♪ >> you are watching daybreak live from new york, sending, and hong kong. >> we are counting down to asia's major market opens. >> investors await corporate earnings and geopolitical risk in europe. shery: we are waiting for major central bank decisions as traders are jittery ahead of an expected ecb right height and the boj expected to stick with its ultra easy policy. tesla sticks by its growth target as earnings beat expectations. the company says it cashed in most of its bitcoin. annabelle: we are staring down the open of japan, australia now. we have a lot of risk on the horizon. there is a debate of whether we have seen a peak of the selloff

in equities. futures wide, lower opens or japan and australia. we have war in ukraine, recession risk in europe, the slowdown at u.s. and china and company earnings to consider. the yen has seen a bit of dollar strength coming in. it's flat now ahead of the boj decision. no changes seen in the policy. ultralow rates expected to continue. let's head to what we had the last few minutes. microsoft planning job cuts. we had some earlier this month. now they will be removing job listings for the cloud and a security businesses. we are seeing that stock drop now. it adds to a broader conversation around a job losses or hiring freezes at tech companies. that applies across the broader macroeconomic environment. apple may be cutting. tesla also cut some workers. we could see further reductions

over the next few months. still, that stock a little higher following earnings. shery: it is not surprising we are seeing u.s. futures under pressure after a very volatile session in new york. the s&p 500, consumer discretionary leading the game. annabelle mentioned the hiring freeze in google. that hit the tech sector. the 10 year yield above 3%. but the two-year continues to be inverted for a third consecutive week. we see pressure in oil prices. although, the new york session did pare back some decline given the risk on optimism. but that's not really being mean -- maintained now. haidi: let's get to our top stories. details on tesla reporting second-quarter earnings that beat wall street estimates and reflected on the company's

progress in getting production back on track amid supply-chain hurdles. separately, watching central banks today. the ecb looking at a possible .5 point hike. the boj as well. -- we are watching the boj as well. it's bring in our global economic and policy editor and our in-line strategist. let's start with tesla. gabrielle, what was the guidance for the second half? gabrielle: tesla, elon musk said he thinks that is potential for tesla to have record production in the second half of the year. when it comes to their volume sphere, he said he expects them to stay on track to increase output 50%. there's a lot of hedging in that because there are supply-chain hurdles, shortages, labor shortages. but, you know, i think they will be able to make know, i think tl

be able to make it. that is what they are saying. haidi: what what about the bitcn they sold off? gabrielle: tesla sold 75% of their bitcoin holdings in the second quarter. they explained this was because when the shanghai lockdown started he was not sure how long those would last and he wanted to maximize tesla's cash port for security. he said, don't read too much into it. tesla could increase bitcoin holdings again in the future. nevertheless, people who hang on his every word did not appreciate that tesla did that. haidi: the ecb, do they go 50 basis points, do they move more gradually? there is chaos with italy at the moment as well. kathleen: there certainly is. this is a complicated decision,

more complicated if they had not waited more than 10 years to do their first rate hike. 8.6% inflation on the headline. look across europe. inflation rates are even higher in italy and spain the countries whose bond markets will be hit so hard as the ecb makes it clear they will give a plan for fragmentation. how to avoid having critical countries get their bond market hit hard. a 50 basis point rate hike will probably make them hit harder. but christine lagarde opened the door to a 55 rate hike june 28. the crisis in the italian government, it looks like mario draghi may have to step down. we saw italian stocks, italian bonds hit hard today. we don't know much about the fragmentation tools yet. there is some concern that there is so much dissension in the ecb now over what they should do.

should you do this as an unlimited gift to anyone deal? should it be as long as you maintain your promise to be fiscally responsible, we will bailout your bond market when he gets so hard? apparently is also a point of contention among policymakers and themselves. the 25 basis point hike, wouldn't that be better if you are worried about fragmentation that a 50 basis point hike that could make it even worse? these are the kinds of decisions , hands, and signals we are waiting to see when the ecb has its meeting tomorrow. shery: we have meetings by the boj and bank of indonesia as well. what are we expecting? kriti: even -- kathleen: even though the yen has gone to a 24 low against the dollar and the bank of japan in the past three months has had to buy bonds repeatedly to now 50% of the jgb market, if inflation is rising, look at the core food, the cpi

minus their core. governor kuroda keeps saying i need to see inflation driven by things like wages going up, not by commodity prices. that kind of inflation hurts consumers and businesses. it's not enough and we will keep policy on hold. that's essentially what he said of the press conference. we will wait until what he says about the yen and when they might move. the bank of indonesia, 14 out of 36 economists expected them to raise their rates by 25 basis points even though the broader consensus is looking for them to keep policy on hold. their inflation rate is rising. they have issues. the head of the bank of indonesia has pushed back when he spoke to haslinda ahmed at the g20 meeting recently. he is also a wait and see.

if he turns out to be like kuroda, that's what people expect. but maybe he will make a right hike when people aren't ready for it. haidi: it does not sound like the yen will get the recover early -- recovery catalyst today. mark: probably not. when the dust settles people will go back to looking at huge interest rate differentials between the u.s. and japan and the potential for the fed to continue to push rates higher. and in the path in europe will certainly be on a higher right path there and leave japan behind. they can do last-minute spending, negative rights. that will obviously be a big headwind for the yen. at some stage, people will question the overall strength of the u.s. dollar, and, people will be looking for a turnaround against most currencies. the narrative is still very much that the dollar is the only game

in town. because of that, the yen will be one of the easy victims. it's a currency people like to short against the dollar. and against a whole range of others. that will continue to play out for a while. there is no incentive for traders to certain -- suddenly get bullish on the yen. shery: we saw good reaction coming from earnings from tesla. also, from nestle as well. how are we expected this to weigh into the broader market sentiment? mark: i think what you are seeing mostly, look at the s&p 500. that's mostly a short covering rally position going into the last couple weeks. it was extremely short. there are lots of negative stories like the bank of america survey as well telling that it would have never been so bearish on the market for more than a decade. it was true in the cftc positioning as well.

with the fomc ahead, of course, people want to take some risk off the table. we had a story today about microsoft cutting some open positions and reducing hiring. they don't see the economy in great shape. these things will weigh on the market in weeks ahead. microsoft is not the first company giving a pretty cautious view on where the u.s. economy is going. that's far more important over the next couple months. what happens with the fed still rising rates as well. we will go into a difficult time and there will be no help from europe. europe has the nord stream issue with the gas coming back onstream or not. that will be a big headwind for europe. the global economy will not have an easy time. so, the fact that stocks are at a bit of a rally in the u.s. is probably temporary. we talked yesterday about will the s&p 500 see 3000, 500 or 4500? it's still mourned -- more likely to see the downside that

the upside. haidi: mark cranfield, gabrielle coppola, and kathleen hays. you can get a market rundown in one click. there is commentary and analysis from bloomberg expert editors. find out what is affecting your investment now. let's get to vonnie quinn with the first word headlines. >> president biden expects to talk to president xi jinping in the next 10 days. he is expected to announce his decision soon on whether to end a trump era tariffs on chinese imports. it's not a good time for nancy pelosi to visit taiwan. the esp reported plus he would lead a delegation to taipei next month. italy's government is poised to collapse after three keep parties. or it for prime minister mario draghi.

economic warning signs start to flash. the former ecb chief is expected to resign thursday. if the president accepts his resignation, emergency elections could be called for early october. the race to succeed boris johnson us down to two contenders. conservative party members will choose between liz truss and rishi sunak. liz truss remains publicly loyal to boris johnson's but rishi sunak's decision to have -- to resign was a key in his eventual downfall. sri lankan lawmakers elected former prime minister ranil wickremesinghe as president. he remains deeply unpopular among protesters that have called for his resignation and set fire to ms. residence. he was named acting president last week and imposed a state of emergency across the country.

i am vonnie quinn. this is bloomberg. haidi: ahead, digging into tesla earnings speaking to morningstar's sass alstom -- assess austin. how much more is there to the dollar rally and the likely impact of today's doj meeting -- boj meeting. this is bloomberg.

♪ shery: a look at the bloomberg dollar index holding steady after gaining for the first time in four days. treasury yields, the 10 year yield above the 3% level. on the other, the euro tumbling after italy's government is on the brink of collapse with prime minister mario draghi likely to resign soon. holding at the 102 level. haidi: haidi: let's get more when it comes to the effects of dollar strength said to continue. joining us now is todd elmer of fx -- intouch capital markets.

significant weakness in the u.s. dollar complicates inflation. how much momentum do you see driving the greenback? todd: i think there is a lot of momentum left for the dollar. look at the macro factors. a lot of those remain. we are seeing a global slowdown. we are seeing other economies that are more highly leveraged. development in europe with the war in ukraine. of course, the fed is continuing to be among the vanguard leading to move towards higher rates. i think all those factors combined to create quite a strong environment for the dollar and critically we are not getting indication yet that any market positions are stretched. i think if anything, the move to buy the dollar has lagged behind what we might anticipate. there is a significant ammunition for buying, particularly against the euro

and higher leverage to the global slowdown. haidi: in terms of dollar yen, the policy to vergence is clear -- the policy divergence is clear-cut. with the euro is there anything the ecb could do in terms of moving more aggressively than what is priced in to stem the weakness? todd: i think we have seen some expectation that we may get a 50 basis point hike tomorrow. but you look at the ecb decision we will receive in its totality. that is to say, the market will also respond to the fragmentation, the anti-fragmentation efforts, particularly, given the political turmoil we are seeing in italy. when we put up all three of those factors together, i think the risk is there may be a degree of disappointment with the ecb decision.

haidi: are we going to see the currencies of countries and central banks that are lagging a bit in the tightening cycle being punished, as we have so far, with the japanese yen. where would that put the chinese yuan given that they are moving in the opposite direction but we have seen resilience in that currency? todd: i think that when we look at china, it is clear that the failure to move away from its very restrictive covid policy is impacting a toll on the economy. combine that with the u.s. dollar. i think that points to a slightly higher level for dollar cnh data trading around the view. investors may focus on other currencies while we are seeing sharper movement more volatility. haidi: you mentioned commodities currencies earlier. you have talked about a

potential slowdown globally being transmitted through the commodities channel and that having an impact on those currencies. but, right now, the consensus seems to be that although we are seeing prices under pressure, the supply issues remain. but we might see commodities continue to gain in years to come. is that something you think about? todd: certainly supply chain constraints remain in place across many commodities markets edit takes a great deal of time for there to be easing. when i look at the marginal information we are likely to receive, i think that when we look at the marginal -- major economies on a sugar high from post-covid travel starting to wear off, swelling of rate sensitive factors like the housing sector. i think that probably means we will see a duper -- deeper slowdown as we move into autumn.

likely, we continue to drag from low energy supply in europe as well as chinese covid policy. haidi: of course impacting the aussie dollar as well, ultimately with china's economy. that's interesting, given that the terms of trade, the commodities, the stories are actually pretty strong. we still see a risk off impact on the aussie and the kiwi to some extent. todd: you hit the nail on the head. there are crosscurrents and it is certainly a difficult situation for policymakers in current -- countries such as australia who do not want to see their currencies weaker. that does risk higher inflation. against that, we have to take into account that a lot of these global macro forces have tended to dominate over some of the domestic development. i think that effect will continue endpoint towards broader dollar strength. haidi: that was todd elmer from

intouch capital markets. great to have you. we appreciate your time. two into bloomberg radio to get in-depth analysis from the daybreak team broadcasting live from our studio in hong kong. listen inside the app you'd that's bloomberg radio or bloombergradio.com. there is a lot more ahead on daybreak: asia. this is bloomberg.

♪ shery: this is daybreak: asia counting down to the start of trading in tokyo and seoul. in japan, the boj is expected to keep monetary stimulus unchanged. this new economic projection is likely to support the central banks stance of pursuing stable inflation through ultralow rates. the country's trade imbalance in june do later this hour

expecting a deficit for another month. sinogi's experimental covid treatment failed to win the backing of health experts in japan that said there was not enough data to show the medicines efficacy. in south korea we are getting numbers for the first 20 days of the month. exports came 4.7% in the first 10 days of the month. the finance ministry is expected to announce plans for this year when it comes to tax revisions. come deb -- hyundai is among the countries reporting second-quarter earnings later today. haidi: let's get a check on the latest business flash headlines. visa is in talks to invest in airwallex seeking to raise $100 million to $150 million in

extension two its latest funding rounds. discussions are ongoing. no agreement has been reached yet. airwallex's previous fundraising rounds valued the startup at $5.5 billion. bytedance is trading at valuations well below $300 billion in the latest round of worsening sentiment around the chinese tech giant. the number is down at least 25% from last year with its ipo now on us. investors are buying shares of the tiktok parent at valuations as low as $275 billion. shipments surged in china last month leading a rebound of the smartphone market. china's mobile phone shipments jumped 9.2 percent, led by overseas vendors like apple and samsung. domestic buyers saw a decline in shipments. apple will report earnings later in july.

alcoa earnings beat expectations highlighting how the aluminum producer is weathering a recent downturn in sentiment. the firm announced an additional $500 million euros in buybacks. pending its stocks closing after hours. alcoa said adjusted earnings due to falling prices and rising production cost. let's get a look at some as express trading. a big day when it comes to in particular trading in europe as well as the japanese yen. the aussie dollar is slipping a little. the kiwi dollar is just over 62 since -- 62 u.s. cents. will the ecb move by 15

and will: we are 30 minutes away from the trading start for tokyo, seoul and sydney. taking a look at what leverage fronts have been doing. bank of japan decision day. we are seeing short or leverage funds coming in moving into the decision. doing a fairly neutral decision does talk to happen on boj. you don't see a big swing in stocks unless we get some sort of talk on the etf purchasing policy. the securities do see no negative impacts to equities, ahead of this decision or after the decision unless boj sticks with the current policy. that yield differential has been a really big supportive factor into stocks as well, because we are seeing the yen weakness really providing a buffer for courtney -- corporate earnings. ecb decision, this is a really high-stakes decision coming in today. a lot of what the ecb can do

factors into recession risks as well. that window of caught sheet -- catching up with that is closing fast that we are seeing recession risks rising. 45% chance of recession in the next 12 months. that is a move up from the 30% level we had at just a week ago. a lot of this really depending on russian and what it does with its gas supply. shery: signaling that europe will start getting gas again through a key pipeline. however, he also warned that unless they sanction parts that were resolved, it will be tightly curved. for more, let's bring in bloomberg's mike. so many things to factor in with this price of gas right now. >> certainly, there's one thing about the supply, it so uncertain. the unique thing about natural gas, and europe it's about the same price at the end of q3 last year, the end of september. that's quite the statement. we pricing a lot of this issue

last year when it went up to hundred percent. you look at gas on a mobile basis, u.s. is up more this year , partly because the exports coming from the u.s. going over to europe. i think what's happening now, sure that there is not much we can do about supply coming out of russia, but we don't expect that to be coming back. like we mentioned earlier, it's much more important, specifically in energy, natural gas in the global transport, pretty significant recession that seems inevitable in europe. haidi: the fact that this is happening right now, is that worrying, and what is that say about the months to come? grexit does, it's the building supply, but in our models, predicting this, you don't expect volatility and heating events like we have now, high temperature of friends that something is wrong. we are getting more and more volatility on a global basis. and it will be in high

temperature events, drawing the demand in the summer. but it's really the winter that matters and natural gas. and these are kind of blips in the trend. but like i point out, u.s. natural gas has priced and most of this, now it's the demand we are worried about. we saw that with the cut of 15% of supply. i remember that in the 1970's when he was the president of the u.s. that's going to happen. and that happen just because of the supply and demand love. now the supplies the difference in his -- is the definition. the u.s. natural gas curve is priced in the five handle one year from now versus an eighth in the front. and i expect that friend to be right and it will kick in and europe. shery: tell us about u.s. energy exports, how is the price affecting that? rex we have the cutback of supply issue, but the bottom line is, it's very much limited, may be up to 15 and total supply, 15%, that's accelerated

because of technology and forming the high price. because of lng, technology can only export so much, which will keep u.s. prices limited in its helping europe. then you look at the macro, the macro is so significant and switching away from fossil fuels and towards renewables. that is the key thing i think we will be talking about when you're from now and getting over this. accelerating the process of getting away from natural gas. shery: mike there. let's turn to vonnie quinn with first word headlines. annabelle: -- vonnie: president biden called climate change an existential threat. revisions include expanding wind power in allocating emergency funding for infrastructure. biden held back after carrying a formal climate emergency and it would have unlocked broad new powers by restricting fossil fuels. president biden: let me be

clear, climate change is an emergency and in the coming weeks i will use the power i have as president to turn these words into formal official government actions through executive orders and regulatory powers that are president processes -- possesses. vonnie: bloomberg has learned the first war crime cases against russians could go before the international criminal court and the hake this year. a multinational investigative team has been collecting evidence. sources say the international -- is in talks with ukraine to deliver one russian prisoner of war to the. hong kong will no longer force people with covid-19 subvariants isolate at government run facilities. officials concluded the variant is more transmissible, but not more dangerous. as a latest policy changed by the government, which travel quarantine reductions also being considered. covid patient still need to meet certain criteria to recover at home. macau will reopen casinos from saturday if iris conditions allow as they have their worst

ever covid-19 outbreak. the plan to reopen the gaming sector after a two-week shutdown is part of a broader resumption of commercial activities. borrowers and sentiments will remain shut and they will still face headwinds from the lack of quarantine for travel. health -- house speaker nancy pelosi is throwing her support behind a bill that provide subsidies for the semiconductor industry. the approval signaled the likely end to a year-long deadlock between the house and senate between a package for boosting competition against china. it would follow $52 billion to chipmakers. pelosi is planning this as soon as next week. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: microsoft has become the latest tech company to hit the brakes on hiring and joins apple, google and others bracing for a recession. in's su keenan joins us with the latest. what do we know?

su: the stock drop down after hours, microsoft getting rid of most of its open role of businesses with the cloud business and its security software unit. freezes will continue for the foreseeable future, microsoft says, although it declined to, -- declined to comment on exactly which divisions and businesses within its firms are being impacted. microsoft also honoring job roles i have already been made open and will make some acceptance for critical roles using the stock down a percent after hours. it was up a percent in the regular session. this is part of a bigger move, again, expanding the hiring slowdown that slowed back in may, which mostly affected its windows, office and teams groups. we are seeing this throughout the tech industry now, which has been up for years on staff, now appears to be bracing for a recession. goals parent company outfit that

has been decelerating its recruiting efforts. amazon said in april it was overstaffed. lift said it was bringing in hiring, resulting in a big stock drop at that time. and apple has slow hiring and spending and some divisions next year. you are seeing fort stock also down after hours. fortis preparing to cut as many as 8000 jobs in the coming weeks. in this as the automaker tries to boost profits to fund its push into the electric vehicle market. that's according to those close to the matter. it would mark a significant step in the ceos efforts to cut 3 billion costs by 2026. changing times. back to you. haidi: indeed, su keenan with the latest. coming up next, we get more and tesla, and outlook on the eb market as they beat earning expectations amid supply-chain hurdles. ramping up output and discussing those prospects and steps with goldstein of morningstar. this is bloomberg. ♪

haidi: checking the fallout of the global supply chain crunch and these are our top stories today. some of australia's biggest employers are relaxing work rules as hospitalizations rise. media reporting that westpac are among those encouraging staff to work from home.

this comes after the nation's chief medical officer urged people to wear masks and stay home if possible. getting chipmaking machines to customers faster by skipping some final quality test, that means the company can't recognize those sales until customers formally accept those shipments. the delays looking at revenue has forced them to have their growth guidance. the ceo says demand is significantly higher than what they can make, but supply chains will continue to be an issue for the rest of the year. california's third busiest point has shot some of its gates and marine terminals for a third day on wednesday as a trucker protest has blocked access. the trucking industry relies on contractors who up until now, had the flexibility to operate on their own terms. they are fighting a law that requires a three-part -- for independent workers. >> well it's rising fast on the u.s. west coast, we see shipping cost moving back towards

pre-pandemic levels. the los angeles benchmark for 40 foot container rates dropped 5.7% in the weekend of july 20. down 21% from the same time last year. port congestion in southern california had eased with the backup falling to 24 ships from january speak of 109. and bloomberg terminal users can read more about those stories and our news with letters on and i trade nl. let's take a look at how tesla's trading after hours in addition to beating expectations, as well as giving positive forward guidance when it comes output. elon musk has set the eb manufacture had supply-chain health, but he sees commodity prices trending lower and also just expressed broad optimism a company can achieve that record volume for the rest of the year. we are seeing tesla still trading higher by 1.5%. shery: for more on the earnings,

let's bring in the energy and resource equity strategist of morningstar who says no news is good news, or at least no surprises. your reaction to your -- to the earnings today. >> it was about what i expected for the cadence of the year. obviously, sequentially down versus the first quarter due to the lockdown in the ramp up the -- ramp up of the two new factories. putting it into perspective, longer-term was higher profits and higher profit margins year-over-year versus the second quarter of last year. all in all, a few surprises, no announcements of new vehicle delays. we are still ramping up. all in all, just another quarter where tesla will continue to execute, and i expect things to improve throughout the rest of the year. shery: what's the price target when it comes to tesla, and did you find confidence in what they said in the production numbers?

>> my estimate is 750, so right around where the stock is trading right now. when they released production earlier in july, i saw no reason to change my fair value estimate . right now, i'm comfortable with 750. haidi: which markets in particular would you be watching for in terms of that break down? how significant is china right now given all of the macro headwinds? >> i think what's important for china is any potential further factory shutdowns for tesla. tesla does export quite a bit out of china of what they produce there. even if the chinese auto market were to fall across the board, that wouldn't necessarily be a sign that tesla sales will fall, because they could ship exports to other markets and get rid of that back and they have. if covid rules do require them

to completely shut down the factory again, that would be a big headwind at the second half of the year. haidi: does this earnings report in the commentary restore some credibility for elon musk? he had a sideshow, but there is the big twitter destruction as well. >> i think for elon musk, it's important to separate tesla from twitter from spacex, and it seems that he has a very capable management team that's able to step in and continue to execute on tesla's goal. even if elon musk devoted more time to twitter or spacex in the future, i still expect them to ramp up new factories, lower their costs, and p able to increase their volume. shery: let's talk a little bit about those costs, because they did raise prices with higher battery prices before.

>> i expect them to raise their prices to pass along inflation. tesla's luxury vehicle with a sensitive review. it gives them pricing power to raise vehicle prices to pass on raw materials. it will be when the vehicle will be delivered and if inflation comes in higher, i expect them to continue to raise their prices. shery: tell us about the demand we are seeing for tesla products. elon musk called the annoying way times, just given how much demand there is still for tesla products despite the price hikes. you -- do you see that continuing? >> i do, i think they will hit 50% growth at least this year and continue strong growth into next year. i think there is still enough

luxury auto demand for tesla. tesla is the best ev. tesla cvs compete with control complex to an -- combustion interviews. i see no port on demand anytime soon. haidi: how important in a highly anticipated do we see getting the model y suv in the cyber truck? >> i think it's important to launch the cyber truck next year if they want to heavily compete, fully compete in the truck market. because they are ramping up production, gm is coming out next year. tesla does not want to be late to the party and risk losing that first thing that they've enjoyed right now. so as long as they are unscheduled and come our trucks in the middle of next year, i think they will be competing in doing well in the market. haidi: always great to have you

with us. he was mentioning one of the key risks of tesla with further lockdowns of how it could impact the chinese factory. adding just 12 high mid risk areas with a subject to lockdown. adding four new covid cases outside of quarantine, 17 local covid-19 cases in 12 new high mid risk areas that are subject to lockdown. we know there is mass testing underway as well as targeted lockdown areas and they continue to about a with being able to adhere to covid zero for shanghai and other parts of china. we see the lockdown for the casinos. we see the chinese currency really coming under the depreciation pressure as a result of these lockdown fears as well. as for the issues when it comes to the mortgage payments on the property crisis that's underway ramp -- underway right now.

lots more to come. this is bloomberg. ♪

shery: breaking news out of japan, we are getting the latest

trade numbers with the rising 19.4% year in year and beat on expectations of around 17%. it's also an acceleration from the previous month of may. take a look at that whopping number of 46.1% gains for the month of june. broadly in line with estimates, not surprising given that it has really been increased given the weakness of the japanese yen, which brings me to my next point, why we see that trade deficit again for another month in the month of june, coming in at 1.38 trillion yen, slightly less than expected. another month of trade deficit, just a number around ¥2 trillion as we continue to see that yen weakness, commodity prices rising, we see the u.s. rising 60%. e.u., 22 percent. china, a percent year on year.

haidi: our senior reporter for effects and rates james us from singapore. it begins its policy meeting today, who's going to win the test so it comes to the yen and jgb markets? we know that the governor is really staring down market expectations of a pivot. >> is playing out on a macro stage. it's on both the yen and jgb in retreat so little bit. they may be making a point. but no repeat performance expected on targeting the yen, for example, like in the previous months we have seen. it's still up comfortably close to the 140 level, but a slow grind up. now, so put it into perspective,

bank of america survey found that the yen could be overdone. currency could reach 160 per dollar. perhaps not as serious as was seen before. shery: what about the shorting of the euro? >> short out there macro markets and will be at the mercy of sentiment. he falls back from the brink of this. if the ecb was to be on the downside and if the italy situation takes us away, all of this could be on the euro server -- server. less case scenario. the currency, deutsche bank don't rule out 95. still in bear territory here. shery: looking ahead to the currency move given that we have

the boj and ecb decisions. >> microsoft eliminating open job with security software units. hiring freeze will continue for the foreseeable future, but it still honoring and job offers that have already been made. the hiring slowdown was disclosed in may, which mostly affected its windows, office and teams group. they are limiting clients for the rest of the year and curtailing growth plans for 2023. this intense get a handle on disruption. it expects capacity to be 8% higher than pre-pandemic levels. far short than the toy percent jump in has forecast. united's earnings fell short of estimates but it expected positive earnings for the full year on strong demand. the experimental covert treatment has failed to win the

backing of health experts in japan. they revealed the members saying there wasn't enough data to show the medicines efficacy. they will weigh for phase 3 file -- trial data expected in november. haidi: trade begins in korea and japan shortly. tesla's better-than-expected second-quarter earnings is in focus in the asian suppliers at the fall. the electric carmaker is also keeping the 50% outlook wrote target. we are watching lg, panasonic and sign of group as well. we are also watching shares of japanese banks, mitsubishi and shins a as the boj expected to stick to its ultra lose policy sales. coming up next, we get more on the ecb and boj decisions. 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 on your wireless bill, over t-mobile, at&t and verizon. wow. i can do better. yes, you can. i can do better, too. break free from the big three and switch to xfinity mobile.

-hi, i'm smokey bear and i made an assistant to help you out. because only you can prevent wildfires. -hey assistant smokey bear, call me papa bear because i'm "grrr-illing" up dinner. haha, do you get it? -yes. good job. -so, what should i do with all of these coals? -don't just toss them out. put them in a metal container because those embers can start a wildfire. -i understand, the stakes are high. assistant smokey vo: ha-ha, ha-ha.

-see, smokey think's im funny!

shery: this is "daybreak asia", counting down to asia's major market open as we brace for decisions by the boj, ecb and bank indonesia. haidi, central banks in asia are expected to brave global pure pressure and stay on hold. haidi: we are watching for the currency reaction when it comes to the yen and watching the euro, earnings season is rolling along. we had good numbers out of tesla and we will be watching for that reaction asia. let's get you with the market open. >> just a few seconds away for the open of japan, australia and the open on cash treasury markets. we have seen yields really edging higher for the last few seconds but the focus on the great decisions you are just mentioning the boj in the ecb.

ahead of that we got the yen, fairly arranged bound and strategists are not seeing much major catalyst for it to strengthen any further in the near term. equity says they will take the direction from other markets on boj, ls we get, around the purchasing policy. we did also have those june export numbers and we saw the jump in the previous month up 19.4% of the year. speaking of export data, turning now to what we have in korea as well because we've got the export for the first 20 days of july, bigger jump coming in at 14.5%. that was a global bellwether for the economy here. there was a time where we saw more lockdowns returning to china as well. we saw more cities really reinstating these moving curves, extra covert testing as well. the other big factor or

indicator we are watching for is that trade balance that still to come out. it certainly has been a big push or a big weight on the be ok. a lot of pressure here to be stemming capital outflows. really exacerbated by those moves we are seeing in trade profits. in terms of what we see in the direction of markets at the open , we are continuing to see the kospi trading higher this morning. the korean won is fairly arranged bound around that 13 k, 1300 level sk security likely to stay here, just also getting that trade data back, that balance here, a reduction of $8.1 billion. that is a further deterioration that we are seeing on the months prior we saw it coming in at 7.6 billion. it really does put the be ok under pressure here. a vicious cycle that you create with the weakening one. let's go now to the opening of the asx 200. we had seen futures indicating a lower -- slight here at the

open, keeping an eye on bond yields. macro factors with the two big great decisions we saw for the boj and the ecb. oil also online. brent crude a little bit softer to start. really assessing that u.s. gasoline demand. stockpiles. you are also looking at downgrades to the growth outlook. haidi: this is the asia development bank developing asia. we see developing asia in particular expected to grow 4.6% for the year. that is down from 5.2%. we are also seeing inflation, that forecast being raised from 4.2% from 3.7%. the 23 gdp forecast developing asia has been cut honestly from 5.3% to five .2% inflation up to 3.5% from just over re-percent. china in particular, on key for 2022. gdp forecast is lowered to 4% from five. next year it's at 4.8 percent. and they also cut the inflation

outlook for china for this year and next as well. for india, the other major economy to watch out for, 2022, the growth forecast is down 7.2% from 7%. inflation also raised to 6.7% from 5.8%. so really we are seeing china's covid zero push to containing the virus, creating a lot of these ripple effects on regional supply chains and economic development, not just within china, but more broadly. that is a shout look including china, taiwan and south korea has been cut to 3.8% from 4.7% with them saying that growth will be weaker than expected, and that is really on the back of many economies in the region, as we know, choosing to live with the virus and reopening with the exception, notably. shery: that's in the chinese economy, really telling. not surprising that we got the premiere at the world economic forum, signaling that he is

flexible and that 5.5 percent growth. our next guest is moderately positive on global equities. and much prefers stocks and japan and develop asia-pacific. let's bring in the chief global strategist at nico asset management. good to have you with us. first of all, give us your reaction to the economic downgrades that we are seeing around the world and what that would mean for global markets and risk sentiment overall. >> well, i think a lot of the downgrades are already incorporated in the markets, to be honest. the market has priced in a recession to a's significant degree. we actually don't believe that will happen, we are a little bit more optimistic, but it certainly isn't helpful for some forms of risk sentiment, and be haps -- and perhaps business confidence as well. shery: given the economic challenges, the boj seems to be determined not to move when it

comes to the ultra-easy policy, is that why you prefer japanese stocks? >> it is true that japan's macro backdrop is more stable than the rest of the world at this point. the economy is recovering and coming out of its lockdown state and consumption is increasing. in it has obviously been a headwind for global investors. at this point, we don't think the yen is going to get a lot weaker. and yet, the competitiveness of japan has improved, not just versus the states, but also versus taiwan and korea, the yen has depreciated and depreciated quite a bit. so corporate profits should be quite strong, especially as the forex hedges that corporations have rolled often they start to price their export profits back and many more yen than before. so the corporate earnings

profile looks better in japan for upward revision then it does elsewhere. haidi: does the rebound that we see in china hold, or are there cracks that we see for the potential systemic fears over the property sector? >> it certainly is rough, and there is a chance that more lockdowns could happen. obviously, the number of cases are rising there in multiple cities and sectors. and unfortunately there are many different variants there now. i report that there are 10 different variants there. it is troublesome. so there will be a factor when it happens with covid there. the economy is trying to rebound and some of the exports are very strong. the factories are high. it's brought question of the consumption side, whether artificially repressed or due to the wealth effect that's going to hold back the economy pretty significantly going forward, it seems.

haidi: one of the pressure points when it comes to the yuan is the dollar when we see depreciation risks decreasing for the chinese currency. how much further dollar upside do you expect to see? >> we actually don't expect a whole lot more. our forecast that we made about a month ago for the end of december, it's exactly where the rates are now. where the foreign exchange rates are now. and we see that the fed is basically achieved the expectations for further hikes that it wants and that commodity prices are down, so there should not be a lot more on the central bank that should push the dollar higher. in fact, the currencies of the yen and the euro have been very weak versus the dollar already. and how much more, they go based

upon a scenario which won't change very much going forward for central banks. haidi: john, always good to have you with us. chief global strategist. let's get you back to hong kong for a look at some tesla suppliers in asia. annabelle: very quick check, we got second-quarter earnings beat, they are indicating they are getting over a supply chain over the covid lockdowns in china. elon musk sharing something about the potential for a record-breaking second half of the year. that would be positive news for its biggest slice for the battery maker here in japan, also in korea. we are seeing a bit of a mixed reaction here today. shery: we will be watching those stocks. let's get to vonnie quinn with the first word headlines. vonnie: thank you. president joe biden says he expects to halt the chinese president xi jinping within the next 10 days. biden has been expected to announce his decision soon on

whether to ease tariffs on chinese imports. u.s. president said it's not a good time for nancy pelosi to visit taiwan. they said she would lead a delegation next month. the house speaker is throwing her support behind the compromise senate bill that provide subsidies for the semiconductor industry. it signals the likely into a year-long deadlock between the house and set out on a packaging debt boosting u.s. competition. it will follow 52 converts -- for bill makers. she is planning for a houseboat as soon as next week. bloomberg has learned the first were crime cases against russians could go before the international criminal court and the hague this year. in -- the team has been collecting evidence for potential crimes in ukraine. sources say the international court is in talks with ukraine to deliver one russian prisoner to the hague. macau will reopen casinos from saturday if virus conditions

allow as they have their worst ever covid-19 outbreak. the plan to reopen the gaming sector after a sharp it down is part of commercial activities. bars and cinemas will remain shut and businesses will stake headwinds from a lack of quarantine. global news, 24 hours a day on air and bloomberg quicktake, powered by more than -- global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn, this is bloomberg. haidi: still ahead, a deeper dive into the policy on boj days as their global research joins us. but coming up next, we get the latest from europe ahead. that key ecb decision. they are awaiting the reopening of the russian pipeline. this is bloomberg. ♪

shery: central bank continues as the bank of japan and indonesia are expected to hold the key rate steady while the european central bank looks at a 50 basis point move. kathleen hays is here with the latest. kathleen, we continue to see the japanese under pressure. 140 insight. but the boj does not want to move. kathleen: governor kuroda will let it weakened. he knows it's hurting consumers and businesses. it is very popular with the japanese people. however, he is convinced that

japan still need stimulus, even as inflation, even as its core gauge on the cbi take out those fresh food prices, over 2% at 2.1%. but it's not the right kind of inflation. that's what governor kuroda keep saying. it's driven by commodity prices, tequila the energy prices, food prices as well. that is not like seeing inflation expectations rising, so the businesses have to raise people's wages. that's what he's waiting to see. he's worried about the economy. he thinks that banks, small businesses still need the negative key rate and that in terms of financing japan's big budget deficit. they need to keep the great low. we don't expect anything there. we are looking to see how much they raise their inflation forecasts and how much they cut their growth forecast and what kind of questions he gets, speaking to your point, about the yen at the press conference after the meeting. that will be big news. we go to bank and then he should, and we know that he told

bloomberg television just in the last week or so that -- essentially what he said is he's not ready to raise rates unless he has to. these looking at supply chain pressures. inflation has started to rise and indonesia. we did there he six economists that are looking forward to wednesday five basis points -- excuse me, no rate hike at all, but that leads -- 14, they are looking for a wednesday five basis point hike. one of the people in the survey is one of the most accurate economists we have in our bloomberg surveys looking at bank indonesia. so there is a chance we will have surprises. very little chance that governor kuroda has surprises. haidi: today it's not just the ecb's decision, but waging the restart of nord stream, the gas pipeline. if it does without russian gas, it is just another element risking the economic outlook for europe. so much going on for the ecb on what they do. kathleen: you mentioned the nord stream pipeline and it looks

like may president putin has changed his mind and will open a partly. but how much of a perfect storm could the ecb be facing as it makes it's very important policy decision? we know that inflation is 8.6 percent year-over-year in the euro zone. that's why they've started talking about a 50 basis point hike, even though, at the june 9 meeting, they left with a clear consensus for 25, maybe they looked at 50 in september. what happened since then. the inflation moved up, the u.s. fed hike key rate by 75 basis points. but all of this is going on. again, as you say, this growing, unstable background. the nord stream pipeline, prices -- crisis in italy, mario draghi may have to step down. yields are rising. how are you keeping eurozone together if you have a big spread and bonds, if money wants to flee some of these countries and those kind of bond markets

and not others like germany? that's why we are showing you how the yield spreads have widened out, particularly for italy. that's another reason why as they talk about fragmentation in their crisis tool to protect faces like italy, why would you do a 50 basis points rate hike, because he will make the problem worse. 25 basis point rate -- rate hike makes more sense. it's easy to believe this is not a federal question going into the meeting. there will be a big debate and we will see where they come out. haidi: in addition to the gas pipeline, ecb and boj we are waiting for the resignation of mario draghi. we will put that in there. kathleen hays, global and economic policy editor. very busy day for kathleen. let's look at how euro and futures are building up. we saw the risk aversion, the realization of all of these cumulative risks for the continent. we saw that three day winning snap -- winning streak i should say, being snapped by investors. futures are looking pretty dire

at this point. seeing them down by just over .5%. down by 3/10 of a percent in german dax futures. the king pretty tepid. the euro trading to the dollar, just holding at the moment, really, a lot hinges on what we get from the ecb. as kathleen mentions, chaos politically and it comes to italy, the government turning against the prime minister, and we are keenly waiting and looking at these fears that russia may not restart gas suppliers for the continent later today. in that countdown continues to see that bigger pipeline for nord stream will restart after maintenance. big editor for energy and commodities david stringer has been following this. you look at markets pricing and 40% restart. of course, putin has signaled that there would be a restart. there is no guarantee. >> good morning. that's exactly right. all at the moment are the market

orders, and that's exactly what they are, orders with no indication of supply. and that's why much of europe -- those traders that couldn't get to sleep in the next couple of hours, there are waiting until about 6:00 a.m. berlin time until we see the end of the ten-day maintenance timeframe for the nordstream 2 pipeline and we will continue to see how much gas is flowing from europe -- sorry, from russia back to europe. that 40% figure, that is higher thin they have been expecting the past couple of hours. earlier in germany, operators were suggesting that that could be about 30% bigger. certainly, it is looking like a little more -- looking a little closer to expectations at the bid closer to the kind of volumes who were seeing before this maintenance time happen. but as you said, all of this really depends on the deliveries we see.

and of course, all of this remains dependent on putin and his ability to flex supply based on the politics. shery: on the oil markets, we continue to see the downside pressure because of recession fears. david: absolutely. the traders in the oil market are away at the moment. the fears of slower growth. will that deal another blow to demand? already that market is closely watching the situation in china. not only those lingering covid -- what is the outlook for growth there. so lots to contend with both and gas markets, and as you say, and the other markets as well. shery: editor for energy and commodity, david reporting on the energy markets. take a look at how they are doing right now in tokyo trade. and we are talking about it in the double digit, around 10%.

a japanese panel has withheld the covid backing, expecting it to be an experimental treatment. health experts in japan have not backed this drug. they were reviewing this drug, but then said that there wasn't enough data to show the medicine efficacy. there are two other pills. there were high hopes for this. now, we do have plenty more to come on daybreak asia. this is bloomberg. ♪

>> it was unique due to a prolonged shutdown of the factory. the past two years have had a few things. and that has been supply chain

for several years. shery: see lawn -- ceo elon musk with a boost of trading after better-than-expected results in the carmaker is getting production back on track. bloomberg su keenan is following the numbers and he was pretty optimistic about the second half. su: he said the supply chain is coming to an end and sees commodity prices that are threatening lower in its optimistic that the company can really do well in the second half of the year, citing this strong output in the california and shanghai factories. that, since there are higher, he posted earnings of $2.27 a share. handling the estimates of $1.83 a share. the results show that tesla is back on track in terms of production. it left unchanged production forecast from 50% at its annual growth. and it surprised one analyst saying they are doing a good job

navigating it in a difficult environment. haidi: elon musk kind of fruit to this essay sideshow to a sideshow but it is tied to the lockdown in china? su: musk reported there was a bitcoin impairment that reduce second-quarter earnings, but it did sell off about 75% of the holdings. perhaps anticipating a backlash from all those bitcoin bowls that are all huddled. he had a very good explanation. take a listen. elong: the reason we had this is because we were uncertain as to when the covid lockdowns and china would alleviate, so it would maximize our cash position given the uncertainty of their covid lockdowns and china. su: we explained it was a way to increase liquidity in uncertain times and not quote some verdict

on bitcoin. he also makes sure tesla did not sell off any of its dogecoin collection. what's very important is bitcoin remains on the day after the sale was disclosed. musk has been a major influence on digital currency. assets have strong to 218 million, and it is not making any kind of judgment call or verdict on bitcoin. by two. haidi: let's get you a check of the headlines. microsoft is eliminating job listings. the company says the hiring freeze will continue for the foreseeable future and a still honoring job offerings that already been made. at hiring slowdown was disclosed in may which affected its window office and teams group. bloomberg is preparing to cut as many as 8000 jobs in the coming

weeks. that as they try to boost profits for ev. some of it comes from the unit producing gas through vehicles. ford ceo says that they talked about putting too many people in bringing $2 billion in cost by 2026. google and lift other latest companies to hire amid mounting recession fears and rising inflation. it will force hiring for two weeks to allow the company to reveal headcount needs. the list will shutdown down its business and cut about 60 jobs. because as the ride-hailing giant grapples with the labor shortage in its stock price. lots more to come here on "daybreak asia". this is bloomberg. ♪ this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes.

[ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app.

>> this is "daybreak asia", i'm vonnie quinn with the first word headlines. climate change has been called an existential threat. new revisions include expanding wind power in allocating emergency funding for infrastructure. biden held back on declaring a formal climate emergency and has new powers restricting fossil fuels. president biden: let me be clear, climate change is an emergency, and in the coming weeks i will use the power i have as president to turn these words into a formal official government action with the appropriate proclamations, government orders and reglet tory powers that a president possesses. >> the great to succeed uk prime minister boris johnson is down to two contenders. around 170 5000 conservative party members choose between former and -- former secretary and former chancellor. the position to resign with the

key event was the downfall. the winner will be announced on september 5. italy's government is close to collapse after three key parties with true to support mario draghi. it could plunge the country into once of political turmoil as economic warning signs start to flash. the former chief is expected to resign thursday. if the president excepts a resignation, emergency elections could be called for early october. hong kong will no longer forced people with covid-19 subvariants to isolate our government runs facilities. officials concluded they are more transmissible, but not more dangerous. this latest policy change by the chief executives government with travel quarantine being considered. covid patients facilities me certain criteria to recover at home. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. shery: the development bank cut

its forecast for growth in developing asia this year. this as china's covid zero approach tempers economic development. let's get more from bloomberg's chafed -- chief economic correspondent. how expectant was that given that we continues to see the downside pressure from the covid zero policy, that even now, we continue to see more outbreaks in cases and restrictions on going? enda: i don't think there is any surprise to downgrade the growth forecast at the moment, be it in asia or anywhere else. we looked at the mechanical catch-up going on. a lot of forecasts for china and the rest of the region in the year have been more buoyant. they are being downgraded to reflect a happen, especially we sought into cute gdp data, it had the lockdowns of restrictions. that's the china story. that spilled over throughout the region. the imf has warned that they are going to downgrade their own global growth forecast fairly soon as well. i just think we are in a cycle of catch up with the forecast,

the beginning of the year, inflation story, the interest rate story in the china covid zero story wasn't as clear as they are now, but when you combine that together with russia's invasion of ukraine, all of that is putting downward pressure on it, and they are obviously responding to that. haidi: it's not just covid zero threatening the micro outlet, it's also the looming risks from the ongoing property crisis. enda: that's right, it continued to worsen, the boycott spread over the projects and in the province they are talking about a new bailout to help the real estate developers. and this is interesting because it will be the first date back bailouts on the idea that would appear to be the developers to keep them ticking over. we don't have too much more detail on it or how it will operate, but they are trying to close the loop and keep the stretch away from the banking system. that's happening as others in

their property supply, such as those who supply real estate developers, they claim they are not getting paid for their goods and their work and they are starting to talk about boycotting deliveries to those real estate sectors. so it all adds up to a situation that continues to worsen for the authorities. we do see the response with the bailouts and i think going forward it will be the expectation that it will be more like this for the central government because they are desperate to close the loop on this and of course, to get a lid on any kind of social unrest stemming from it. >> bloomberg's chief asia economic correspondent there. that's turn for a check of the markets. pretty mixed picture at the moment. annabelle: that's right. we are starting to see the rally here. but going off of what he was saying about the reaction to their property crisis in china, specifically looking at the dollar bonds we are seeing. we are seeing that spread really widen. we are back up to the highest lows we've seen around four months. the spread above relative to

u.s. treasuries to 20 basis points. he did mention the support we could see. basically, helping developers give catch to them to help them finish off their projects. but the risk of that is that it exacerbates the problem already existing in the system, which is developers not having money to finish their projects on their mortgage holders being the one left holding the debt here. but, the question is where we go from here. the indicators are suggesting we could see a further rise. let's move onto the board of markets, because volumes are looking pretty thin across the board. we are seeing a mixed picture. korea continuing to add to the gains through the s&p 500 closing higher for the second straight session. most of the gains in the tech stocks as well. meanwhile, what we see for japan, australia looking a little weaker. we've got these company earnings coming out, recession risks on the horizon and those rate decisions from the ecb in the bank of japan. haidi: the bank of japan is

likely to be a part of the policy meeting. although the yen is close to the key psychological level of 140 per dollar. our next guest no longer expects the boj to adjust policy under governor kuroda. in fact, things they will be missing the window will policies altogether. joining us now is that head of japan economics and global research. pricing and the recession. do we need to stop talking about a privet until governor kuroda's term is completed? >> yes, thank you for having me on the show. as you said, we have been non-consensus for the beginning of the year, expecting the bank of did -- pink of japan to deliver one-off policy adjustments in the fall. we no longer see that as the base case. the big reason for this is because, as a firm, we are growing more pessimistic about the outlook for the global economy, given headwinds from inflation and the energy squeeze

, so we are now looking for a recession of the united states, and since 1960, every time the u.s. has slipped into recession, japan has followed. we don't think this time will be annexed -- will be an exception. the mastic economy looks ok. we have a pickup and services consumption from tailwinds from the reopening. manufacturing sectors are starting to weaken. we think the growth concerns will trump the desire for the bank of japan to move forward with normalization. we think it will have impact. haidi: how does the recession in japan, coupled with the weakness in the currency, coupled with the unusual dynamics when it comes to the reflationary effort, how does that play out for the longer reflationary campaign? >> well, it is a setback. but i to think that the bank of japan, in particular, is going to be worried about the risk that if they tighten prematurely

and are perceived as moving too quickly, that they could potentially shut court this -- cut short this reflationary session. speaking so rigidly in an environment where global rates volatility is higher, global inflation is higher, risks depreciation of the yen, which we have seen since the beginning of the year. if that yen move is too fast towards depreciation, it actually ends up undermining consumer purchasing power and put the squeeze on consumption. and that is actually negative for the long-term reflation agenda. but it doesn't seem like the bank of japan feels like it's the time to step in. that is really the government's role to support household consumptions for fiscal policy. shery: we have seen how unpopular governor kuroda was given his comments on inflation and price pressures on consumers. but when you talk about that on

sticking to icc, could you see the boc does the boj targeting a different side of the curve, and would that help? >> i think it depends on the extent of the policy change, the degree of the policy change, partly depends on the market environment. for example, i think had they -- four moving the target back in may or june, when there was tremendous upward pressure on their great target, though icc target, it actually could have been quite disorderly, and i don't take it really would've helped the broader agenda of stabilizing the currency. so -- but, if we are talking about heading into recession, and then hopefully there will be a window, either in late 2023, or most likely 2024 where the rate market and call markets priced in the next fed hiking cycle, then i think that is ultimately a good timing to actually abandon why cc. if we are headed towards the

next decade for example, of an environment of higher inflation volatility and more volatile cycles, then i think why cc is actually inappropriate for that kind of environment. haidi: what sort of market -- shery: what sort of market dislocations are we seeing a japan given the huge presence of the boj? >> it is affecting gigi b you market liquidity, and market functioning. i do think it will be interesting to see the next installment of the bank of japan's quarterly bond market participant survey, which will come out in september. and i think that will show a decline in market functioning measures in the jgb market. of course, the biggest place with the dislocations are there currency markets. the boj has fixed interest rate stability over effects stability. acting as an escape valve for the policy. i'm not saying all of the

un-depreciation is on the boj, this is a strong dollar story as well, but it is not -- it is probably adding to those selling pressures in the yen market. shery: is the scenario a real risk now? >> yes, that's kind of our base case. it to be very precise, the stagflation usually involves a higher in rise in for structural reasons, for demographic reasons. it's hard to expect in japan, but we are looking for a very weak growth from late 2022 to middle 23, coupled with barely elevated inflation. we don't think inflation is going to come down despite the slowdown in the economy because a lot of this is imported, a lot of this is cost bush inflation. you will have relatively high inflation coupled with low growth, which is close to the definition of stagflation. shery: good to see you again. head of japan economics of the

osa global research. coming up next, sri lanka's got a new president, but he's an old face in the government. we look at the challenges he faces in uniting the nation in securing a crucial imf bailout. this is bloomberg. ♪

>> we aren't trying to compete with each other. that's the risk of destroying the country. and there are many, many people who have different viewpoints. i would like to bring everyone together. so a national consensus is born. haidi: that was -- elected by the parliament as a country's new president. of course the unity comes when the nation's new leader remains deeply unpopular among protesters. under the ousted president. the president -- let's get more from bloomberg. how difficult will it be for the new president in sri lanka, given the financial crisis and given this popular need for a new leaf to be turned

politically? >> he is a very old hand, he has been premier several times, he was also prime minister under --, now president, but he's also a very unpopular man. mind you, his house was burned down by protesters, and you have heard protesters -- are we have heard protesters say it leads to who? it won't be easy for him to hold the financial crisis and get everybody in sri lanka to agree that he should be allowed or given a little bit of time to act. it's going to be a very, very difficult job for him. shery: especially as you said, his official residence was set on fire. does this mean that we could expect more protests? >> from the ground what we are beginning to here is that we are already in sporadic protests asking him to go.

so protesters, in a way, are coming back. what happens in the next few days is crucial but not clear. but what is clear on the ground is it's not -- he's not a very popular man. although he's known globally across the world. he's known as an old hand that can kind of steady the ship. haidi: so there's an issue of credit -- public trust, credibility. so what is the next move them, particularly as there desperately needs to be stability to negotiate on the economic and loan side? >> a couple of things that we know that he will try. to meet with all of the political parties, including those in the opposition and kind of try to convince that he is their best bet, although they might not like each other, he still the best bet, he still the best option of all the options that are there. so that looks like what he is

going to try. whether that will be accepted by people who are protesting, and for months now, that is still not clear. shery: the latest on the ongoing crisis in sri lanka. coming up, another sign of souring sentiment around chinese tech giant. we are hearing that bytedance evaluation has dropped at least 25% from last year. details ahead. this is bloomberg. ♪

shery: his are quick check of the latest business headlines. earnings beat expectations highlighting how the top u.s. producer in weathering recent downturn in sentiment. additional $500 million share buyback. sending it stocks surging. it increase from the prior quarter due to falling prices and rising production costs. united airlines is limiting fines near the rest of this in curtailing growth plans for 2023. attempting to get a handle on flight disruption. they expect flight capacity to be a percent higher than pre-pandemic levels, short of the 20% jump we have forecast.

its latest earnings vote short of estimates, but expect positive earnings for the full year on strong demand. iphone shipments likely surged in china last month, leading a rebound in the smartphone market after covid lockdowns were. official data said it jumped 9.2%. it was led by overseas vendors like apple and samsung. while domestic brand saw a decline in shipments. they will provide retails on the chinese shipments and it reports earnings later this month. tesla beat second-quarter earnings estimates reflecting its progress in tackling supply chain issues in covid lockdowns at a china factory. adjusted earnings of $2.27, beating expectations but fell from the fourth-quarter, making it have a forced profit decline since the end of 2020. tesla also maintained its 50% annual growth outlook for delivery.

haidi: bloomberg has learned that bytedance has been trading in valuations well below $300 billion. that fell 25% from the peak, with its ipo now on ice. let's get more details from lulu chen. is this just another indicator of the worst and sentimental -- still bad sentiment when it comes to china's tech giant? >> that's right, investors have been buying bytedance shares for as low as 270 $5 billion. that's a significant decline compared to the $460 billion valuation that they had in last year. it really underscores the sentiment that is still very much staff and around chinese tech giants, especially given bytedance has faced setbacks, including shuttering a key gaming operation and letting go of about 100 staff, and seeing key management departure from

the company. shery: is this a reflection of the new complex regulation that companies like bytedance are under now? >> bytedance is self is still one of the most global companies among chinese tech giants. the company itself is still projected to produce $12 billion of revenue, and that's more than twitter and snapped combined. yes, chinese tech giants are facing a new paradigm, facing a future of lower revenue growth and also more stringent regulation. and a key freeze on the listings and it's really an overhang for all chinese tech startups right now. shery: that's lulu chen there in hong kong. some of the stocks that we will be watching in hong kong in the mainline markets and about half an hour at the open is tesla's better-than-expected second-quarter earnings that are putting its asian suppliers and focus. those are some of the stocks

that we will be watching when it comes to that ev electric carmaker sector in the news that we had that tesla will be further raising its shanghai output. shares of macau gaming firm could also be active after the seas official said that they will reopen casinos from saturday if a virus conditions allow it. haidi: we are also watching chinese homebuilders at this point, the bailout fund is being set up to help cash up developers complete housing project. that has really sort of flag's potential systemic risk. take a look at the broader market and it is looking pretty tempered. stock rally has come to a bit of a great -- a bit of a wavering holt and the part of the third day session, investors bang up signals from the latest earnings as well as geopolitical risks in your. big day for your. not just the ecb decision on

whether it would be 25 or 50 basis points, but also the restarting expected of nord stream gas pipeline. we have seen some indications that output could resume and could resume at around 40% of capacity. there are no guarantees on those deliveries until it actually happens. also watching trading in vienna as well as nikkei 225 up by just -- going into that boj decision. continuing to just stare down expectations for a any kind of hawkish pivot. shery: we continue to see downside pressure after we had a very volatile session here in new york. with this see stock gaining for a second session after optimism was hit during the session with tech, given that google said it would pause hiring for two weeks. that's after the market posted a couple of hours ago.

microsoft cut jobs and they are slowing hiring as well. we are continuing to see the downside when it comes to u.s. futures at the moment. haidi: such a wide range of risks wherever you look at the moment. we will see in the next hour on bloomberg tv. these risks are really keeping investors on the edge of their seats. holding that discussion with sean darby, getting his views out of jeffries. the cause will be exploring opportunities in chinese markets, given that we have cloud covering over the property market and also some expectations of the conversation between president biden and president xi within the next 10 days. that is it for "daybreak asia". our markets coverage is next going into the start of trading in hong kong, shanghai and shenzhen. this is bloomberg. ♪

millions have made the switch from the big three to xfinity mobile. that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network, with the carrier rated #1 in customer satisfaction. that's a whole lot of happy campers out there. and it's never too late to join them. get unlimited data with 5g included for just $30 a line per month when you get 4 lines.

-hi, i'm smokey bear and i made an assistant to help you out. because only you can prevent wildfires. -hey assistant smokey bear, call me papa bear because i'm "grrr-illing" up dinner. haha, do you get it? -yes. good job. -so, what should i do with all of these coals? -don't just toss them out. put them in a metal container because those embers can start a wildfire. -i understand, the stakes are high. assistant smokey vo: ha-ha, ha-ha.

-see, smokey think's im funny! ♪

david: this is my kitchen table and also my filing system.