heidi: welcome to daybreak asia.

shery: the fed doubles down on dumbo rate hikes, another 35 basis point is possible while denying the u.s. is in recession. wall street surges are in hopes of an event will slow down in the peso fed tightening. we look ahead to samsung earnings, an expansion of a tie up with qualcomm. we the u.s. futures pair back to earlier declines. the nasdaq 500 saw the best day. this is coming at a time when these companies gained ground and they continue to rally as chair powell spoke about a potential slowing of the pace of rate hikes at some points. we have treasury yields falling

as traders are paring back expectations. heidi: as we get every time we have the fed move, given the dollar peg, raising the base rate. in line with what we get from the hong kong authority after every fed decision and we have seen that coming under some pressure given the levels of intervention we saw from the local rates being pushed up in response. that moved as expected from the hong kong monetary authority to go in line with the fit decision. the rest of asia is processing the 75 basis points from the fed. chair powell does not see a

recession but 75 basis points again on the table for the next meeting. there will be some concerns when a concert at impact on the capital outflows. we see an optimistic set up for the start of trading. australian futures seeing .8%. we have the nasdaq 100 or 4%, we could see technology stocks seeing a boost as well. the bond rally continues, the yields continuing to take a slide. here in australia we saw the rally in australia take a hold on for the cpi numbers came in softer than expected. that is pushing back expectations of an overly hawkish rba hike tom august -- come august. we are watching the aussie dollar and yen. shery: the market reaction has been pretty surprising, the ground and we are seeing for the third time after a rate hike by

the federal reserve. the fed has delivered the .75 rate hike and it will continue until inflation has peaked and it is clearly heading back down. we are joint by our editor -- joined by our editor. a 50 basis point hike for june and july. what was the message from the fed? >> inflation is a big problem and we are doing it now and we will not let up. it is a question when they succeed. the kind of things that jerome powell said, inflation is much too high. it is essential to get it back down to the 2% target while it is 9.1%. it has a ways to go. they need compelling evidence that inflation is coming down. he stressed the word, it cannot be a pause or a bit of movement. it is possible, but an unusually

large rate increase, it is possible at the next meeting in september. he says i am not going to give you any signals on that now. he said the pace of the rate hikes, it will depend on incoming data. in terms of what we can get from clues, i think it is so important when you set about the june dot plot. the summary of economic productions which gives us this chart of how many rate hikes they will do. let us listen to what he said. >> we will be guided by the data. you can think of the destination as broadly in line with the june sep. it is only six weeks old and sometimes sep's can get old really quick. in this one i would say it is probably the best guide we have as to where the committee thinks it needs to get at the end of the year and into next year. >> the best guide of where the

committee needs to get. he says we have not changed our minds since june. it is the end of july and we think the funds raised this year will get up to 3.5% by the end of the year is pretty much the consensus. another 50 places point rate hike -- basis point rate hike. markets may be relieved that they are more aggressive but it is clear at least on july 27 without seeing too much more of data, this is where the fed is still heading. heidi: victoria green said we are arguing over there is a recession or not, we are here in a recession. how delete rate the concern when it comes to jerome powell -- how do we rate the concert want to constitute jerome powell and they. >> you have jobs averaging 400 a

month. we know that markets are worried about the yield curve, there is no long and variable lag when it comes to the job in yields. what it has done to the u.s. are zinc market -- to the u.s. housing market. jerome powell also said job markets felt robust, he thinks it is possible there is a path to a soft landing. they think they can get it done. when he to see growth potential. -- we need to see potential. after the fed presser, they said the fed would have to hike rates quite a bit more than markets expect. may be the markets are over anticipating the fed and i would say that is one of the key takeaways from today. heidi: let us get you the latest

market reactions. we are looking at this rally where just 85% of the companies actually rose overnight. how long current and resilient what this rebound be -- how long-term and resilient what this rebound be? >> the market was looking for anything positive from this decision. there were certain grounds throughout for investors and that is what they latched onto. if we look at the last couple of fed tightening's that we have on the bloomberg in may and june, those were followed, investors paused and recalibrated and markets actually declined. as jeffrey rosenberg said, this market is experienced. be cautious.

another great comment from jake gordon who spoke saying that rallies are fun in the moment and then they are followed by a hangover. we have to see the party is going to continue, or if there will be a hangover. we could see possibly a little bit of sobering months. shery: we are saying that reflected in the treasury space. -- seeing that reflected in the treasury space. >> we saw treasury yields fall and to some extent, that fuels the equity rally, especially in the tech sector. the treasury market also is pricing -- bracing for the peak

in rates. as a treasure would have to see where that got. -- where that goes. i think the real reaction to what we saw today from the fed is going to come in the next couple of sessions. shery: we are expecting a ton of data. our cross as it asia editor with her take on the market, let us get to bonnie. -- vonnie. >> xi jinping says china is facing more complex risks and challenges. the president assist the nation is entering a new phase and offers strategic opportunities and problems. he praised the communist party's response to the pandemic and the taiwan strait.

u.s. and chinese officials must reach agreements to avoid delisting a chinese companies from the american stock exchange. it could force companies including alibaba and others off of the nasdaq and new york stock exchange is as soon as 2024. it may need an update. the u.s. senators passed a bill that includes money to boost semiconductor manufacturing. the legislation is a bid to strengthen u.s. supply chains against supply chain disruptions. it is expected to pass the house later this week. australia is slashing its gdp growth, blaming inflation and global risk. the treasurer outlined his new target of 3% for the fiscal year. it is expected to slow.

the economy is still growing, the challenge is with inflation which is at a two decade high. 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: as the dollar is losing some of the strength recently, talking about the outlook and the impact on commodities demand. tom james will be joining us. shery: michelle girard sees the fed raising rates into early next year despite recession risks. we discussed the central bank's options with getting to grips with inflation. this is a bloomberg. ♪

heidi: the emphasis is getting to neutral is over. >> the ketchup phase and the phase -- catch up phase is over and we are in a new phase. at some point the committee will slow down, that is a reasonable picture of how the next few meetings and months will play out. >> powell refer to the funds rate as a neutral, at the inflation rate is at 6.3. that is so far above the funds right. we have a negative funds rate. how could that be neutral? >> it is an estimate and the

estimates are not clearly -- they have big ranges of potential variants around them. i do not think we should confuse what you would call restrictive territory or real positive real rates with the notion of neutral, neutral really is where they think in normal circumstances, at the economy and the are imbalanced. this neither is stimulative nor is it contractionary. that is what neutral is supposed to mean. it is a notion of 2.5%. shery: what was he thinking of a characteristic recession. words are not there there --

words are not there yet. >> he is thinking of something that is very broad-based and a fairly long duration. he has also thinking of an employment market that, he put emphasis on a positive employment market and the is the principal reason he cannot deny that we are in a position at the moment. heidi: let us bring out kathleen hays, standing by with our next guest. >> joining us now is the head of natwest markets. you have had a couple more hours to think about this, what the affected and what is said.

doing whatever it takes to bring down inflation, it will keep hiking rates until they see lower inflation? do you see things a little less hawkish as they have been? >> i do not think it has been as hawkish today as it has been. arguably, like dennis lockhart was saying, the truth is we are moving to a different place now that the funds rate has reached a level that the fed estimates is close to neutral. you asked exactly the right question. how can we think that is neutral? nonetheless, the fed has moved to a point where it is no longer accommodative. going forward, perhaps, it is not as -- it does not need to be as aggressive or move as aggressively as we have seen. of course, it is going to be data-dependent and i will cite the market reaction, i do not

think the fed was as dovish as the market reaction was suggest market participants thought the fed share was -- chair was. >> chair powell made it clear, two months of data will get two new inflation reports, gdp, a lot of numbers. economists have to look ahead. are we going to point out in september that as of 75 basis point rate hike is on the table again? >> everything is on the table. one thing we were happy to see is the fed chair did not try to guide markets with so much information ahead. that caught the fit into trouble with recent meetings, they try to signal ahead of time what they are likely to do. there is a lot of information. i think the information suggests that the fed could perhaps again have the 2.5%, they can begin to

move a bit more slowly. we do believe that the inflation rate has peaked and it is good to stay high. it will be looking to move over the next couple of months, at least in the right direction. we will have more evidence of the economy moving momentum. i think that they will keep going, they will step down to the 50 basis point move rather than another 75. >> what affect the rate of recession -- risk of recession as the fed continues to hike until they get to 4%? that is a long way to go. >> we think the fed will continue to hike. i think the market is expecting that if the economy slows. we do think the funds rate gets to 2% next year. i think the -- i think we have a meaningful risk of recession because the fed will be taking that action to intentionally

slow the economy down to bring inflation down. at least 50-50, we do not have it in our forecast. it is absolutely a very meaningful -- i think it is probably more of a 2023 stories and now. >> how closely are you watching signals from the bond markets? chair powell is watching the three month and 18 month forward curve. now we are seeing the biggest decline in that cap since the 1990's. >> the markets looking at the 2-10 year spread. this is above the 10 year yield, also another side of recession. the move lower in yields is the market reflecting expectations. i think that the decline in yields, it is the right story in terms of i think the economy is

going to slow. does that mean inflation is going to come down? does that mean the fed can stop raising interest rates like the markets pricing in? i think that will be challenged. i do not think the fed will be able to reverse course that quickly. heidi: fed participants are looking at the market reaction with their head in their hands. we expect to see some that speak to try and really drive the message home that this is not -- there is not this pivot that is being priced in? >> the pivot in 2023 where the markets are spending the fed to cut interest rates, that is a long way off. i think the fed is trying to guide markets in the past few months, it is coming back to

bite them. we have a gdp report that is likely to be soft. we expect higher inflation readings later in the week. we have cpi next week. i think the fed will decide what the data says the fed is likely to do. shery: the pace of the running of the balance sheet will accelerate over the next few months. you are a bond market participant for a long time. what impact is not going to have? >> it is a concern. more in terms of market functioning. in the bond market we do see a great deal of ill liquidity. unprecedented illiquidity. i think it reflects us pulling back of the fit buying treasury

securities. the market has to learn how to function without a significant buyer in the marketplace. i think it is going to be creating additional challenges for market function away from the market trying to digest the inflation and economic slowdown kind of trade-off if you will. it is absolutely important, markets need to stand back on their own two feet. shery: it is good to have you with us. you can get more on that story on today's addition of daybreak. go to dayb , you can customize your settings so that you only get the news on the

assets that you care about. this is bloomberg. ♪

shery: we are counting down to the store of trading. in japan, we are watching technique accounts including nintendo which could get a lift after the nasdaq surge. u.s. house speaker though they visit the country in early august for a trip that may coincide with a pulse. in taiwan that has anchored china. -- with a stop in taiwan that has angered china.

the fed hike was in line with expectations and will have limited influence on korean markets, we are watching the korean won. manufacturers confidence has fallen from 83, further below 100 indicated the pessimists don't wait the number of optimists. second quarter earnings at any moment, we do not get those with the preliminary results. heidi: the impact of a strong dollar, it has been seeing recent weakness, and flow capital point us. 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.

the fed hike interest rates for the second straight month with jerome powell saying a similar move could be possible. he said rather than offering explicit guidance, policy would be set on a meeting by meeting basis. the fed will slow the pace at some point. >> as monetary policy types further, it will become appropriate to slow increases when we assess how the cumulative policy adjustments are. >> a deadlock has been broken on legislation. the plan could raise $739 billion in revenue and reduce deficits by $300 billion.

a group of offshore creditors to china evergrande is demanding information. according to the wall street journal, they say evergrande did not explain how nearly $2 billion was guaranteed without any disclosure. creditors are demanding compensation for the lost funds. international flights are restarting as china uses part -- eases. the website shows a flight from paris once a week. china has halved the quarantine requirement. president biden has tested negative for covid-19 and ended isolation. he stressed covid-19's and gone but americans can avoid serious illness. he tested positive last week and

was working remotely from the white house residence. >> ba.5 means many of us are still going to get covid even if we take precautions. that does not mean we doing anything wrong. covid is still with us. as it has been for 2.5 years. our fight is making a huge difference. >> 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 get a look at asian markets as we set up for the trading session. 75 basis points, another jumbo hike could be on the table. we're watching tech stocks as we saw the big jump from about 4% for the nasdaq 100. watching asian currencies,

dollar-yen, seeing weakness across the u.s. dollar. we saw the short-term bumpare u. shery: the bloomberg commodity index has been gaining ground. gains of 20%. gold is extending gains. we are continuing to watch crude prices heading towards $100 per barrel, rising after the government report showing demand is rising globally. we have seen softening in some parts of the commodity space like metals, some crops, that is

someplace where the fed can get comfort. haidi: when it comes to the impact on commodities, our next guest joins us. so much debate over semantics. some other global economies as well. what is the broader outlook? taking into account we still have supply chain issues. guest: good to be here. it's a mixed bag. in the commodity space, the main volatility should be expected around the grains market.

fertilizer. that is the worrying thing, we have not seen the full impact of the cost of impacts. there is a scarcity. china is slowing down, the put a squeeze on that recently. we also have doubts as to when 10 ukraine and russia come back to the market in terms of grain and fertilizer? they are the top three exporters in the world for both of those. haidi: we have seen more u.s. dollar strength. the strong divergence, therefore

continuing to drive more upside. guest: yes. consumers pay, certainly what we are keeping an ion is the usa job growth, wage growth. tightness in some economies like the u.k.. the amount of workers is still going down after covid. more people leaving the workforce. there are a lot of strange impacts there as well. in the end, commodity prices, someone has to pay for it. with the food inflation we have been seeing, will the salary increases, will we see that? we see the money -- shery: how are you getting

exposure? guest: we have seen quite a correction, and some of that i guess is an implication of slowdowns in economies over the coming 12 to 18 months, iron ore is heard by possible slowdowns in manufacturing, high energy costs. copper has come off, down to 2020. we're seeing some of the industrial metals, some interesting opportunities. hopefully by then, central banks will be able to tease up on the monetary policy and drop rates.

shery: what are the geopolitical concerns with russia and ukraine? guest: on the energy side, we are thinking oil prices will remain sideways. opec seems to be keeping things stable, maybe a fall on wti prices towards the end of the year, $83 a barrel, brent crude slightly above that. anything more than that is not expected, that would really have to be an acceptance of russian crude.

doesn't seem to be using up. certainly expecting quite a bit of volatility. haidi: what is the broader outlook when it comes to some of these china-tied metals like iron ore? we are seeing relative weakness when it comes to concerns over demand, despite the infrastructure stimulus we see from beijing. guest: china, one, we need positive engagement on fertilizer. china is trying to control

fertilizer domestically. with russia and ukraine, a lot of people depending on fertilizer exports. on the iron ore side, that's going to come down to, came the u.s. economy stay positive? employment is looking good. the u.s. dollar is benefiting the u.s. economy. shery: good to have you with us. meda sees sales decline. we will hear from mark, up next. this is bloomberg. ♪

shery: breaking news out of south korea. we are getting the latest out of samsung, 10.9 5 trillion one which is a slight missive estimates. when it comes to sales numbers,

that is a slight -- operating profits,profits, 14.1, the estis 14.44. we continue to watch samsung given the jump in revenue, but now we are seeing net income coming in with a slight miss and shipped operating profits coming in at 9.9 8 trillion. haidi: we are watching for a lot of details. the availability of supply will be key going forward. let's get more on those results. let me get your first read of these numbers. reporter: good morning. we're just getting those numbers for samsung. we are seeing the mess.

-- that miss. they were expecting 11,000,000,000,001. results show its slightly lower in operating profit. much lower. earlier when samsung gave guidance, it showed more than 20% growth were in sales and operating profits where the slowest in years. that has been the story with a lot of companies in south korea that are exporting their goods. the operating profits showing a mess because of the growing costs and slower demand around the world. shery: what are we seeing in

terms of partnerships and other businesses? we heard they are extending partnerships with qualcomm as well. is there upside with although there are pressures, there might be some other opportunities for growth? reporter: that is one area. samsung recently said they have started production and was seen as one of the key things is there foundry business which they aim to grow as big as tsmc. that has not really happened. now when the call start,

investors will likely ask that question. haidi: let's take a look at the stock price. it's fallen about 40% since 2021. the chart shows it's the cheapest in about four years. dropping below the pandemic low, the 12 month forward path earnings ratio hitting the lowest levels in recent years. will investors think they are finally cheap enough to buy? reporter: that's a good point. the stock price has become cheaper compared with recent years and portfolio managers told me they find stocks cheap enough to buy again.

the stock price of samsung has been going not much in relation, the valuations have a lot more of what matters at this point as they try to find the cheap stocks in the market. shery: if you want to follow more on this story, you can get commentary and analysis from expert editors as we hear from samsung. earnings will be more volatile in the second half versus last year. let's turn to u.s. tech giants after a missed forecast. let's bring in ed ludlow.

how challenging was it for meda? reporter: the results reflected shrinking budgets. what we have seen throughout the week is there have been successes and misses. it was a narrow mess on the top line. what i found so interesting when jay powell said no signs of recession, you have mark zuckerberg talking about an economic downturn and how they are seeing that play out in the advertising market. the mainstay of their business is advertising, and they have one eye on the future with the metaverse, if you look at that commentary, they are continuing to invest heavily in that area but facebook reality labs boosted revenue, and also had a $2.8 billion loss. we also saw belt-tightening.

the mantra, telling employees focus on a few priorities, saying it's not good. haidi: we see different crosscurrents. qualcomm, it really doesn't look great when it comes to the forecast. reporter: it's interesting. those samsung numbers tell us a lot. you have the samsung handset view of the world. qualcomm is the biggest supplier of chips, and they basically gave an outlook that was tested, probably a bit kind. but they are talking about is revising downward views for the

rest of the year on the lower end of the smartphone market. talking about android handsets. that's interesting because it gives us a lens into the consumer, you think these corporate earnings are a leading or lagging indicator, but that is what we heard. that will give us the fuller picture of what that demand is. china is such a big player as well. on balance, things are not looking great. haidi: ed ludlow talking through some of those lines. we are seeing the impact of a strong u.s. dollar, 1.3 trillion won. we had numbers from sk hynix, the weakness in the won

playing out. 50 men staying solid, dram supply in line with demand, so we continue to watch second-quarter results. plenty more to come. this is bloomberg. ♪

shery: we are tracking the fallout of the supply chain crunch. boeing lowers its target for 737 max deliveries and scrapped near-term lands -- plans. the ceo says a full year output is expected to be in the low 100s down from an earlier prediction. boeing is working around shortages. airbus has trimmed its delivery forecast and postpone plans. the ceo says supply chain problems will not support the previous when but should not hit financial performance in the short term.

below the average analyst estimates. it was forced to raise car prices to offset surging commodity prices. haidi: the senate has passed legislation delivering grants and incentives for semiconductor manufacturing. it heads to the house and then to president biden status. manufacturing has lost ground in recent years to foreign competitors. the philadelphia stock exchange index is down around 30% this year. terminal users can read more about these stories in our newsletter. we are continuing to watch the earnings call when it comes to

samsung. we just heard about the benefit when it comes to the dollar. talking about smartphone market earnings. they expect growth. they are expecting levels to remain similar in the second half year on year, interim dividend they declared. fundamental demand will stay solid as well as consumer products and mobile is likely to stay week. of course, we are watching the start of trading in the next five minutes. coming up next, we are taking a look -- ♪

shery: this is daybreak asia. counting down the major market opens and reaction from the fed rate hike. we saw the positive wall street rally, but we will see if that carries on. haidi: watching for the reaction when it comes to hstech. sk hynix, pretty dire when it comes to economic outlook. now we're just passing through those earning calls. missing the profit estimates. shery: markets have to digest a lot this week. earnings from meda, qualcomm. take a look at what the nikkei is doing now. 7/10 of 1%.

we are seeing that jump, we saw that expected rate hike from the fed. the japanese yen at the 136 level, seeing strength against the dollar, not surprised we have seen weakness recently towards the one-month low. we will watch the markets as the 10 year holds. still below the 2.8% level, not enough as traders are paring back expectations of more aggressive rate hikes. take a look at what korea is doing. it's missing when it comes to the net consolidated number, we are talking about slightly before 11 trillion. the kospi is gaining and samsung

is higher at the moment. we are seeing bargain-hunting. the korean won seeing strength against the u.s. dollar at the 1300 level. haidi: that weakness is playing through, take a look at the aussie dollar. sitting pretty close to a seven week high, just under the 70 level. going into the rba decision, watching some technicals. seeing a more -- the 10 year yields, the bulls continue to

cheer. we also saw a rally coming off the softer than expected cpi reading yesterday, that pushback of any kind of supersized hike in august. the fed delivering. where joined by kathleen hays. key messaging from jay powell, clearly the market is trying to find anything positive they could. kathleen: they were and you can't blame them. all kinds of investors want to get back in. jay powell made it clear he might want you to do that, but right now, inflation is much too high. it's essential to get it back to the 2% target, it's 9.1% right now. over 6% on the fed's key

measure. he also said in answer, yes, an unusually large rate increases hospital -- possible, but no decision made and he did not want to give any signals on that. they are moving away from forward guidance, back to the fed where you watch the data, it will depend on the data comes in by september. >> we are going to be guided by the data. you can think of the destination as probably in-line because it's only six weeks old. sometimes they can get old really quick. probably the best guide we have as to where the committee thinks they need to be. i will point you to that.

kathleen: the dot plot shows at the june meeting, the fed was looking to get to 3.5% by the end of this year. 50 more basis next year. a long way to go. if you want to start buying stocks, go ahead. but he's not worried about a recession. the job market is still strong. there is maybe a path to a soft landing if they pull this off. we need growth below potential. in terms of thinking they are maybe going to slow down, bill dudley, he says the fed will hike rates a lot more. other people are saying 5% before it gets high enough to start bringing down inflation and get the fed off the pack. shery: perhaps that's the point. waiting for the market to pass through.

let's discuss more. always good to have you with us. is this just a knee-jerk rally? will this fade? guest: it looks like it. two sides of the equation, certainly the right side. in terms of what the markets need to price in, even if we don't think -- when i look at the earnings side, tech companies starting to talk about hiring slowdowns, this is not seem to me like we are six months from the bottom.

shery: we have been talking about the lost forward guidance. what does that mean for the market? guest: less positive for markets. i think the contentions seem to be close to what we are forecasting. it's clear to everybody. when you go towards gdp numbers and earnings in particular, slow down is likely to last beyond the end of the year. not seeing a lot of upside.

haidi: a lot of semantics when it comes to recession. taking into account that uncertainty, do you recommend going into defensive? guest: and a must besides the point. we know it's going to slow down significantly. that almost does not matter, to your question, yes, for the next six months i would be a bit defensive. it needs to be defensive. i'm not suggesting we should be about equities, but bonds. also, hedge funds.

haidi: what do you see more broadly when it comes to asset classes across asia? who do you see as being the winners and losers? guest: we think maybe china is on its own planet in terms of cycle. giving an example, we think export growth for the region is going to slow down. the region will probably slow down. south korea, for example, exposure to semiconductors and exponents probably having underway.

benefits, energy, commodities in general. exports are positive, should hold up. china is far advanced in the down cycle, probably at the bottom. that is also a place we like. shery: we're getting the bank of korea statement right now reacting to the rate hike saying they will strengthen fx capital flows after the fed carried out the 75 basis point rate hike. the reason we are watching this. we heard from the korean finance minister they will be watching markets closely, we have seen significant weakness in the korean won and concerns about capital outflows given the rate

differentials. haidi: recessionary fears are gripping when it comes to the season of earnings. watching vstoxx. -- these stocks. they are reporting a sharp decline, cutting the dividend in half. concerns over china giving an uplift. 3/10 of 1% in a market trading higher. samsung in focus. the 10.95 trillion missing estimates, likely to see weakness, we had pretty dire guidance from qualcomm but we

have seen broader tech. the index is up by a most 5%. softbank also continuing to rally. they did get that earlier boost from alibaba. let's get you to vonnie quinn. >> joe manchin and chuck schumer have struck a deal on a tax and energy policy bill that breaks a deadlock. it provides $369 billion for energy and climate change. his speech by xi jinping says china is facing complex risks.

both the messick and internationally. the chinese president says the nation's entering a new phase. he also praised the communist party response to issues. australia is slashing gdp growth by half a percentage point. an economic statement, they will outline a new target of 3% for the fiscal year. he says the economy is still growing, but challenges are also, inflation at a two decade high. gary gensler says u.s. and chinese officials must reach agreements to avoid the delisting of chinese companies. in american law signed in 2020 could force companies off the nasdaq and new york stock exchange is as soon 2024. he says rules may need an

update. 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. shery: joe biden and xi jinping will speak for the second time this year. we will discuss the priorities and uncertainty between washington and beijing. just ahead, a look at the financial health of an asian tech company. we will unpack samsung's earnings report. this is bloomberg. ♪

shery: su keenan joins us with the latest. we have a lot of fears. reporter: one analyst points out the sharp drop in pricing tells the story. 14% price drop on top of an 8% first quarter price drop. it shows how quickly the ad revenue business has deteriorated, hence the first quarterly sales decline. the phrase is it's another great quarter. those days are gone.

investors are seizing on the outlook. let's take a listen. >> we have a quote from mark zuckerberg. >> we have entered an economic downturn that will have a broad impact on the digital advertising business. it's hard to predict how deep or long the cycles would be, but i say the situation seems worse than it did a quarter ago. su: meta not seeing the same strengthen advertising alphabet did. he put emphasis on the competitive effort up against tiktok. 2.8 billion dollar loss, water

than last year. -- worse than last year. haidi: let's get to samsung. second quarter profit missed analyst estimates on consumer gadgets. let's get more on these results. asia stocks reporter joins us. parsing through more of the details we are getting from the earnings calls. reporter: this has been a rare earnings miss from samsung. two of its biggest businesses have both missed operating profits, and that is likely as sales have been coming in slightly better than expected.

they are missing operating profit likely from weak demand and rising costs, however there is a silver lining, showing how the company is managing the situation which is the memory business improved year on year and quarter on quarter, because the company has focused on meeting solid demand and trying to maintain lower-than-expected price gains. shery: are all of the challenges priced into the stock? we are seeing a boost in today's price. guest: the managers i speak to think that is the case. the stock has been near the multiyear price to earnings

ratio low, lower than march 2020, early days of the pandemic. we are seeing 1% gains at the open which is in line from relief from investors. the stock market is helping. shery: take a look at what mitsubishi is doing. we are seeing a huge boost, double-digit gains, the most since february of 2021, this comes on the back of earnings where they boosted operating income guidance. it beat the average estimates and they see operating income coming in at 110 billion yen.

it's much higher than estimates. they also talked about how they are gaining as much as 12% at one point. we will look at what ubs thank's new leadership means for the future. this is bloomberg. ♪

haidi: let's take a look at european futures, we get the rest of the world passing expectations, potentially 75 basis points at the next meeting not being ruled out.

investors are digesting corporate earnings, bracing for the fed, watching for the impact as we see in terms of the currency. let's bring in our bloomberg equity strategists. the suck about credit suisse, fireworks yesterday. guest: the good news is they are taking definitive action to correct what has been a difficult couple of years. the bad news is, there is more volatility to come.

pushing it more towards lower risk asset management businesses, maybe ubs. at this point, there is little specifically with credit suisse and the rest of the european banking industry. this is all specific and a restructuring story. there is not a lot of expectations built into credit suisse. shery: what clues are we getting about the broader economy? guest: i think there is some interesting nuggets to consider. what jumped out to us is you saw positive impact, and that is

supposed to happen when interest rates rise in the economy is ok. by the same token, if you look at deutsche bank, the corporate banking business did just this, and they have a strong fixed income trading business. you have also got the core investment banking business that clearly was concerning. it's just not the nature of a core traditional, corporate bank like we saw with the other two that is currently quite positive. haidi: is it now enough for higher interest rates to be driving positive sentiments for banks? guest: that gets to the crux of the issue. if you look at how the market is thinking about this, there is a lot of skepticism. generally speaking.

it should mean that banks trade up, and they did early on, but for the past couple of months we have seen a break in that. central bank is going to slam the brakes on so much that we have a recession. shery: tim craighead with the latest on banks in europe. coming up next, the bloomberg dollar spot index at a three week low after the latest rate hike. what investors see. more ahead, this is bloomberg. ♪

>> the real economy is running ahead of it. >> jay powell is confident. >> it's hard to argue we are not in a recession given the fact that one indicator, the leading economic indicators have had four down prince in a row. anytime that has happened is a signal we are in or about to enter a recession. shery: key voices reacting as we continue to see gains for asian

equity markets. this is after we saw stocks rallying. sigh of relief after the hike. the energy sector is up, wti and gain ground. let's get more. i talk about this rally, but i have to be skeptical given what we saw in may and june, not to mention what we saw at the last two meetings. guest: it seems to be the fed meets expectations.

there was also this underlying narrative from the market that the fed needed to take a slightly softer approach. not immediately go we hiked 75 last time, we're going to hike again. some things in the economy are starting to show the impact of what the fed is doing, and it's hard -- we get gdp, and readings on price pressures within 24 hours of fed announcements. if those data were to come in and a disappointing fashion, that might change what the fed

is going to do. the real question is what do they do if the growth side of things is bad but so is the inflation side of things. that will be a much harder read of what the fed is going to do after that. markets are happy. haidi: this seems to be some deep divisions on wall street in the bond market across a lot of asset classes in terms of credibility, if they are doing enough or too much. what does that portend for where we see treasuries or broader bond markets? guest: key question for bonds, bonds have sold off so savagely so you would expect the rebound

at some stage. they usually do rebound in a tightening cycle. new zealand bonds heading for the best month since 2015, treasuries are heading for one of the best months in a while. the fed has done what many are thinking should be enough to bring inflation down. the big question remains, will inflation come down as rapidly as it needs to come down. that puts a big question mark over the rally in bonds, if the data turns and 10 year yields are back about 3%, i don't think stocks are going to be higher from where we are now. haidi: putting a big question

mark over the direction of the u.s. dollar. the spot index has dipped after the rate hike, but investors around the world are saying king dollar is not that just yet. let's bring in ruth. you have been speaking to money managers who say there could be more upside. reporter: absolutely. the message is don't fight the dollar right now. it's rallied a bit overnight, but it won't take much. the europe energy crisis is still ongoing. the dollar index shows there is plenty of room to run. the dollar benefits from the rate hike.

shery: what could be the factors that might stop the mighty dollar in its tracks? reporter: china's growth recovery, the war in ukraine, none of these are in-flight immediately, and that is driving dollars sentiment right now. hsbc says it's too early to call the top just yet. worsening of the ukraine crisis or a renewed lockdown in china could see dollar strength surging again.

>> the u.s. senate passed a bipartisan bill that includes billions of dollars in grants and incentives. the legislation is a bid to strengthen u.s. national security this week. officer creditors say evergrande not explain how $2 billion was guaranteed without any disclosure to investors. international flights into beijing are restarting after more than two years. air china's website shows direct flights from paris china has

house the quarantine time required to seven days. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: next, and author joins us to preview joe biden's call with xi jinping. taiwan is likely at the top of the agenda. this is bloomberg. ♪

haidi: president biden is expected to speak with xi jinping later on thursday, first dialogue since march. taiwan's are rising over taiwan and trade and tech competition. joining us now is the author of red capitalism and privatizing china. the last conversation was in march, the global situation in china economically has deteriorated. guest: they should be speaking

on a regular basis. there are many points of contention and i don't see any movement on any of them. you have the trip to taiwan. the thing, what can come up? haidi: when it comes to taiwan, hong kong, the trade competition, this is always going to be the set of issues. how can they best navigate within these limitations and conflicting crosscurrents where you can get a result that moves the relationship forward? guest: first of all, they should be taking this idea of the

president of the u.s. and china needs regular dialogue. their only getting worse. you look at the war in ukraine. it's important biden keeps speaking truth to the chinese leader. shery: no we going to get into the close relationship between china and russia? >> they will have

semi-conflicting statements. chinese will say americans believe them. there is no way they can afford to not, leadership will talk about peace and sovereignty where there is obviously russia, the biggest friend and ally. it's going to be nice work. perhaps what you will get is an agreement you will be more regular and consistent. shery: we might get more to come

, the tariffs still in place on chinese goods. will we see more divergence here and what will that mean for the global economy? guest: it's rough. that path continues. you look at almost any other topic, it's the same. there is nothing that will fundamentally turn things around, and i think you have to get past the coronation before you can expect any changes. he does not want to show weakness. china is covid zero. china is off a two-year hiatus, and has to face outbreaks in a

meaningful way. it's not coming back to normal. haidi: you are right that it's not a seamless year you would have been wishing for between covid zero, the mortgage and property prices as well, how we can deceive domestically given these pressure points? guest: you read about political factions, i don't buy into a lot of that. the way the party works, there are not people able to take over, but we think performers will be deciding this year. this position will be very strong. this is a communist party problem. in that sense, the position is very secure. they have a lot of challenges

and the nature is they are authoritarian, they are looking at control. they are managing the narrative, managing people. shery: the author of red capitalism and privatizing china. thank you so much for joining us. be sure to tune into bloomberg radio to hear more and get in-depth analysis from the daybreak team, broadcasting live from hong kong. listen via the app or bloombergradio.com. plenty more ahead. stay with us. ♪

haidi: we are used to seeing these between traditional minors. does not think the fed is behind the curve, he is saying the unanimous decision to raise by 75 basis points means he is no longer behind the curve. the cio guggenheim says the guidance will mean inflation will still end the year at

levels between 5% and 6%, beyond the target. >> after this run in the stock market, by next week we are sitting around and questioning, are they really being credible? shery: counting down to the market open in mainline china. david ingles joins us. as expected, the hong kong monetary authority moved. david: they did. what that means moving forward, pretty much all economists we have asked are the prime rates rise from here. the reason this is a problem is

because it affects mortgages. analysts have come out with research. this gets to levels of 2006, 2000 levels, 7% to 8%. what that means is borrowers are going to get squeezed but margins might see some relief given they are able to pass it on. look at that closely. when you look at the mainland part of the equation, it underscores a different part of the cycle china is in. you just talked about this earlier. you essentially have a lot of these banking systems flush with cash. we had some -- we have the

agenda for today. tech is in focus. on the back of that pop in the nasdaq index, the policy meeting comes by the end of the month and possibly the phone call between the two presidents. haidi: david ingles will be back in the next 10 minutes. china's largest restaurant is making sustainability an integral part of its growth strategy. in an interview, the ceo told us about the plan to make the restaurant empire more eco-friendly. >> the whole concept is we have

seen sustainability is an interval business strategy, part of the growth. >> we have had a war. >> happening on the ground in shanghai and across parts of china has presented its share -- their share of challenges. how do you think it's more sustainable going forward? >> fortunately, our in-house logistics works wonders and magical things happened because all of these are tailor-made for young china, and they were amazing. we have digitized supply chain disabilities because we can move them around between the store

and brand. we are also one of the very few companies that has in-house delivery writers. -- riders. they can deliver food to some customers and employees, and when some of these cannot serve, our headquarters staff with the culture of helping each other to use their own car, part of what was the general manager. david: what conversations are you having so they can avoid -- abide by sustainability objectives? >> two thirds comes from suppliers.

when we embark on a journey of how to achieve that, we immediately start the conversation and seek their constructive opinion because we have to do it together, we cannot do it alone. we have the conversations and get their opinion and put together a roadmap. the challenge is profound. when we start a conversation, we realize they want to be part of it. we have a platform where we continue the dialogue.

we have to learn at the same time. we set the greenhouse emissions for suppliers to work with us. shery: the yum china ceo. coming up next, laura fitzsimmons discusses how the bond market has buffeted between inflation now and recession later. stocks are on a rally. alex wong hon's for opportunities in the market. lockdowns still threatening recovery. china open is next. this is bloomberg. ♪

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