heidi: good morning.

we are counting down to asia's major market open. shery: the top stories this hour, microsoft misses sales and profit expectations on a stronger dollar and weaker corporate demand. google ad sales hold up. heidi:/growth outlook, saying that the world may be on the brink of recession. shery: russia is set to keep squeezing vital gas to europe as long as the war in ukraine continues. u.s. futures rebounding from the session we had in new york, s&p 500 fell. we are not surprise given the consumer confidence falling to the lowest since february of 2021. traders are bracing for the fed rate decision.

disappointing guidance from walmart, clouding the market throughout the session. so far, we saw the 10 year yield hold up, that risk off sentiment in the oil space as well. the asian session rebounding above the $95 a barrel high. sales growth the so lowest since 2020. especially without the bet, -- especially with alphabet, after earnings, countering the narrative that perhaps a slowdown in the economy will really hurt electronics. it is a back-and-forth with traders trying to decide where to go from here. heidi: there is a lot of

conviction, isn't there? we do have the second quarter cpi print out of australia, that is expected to cover at 3.6%. it is sending -- sitting under the highest level in five weeks. any move above $.70 will be short-lived. sydney futures are looking pretty tepid. all of this is as we get more bargaining outlooks from global institutions. the cutting, we know what these factors are, monetary tightening, the impact when it comes to the emerging markets. the world may soon be on the cusp of an recession. at 3.2 this year, that was at 3.6 in the forecast back in

april. it was at the highest a long time ago. we talk about the efforts to contain inflation by the central bank, it is expected to bite with the global outward -- output. shery: we kept looking at more session signals. really analysts and economists have been discussing -- dismissing that. chair powell talking about the three month forward curve that was the one that mattered. he said that one is the one that mattered back in march and the fed peaked soon after. it is done a steepening and there is a longer in data. -- a longer decline in data. policymakers are starting to turn. earnings as well, what are we going to see in terms of guidance?

microsoft reported quarterly sales that fell short of analyst projections while google earnings was able to meet estimates separately. the imf caught the world gdp output. let us get more with our anchor, our editor, and energy reporter. let us start with the tech earnings on the more upbeat note, what is going on with alphabet? >> we saw earnings just slightly miss but advertising, we saw a beat. given the results of snap and twitter, google's results show that the ad market is still strong. i did speak with the cfo and she used the word uncertainty several times. that is the best way to characterize the situation we are facing.

they did have a big lapping of high-growth last year. she talked about the growth in search advertising was driven by a recovery in travel and retail. people are traveling, shopping, despite the inflationary environment. we also talk about to talk. i talked about the threat of tiktok to youtube, youtube is a big source of digital advertising for alphabet and she says people want to consume short form videos, they are investing in youtube shorts and other ways to watch shorter videos. they're working on engagement and hope that monetization will come later. heidi: we are getting more lines from microsoft after the disappointing quarterly report, the currency effect will lower their first quarter sales by 25%.

we are also seeing the stock extending those gains to about 3%. as the currency is affected, it was tempered demand, that was the story for the cloud service. >> microsoft is emphasizing the stronger dollar being a problem. it will affect these big mega cap tech companies as we see these results. microsoft's results are dimmer than alphabet's. we us are not great numbers in the cloud business when it came to google cloud numbers. they came in slightly below estimates. what we are seeing with microsoft is a little bit more alarming. it seems like these companies are having trouble figuring out if we are going into a recession or not or maybe we are already in one. it will be interesting.

to see how these economic conditions play out over the course of these next several earnings reports. shery: when it comes on the numbers of economic growth forecasts, imf getting grammar on the april outlook. >> what we are seeing is all of the things we have been talking about since january. all of the risks to the economy are not abating. as they talk about a central banks starting to hike, we get this one day before the fed decision. here is what the imf chief economist had to say about the outlook. it has strengthened significantly, the world may teetering on the edge of a global recession. the growth for 2023 is down to 2.9%, overwhelmingly going to the downside. take a look at my list.

there will even be a sudden and complete stop in gas imports from russia to ukraine. that is a big concern of their s. consistent inflation, chinese property prices, renewed covid flareups, cutting the china gdp forecast to 3.3%. finally, i think the fact that they say in this imf outlook that the number one priority even with all of these so not risks is getting inflation under control. -- all of these risks is getting inflation under control. heidi: it is quite interesting, the maneuvering we are seeing ahead of the decision. >> we know for a fact that they will cut 75 basis points -- hike

75 basis points. chair powell will have to acknowledge the fact that precision risks are rising. when you have 400,000 plus jobs a month being created, you are not in a recession, at least not yet. he will stress how important the inflation fight is. the mistake is we cannot not hiking enough. -- we can not make is not hiking enough. are they signaling another 75 basis point rate hike or are they going to suggest that the next one could be 50? the next fed meeting is in september. heidi: the pressure coming from the gas flows in europe. how much gas europe could get? >> europe is seeing one of the

worst energy crisis in more than a decade, especially on the natural gas side. it will cut natural gas flow capacity through nord stream pipeline through germany about 20% capacity, that is down to 40% capacity -- from 40% capacity. this is triggering recession fears and the possibility of rationing national gas markets. we have had the eu members having a political agreement to cut natural gas useage by 15% -- cut natural gas usage by 15%. natural gas prices, we see prices of the european benchmark surged around 12%.

shery: it has been a wild ride, the plunge we saw in june and a monthly gains. what is the outlook? >> the u.s. is also having these twists and turns. the u.s. natural gas did a u-turn and a surge -- surged. we had a multiple factors contributing to that. on the demand side, we have seen the u.s. is going to see the hottest summer since 1950 and that will boost demand for the air-conditioning field and the power plants and that is natural gas. on the supply side we see u.s. inventories for natural gas 12% below the pope your average and that is given as supply chain concerns as well as the natural

gas storage ahead of the winter season. today is special because we are one day ahead of the artist exploration -- august expiration date. that leaves volatility in the market and that is where we see such huge price moves in the natural gas markets. heidi: take a look at how microsoft is trading at the moment, we see a big jump after hours. they came out with sales growth that fell short of analyst expectation. in the call afterwards, because the fo says they have 11,000 new hires to start the first quarter. the news actually being that they are forecasting double digit sales for 2023. that is sitting well with the

after hours trading session. heidi: you can get more of your bloomberg top tech earnings as the make is -- and the latest market moves. let us get you caught up to date with the first word headlines. >> xi jinping has been invited to the g 20 summit by his indonesian counterpart. the two leaders say that the indonesian leader extended the invitation. he was unclear whether he will actually attend the summit. the two candidates for the conservative party clash for a second day on the economy with both accusing each other for having policies that are morally wrong. one said tax rises come at a time when families are struggling to pay for food and the other pledged to deal with

inflation and help the economy. >> we have the highest tax burden in the country that we have had for 70 years. i believe that we need to keep to our commitment of not raising taxes. >> i will get you the help that you need with your bills, are economy growing, cutting red tape and getting our taxes down and do whatever it takes to tackle legal migration. -- illegal migration. >> a new ceo, it is part of a long-running effort to turn around the struggling lender. credit suisse says the announcement is expanded later wednesday. -- expected later wednesday. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. heidi: we get more on the big tech earnings, technology giants

convince consumers that they are indispensable to keep up their growth. coming up next, we talk about two hot topics, the fed and tech. this is bloomberg. ♪

heidi: we continue to watch microsoft as we are hearing that they will slow the rate of hiring over the course of 2023. they were cutting jobs as well. this is confirming some news we heard earlier about a hiring slow. we also heard from apple and others. politics is never far from the fray. president biden will be speaking with chinese president xi jinping on thursday as we see worsening when it comes to the u.s.-china ties. we have seen nancy pelosi get bipartisan support for a possible trip to taiwan. lawmakers argue it is important for that trip to happen. that is expected to continue to raise the ire of beijing.

jinping has already warned of repercussions. we are hearing about the conversation between them will happen on thursday. let us bring out our next guest who is expecting a shallow u.s. recession as the base case. the recessionary backdrop is not going to be helped by increased geopolitical tensions. something of a turmoil when it comes to tech. how much attention when markets be focusing on this conversation between the chinese and u.s. leaders given how high the stakes are? >> i think it is incredibly important. it is incredibly important for a reasons. the fed is the story of the year. the reason why u.s. and china's

relations matter is because of below trend inflation is because of china's influence. its globalization and its incredible importance in the atmosphere. the u.s.-china relationship has never been about bilateral trade relationships, it is a rising superpower. china wants to be recognized as such. i think it is incredibly important to the growth outlook and imported to the inflation outlook and on the top of every investor's mind and will be for the federal reserve as well. heidi: how much benefit will the markets get if we see the removal of some of these trade tariffs? >> i think it is relatively short-lived. i do not think the tariffs have a natural feature mechanism for inflation. they may begin to bring

inflation down on a more gradual basis. it is how it feeds through investors and inflation expectations. how it feeds through to corporations' spending habits. all of the distractions around the intermediate inputs to inflation, we need to look past and focus on a long-term basis. that will shape the reaction function from central banks. i believe we are exiting a decade where the natural inclination is always to revert back to a zero interest rate policy in times of stress. with an interesting or a fine game, a trial, but ultimately it has gotten us to where we are and they are going back to inflation textbook. i think that is what should be guiding us. shery: i want to get to the central bank when it comes to the fed. need to ask about what is happening with the china-u.s.

story. we heard from alibaba that they are going to try a dual primary listing in hong kong as well. what happened to the adr market? is it irrelevant now and over time? >> i do not think it is relevant and i do not think it is relevant over time. chinese companies have risen to a global presence, they have a desire to have that global presence. china is wanting to bring them back into the fray. that is the question. we are seeing as well in china is it is flying too underneath the radar is the unrest we see in the mortgage market in china. in keeping the social unrest becomes increasingly difficult where growth in china is slowing. i do not think the adr market is

dead, i think western civilization and western market is what dominates and i think there is a presence to be listed there. shery: how much clarity do you expect to get from this meeting? >> i think if i had to put a base case i would say that the market assessed probability is the base case. the market is not yet discounting enough the probability of getting 100 basis points. for the banks to have flexibility is to regain the credibility in inflation fighting. an upside fight, i think it is part of the discussion and i think those are happening in real time tomorrow. we will find out the aftermath. we need investors to trust the fed, and can fight inflation. shery: thank you so much for

joining us today. we have plenty more to come, this is bloomberg. ♪ how will your business adapt to change? you could hire an office full of peyton mannings. what's up, peyton? good morning, peyton.

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heidi: ubs tumbled out repeating work -- weaker than expected profit. investment banking results also count expectations while loans fell for a fourth straight quarter. >> i expect a affirming of economic policies in china -- a firming up of economic policies in china up and around asia. has a demographics speak for themselves. -- the demographics speak for

themselves. shery: a profit warning after the cells were hit by consumer boycotts in china, recovery was slower than expected. the warnings drag on shares, many already under pressure due to walmart's cut. heidi: the bullish views on microsoft, meta, and amazon. we speak to the apple ceo on his outlook. this is bloomberg. ♪

shery: as risked on futures trading -- as risk on futures

trading are at the moment, we also have texas instruments starting after hours concerns that a slowing economy will slow demands for electronics. it was the turnaround we saw in microsoft that is catching everybody's attention. they fell because of the revenue profit myths, they will see double-digit sales growth before 2023 that is leading to an upside in after hours trading. let us bring in our next guest, the founder and ceo at applico. let us start with microsoft. how positive was the guidance we saw in trading? >> i think it was very bullish. we talked about consumer advertising, he talked about board enterprise contracts.

of the big five tech monopolies, microsoft has the least dependency on consumer and advertising weakness. they are the strongest positioned in the group, they make new business model investments which you are starting to see benefit them over the long-term. shery: let us talk about the consumer. consumer confidence has really plummeted. that did not fit well with the regular session. who are the biggest beneficiaries of this new environment where you have to be careful about consumers not spending as much because you have prices surging and borrowing costs continue to rise? >> at the end of the day, any technology monopoly will be a fly for safety. investors want to put their money in less risky places that can still grow.

any of these big five technology monopolies have that. you see alphabet up in after earnings although they missed. alphabet and snapchat are two different animals. snapchat is smaller, much more susceptible to recessionary woes , do a downtrend in consumer sentiment and advertising trends. all of these technology monopolies fair ahead of their smaller peer competitors and cannot reinvent in -- and can reinvest. amazon, meta are poised much better than alphabet and apple on a relative basis. heidi: i want to bring up the coming down to earth when it comes to the broader market. you see the decline from the

2021 peak. you talk about the need for strong returns as a conviction trade and i think that is the psychology of investing in trade. you want the relationship to continue, is that now looking pretty shaky if we are seeing a bit of a reset in terms of returns? >> tech asset price inflation was completely insane. there was no way to justify our multiples were at and if you look at where the prices are at today, they are still up 30%-50% from where we were pre-covid. you are larger technology monopolies are still up where they were 2.5 years ago. look at the smaller technology competitors, they are much more susceptible, they do not have the profits they can point to

and their growth is getting dimmed. the growth is slowing, they have a much stronger base to build from and reinvest from. those things start to be mattering a lot more as we look at what is ahead for investors and for the technology investing environment. heidi: how much do ceos matter right now? >> a lot. that is why i do not like google and apple as much as i like the other three. i do not think that they have been as innovative and progressive on growth and investing in new, disruptive digital business models as the other studios. look at andy and how they are leading on health care, look at

google and apple's inability to make it happen in health care versus some of the other players in the field. that is one of the biggest reasons why i am more bullish on those three than those two, google and apple. shery: apple released a promotion in china and that is the big one this week as well, right? >> i think apple is on thursday. what is it for apple? it is all about the iphone. the pc market is weakening. this is all on the iphone for apple and apple has not been able to figure out what is the next thing. what is the new up and coming business opportunity for apple beyond the iphone and app store? they have not been able to do it and where does the buck stop? it is stuffed with the ceo and

that is tim cook. -- it is stopped with the ceo and that is tim cook. heidi: president biden will speak to xi jinping as tensions rise over taiwan. kathleen, we have been getting hints of this key conversation for a number of weeks. it comes at a time when the house speaker's trip has already elicited threats of escalation from beijing. >> that is the big thing everyone is watching right now ahead of this call and it makes the timing of the call challenging. we do not know whether the speaker will be making the trip to taiwan or not. this call will be happening days before she could be making the trip. if she does make it, it could be the first week of august that she makes it. certainly, this is a major issue that has come up. we already have this happening against the backdrop between

dower u.s.-china ties. this is if this is overshadowing any progress that could be made on the call. shery: we are watching to see if washington would be lifting tariffs on chinese goods. what do we expect to be exchanged at this meeting? >> that is something we have been watching very closely. it seems as though president biden was close to making a decision about that but he did not move forward as of yet. it was interesting that today that a spokesman for the national security council said that he actually did not expect tariffs to be a big topic of conversation on this call. once the two leaders get in the room, they can talk about whatever they want to talk about. it seems as though the outstanding question as the biden administration has been reviewing these tariffs is the extent to which they want to lift the tariffs, when they want

to lift them, and it tariffs they want to lift. -- which tariffs they want to lift. this other problem about taiwan makes something that could be perceived as a confession to china even more problematic for the biden administration. heidi: there latest news. let us get to the first word news. >> inflation rises as central banks hike rates. the imf also expects the global consumer price gauge to increase by 8.3% this year. european union is preparing for the possibility of a full cut off of russian energy supplies as member nations agreed to reduce their natural gas used by next winter. this reflects rapidly

deteriorating gas flows from russia. the supplies through the nord stream pipeline is supposed to drop to 20% capacity. >> it could stop by any moment. this is why we have asked the commission to propose a contingency plan. >> russian will opt out of the international space station after 2021 and build his own outpost. russia will fulfill its obligations to other partners at the space station before it leaves the project. twitter and elon musk are fighting about the start date for their trial. twitter is insisting on october 10. twitter says it has been -- spent on $23 million on musk's

proposed acquisition. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. heidi: i for morning cause ahead of the asian trading day. the sovereign wealth fund thinks it is looking more attractive. bonds are said to offer more value. it has come under fire as bond prices have plunged along with equities. the tic thinks the -- gic thinks of the portfolio is making a comeback. shery: goldman is staying overweight on as as it class despite risks in the property sector. earnings, strategists say that china's growth recovery and easing policy will support offshore chinese stocks and for the property sector, goldman says it is too big to fail.

plenty more to come, this is bloomberg. ♪

heidi: taking a look at the to head for australia and new zealand, new zealand's central bank is reviewing is a response to the pandemic responding to criticism it overreacted to the recession. earnings are on the way following the grim warnings about the prospect of a global economy -- alan is here with us in sydney as well. when are we expecting when it comes to the chinese outlook -- what are we expecting when it comes to the chinese outlook? >> the iron and ore price has

been averaging over $132 per ton. demand has been weakening due to the lockdowns in china. the ceo said what we had from rio last time was not sustainable. a tight labor market in australia, industrial action in canada it away on aluminum prices. that is the second largest segment also. we are expecting around $9 billion. shery: iron ore prices have been so volatile. looking at the chinese economy as well. what are we expecting on the outlook there? >> 90% of rio's income comes from iron ore. this has been driven by iron ore prices flipping to $70 per ton as they stand to build up steel outboard -- steel exports.

should this come to fruition, the dividend would also suffer unless the payout ratio gets changed. anything around china, anything around the dividend payout ratio and the iron ore price. even though rio tinto shares are off 1%, we outperformed the broader asx. heidi: we know the iron ore is something that has not been as effective when it comes to the deterioration in the china australia relationship. has there been optimism we can see a reset when it comes to the trade session? >> rio tinto issued a dire warning about the state of play globally when it comes to the economy. china is playing into that concern around the property slowdown.

mortgage strikes in china as well. rio tinto managing expectations ahead of this result, the economic picture is more broadly heading into the second half. heidi: cti day is very exciting. what are we expecting? does it move the needle at all for the rba? >> we are expecting headline inflation. to give you some perspective, the last of inflation was around that it was 30 years ago. they have pushed rates to 17% to break the back of recession. we have not had inflation outbreaks. we have the main gauge, that is sent to be 4.7%. we have got inflation really gathering.

the rba, even though it is likely to raise rates -- heidi: a big day ahead when it comes to australian markets and investors. you can catch our exclusive interview with the rio tinto ceo in london. if you are watching out of sydney, it is 11:40 p.m. ♪

shery: ubs ceo says that the bank's second quarter was one of the most challenging for investors in the past 10 years. profits fell short of expectations as the institutional investors fell. they are still excited about china and asia despite the headwinds. >> it was a quarter with different challenges, we focus on our strategy and making sure we could grow before investing there. there were flaws in private markets at 3.9 billion, 4 billion as well.

we released two new digital applications as well. you saw on one side of private clients giving all of the time and sidelining their money. we saw a lot of activity and that is what you see in our investment banking. all of this basically delivered a revenue line, cost down by 1% for the past year. 2.6 billion. >> the landing, it looks quite grim. down 17%. landing down 12%. do you think we are in fear mode on the client's side? >> you see a couple of things impacting our revenues. the level of the market has less recurring fees.

sidelining the wait and see a pattern of our clients, transaction revenues. because of the rate environment we saw rates increasing by 24%. that is a consequence of almost compensating for the pressure on the seaside. in the generating assets we saw money coming in, 400 million, and we saw the -- >> where does that money come from? >> it is a small and diverse picture. generally driven by tax havens, that is higher than we expected. we saw 3.3 billion coming in from the asia-pacific. after three quarters of a lower transaction revenues, you see mandates.

it is turning to us, that is what a blow from the asian-pacific comes in -- when a flow from the asian-pacific comes in. >> any sign of that bottoming out? >> no. we report what we see. depending on the level of the markets, we see there is more or less appetite. i do not expect too much deleveraging. it depends on where markets are going. we see in the u.s., leverages going up. we were successful on a mortgage basis. business as well. overall, we saw almost $1 billion in that year alone in the wealth business. >> headwinds in asia just keep smacking you.

do you still feel full bowl on asia? -- bull on asia? >> you cannot turn away from asia and if you look at the trends and the future. the demographics speak for asia, china. there were a couple of on clarity's there -- unclarities there. on the back of further political clarity in china, i expect it firming up of a political scene in china. the demographics speak for themselves. asia is much bigger than china as well. we are active in southeast asia.

heidi: let us get a quick check on the latest business flash headlines. alphabet rose after hours as ad sales beat expectations. at a sales was $40.7 billion, forecasted for 40.3 billion. microsoft jumped in after hours trading after forecasting double-digit sales in fiscal 2023. the software giant posted fourth-quarter expectations that were lower than expected. general electric's surprise wall street by posting better than expected second quarter profit and positive cash flow. ge aerospace and 27%, the ceo

continues to battle inflation, supply woes, and thinking demand for wind turbines. he has plenty to break up his conglomerate next year. shery: a ceo speaks about strategy and timing in the market while navigating inflation driven volatility. the mp capital investors since why she sees capital pressures easing over next year. daybreak asia is next. this is bloomberg. ♪

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