heidi: welcome to daybreak asia. shery: please stop stories -- the top stories this hour, microsoft has a lackluster report. alphabet was resilient as sales. lifting the u.s. equities, plus a president biden to speak with xi jinping on thursday as fresh tensions flare over taiwan. heidi: busy week it seems, look at how the features session is shaping up. we are seeing futures looking pretty flat at the moment. an early decline under half a percent. we had eco-data and a week outlook when it comes to tech names. we also are watching new zealand

, looking fully flat at the moment. the central bank looks to continue as we get into the central trading session. they could get a lived on the positive results from alphabet and the after hours trading moves from microsoft as well. we saw the nasdaq seeing the bounceback. looking pretty steady at the moment. we did see it rising to the highest level in five weeks. the ceos a by the time we hit it, and gains would be short-lived. we have the ever-growing global recession years. shery: we are seeing a turnaround in the after our session with futures gaining ground after the s&p 500 under pressure. sentiment ruling over as we have concerns about economic data,

consumer confidence falling to the lowest since 2021. you have ups which we usually watch as a barometer of broader economic health disappointed on delivery. that is a weight on the market. we had oil falling as well. oil is rebounding in the after hours asian session. look at the after hours trading you mentioned, we are seeing microsoft gaining about 6%, bullish guidance. same thing with apple. when it came to spending, really turning around the narrative we saw after snap did so poorly with ad spending. perhaps the economic slowdown will hurt electronic demand. a volatile session, throughout the day and this week as we get the huge earnings reports. heidi: earnings from the tech

sector, there is cold water being poured on by the imf. president biden to meet a fusion paying tensions over taiwan. we are joined by our senior executive editor, also with us is the global and economic policy editor. we have a date that we will see this critical conversation. we have already seen beijing really threatening to escalate the tensions in this relationship if we see this i want to the house speaker. -- if we see this visit to taiwan from the house speaker. >> will they discuss whether or not speaker pelosi actually will or will not go to taiwan? i am not so sure. they will have a discussion

about the importance of the taiwan's situation to both sides and how each is reading the situation. especially after the russian invasion of ukraine. the has put a lot of focus on what china intends to do with taiwan -- that has put a lot of focus on what china intends to do with taiwan. and strengthening taiwan's defenses. that would be the forefront. heidi: what are the two sites hoping to achieve here? >> i do not think that there will be in evolution of achieving a great breakthrough in the relationship. at best, the two sides are hoping for some stabilization to avoid any undue conflict. with the economy, globally, china and u.s. looking the way it is, the last thing anybody wants is a crisis in the western pacific. with chip shipments coming out

of taiwan, any disruption to that would be not good for the global economy. shery: the imf downgrading the growth outlook again. >> back in april, when they started downgrading, they have gotten even worse. that is how i interpreted it. it is overwhelmingly down to the downside as they were of a global recession. what if there is a complete cut off of europe's gas imports? what if inflation becomes more persistent? the escalation of china's property crisis? renewed covid flares? let us look at what the imf chief economist said today. the outlook has darkened significantly since april. the world may be teetering on the edge of a global recession two years after the last one.

in terms of what their forecast is for next year, the 3.3 percent gdp for this year, it is down to 2.9% for 2023. very important to note, the imf were signs -- defines recession as a gdp of 2.5%, emerging market economies often have less, faster gdp growth than developed nations. that is how close we think -- they think we are to a global recession. they expect this year off from a 7.6%, central banks have to get a right. that is one of the things that will make all of this fight the economy. heidi: we see these positioning's of market expectations. we are seeing the expectation that the fed will be forced to be more aggressive.

we are watching the indicator across the yield curve about what that says about the outlook. >> that is something to watch. it has inverted and that can mean recession. if they do a 75 basis point rate hike, are you we do say that is a less aggressive fed -- going to say that in a less aggressive fed? there remains a question. jerome powell is expected to say yes, we still see a soft landing. labor market is still strong. he is putting the emphasis on the fight against inflation. they are hoping that they will not have to go so long. if they do that front loaded, they can knock it under the chin. i spoke to a former fed official about what they are going to do tomorrow, i spoke to a wall street economist, the former fed official, they said the same

thing. they do have to hit this hard and what about the elections in september? i want to put that on the table. they went back to a 100 basis rate hike, that would be a huge surprise. shery: we can tell what is happening on the ground due to all of these companies. give us some clues about the state of the consumer. and they turn around microsoft shares? -- the turnaround in microsoft shares? >> microsoft shares will be up double digits. they ended the fiscal fourth-quarter below estimates on the top and bottom line. this company had a well told story, overseas sales and profits that was evidenced in corporate pull back on spending on cloud and software.

you take the asia or cloud unit, they are saying that there are fewer deals, the volume of deals is down. $100 billion deals, it has hit a record. a mixed picture, the market like s what it is hearing. in the near term, it is going to get worse. heidi: what about alphabet? >> they have missed or just met almost every metric that they put out apart from one, that was the motto that mattered, and revenue came in higher than expected -- the one that mattered, ad revenue came in higher than expected. we see this from credit card providers, that held up well. youtube was interesting because there are social media ads.

they broke off from the same period a year ago. i think what is interesting about alphabet is that there is some finding talk going into next year's they also are impacted by -- going next year. there also impacted, they are freezing hiring and bracing for a changing microenvironment. going into wednesday, this is changing the psychology of the market overnight. it will be an interesting day tomorrow. shery: we do have breaking news. we are hearing from the washington post that the department of justice is investigating president trump's actions in the january 6 probe. this is investigating his actions as part of a criminal investigation in efforts to

overturn the 2020 election results. the prosecutors are questioning witnesses before a grand jury including two top aides to vice president mike pence. this raises the stakes of a politically difficult situation involving a former president which is still so important for the republican party's fortunes as we head for towards -- as we head for the political elections. >> the eu is preparing for a possibility of a full cut off of energy supplies. every to reduce natural gas used by 15% until next winter. it reflects rapidly deteriorating gas flows from russia. supplies were set to drop around 20% of capacity. >> gas can stop at any moment. this is why we asked the

commission to propose an contingency plan. >> bangladesh has become the latest nation to ask the imf for a loan. the government has asked for $4.5 billions in aid. as imf says it stands ready to offer support. a new ceo to replace thomas, according to the financial times, this is part of a long-running effort to turn around a struggling lender. the announcement is expected later wednesday when credit suisse reports second-quarter earnings. elon musk and twitter are fighting about the start date for the delaware trial. twitter insists on october 10.

twitter says it spent more than $33 billion so far on musk's proposed acquisitions. 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: we will take a closer look at the second quarter earnings and a full your outlook amid growing fears of a global recession. we discussed investment strategies with an individual who says it is good to spend your cash instead of leaving it on the sidelines. this is bloomberg. ♪

shery: we have news out of south korea, the second largest memory chip maker after electronics. operating profits are gaining 56% year on year. it is a beat on expectations. consolidated net coming in at $2.87 trillion -- 2.87 won. it is growth of 34%.

demand remains resilient for south korea and a week korean won may have helped these numbers. they are seeing 2022 market demand at 20% plus year on year. they will review next year's investment plan. bloomberg has reported that the company is considering cutting its 2023 capital spending by a quarter. we have seen in demand weakness as well. we are watching the latest from sk hynix. we expect growth around 10%. also second-quarter in the single percentage. demand for server memory is likely to slow in the second half as well. heidi: some interesting themes when it comes to trading 82 names going into the asian session -- going into tech names

, going into the asian session. we saw resilient earnings out of alphabet, missed sales growth when it comes to microsoft but an upbeat outlook. that is adding to the optimism we see in the after session. shery: our next guest says she likes sectors with pricing power in times of inflation. let us bring in nancy, where are you finding those names? >> in the same sectors i have been talking about all along. there is always utilities, like i said, anything that has pricing power that most likely people will not give up buying. if you get your electric bill and it is up 35 percent, you are likely not going to cut off your electricity. you will continue to pay it and

hope it does not continue to go up as high in the future. shery: do you see opportunities outside of the united states? >> we are staying far away from or limiting exposure to outside of the u.s. because the dollar is so strong. as companies recover and they do well, there is a huge hurdle to overcome with the currency exchange in the first place. we are holding back a little bit on our of the u.s.. -- on outside of the u.s.. heidi: are you keeping or advising clients to keep some powder dry? >> it depends. we are in an advisory firm and we are in the business of meeting long-term goals for clients. there is no reason to be in a crazy market like this where you

have extreme volatility from one day to the next. for longer-term goals, i think we are in a great environment to enter and there is a lot of controversy about whether we could hit bottom or not. it does not matter because it has been a very good environment for deploying cash in the past six months. eventually this is going to be a blip on a graph. we are looking back at it. heidi: we are seeing major institutional investors including singapore's gip saying that there is important in the 60-40 portfolio. where are you sitting on that? >> the 60-40 phenomenon is too cookie-cutter. it should be personalized to each person and what their objectives are or appetite for risk is.

what their goals are and the timeframe for the goals. an average of 60-40 does not work for everybody. you have to really analyze each person's situation. what is made up of this 60-40, there is so much behind that. the 40% could be long-duration, short duration, intermediate duration. there is much variation and it is not an easy answer to say it should all be 60-40 and everything will be fine. heidi: given the global recessionary risk, you let to commodities play. how do you get that exposure? >> we have been buying indices for the most part. i think it is hard to focus on just energy or just one of the metals. go with a whole index. it has done extremely well.

there is a bit more of an upside. we are getting to the point where we may just be taking the money off of the table shortly. heidi: great to have you with us. you can get the round up of the stories you need to know in today's addition of daybreak. it is available on the mobile and the bloomberg app. customized settings so you get the news on the industries and assets that you care about. this is bloomberg. ♪

shery: we are counting down to the start of trading. over in japan, south africa, considering the the first yen

denominated bond. it is looking at samurai bond funding because of the commitment to low rates mean that they are a cheaper alternative to eurobonds. a pair of managing partners who help with vision fund are leaving to join a new investment firm led by the platform's key architect. we have a earnings we are watching today including mitsubishi motors and hitachi metals. consumer confidence has tumbled the most since the onset of the pandemic. rising interest rates, the financial services commission is set to announce shortselling rules in the third quarter. sk hynix has reported second quarter profits that beat estimates. we get this later this hour. heidi: let us get caught up to

date with the latest business flash headlines. general motors has a positive cash flow. sales at the aerospace saw an of 87%. they battle inflation, supply wells, and thinking demand for wind turbines. they are looking to pick up the conglomerate next year. profit warning after china was recovering slower than expected. it is down from as much as 13%. the warning drag on shares already under pressure from walmart's outlook cut. shery: the dow jones industrial average reporting that activist investor delegate management has a stake in paypal. the size of the state and the

intentions are going to be learned. paypal has $8 billion of cash in short-term investments and debt activists are brought to companies and they say could allocate capital more aggressively and the dow jones industrial average reports that the management has a stake in paypal. they do not know the size of the state. the global growth forecast at australia's inflation data. this is bloomberg. ♪

>> the imf has cut its global

growth outlook for a third time as inflation rises. the fund expects global expansion to slow. the imf expect the global consumer price gauge to increase . sources say president biden will speak with xi jinping on thursday amid fresh tensions on taiwan. beijing has warned that will take a resolute and strong measure against every visit. candidate is vying to lead britain's conservative party accuse each other of pursuing policies that are morally wrong. please trust said it comes at a

time when families are struggling to pay for food. >> it's wrong we have the highest tax burden that we have had for 70 years. some leaders want to keep to the commitment of not raising taxes. >> i look at our economy growing. cutting red tape. i will do whatever it takes to tackle illegal migration. >> russia says it will opt out of the international space station. the new space chief says russia will fulfill its obligations before it leaves the project. it comes with relations strained over the war in ukraine. students in hong kong will be required to take a course on the beijing national security law.

the university of hong kong says it will be compulsory in the coming school year. several other universities will offer classes. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: let's take a look at the set up when it comes to the asian session. somewhat more muted, we are seeing u.s. futures flying after a big boost in the after hours on the back of alphabet and guidance out of microsoft. watching asia tech for some outperformance. nikki futures trading higher by over half a percent. tepid start in sydney. down for tenths of 1%. we are expecting a big cpi prints. watching dollar-yen given these changing tensions, kiwi stocks

looking flat. we saw the aussie dollar climbing to the highest in over a month and those gains could be capped. part ofg from the revised downward from institutions like the imf. shery: we are awaiting the growth forecast downgrade, now we finally have it. coming without warning that the world economy could be teetering on the edge of recession. the fund has cut its outlook for this year and next. we has to chief economist about the risks they are seeing. guest: it's a significant downside risk. we forecast growth was going to slow down to 1.2%. we highlight that in case there

is a full shutdown of russian gas flows, the downgrade could be more severe by 0.8% to two percentage points downgrade in terms of economic activity. >> what are the chances of it revising even lower? how quickly could we get there? >> what we call an alternative scenario is a plausible downside risk, the scenario of a full shutdown of gas flows to europe. we view it as quite likely but not as likely in the baseline, there is hope gas could still be flowing to the area. >> there are paths you will

assume to be in recession. can european countries work together? can they prevent the worst case scenario? it can mitigate and absorb some of the impact. securing alternative supplies, so all of these mitigating policies will have an impact them will help the european economies. baseline, we are not seeing a recession in the u.s. in 2022 or 2023, we are seeing a significant slowdown. this is a significant slowdown. to give you an idea, growth

slows down to 0.6%. this is a low number. we are seeing a very narrow path for the u.s. economy to avoid a recession. a small downside risk could be enough to knock it off. shery: the fund is expecting price pressures to worsen as higher food and energy costs decline with lingering supply and demand balances, the imf forecasts the gauge will increase 8.3% this year. that was the biggest jump since 1996. haidi: it's being fueled by the spike in oil prices. joining us in the studio is --

it feels like a lot of central banks are setting up for this moment. guest: we think australia can withstand a higher cash trade, but i think economists are getting ahead of themselves, whereas the market pricing is well over a years time. it's looking much more supportive. haidi: take a look at this chart when it comes to the complete collapse of consumer confidence.

the biggest one was when covid-19 hit. how much of that concern is reaching the consumer with everything going on in china? guest: all of the consumer indicators have tagged over the past few months. , investor confidence numbers. i am not surprised. if you're in australia, inflation is at a multiyear high. it's feeding into the purchasing power which is why the pmi's showing up in july, it went negative. there is this big risk of a recession in the next few months , ultimately i think that's why the global central bank won't be able to take rates much higher from here. the current pricing of rate hikes is probably appropriate and any more than that, rate

hikes will probably cause a recession. shery: can inflation come down without lower commodity prices? guest: some of the indicators on the commodity story look a lot better over recent weeks and months. prices have come down. the only concerns are energy and gas. that is a concern for europe, russian gas. it's a reason why we think european growth will slow quite significantly, but across-the-board i would say the commodities story is looking more supportive for the coming months. shery: how much can the fed really do with a 75 or 100 basis

point rate hike this week? guest: the 75 basis point rate hike will work to slow consumer demand, and we can see rate hikes are working to slow consumer spending. especially in the retail data, volumes have been quite weak. this is the point of rate hikes. the fed wants to slow consumer spending. haidi: how big are the market risks for asian central banks? you're starting to see some alarming capital outflows from a number of economies, most of them around southeast asia. guest: i suppose the risk is what happens with the u.s. dollar and the impact of a high u.s. dollar on some currencies because obviously it means currencies of other countries pegs to the u.s. dollar means a weaker currency, and that can be negative.

we think we have probably seen a peak in the u.s. dollar. normally, the u.s. dollar tends to weaken after the market has priced in what the fed is going to do. haidi: you also see interesting phenomenons when it comes to trade deficits with china. perhaps that's been reflected in demands for goods. what do you see as a pass-through for a recession? guest: i am optimistic on china. there is a lot more room for stimulus in terms of the monetary and fiscal side. china does not have an inflation problem. there has been an increasing consumer demand that a lot of the developed world. in terms of other indicators, i

think there is more upside. the recession is quite low over the next 12 to 18 months. haidi: great to see. don't miss our special coverage of the fomc decision. you can catch at 1:30 in new york. ♪

shery: sk hynix posted a 56% jump in second quarter profit thanks to resilient global demand for chips and a week korean won. guest: as expected, they were even better than what analysts were expecting.

we will see slowing global demand for consumer electronics product. that's not a surprise because we have heard from its rival that demand will slow down for the second half of this year. investors will move their focus. haidi: is this going to be enough when it comes to guidance for investors? what are we expecting? reporter: sk hynix shares have been about 10% gains so far this month, but that's after nearly 40% slumping in the stock price

from the 2021 p. bloomberg news reported they may be cutting capital expenditure by about one quarter in 2023. it's important because given the slowdown in demand, what could determine the chip price going forward is samsung, how they are going to limit supply conditions. investors will be paying close attention to guidance on capital expenditure for this year and next year.

the stock market will likely be reacting to guidance going forward. haidi: we're looking ahead for more details. you can always tune into bloomberg radio, hear from the data and analysis, broadcasting live from the studio and hundred. -- in hong kong. lots more ahead. this is bloomberg. ♪

haidi: checking the fallout of the global supply chain crunch. a heat wave is driving demand for air conditioning, temperatures are expected to reach 40 degrees celsius,. testing china's ability to keep factories running and adding to the pressure. the power industry is recommending coal imports subsidies to prevent shortages. ups posted a 4% drop in daily packet volumes last quarter as people spend less on deliveries for their homes. lockdowns also had an impact, pushing international volumes down by 13%. the company wants to reduce

driver hours by eliminating the rate. the company says the market is more uncertain than six months ago with demand below expectations except in china. shery: wheat futures, extreme drought helping drive futures to the highest and more than a decade, adding to runaway food inflation. exports remain unclear. an automaker has secured enough battery raw material to produce

one million electric vehicles. they spoke in an interview. >> we have affordable products on the way, we are producing the heavy -- chevy volt. the chevy blazer is coming in at a lower price point. we talked about the equinox ev which will come in at about $30,000. the goal is to provide electric vehicles across the entire portfolio. >> one question. what are you doing about supplies? the chemistry of batteries, manufacturing of the batteries. how do you take battery development to somewhere units? >> we have been very thoughtful

about our approach going back to the design of the platform which gives us the ability to make a diverse suite of vehicles, whether it's the chevy blazer or cruz origin across-the-board. gives us a lot of versatility. i'm pleased to report our team has secured all of the battery raw materials needed to produce one million vehicles with binding agreements. we are ready to go. our facility in ohio begins production in just a few weeks. we will be able to rapidly scale production. >> every vehicle uses a computer because of the chips required to give them all of their futures. you talk about chip shortages and reducing potential output. how long do see that persisting?

>> this is something we have been working through since december of 2020. the team has been remarkable in our ability to manage it. they have done a really good job in the short term. longer-term, we are focusing on simplifying the semiconductor architecture and going with fewer chip families that partner deeper through the supply chain. haidi: paul jacobson. getting the latest on shanghai. we see local covid-19 cases.

this is coming as we see a shift . we continue to monitor that situation. we know there is increased mass testing in the city. let's get you a check of the latest business flash headlines. sales jumped as the french luxury conglomerate continues to thrive despite slowing economic activity. organic revenue soared 19%. the company says cells helps drive the -- alphabet rose.

again suggest google can whether a marketing spending crunch. add sales topped forecasts, analysts described it as a sigh of relief. shery: in asia, semiconductor shares show better-than-expected profit. keeping an eye on renewable energy shares with solar power generation in japan and south korea expanding to record levels in may. the market opens are next. this is bloomberg. ♪

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shery: sentiment turning

positive. we are seeing tech giants gaining ground in after hours, not to mention disappointing eco-data. shery: inflation risks. we are seeing things more muted when it comes to sentiment. cpi out of australia, big prints. 21 year high. we have industrial profits out of china. this as we had the 10 year yield in the u.s. slightly higher for a second session given as we

mentioned economic slowdown concerns. we saw two sessions of losses, the japanese yen is trading at a narrow range and we continue to see downside. we have a strong 40 year jgb sales so we will continue to watch the market. take a look at korea, we are watching chipmakers. they warned of a slowdown in the second half, not surprising. we are seeing not a lot of movement at the start of trading but it's all about the korean won. we saw a bit of a rebound. we continue to see weakness with the strong dollar story, not to

mention we are heading towards a fed rate hike. haidi: busy day, all of the earnings we continue to parse through. flat at the moment, tepid losses. we are seeing a bit of strengthening of the dollar. we get these crosscurrents with global recession risks, the commodities. taking a look at the 10 year yield, looking at bond markets. we're seeing returns of 1.8% so far in july, the first monthly gain in australia since november. shery: let's take a look at the

bond markets. our next guest says dollar strength is not likely to be as persistent. what are the implications of the dollar peaking for asian equity markets? guest: good morning. it's one of the real factors we look at around asia. we are very much having them and focus with financial markets tightening. thinking about the asian recovery, china is going through a staggered reopening. it should be quite supportive more broadly.

if we see the fed trade-off between the market and inflation , the market may be priced in the peak for interest rates. shery: how much of the moves have prices priced in? huge tech earnings. guest: it's been a case of not terrible but not great. it's been quite a mixed bag. see clear messages around swelling demand, big retail names. this narrative around that rotation, persistently trying to move into value.

for us, it is about valuations. valuations have come down, not nearly as much in other parts of the world. we watch that closely in of thinking about if there is anything more to come in the u.s. market. haidi: talking about this reset when it comes to tech. take a look at this chart. coming down from the -- they're going to really have to outperform in a challenging environment. guest: these things are so

highly valued. valuations have gone up to such an extreme that of course when the narrative started changing, they felt the greatest pressure comes back to that point around valuations falling further from here, what you are seeing in terms of profitable companies versus nonprofitable companies. the here and now is around where the market is trying to find the bottom. there is not going to be

negative sentiment towards a recession or what comes from thinking about fixed income in a way for equities. haidi: we have the big news about alibaba pursuing the primary listing in hong kong. re-shifting his focus back to the world, does that give more impetus for market sentiment or do the macro factors create a lot of uncertainty? guest: there are a few uncertain factors. it's not clear how much flexibility they will have with restrictions. it's a very important signal. for us, there are signs that there is flexibility coming through. strong investment in infrastructure, the growth story

and the second half of the year. the government is trying to address some of those issues. some of those regulatory changes we have seen come through. i think that is what is being reflected in some earnings. you want to have access to global capital, you might move into a world where you see a dual listing scenario, haidi: let's take a look at some early movers.

10 minutes or so into the start of trading. watching sk hynix, unchanged. the chipmaker posting a 56% rise in second quarter profit on global demand for chips. watching the apple supplier, good guidance. the pace was softer. samsung electronics is one to watch as we see korean stocks start to recover. tokyo up by 1.3%. canon is boosting operating income forecast and the numbers are broadly meeting estimates, but we are seeing some pretty

big downside. >> the eu is preparing for the possibility of rapidly deteriorating gas flows from russia. gazprom says supplies are set to drop to 20% of capacity. >> it can stop at any moment. >> xi jinping has been invited to the g20 counterpart. they held a rare meeting in beijing where the indonesian leader extended the invitation. china says they think the host and where success, but it was unclear if he will attend. credit suisse is set to name a

new ceo. according to the financial time, it will be as part of a long-running effort to turn around the struggling lender. he runs the bank asset management division. the announcement is expected later when credit suisse reports second-quarter earnings. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: with alibaba seeking a primary listing, we will talk about the exodus of chinese companies from new york. we will look at whether we have seen a bottom for the classic 60-40 investment portfolio. this is bloomberg. ♪

haidi: [indiscernible] one focus is the 60-40 portfolio. david ingles joins us. is it the come back? we see some big institutional investors saying so. david: we have seen a comeback.

what you are looking at is two things. one is the rally from the bottom to the top, and from the peak to the bottom. the negative number tells you it's falling more than the rally. when you are at zero, equidistant. it shows you two things. the lows we hit on the specific measure have fallen further and further across different cycles. that's one. the other thing is if you see where recessions are in reg, that the bottom for this measure happens right during the recessions themselves. we are waiting for the fifth. if that's any indication of the future, it has yet to bottom.

i will leave that data. shery: watching u.s. gdp numbers on thursday and whether we are in a technical recession will depend on the call made by the national authorities because the economic research number is who decides in the u.s. if there is a technical recession. i digress. it all depends on what the fed is doing. others are expected to follow suit. even as we talked about recession risks in the u.s. and around the world, kathleen hays is here. what can we expect? given the economic concerns, will they pull back a little bit? kathleen: most bets are not yet.

there is no sign we are there yet. the fed will make it clear in their policy statement that maybe they don't see as much growth, and jay powell is probably going to be asked about all kinds of recession risks after they do the 75 basis point rate hike, and talk about the strong labor market, soft landing, be aggressive, maybe you can avoid an actual recession. at the same time he will say inflation is our job. what about yield curves? you showed the charts of his favorite yield curve getting worse, even if it's inverted,

it's probably going to signal that it would be not hiking rates enough. letting inflation get more entrenched. more aggressive in the future. this is the biggest rest. he's wanting to avoid any signaling there is any kind of put or sense that the fed is going to look at this recession and slowed down, and the question is, whether or not -- by september, the fed will have two more cycles of inflation numbers, the job market. what stance is it going to take in between? that is a potential market mover. haidi: it's just one of the risks the imf is flagging when it comes to once again another

downward revision, saying we can see the global economy heading towards recession. kathleen: they say overwhelmingly the risks are getting worse since april, they revise the forecast, gas imports getting cut off entirely by putin, what if inflation gets more persistent. they are watching all of these things. here's what the chief economist said. since the last forecast, the outlook has darkened significantly. the world could be teetering on a global recession. the imf sees 2.9% gdp growth. they define a recession as 2.5% gdp. that's how close we are.

one of the big things out there, central-bank rate hikes fight the global economy, but central banks say getting down inflation is the number one priority. haidi: do not miss our special coverage of fomc. 1:30 a.m. thursday in hong kong. bloomberg has been told president biden will speak with xi jinping on thursday as tensions continue to rise over taiwan. expectations were to talk about the dropping of some of these tariffs, and the last few days, we have seen these escalating tensions and threats from beijing over the proposed visit for the house speaker. stephen: geopolitics is going to play dominantly in these talks.

the tariffs issue is not likely to be on the agenda. i'm gathering the united states is not necessarily want to put choosing paying in a position to negotiate those towers. if not a negotiating tactic with china. geopolitics is, taiwan is at the forefront with this talked about visit by the house speaker in early august. lawmakers have been encouraging her to make a stop in taiwan and that of course is wrangling beijing. a house speaker has not visited

since 25 years ago. china is a different beast than 25 years ago and much more strident on defense issues and relations with the united states are at a bit of a nadir. diplomatic ties and relations, discussions, dialogue resumed again in 1972. it's a tenuous time and even the u.s. military according to joe biden is encouraging pelosi not to make the trip at this time. given the potential for china to retaliate, the ministry of foreign affairs spokesperson has said the consequences will lay on the united states for any serious reaction from beijing. shery: stephen engle the latest. this as we continue to get more

news in terms of china's property sector, we are hearing from the largest developer that they are going to raise 2.8 3 billion hong kong dollars, the price would be -- they will be selling 870 million shares, and as we continue to see these developers under pressure with mortgage boycotts continuing across the country. plenty more to come. haidi: that property market is stressed. it's one of the key macro factors we look out for. there is a lot more to come. this is bloomberg. ♪

shery: this is the week mega cap tech companies report. alphabet is posting earnings in line with estimates, sigh of relief with concerns about the at market. su keenan is here. su: it could turnaround psychology. if you look at how they came in on the numbers, with every metric, they either just mr. just met. when it comes to the metric, ad revenue came in much higher.

google may be positioned to whether a crunch in marketing spending. the execs pointed out and told bloomberg there was a lot of activity in travel and shopping. that's where a lot of the search ads were. though she says the environment remains complicated. shery: investors focusing on the guidance which was more upbeat rather than the miss itself. su: double-digit sales growth is easing investors concerns after they missed on a number of factors from the stronger dollar to services, weaker demand, but it was the upbeat outlook. microsoft said it expects income

to increase at a double-digit pace. the impact of currency fluctuations easing. they're also saying they see a lot bigger deals going down the road for cloud computing software, all of that is a positive spin on the tech story thus far. interesting to see how this impacts the u.s.. haidi: su keenan. we find out why, next. this is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working.

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haidi: let's take a look at how shares are trading. inflation is proving to be on bulls. first monthly gain since november. we are seeing the focus shifting . that is playing out on bond yields. take a look at the aussie dollar. we saw the highest for the aussie in about five weeks. any moves could be capped by the fact we see rising global recession risks. not much action when it comes to trading in equities.

australia is up 1/10 of 1%. >> the department of justice is investigating donald trump's actions to overturn the 2020 election results. prosecutors have spent hours questioning witnesses before a grand jury, some questions about faye collector efforts. sources say president biden will speak with xi jinping on thursday amid fresh tensions over taiwan and a visit by nancy pelosi. beijing said it will take resolute and strong measures. the conversation will be the first between the two leaders since march. bangladesh is the latest south

asian nation to ask the imf for a loan. the government has written asking for $4.5 billion in help. russia says it will opt out of the international space station and focus on its own orbiting outpost. russia will fulfill its obligations. shery: european union countries have reached an agreement to cut gas use as the prospect for a full khalaf from russian supplies grows increasingly likely. let's bring in our reporter.

what are we hearing so far about supplies coming from russia? guest: the nord stream one pipeline said to fall from 40% capacity to 20% due to some geopolitical issues between russia and the west. that's because they are a turbine. they said this is just a play by russia, using it as an excuse because they want to punish europe for supporting ukraine amid this more. russia is using energy as a weapon in the european union is trying to figure out what to do.

haidi: in the meantime, china is very quiet. are they betting covid zero will continue to put a lid on demand? reporter: when you are looking at this market, it looks like japan, germany, everyone is looking to buy liquefied natural gas to make sure they are prepared for winter. that has provided a lot of relief for the market, though supplies are going to other countries like europe. they are betting that the covid zero policy continues through the winter, it reduces economic

activity, reduces factor for electricity. therefore, must demand. if there is a cold winter or china reverses the policy, you could see demand surge and essentially take gasaway for countries that needed. that can cause a really big issue. will the gamble payoff? it creates a giant rift in the market. this is one of the aspects that beyond just russia is a risk for the global natural gas market which is trading at extremely high levels right now. haidi: let's get more on china.

evergrande days away from unveiling a restructuring plan that speaks to the huge complexities of the world's most indebted developer. we can understand, $300 billion of liabilities. no wonder is taking this long. does the drawnout nature benefit evergrande more than bondholders? guest: evergrande is very complicated. when it comes to the offshore assets, not that complicated. it's pretty established. bondholders can only get a hold of overseas assets. to that extent, it's not that complicated. you are trying to chop off one arm and give global investors what they are due. shery: does that mean they

should try to get whatever they can right now instead of holding off? reporter: yes. whatever the restructuring plan that comes up this weekend will be very bare-bones and we will not see much of it. last year, they sold stakes but there was no cash exchange. if offshore bondholders are not careful, they will be gone. haidi: country garden's placement we are getting details of, is this a desperate move?

reporter: it's interesting. in recent days you see traders trying to look at companies that trade at distressed levels. country garden was up 13% yesterday. they were taking advantage of that to raise liquidity in the market. there is still appetite. shery: still ahead. capital investors are expecting global equities to remain at high risk of further falling in the next few months as central banks work to combat high inflation. that conversation is next. this is bloomberg. ♪

shery: take a look at how shares are trading at the moment. we are seeing downside right now. despite the fact there is a little more positive sentiment in u.s. futures. discretionary materials leading the declines the staples are gaining ground. we have seen more positive

sentiment into the asian session that does not seem to be holding up especially with japanese stocks. korea is down. haidi: regulators have threatened regulation if they do not comply with auditing rules. let's bring in a managing director. great to have you with us. they expect more of these dual listing arrangements by these chinese companies. what is the significance you see in alibaba doing this?

reporter: the listing is making alibaba a more dependent entity. there will be more chinese mainland investors. new attract more investors -- you attract more investors. those are a few key points for alibaba. haidi: does this open the gateway to a better outlook for alibaba? it would be one of those things where they consider regulators want them to do in terms of bringing the business and more of an alignment with sort of

priorities. reporter: you're going to see and easing regulatory environment. perhaps i think because china is more focused on economic development or recovery. we have concerns over the general week to mount and competitive landscape. it feels week and some businesses and growth is slowing down. shery: what is the catalyst?

guest: [indiscernible] they have had some interesting movements, more brand emergence to both, they are also creating more synergy. people are waiting to see the numbers whether this change can bring upside. will are awaiting and seeing. shery: what does this signal for the broader chinese companies that are listed in the u.s.? we have heard some people say this makes the market irrelevant over time. guest: investors have been more

active. both u.s. markets are having [indiscernible] they would have a big understanding of these conflicts. going forward, there will be more investors. haidi: do you think in the medium and long term it signifies the beginning of the decoupling when it comes to these companies reallocating focus and prioritizing that focus on mainland china?

do you see this as a beginning or the process of decoupling between china in the u.s. in terms of the shift in focus of these companies? guest: this is only the result in terms of broader picture. it totally depends on the picture. it's difficult to say that. most of the companies have a simple purpose. contracting investors.

[indiscernible] haidi: the outcome of the delisting risk. let's get you a quick check of the latest business flash headlines. sk hynix is posting a 56% second quarter profit thanks to resilient global demand. operating income rose in the quarter and now facing analyst estimates. it alleviates some concerns about slumping demand and oversupply. profit warning after sales hit by lockdowns.

down from as much is 13%. the warning dragged sportswear makers. ubs tumbled after reporting weaker than expected profit in the second quarter. investment banking results -- optimistic about the outlook in the region. >> the demographics speak for themselves. haidi: we are expecting credit suisse early's later on. the ceo will be stepping down.

this is a long-running effort to turnaround the lender. shares have been down 60% or so for credit suisse. a swiss banking veteran, over a decade at credit suisse before going to ubs. we will be hearing those earnings. we are watching for deutsche bank earnings, they need revenue momentum when it comes to managing cost pressure, at a time where there are increasing challenges to keep costs and expenditures under control. that will be crucial. we saw ubs underperforming peers so analysts will be watching to see if deutsche can do better on

that front. shery: viewers can get the latest at tv . this is bloomberg. ♪

haidi: we are seeing three-year

futures, the australian inflation print coming through, looking at a 21 year high. if we get a lower figure that pulls back expectations on what they are will do, but certainly economists are saying they have a bit more leverage in terms of being able to move to tighten policy than some other economy. we are seeing rising energy costs. shery: we are getting industrial profit numbers later in the day, profits have been sliding. we will continue to watch, we are seeing the downside, reopening's are slowly starting to happen. haidi: let's get more from our

asian stock editor. reporter: as you discussed, it's a closely watched number. it's not very bright. because of the on-again and off-again covid restrictions happening since april, people are expecting a further slide in june. economists are expecting because companies can plan ahead properly. they do not have clarity on one cities will be locked down. shery: which is affecting home sales. we're hearing from the s&p that they are not expecting home sales to recover this year at all.

reporter: doubling the previous project. s&p has been tracking the developer sector pretty closely. the ramifications are leading to more -- shery: some of the stocks we were watching on the mainland when they open include some semiconductors because we have sk hynix reporting better than expected. morning of slower demand in the second half. just as we were talking earlier, raising $360 million, other developers.

coming up in the next hour, why the summer of love may soon be over and it is time to sell bonds and by volatility, the risks to china's recovery including the new closed-loop system in shenzhen. that is it for daybreak: asia. market coverage continues. standby for bloomberg markets china open. this is bloomberg. ♪

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>> we wouldn't be there if they were really doing well. clearly t