukraine. even on the policy front, it looks like there are real risks to having a cohesive strategy to working the world out of this crisis. shery: how do you coordinate when you don't have a clear understanding of where we are at globally? this seems to be the worry

sending the dollar so high. we are talking about record numbers in it comes to the bloomberg dollar index. let this means is the bullish positioning on the u.s. dollar has surged to a seven-year high and is triggering more outflows from asia. we continue to watch the asian markets as investors take $70 billion out of those markets and this year alone, more than double the outflows in any 21. let's discuss what's happening -- in 2001. let's discuss what's happening with haslinda ahmed, we warning about the government risks and if they don't focus on supporting the cost of living. >> there is much more awareness the horizon has darkened over the last month. we do need to tackle seriously inflation meaning monetary

policy, but fiscal policy could unintentionally go the other way . it might be providing support to populations in an untargeted manner creates more pressure for prices to go up and then monetary policy should target even further action. >> is there complacency in our conversations with finance ministers? >> in two years, we've had to unthinkable the elements -- covid and then the war in europe. what is to guarantee there is no other shock for which we have to be prepared? you have to be called for more

alerts to the conflict environment. there is significant urgency for this year and the next. haidi: consensus the federal reserve will finish raising interest rates this year. for more, let's bring in a garth reynolds. really grappling with the global recession risks. what was the message that came out of the g20 and imf over the weekend -- not a positive message that came out over the weekend. >> disruptions to supply, which causes inflation to be very elevated. elevated enough, deterring

businesses and consumers from spending as much as they would on various items if the prices were more in a normal range. they have to spend more on some things, like fuel, they cannot spend as much on others. that in and of itself would act as a drag on growth overall, but you have the banks, understandably, we cannot necessarily fix the supply shocks, but we can fix demand which we set too high because of what we did during the pandemic and left it on for too long. not just raising rates but starting to remove quantitative easing impacts. all of that adds up to a slower growth profile and that's why some of the inflation expectations are coming down.

it coming down mostly because the global economy is set to slow. shery: so we are seeing not only more tightening but the hidden blows because of concerns about a potential recession, all sending the dollar higher and higher. but does this mean for asian markets? garfield: it makes for a tough outlook for asia because those dollar flows -- the dollars are rising because there are flows back into the dollars and those close have to come somewhere. that's quite a traditional move. the good news is, potentially, we are reaching perhaps peak inflation expectations if those play out.

that might mean we are close to the peak when it comes to the dollar. shery: let's talk about peak oil prices. u.s. president joe biden wrapping up his politically risky trip to saudi arabia without a commitment of easing gas prices at home. saudi arabia says the decision is for the broader open plus -- opec-plus to make. 0 it's about the kingdom's long-standing policy to make sure there is an adequate supply of crude oil on the market. follow the supply and demand situation carefully and determine the potential shortage that we work on increasing crude oil production with our opec partners and opec-plus partners. shery: let's get more on that.

what was president biden able to achieve during this trip? tony: the message today from administration officials who were speaking this morning on the sunday shows is gasoline prices at the pump have come down. this is of course a political message because biden is under so much pressure from inflation and prices at the pump are a big factor. the flipside is first they want prices to come down even more because they are still extremely elevated, historically's eking in the u.s. biden did not really -- he got the fist bump, as was mentioned earlier, turned out to be a sort of slightly awkward and controversial moment. but he did not get any commitment on oil production increases. that said, we heard today from a

member of the delegation that went on this middle east trip, the state department energy advisor. he said we are not just looking at saudi, we are looking at some of the smaller producers like the uae and kuwait to come through for us. haidi: this is obviously a high-stakes big gamble for the president. given we are months away from the midterms and he needed that political win, could it be framed as such? tony: that remains to be seen. it could turn out to be one if, in fact, these hints of some kind of action by opec or opec-plus turn out to be true and producers step up a little bit more. we know from saudi arabia they are producing at the top of their range and that is how that

comment comes in from the saudi foreign minister. it was a gamble, it was a big gamble, and it certainly needs a win. haidi: let's go over to vonnie quinn with the first word headlines. vonnie: new covid cases in china continue to climb with outbreaks in some region whitening. this situation remains severe in shanghai. the country reported 580 local cases, the highest since may. and a city wide with all non-essential businesses through july 22. almost all businesses, including casinos have been shut since july 11. japan has notched up a record number of covid cases. more than 110 thousand cases were reported saturday come up passing the previous highs in february.

severe illness has remained at relatively low levels. the prime minister told a news conference he was not planning a return to restrictions or restricting people's movements. the imf says -- with sri lanka will proceed once a new government is in place. the fund is awaiting the appointment of new officials, including a finance minister. the country is facing a power vacuum after the president's resignation following months of protests. canada's finance minister says the economy is strong avenue handle the inflation fight. that bank of canada is acting forcefully after its recent hike. >> inflation is certainly elevated and i would say is our

biggest concern right now. the bank of canada has been acting forcefully. i think it is entirely reasonable to hope for a soft landing for canada. vonnie: global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: the g20 finance chief meeting wraps up without a communique but watch out for some of the important takeaways. we will be walking you through a little later. haidi: the imf set to slash its global growth outlook. we get a deeper dive into what lies ahead for the global economy next. this is bloomberg. ♪

shery: several key rate decisions to this week. let's take a look at the week ahead. markets will find out if central banks from the eurozone to japan can lift the global push for aggressive monetary tightening. most economists say they will have their first rate hike in more than a decade limited to a quarter-point. that comes after bank of japan and ink of indonesia are expected to keep things unchanged. in china, inc.'s are expected to hold lending rates as the country deals with a slower than expected economy from covid lockdown. goldman sachs and bank of america due to report before the opening bell on monday. haidi: tech earnings also in focus. we will be watching for guidance out of netflix as well as commentary on its add plans. reports amid the fallout of elon musk's abandoned takeover bid.

twitter says it will not host an earnings call due to the legal matters surrounding the deal. that's your week ahead. shery: the imf says it will cut its economic outlook in its next update. the finance chiefs grapple with a list of shrinking options. let's bring in a senior economist at moody's analytics. always good to have you with us. we have seen financial conditioning -- conditions worsening. we see central banks moving. what is your assessment of where the global economy is right now? it does make sense to be downgrading expectations at this point. >> i think it makes perfect sense to be downgrading expectations at this point. due to the headwinds facing the

economy -- elevated inflation, central banks moving very aggressively to try and tame inflation. we are looking particularly at asia and it has slowed -- china has slowed quite substantially. with that ongoing zero covid policy they are sticking with, it means the likelihood of a strong rebound in china's growth rate is low as well. the culmination of all those factors means businesses and consumers are incredibly anxious. if we have one more exogenous shock that confuses businesses even more, it could tip the global economy down a path in recession fears could be realized. shery: given the tightening moves from these other economies

come how difficult is it for the ecb or boj to hold the line when their currencies have record lows as well? katrina: that's a good question. the ecb has treaded lightly when it comes to policy normalization. i think they will have to move more aggressively, but i don't think that's necessarily case for the bank of japan. we are expecting them to keep their policy steady and they are going to look through the weakness in the end to maintain that ultra-accommodative policy. when it comes to the bank of japan, it doesn't make sense for policymakers to be normalizing policy in any given kind of sense. the weakness at home -- haidi: our inflationary risks coming to the forefront when it

comes to it being a possibility and will we see some central banks or perhaps the fed having to hike during a recession? katrina: i'm less concerned about stagflation. because central banks are acting so aggressively to tame inflation that we are seeing inflation expectations come down in the u.s. and there is the ongoing credibility that central banks will be able to deliver on the inflation targets in the long-term. the central bank credibly hasn't come into question yet. the concern around stagflation isn't the biggest concern when we are looking at risks to the global economy. we are looking at how the global economy is going to be able to navigate through the challenges both within our region and abroad as well. haidi: there are sector specific

risks now in china particularly when it comes to the crisis we currently see with mortgages in the property sector. is that a risk in terms of systemic flow given that it's operating in the backdrop of a slowdown as a result of covid zero? katrina: definitely. what we have seen in china is policymakers have moved substantially on the fiscal and monetary front and we are seeing demand is quite constrained in china. with households reluctant to take up cheaper loans even know they are available, because of this volatile covid environment as well as concerns about the global economy as well. even though policymakers are continuing with ongoing stimulus, there's not a strong

demand environment yet. that means policymakers are going to continue to have to provide ongoing stimulus. there is concern about the zero covid policy, if we see another extended lockdown, another shanghai-style lockdown, that means all the monetary and fiscal stimulus policies that have been introduced don't have much potency because we've got large chunks of households and businesses being forced to stay home so they can't continue to operate in eight usual capacity, which is a concern. -- in a usual capacity, which is a concern. haidi: you can get a roundup of the stories you need to know in today's edition of daybreak. this is bloomberg. ♪

haidi: taking a look at the bay head for australia and new zealand -- new zealand set to really second-quarter cpi, expected to push above 7%. australia is reintroducing payments for workers forced to isolate after contracting covid-19. plus rare earth among the big runners reporting today. runners reporting today. this is bloomb -hi, i'm smokey bear and i made an assistant to help you out. because only you can prevent wildfires. -hey assistant smokey bear, call me papa bear because i'm "grrr-illing" up dinner. haha, do you get it?

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shery: the imf plans to cut his

sex global economic outlook substantially as finance chiefs grapple with a shrinking list of options. the managing director spoke to bloomberg in an exclusive interview about the challenges policymakers face. >> there's much more awareness that the horizon has darkened over the last months. we do need to tackle seriously inflation, meaning monetary policy is tightening. but fiscal policy could unintentionally go the other way. it might be that providing support to populations in an untargeted manner creates more pressure for prices to go up and then the military -- the

monetary policy should target even further action. >> is there complacency in our conversations with finance ministers to talk about a slowdown but from a position of strength? what could possibly go wrong? >> it's important to recognize we can overcome the recession successfully. in that sense, try achieving a good result is understandable, but since the beginning of the year, we have downgraded our growth projections twice and in two weeks, we will downgrade them one more time. i would remind everybody willing to listen that in two years, we

had to unthinkable events -- covid and then the war in europe. what is to guarantee there is no other shock for which we have to be prepared? you are right to call for more alerts to the complex environment we are in and significant uncertainty for this year and the next. >> policymakers here have blamed russia solely for the position we are in. are we overlooking other factors? >> we have to be objectively analyzing what are the reasons inflation has shut up so much. there are three reasons.

first, we all thought covid is over. but come january and omicron, and that was a massive disruption in the supply chain. second, by providing a lot of support and rightly so to households and businesses, savings went up and demand shifted from services to goods. but the production and delivery of those goods has fallen behind. that also put pressure on prices. third, commodity prices jumping up. for food prices, there is a reason to be cautious and careful and it is weather related disruptions. >> you talk about the yawning divide between emerging and developed economies. is it getting better or getting

worse? >> it has not gotten better, for sure. but when you look at the last two years, developing emerging markets has been reversed and we are not seeing an end of this reversal yet. the most concerning issue is the fact tightening of financial conditions combined with dollar appreciation is making conditions in emerging markets for that service much more difficult. 30% of emerging markets are in distress. >> dollar liquidity not quite the problem. could we see a problem in pockets of the world? >> what we know is of the

aggregate, there's plenty of dollar liquidity. when it comes to dollar liquidity for countries where the currency has depreciated dramatically and continues to fall, it's a very different issue. it's availability -- there are pockets this has become quite a difficult issue to handle. haidi: division over russia's war in ukraine meant that g20 finance chiefs meeting left without the usual communique. joining us now is the director of the institute of global finance. great to have you with us. the fact there was not a communicate and it was to manage

expectations going into the weekend meeting, what does it say about setting expect haitians and the effectiveness of multi-nationalism? >> i think we know we need to do far more than when it comes to multilateralism. we wouldn't like to see leaders of the g20 come together and there's no communique. there are some issues as global public goods. they are borderless. they don't recognize culture race. food security, even global peace and security. we need to go beyond the current mutations we are facing and see how we can intensify efforts to put more inclusive and effective market naturalism.

i remember when i read an article from 1947 about human rights values. she said we can legislate the value of human rights but there are many good people and nations that rise to abide by these values. we need to do more to generate light more inclusive models. haidi: those values, some of the leaders had attended over the weekend, that is the issue -- russia has a seat at the table despite the ongoing war in ukraine. can that effective dialogue continue? are we setting up for a bifurcation given that we know putin and russia are making inroads in terms of reaching out

to some of these other states to choose a side? >> yes and it goes to the heart of are we living in a world which is what we call multiplayer larry -- multi-polarity. if this system is an effective one, all we need to look at the bigger picture of these challenges and look at how we can bring this concept of multilateralism not only among world leaders, it's their responsibility of people, citizens and others where they can influence the minds of people living in different parts of the world. we should go simply beyond the leaders. shery: how much understanding

was there about the southern default risk? there's a shot -- multi--- we've seen distressed debt coming from sri lanka. we've talked about pakistan, we've talked about egypt. is this a threat to the global economy? >> absolutely. we've been discussing we cannot necessarily get agreement at a g20 level for some collective actions, one of the issues being food security as part of this process. the question is if we don't act collectively, there is general just -- a sovereign risk and one of the consequences would be more economic refugees at the doors of many developed countries. virtually by the end of the year or beyond.

that's where we need to be more proactive to see where these develop -- developing countries can manage the price of food and cost of imports so we do not create consequences. one would be more economic refugees if you like. shery: you talk about food security. we've seen government trying to set up another fund like what we saw during the pandemic. did we get something concrete out of this g20 that could be used in the next few years? >> the idea is absolutely great. the next step is are we going to see in effect all member countries contributing to this fund or its going to be used

unfortunately, national politics. we need to wait and see whether this fund will get up and running. if people are hungry right now, they are under pressure. we need to have short and medium-term plans. haidi: great to have you with us, as always. let's get you the first word news with vonnie quinn. vonnie: a u.s. energy envoy says he's confident gulf razors will increase output after president biden's visit to that area. senior advisor for energy security told cbs he is confident we will see more steps in the coming week. he cited gulf oil producers kuwait and united arab emirates. the former pakistani premise or is giving a key vote in punjab.

his party's leading and 16 of 20 seats, with a possible defeat for the country's ruling aberrant. it would give the former leader a new dimension to pressure government to hold early elections wait -- which must be held by october, 2023. italy sports italia and the league backing mario draghi has broken. after he announced his resignation last week, we are told italy's put go groups are preparing for a possible snap election. he's a set to address parliament on wednesday. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: coming up next, we hear from the saudi for an administer . details just ahead. -- foreign minister. de

haidi: we are counting down to new zealand's inflation taper. the argument is inflation pressures have been described as pervasive. this height -- this rate hike -- pressure on the kiwi dollar was

expected and we saw the kiwi dollar falling 1% against the u.s. dollar last week. haidi: it is that relentlessness when it comes to selling the kiwi dollar despite the fact it's been at the forefront of all this hiking. we are awaiting on inflation numbers and they are not expected to hit that 7% threshold, given we have been pushing 6.9%. 7.3% is the cpi year on year, smashing expectations of 7.1% and a fast clip of alteration. quarter on quarter, that's a gain of 1.7% and also beating expectations of 1.5%. just a little lower than the previous quarter on order reading. uncertainty remains high when it comes to global commodity prices. a lot of these geopolitical

elements as well. trading partner inflation has continued to search for new zealand and we see domestic inflation risk to the upside given high inflation expectations, unemployment is at a record low with a labor shortage as well. we are starting to see high borrowing costs hurting consumer and business confidence and we see a decline in housing prices as well. 7.3 percent of expectations in terms of how fast inflation is growing in new zealand. the rbn is expected to keep hiking as inflation is at play here. shery: it seems as if we keep getting those new records. whether new zealand or korea, the fastest in over 40 years. and a lot to do with commodity prices. saudi arabia interesting any decision to pump more oil must

be made by opec and its partners and not unilaterally the u.s.. it is confident gulf nations will open the tap but as president biden wreps up his visit to the kingdom, the industry of foreign affairs was playing down the idea of any agreement. >> it is not about an agreement. it is about the kingdoms long-standing policy to work to ensure there is adequate supply of crude oil on the market. we follow the supply-demand situation very carefully and determine a potential shortage, we work on increasing crude oil production with our opec partners and opec-plus partners. we do this on a consistent basis. if you look at the past nine months, we have been increasing production substantially. if you look at a couple of months ago, we accelerated the

production increases by several months and we will continue to work along those lines. >> inflation is a concern across all economies. gasoline higher in western europe and america, etc. should the kingdom have stepped in earlier when russia invaded ukraine and prices were skyrocketing above $100 a barrel? >> i don't know that this would have made much of a difference. it takes time from the time you extract crude oil and the time it gets to market, several weeks. because of the geopolitical risk, there was a lot of concern and fear that drove the price up , irrespective of the supply-demand picture. so the price accelerated, it

increase $30, $40 in a week to 10 days. then we saw a drop of $30 in the space of one week when there wasn't a substantial increase, so it was driven by emotion, fear, and speculation, not because of geopolitics. when you look at the climate of the market, we try to meet the requirements of the market so there's no shortage in the actual market. what we cannot deal with his emotions in the fear and the speculation that operate outside of the traditional supply and demand. we have taken the position that we work toward the energy markets and seek to ensure the market is adequately supplied and we reassess this edition on a continuous basis and make a

decision on a continuous basis and will continue to do that. shery: they saudi minister for foreign affairs. the price of oil very much impacted by what is happening in china. the demand outlook there, beijing saying its economy is facing persistent downward pressure and is pledging more support. annabelle has the morning call. what are they expecting? annabelle: we did get those lines from the pboc governor, speaking with his central bank peers at other finance chiefs over the weekend. essentially saying domestic inflation is low in china but we have these risks from covid zero and other external factors so we could see more concern for the chinese economy. goldman sachs still negative on the outlook. we already had the hike to the four-year gdp. well below the official estimate. we did get a note from goldman sachs providing more detail into

this. the risk we had from covid zero, specifically there is no timeline where we have an exit for the sorts of strategies. another they are honing in on his property risk. we had the report last week that homebuyers are refusing to pay their mortgages. so this tracks the decline we are starting to see in new home prices in china, which is at other factor. 48 of 70 cities in the last month saw a drop in prices. compare that to where we were in january. 10 cities, five a couple of months later, so headwinds facing the chinese property sector. goldman sachs saying beijing needs to rebuild confidence in this sector. they have already seen investors turning away from it and this idea that is not a sure bet.

haidi: what about chinese equities and what does that tell us about the outlook? annabelle: we've gone positive, negative, positive and we are now negative again. the reason is a crisis of xi jinping's own making. it's his own policies forcing investors to turn away. high yield, huge tech companies on the flipside, other issues like unpredictable regulation, and china's own cozy relationship with china. an investment firm turning away from the sector recently shut their hong kong office based on little demand here. in this sort of environment, we are starting to see a pullback and you can see the run-up in foreign investors peeling off. shery: we will be looking forward to the market open in two hours. plenty more ahead.

this is bloomberg. ♪

shery: here's a quick check of the latest headlines session amc operations for 3.3 billion u.s. dollars as it seeks to add customer growth. the acquisition includes $7.5

billion in commercial loans. the final dividend is expected to be 72 aussies since per share subject to conditions. qantas is anticipating more challenges as it navigates staffed sickness and a tight labor market. passengers angered by delays and cancellations have lashed out at the airlines and ceo. haidi: coming up, the outlook for markets at multi-decade highs. we discussed the implication with ryan belanger. the push to go green by one of the world's leading cosmetic giants -- lori l japan's vice president of research gives us the lowdown. daybreak asia is next. this is bloomberg. ♪

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