haidi: good morning and welcome to daybreak australia. annabelle: we are counting down

to asia's major market opens. shery: good evening from new york. the top stories, geopolitics putting markets on edge as an expected visit from nancy pelosi to taiwan further stokes tensions between the u.s. and china. haidi: australia on track for its deepest tightening of monetary policy in a generation. shery: hsbc faces more pressure to spin off its asia business ahead of a meeting with investors in hong kong. the lender continues to push back on calls to split up. u.s. futures lacking clear direction at the moment. this is the open in asia. just like we saw on the regular session, s&p 500 gaining ground but struggling throughout. geopolitics weighing on the golden dragon index which fell at one point to the lowest more than 3.5%. we saw the clients weighing on the markets at a time when we have concerns about demand as

well. we have a 10 year yield breaking through the 2.6% level. oil also falling in the asian session, falling in the regular u.s. session on demand concerns. we are already seeing how u.s. manufacturing pmi has expanded at the slowest pace in about two years. showing how aggressive fed tightening has been felt across the economy. we had u.s. services and june pmi numbers of the lowest since 2020. we get that update for the july numbers this wednesday. but this is not a u.s.-specific story. we are talking about the euro area and the four largest economies in contraction when it comes to pmi numbers. we saw the hit when it comes to china, south korea, taiwan. the export powerhouses signaling or global -- where global demand is headed. annabelle: certainly a bit of softness coming through, but also some hawkish comments from fed officials. the fed pivot and perhaps a little more unlikely.

ahead of the open we have futures in most of the region pointing to the downside. new zealand flat this morning. also keeping an eye on currency markets, the yen in particular. we have seen it strengthening over the past few sessions now sitting fairly flat but it is below the 132 level. that major macro trade over the year continuing to unwind with hedge funds selling their dollar positions to buy the yen as a bit of a haven play. also keeping an eye on the aussie dollar this morning it is fairly flat around a six week high. implied volatility is also rising across the board ahead of the rba rate decision. policymakers expected to hike by 50 basis points, that would be the third straight move of such a magnitude and it would be the tightest pace of tightening we have seen in a generation. other big eco-events, south korean cpi do in the next hour. if we get hot inflation numbers that also builds the case for further hiking from the b.o.k.

you are also keeping an eye on geopolitical events in north asia. shery: i am very curious to see with the market reaction will be because people saw the offshore you want falling as much as .6% against the u.s. dollar not to mention the taiwan dollar. ndf's also indicated the currency will be lower. we saw the taiwan dollar already touching that 30 per dollar level for the first time in two years. we are talking to the highest ranking u.s. politician to visit taiwan while in office in 25 years. and we are seeing reaction from beijing. we are seeing reaction from washington as well. haidi: we had military drills from beijing over the weekend and escalating warnings if this trip was to happen. we know that is scheduled for tuesday and wednesday. getting back to the rba because all things china-related feeding back to the fate of the australian economy. the rba is headed for its steepened -- steepest tightening in a generation.

you know there is a generation of people in australia that have not had to deal with this scenario of soaring inflation. we have heard from analysts that saying where the cash trade is now is not appropriate given you have inflation at more than twice the 3% target. that is potentially getting out of control and the rba is behind it. we are expecting another 50 basis points today. potentially we have some more buffers because the rba governor saying households to cope with rising rates. we know unemployment is sitting at pretty much a 50 year low at around 3.5%. but we are watching the property market where we saw that decline in property prices, particularly in parts of the sydney and melbourne markets, really steepened in the previous month. shery: really historic action, inferring -- coming from the rba. it will be an exciting day for investors in the markets because we are talking about geopolitics as well, a very landmark visit

by speaker pelosi if she goes through and lands in taiwan. chinese authorities have warned of consequences if the trip takes place. washington is urging calm. take a listen. >> we would like to once again warned the u.s. that we are fully prepared and solemnly waiting. the people's liberation army will never sit by idly. >> the right to visit taiwan, and a speaker of the house has visited taiwan before without incident, as have many members of congress, including this year. the world has seen the u.s. government be very clear that nothing has changed. nothing has changed about our one china policy. shery: for more, let's bring in jodi schneider. what are we expecting on this potential trip to taiwan by speaker pelosi that might include a meeting with their president? jodi: we really just heard in the past day much more about the

fact that she is likely to go. until this point it had been possibly on the agenda but it was not that certain. and now from people familiar with the matter as well as a lot of media reports it looks like she will go, and that she will likely meet with taiwan's president. of course this caused the u.s. administration today to warn china not to escalate, which shows that it is worried about such potential escalation. china has said there would be grave consequences if this visit were to occur. and it really does kind of test this whole relationship. as you note, someone of this stature, the highest elected official, not in the administration, has not visited taiwan in 25 years. so this would really be historic, and would test that agreement between the u.s.

the u.s. has said that beijing remains, that the 1978 agreement is that beijing is the center of china's government. it does not recognize another center. but the u.s. has made clear that any reunification of taiwan with china would need to be peaceful, no military involvement. so this may be a test of that, and china has made very clear that there will be, as they call them, grave consequences. the u.s. was trying to de-escalate today, but was clearly very worried about any potential consequences or reaction to such a visit. haidi: and in fact president xi told president biden just last week in that call that whoever plays with fire will get burned, and a warning with how to deal with taiwan. so if this trip goes ahead, how historic is the visit, and how does it potentially affect the relationship between beijing and washington? jodi: it comes at a critical

time because beijing and washington have been trying to, in a very conflicted time, part of the -- the taiwan issue being part of that conflict, have tried to move somewhat closer. there was that call between president biden and xi jinping last week, and there was even talk of aids looking at possibly having an in person meeting. one would assume that this could scuttle that. there's talk about relaxing some of those tariffs that had been put in place on china during the trump administration, which the biden administration has not yet removed. but all of that, one would presume, would be at risk. this puts not only the u.s., but china in a bind, because china has made very clear that there would be some consequences, and therefore would have to follow through on them, at least in an economic sense if not a military sense. high-stakes all around.

the u.s. trying to de-escalate, but the rhetoric shows that they are worried. haidi: jodi schneider there, as we await for that critical trip by nancy pelosi to taiwan. for the latest on how markets are reacting, more on the big rba decision today, let's bring in garfield reynolds, as well as spotty pandy here. when you take a look at the reaction when it comes to the taiwan currency, how do markets price this geopolitical risk? garfield: it is a struggle to price this level of geopolitical risk, especially outside of the classic, almost, dumbest. possible moves. . the taiwan dollar falls, the yen

rises, and treasury yields dropped. just back away, fell the rumor as it were when it comes to those adjacent currencies. it is particularly interesting that that has been going on at a time when otherwise the dollar has mostly been declining against other major risk currencies like the aussie dollar and the kiwi because of the interest rate changes. that makes it stand out starkly. it also, i would think, makes it likely that unless you have among the worst case scenarios, those currency moves unwind pretty soon after because once the fact comes along it is not as bad as what the rumor wants was. shery: let's talk about the interest rate changes, because we are expecting another historic hike from the rba. swati: yes. markets and economists are both expecting a 50 basis point

increase today. before the inflation report that came out last week, markets were rising in a chance of 75 basis points as well. but inflation was slightly below expectations, so there was a pull back on those expectations. but the rba is still seen raising rates every single month through the end of the year, taking interest rates to 3% by september. which is quite steep. haidi: that steepness worries the market. how resilient is the consumer? what is the risk for australia at the moment? swati: there is a risk of recession, especially if we see a big slowdown globally and if the u.s. goes into recession. goldman sachs is ascribing a 25% probability of a recession in australia over the next 12 months, but it is not their base

case and it is not the base case of a majority of the economists in australia. the reserve bank sees australia's economy is pretty robust, and their confidence comes from consumer spending. they believe households have the capacity to withstand rising interest rates and higher prices of things as well. and they believe consumers will continue to spend even in this scenario and keep the economy going. shery: garfield, we have seen two year swap rates in australia head lower. where we expecting this to go? garfield: well, there is a strong chance that sort of move keeps going. swati was mentioning that rates traders are still expecting rate hikes every meeting. however, much like what is going on with the fed, the expectation is that those rate hikes will slow down.

there's 175 points still priced in by the end of the year, so that is seven 25 basis point hikes, two 50 basis point hikes, and then after that, 25 basis point hikes. 3% would be a full half-point about what rba governor lowe cited as being the long-term neutral rate would be aiming for, so already restrictive. so once you are getting towards that territory, then you are increasing the chances of a slowdown, or even that they pause to see how that goes. given the global outlook, also given some of the pressures on the rba -- don't forget, there is this review going on, there has been concerned about whether it mishandled the post-pandemic period by staying too loose, too long, and confusing investors, economists, and households about

what the rba was doing when they had said they would be holding at a record low until 2024. so, given all that, there is going to be the potential that the rba decides to take a pause at some stage and assess what is going on. shery: garfield reynolds and swati pandey, both to have both of your insights. let's now get to vonnie quinn with the first word headlines. vonnie: the top u.s. ataturk watchdog says it can still demand to view business on a papers even if the -- china and hong kong are the only jurisdictions worldwide that do not allow public onto me -- public company accounting inspections. they are trying to reach a deal before 2024 for keeping off businesses that don't comply. china's economy weekend in july over its response to fresh covid outbreaks. factory output and new orders slowed the weakest level since 2020. retailers are facing the brunt of tough covid researches with revenue growth calling for a

fourth straight month. beige book warned any optimism about a rebound is misplaced. hong kong's economy contracted for a second straight quarter. the asian financial hub is under pressure from covid restrictions, rising interest rates, and weaker global trade. gdp fell 1.4%, much weaker than economists forecast. the financial secretary says the city will inevitably cut its full-year growth forecast next month. 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: still ahead, the rba expected to lift its key interest rate by 50 basis points were a third consecutive month. rbc capital markets joins us later for more. next, wealth enhancement group says with every rate hike the excitation for recession increases, even if unemployment remains relatively low. we discussed that outlook next. this is bloomberg. ♪

>> the notion of a coming fed pivot. >> the pivot everyone is talking about. >> central to this is the view that there will be this immaculate disinflation. >> we still see core inflation accelerating. >> this was not a pivot from the fed. >> inflation is still what we need to be focused on. >> the fed is pivoting here. >> we don't see it. >> chair powell and his unscripted remark said we are at

neutral. >> i am not sure why powell stated that we are near it. >> the market is looking for a pivot. >> the market is trying to force the fed's hand. >> financial markets seem to be pivoting prematurely. >> this is a market trying to always get ahead of the fed. shery: bloomberg tv guests talking about the outlook for a fed pivot. let's bring in our next guest who says the timing of potential cuts could be revised as inflation persists. with us now is ayako yoshioka, senior consultant at wealth enhancement group. great to have you with us. we continue to hear about this potential pivot of the economy in the u.s. at the same time during this earnings season, we continue to hear about resilience among consumers, among businesses. is this just implied that we have more spending, more inflation to come? ayako: sure, thank you so much for having me. we keep hearing about the

strength of consumer balance sheets, the strength of corporate balance sheets. things are much stronger than expected during this earnings season. and so we think it might just be a timing issue for when markets are pricing in the potential fed pivot. at some point they will, because they will refocus on the growth side of the equation, but for the moment i think they are firmly focused on fighting inflation, and they will keep doing so as long as it remains persistent. shery: so, how do you position in this environment where at the same time, we have heard about some pockets of softness in these earnings? ayako: sure. i think you still take advantage of what the market gives you in terms of opportunities for the long-term. there are certain companies with very strong balance sheets, quality companies generating stable earnings and good cash flows, that we think can help investors survive over the next couple of years. haidi: can you give us some

examples of the sectors you are looking at, or the types of companies? ayako: sure. we do like the technology sector as well as the energy sector. so, within technology, as everybody knows, technology was one of the first areas to get hit hard last november and has continued to get pummeled throughout the year. we do see throughout this earnings season there is a continued shift towards the cloud and there are several companies participating in that convergence to the cloud. so we continue to like companies that are benefiting there. on the energy side we know there has been massive underinvestment in energy and in crude oil production specifically. so, we think there are some legs to that over the next three to five years, as some of that investment comes back. haidi: how do you navigate geopolitical risk? ayako: sure. geopolitical risk is always difficult to navigate, simply

because it tends to come from left field. however, it is part of investing. we look to the underlying companies within the equity side, as well as just the overall asset allocation for risk and reward versus just any short-term geopolitical risks that may arise. haidi: i want to take you to our mliv pulse question. it really has to do with the credit market, asking what is the greatest risk you see across the credit space right now. ayako: i think some of the repricing i mentioned earlier in the overall interest rate market and bond market is something that we need to look into just from a timing perspective. haidi: ayako yoshioka, senior portfolio consultant at wealth enhancement group. you can get a roundup of the

stories you need to know to get your day going in today's edition of daybreak. subscribers can get that at dayb . you can also customize the settings so you just get the news that you care about. this is bloomberg. ♪

shery: here's a quick check of the latest headlines. apple has tapped the bond market with a $5.5 billion sale in four parts. the longest portion of the offering, a 40 year security, yields 118 basis points over u.s. treasuries, down from initial price discussions around the 150 basis point range. the order book has said to have peaked at more than $23 billion. pinterest jumped more than 20% in late trade after reporting resilient sales and user

numbers. elliott investment management confirmed they are the top shareholder. the increased sales to $666 million for the second quarter while retaining its average of 433 million monthly active users. twitter has subpoenaed records from morgan stanley and other financial firms that committed to backing the elon musk $44 billion buyout deal. the subpoena seeks details on debt and equity financing in the proposed acquisition. twitter also sought documents from bank of america, barclays, bnp paribas, and citigroup among others. credit suisse has handed out more than $300 million in a single month to retain top anchors after years of scandals, losses, and an ongoing leadership shakeup. more than 60 have competitor -- have defected over the past 18 months, complicating the bank's

ability to compete for lucrative merger and acquisition fees. coming up next, hsbc's earnings beat expectations, but the drumbeat to spin off its asia business is growing louder. we will have more on that just ahead. this is bloomberg. ♪ this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app.

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vonnie: you're watching daybreak australia. nancy pelosi is said to be making a visit to taiwan defying chinese authorities. the plan would be a landmark

move from a u.s. official. she would be the highest ranking american official to visit taiwan in 25 years. the white house urged china not to escalate tensions. the pboc has pledged to keep longo stable. in a statement after a meeting on second-half priorities, the central bank pledged to keep liquidity relatively ample. banks are cautious about lending to cash-strapped developers. the biden administration says a counterterrorism operation has been carried out against significant al qaeda targets in afghanistan. the operation took place over the weekend and did not elaborate according to the associated press. the strike killed a top al qaeda leader. president biden will give an address about the operation at 730 p.m. washington time. ukraine is laying out plans to

ramp up grain words. the shipment was hailed as an encouraging first step to unblocking millions of tons of crops and using global food prices. the first two weeks will be treated as a trial period with no more than three vessels passing each day in each direction. the agreement was established with russia, turkey, and the united nations. moscow is said to be leaning towards rejecting a prisoner swap unless a gets two russians in exchange for the americans washington wants released. washington has called the release of brittney griner and paul whelen offering to release a convicted arms dealer in return. moscow is reluctant to agree to a deal it sees as unequal. 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: hsbc's top executives

will meet with investors in hong kong later on tuesday amid calls by the largest shareholder to spin off hsbc's most profitable side of its business. the asian operations. for more, let's bring in stephen engle in hong kong. what do we know and what are the expect -- expectations ahead of the meeting? >> the expectations are interesting. this is the first time since 2019 the top brass at hsbc has been able to meet with retail investors. there seems to be a bit of a growing tide swell or momentum behind the scenes for this push by the largest single shareholder of hsbc with a little more than 8% share of hsbc to potentially spin off the asian business of hsbc and then list separately here in hong kong. essentially to tap into the

fastest-growing part of the business. we do have a chart that shows the percentage of profit coming from the asia-pacific in particular china and hong kong nearing about 50% of that business. there is increasing shareholder movements including by the hong kong investor and entrepreneur institute calling or backing a push and the cfo of hsbc acknowledged they have been in talks and this is what he had to say to bloomberg television yesterday after the second quarter results. >> we are definitely talking to ping an. they have raised as you would expect with any major shareholder raising issues with us, we are taking it seriously. it is very hard to find any value that we can put in front of shareholders. >> we will have to see what the hong kong retail investor base has this day later today and if

they are getting behind the push. an activist investor at hsbc was behind the 2020 push to counter hsbc's scrapping of their dividend. that effort failed he did garner about 3000 investors to back that move and he is trying to re-harness that enthusiasm for this push to back the ping an push for the spinoff. that would make it easier to navigate the rising tension between china and the west. shery: shareholders must still be happy with second-quarter numbers especially with dividends being restored. >> as of next year they will return to quarterly dividends. the stock was up the most in about 18 months. the stock rose yesterday on the back of these results that came out midday on monday.

they were a very good set of numbers. rising interest rates and currency gains lifted the pretax profit by 13% to 5.97 u.s. -- 5.97 billion u.s. dollars. the consensus was for about $1 million less than that. noel quinn is confident of tangible equity of 12% from 2023 onwards and that is a 2% increase on promised returns they gave back in april in that guidance. good results. shery: stephen engle, our chief correspondent and be sure do catch our interview later with christine fong who will attend the meeting later today. haidi: coming up next, we continue to look ahead to the reserve bank of australia

expected to raise the key interest rate by 50 basis points for a third consecutive meeting. this is bloomberg. ♪ what if you were a global bank who wanted to supercharge your audit system?

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dial back rising tensions with china over nancy pelosi's expected visit to taiwan. this is after beijing threatened military action if this happened. national security council spokesperson john kirby said this in no way changes the one china policy. >> the president was asking -- was answering a question from a reporter surrounding the guidance we give speaker pelosi before she travels. we met with her and her staff to make sure she could make the best decisions on her own. that she had all the information and context she needed and the president was referencing that. the speaker gets to does i'd what her travel itinerary looks like. >> i realize you were not confirming the trip but if she does show up, you mentioned the fact that there were live fire exercises conducted by china last night and you said the country is positioning itself to

potentially take further steps in the coming days. i spoke earlier with a defense secretary who suggested u.s. -- the uss ronald reagan was sent to the region in case speaker pelosi visited taiwan. is that accurate? >> know, the ronald reagan is already forward employed to the region. her activities in the south china sea were long planned. we keep a vigilant posture in the region because we need to but it was not related to any potential visit by speaker pelosi. >> admiral kirby, we know you i've just said that the united states has no interest in increasing tensions over taiwan but this does increase tensions. >> i would let the chinese speak to the degree to which they feel this is increasing tensions. the speaker of the house has gone before in the mid-90's.

members of congress routinely go to taiwan as is their right. if she goes and i am not confirming if she well or not but it will not violate any sovereignty issues or territorial integrity as the chinese spokesperson alluded to. it will be a move in keeping very consistent with american policy for decades. nothing has changed about our adherence to the one china policy or our commitments to helping taiwan self-defense and the speakers trip is in the context of that stable, solid and consistent american policy. >> how do you from a national security perspective prepare if china follows through on what they have said that there will be consequences to this? >> i am not going to speculate here or hypothesize and i'm not going to say anything that gets ahead of where we are right now.

what we said today is that we are watching this closely and we have indications the chinese might take some actions in a military way to protest a trip by the speaker. they can talk about what they want to do. what i wanted to make clear today was that we were going to make sure that if the speaker decides to go to taiwan she could do so safely and securely and number two that we are able and able to continue to meet our ample responsibilities we have in the region. there is no reason for this to come to blows. there is no reason for this to erupt into a conflict. there is no reason for the chinese to use a potential visit by the speaker of the house as a pretext to escalate tensions higher than what they are. and i would remind you that it has been the chinese side through their rhetoric and activities including the live fire exercise, they are the ones escalating the tensions. shery: john kirby speaking with bloomberg.

the global risk markets look fairly resilient despite the geopolitical tensions. with -- annabelle: we did have a knee-jerk reaction in the taiwanese dollar, the offshore yuan. and the adrs for the tsmc. it does reflect the premise that it is hard to preemptively price in any sort of geopolitical risks. a lot of investors have been talking about this including ubs. they say the timeline of a possible confrontation between the u.s. and china over taiwan is a little less clear-cut than what we had with russia's invasion of ukraine. on top of that, we can take a look at the reaction to geopolitical events -- it also

tends to be short-lived. look at the initial reactions to recent events including the war in afghanistan, september 11 attacks. you see the initial loss but six months later we see recovery. haidi: we are still seeing investors turn to bonds from both countries. annabelle: this is perhaps more of a reflection of the recession risks on the horizon here. we are watching what is happening in the treasury markets where we are seeing the biggest ramifications of swings we have in treasury yields. a lot of this chaos coming into the market has traditionally been preferred as a safe haven especially amongst pension funds. a lot of investors talking about this including the nat alliance securities. they say this is in direct response to central bank

actions. these markets or central banks had been the biggest buyers of government debt in places like australia, the u.s. and europe. investors are being slow to pick up the slack. nat alliance is saying the liquidity drought is the highest on ever. haidi: let's get more on the rba decision, it is expected to raise the cash rate for a fourth month in a row. economists predicting another 50 basis point hike ringing the cash rate to a six-year high of 1.85 percent. we are joined by su-lin ong. great to have you with us. there is a lot of talk about the resilience of australian households given how low unemployment is and the buffers that the rba says have been put in place but how do you view that resilience in particular cash especially with the weakness we see in the property market? su-lin ong: we are seeing some

early signs of moderation in a number of key areas and the one that is most -- the most rate sensitive and reflective of confidence is housing. a further decline of prices in the month of july -- not only is the downturn intensifying, it is also broadening out from beyond sydney and melbourne. no coincidence, house prices began to turn down as the rba began its policy normalization with the first hike in may. we expect further declines in the months ahead as the rba continues to hike. we know there will be a like affect broader through to the whole economy other it is consumption, broader construction activity. no slow down is coming later in the year and in 2023. haidi: when do you see the pivot by the rba. by their own analysis they look

at households that will be affected. a 40% or greater increase in mortgage payments. this is when real wages are still falling. su-lin ong: at the moment it is clear that the bank like many other central banks around the world is almost solely focused on inflation. we could see upward revisions in their forecast and in the quarterly statement. it is worried about inflation expectations becoming unanchored . it is keen to make sure the inflation psychology stays well behaved. that is what is driving in large part this policy normalization, the 50 basis point hike is likely today and probably next month. they need to get rates to a more nerd -- neutral level. that is the focus. i think they will continue to do that for several more months. we think the pace of tightening will drop back by october or

november to standard or moderate 25 basis point moves. the rba is lagging global central banks. the cash rate at one 35 is still low by global standards. inflation is too high and there is an extraordinarily strong labor markets. i don't think we will see a pivot from them for some time. shery: how quickly do rate hikes in australia move through to borrowers? su-lin ong: it is faster in australia than other parts of the world because despite a pickup in fixed-rate mortgages over the last few years which is unusual, the bulk of australians are still on variable-rate mortgages. it flows through fairly quickly as the rba changes rates and the lenders change their variable mortgage rates usually between 24-48 hours. the policy traction is stronger and particularly -- we know

australians are among the most highly indented in the world, the traction is greater. there is also a lot of unusual factors driving this slow down. it is faster. i think we have to bear in mind we are still at fairly stimulatory rates. shery: in this environment, what are you expecting from the review of the rba announced by the treasure? -- treasure? r? su-lin ong: the review comes at an unusual time. i think what it will focus on is a number of factors -- how appropriate is the inflationary target? it seems to be international best practice. the key is around the full employment target.

will that be broadened, more inclusive and sustainable employment? and around communication, what else can the bank do to bring itself to the international best practice? may regular press conferences? more detailed minutes? and the composition of the board. the australian board is very skewed towards business leaders which is great input but probably lacks those with strong monetary policy expertise and academics. i think it will look at a range of factors around the conduct of monetary policy under framework as well as the board and composition. haidi: su-lin ong, always great to have you with us. we know australia is a nation of beer lovers but people may have to cut back on how much they

enjoy their beer because this is the latest hit i inflation. there is an excise net comes to the price of beer and that has been lifted by 4%, the fastest pace in terms of correlation to inflation in 21 years. a lot of analysts are saying $15 a pint of beer at the local pub. i am not a beer drinker but i do have a great deal of sympathy for those that are. just about to start forking out more for their beer. this is the latest in a growing list of cost-of-living pressures already hurting consumers. inflation is expected to peak at 8% by the end of the year. shery: i love my beer. the last place i went to felt a little expensive but i was not sure if it was inflation or place specific but things are getting expensive here in the u.s. as well. we have been talking about the fastest acceleration in price pressures in over 40 years or so and now you see consumers in the

u.s. about 13% of consumer spending more than what they earned this year in the past six months. a lot of them having to resolve that cash-strapped situation and turning to their credit card. you see credit card spending surging this year. price pressures affecting us all. to into bloomberg radio to hear more from today's newsmakers. get in-depth analysis. listen on the app or bloombergradio.com. plenty more ahead, stay with us. ♪

shery: apple has tapped the market with a $5.5 billion sale in four parts. what do we know about this offering? >> sources tell us at least some part of it is attractive. you have a 40 year note that could -- if you saw the earlier report on the bloomberg terminal, discussion had been different. we are looking at yields of 118 basis points the order book peaked at more than 23 billion dollars according to one source.

and have the crème de la crème leading the sale including jp morgan and bank of america. haidi: are they hoping to take advantage of the recent momentum in the market? >> there is definitely a timing issue. you look at the second half of july and the credit market came alive. our bloomberg intelligence analyst said it well. in the first half of this year borrowing money was not an option. apple is in and enviable position where it has a enormous balance sheet. it's cost to debt capital is lower than its cost to equity capital. the timing is right. this is standard for apple. every year you see them go to the debt markets because they can. shery: is there not a better use of cash? >> sources give us the standard boilerplate that the proceeds

will be used for general corporate purposes but also per share buybacks and paying dividends. share buybacks reigned supreme but there is the idea of m&a. we were talking about this on bloomberg technology earlier. is m&a the move right now? could you really see apple knowing out and buying a big name in a megadeal? the feedback seems to be not at this point. haidi: bloomberg's ed ludlow there with more on apple. this is bloomberg. ♪

shery: you are one "daybreak: asia."