heidi: good morning.

annabelle: we are counting down to asia's major market open. shery: the top stories this hour, nancy pelosi to meet taiwan's president, her visit comes china to ramp up the military exercises. heidi: u.s. stocks and treasuries fall on singles of further rate hikes. shery: more fallout from speaker pelosi's taiwan visit. one of china's ev battery giants is now announcing a plant in u.s. we actually saw stocks briefly turning positive when pelosi actually landed in taiwan.

we have a lot of concerns about the economic slowdown. falling to a nine-month low, earnings coming in mixed. slumping -- got slumping on chinese demand, oil prices in the new york session, we saw slight gains. for the asian session, we are down around $93 a barrel level. we watched the golden dragon china index. we actually have gained ground for the first time in four sessions. all of the action in today's session is in the treasury space. the treasury rally being wiped out. topping 2.7%. we had plenty of hawkish fed speak to digest. a lot of volatility in the bond market, quite a reversal. heidi: the fed pivot looking a bit less likely.

we see that in asia, the kiwi bonds are trading, at the futures for japan and australia, specifically how and when china will react to nancy pelosi visiting taiwan. equities, we are heading into a risk off session here in asia. kiwi stocks are online, we also watch how china trades today because we have the csi 100 close to correction territory. in terms of the currency space, we are saying the aussie dollar slipping below the 70 sent level. the yen failing to break through the moving average. let us also take a look at taiwanese assets as well, specifically how they have faded into the u.s. overnight. the taiwan a-shares, we see taiwan stocks down around 2%.

not the same magnitude of losses we saw in the taiwanese dollar, below the 30 level. it is the market volatility on the back of nancy pelosi's trip to taiwan. further come back is quite interesting to me, there is a sense of markets waiting to see, we have the meeting and the press conference to follow today in terms of how prices affect a geopolitical risk. we have heard china announcing a military drills and circling taiwan, setting the stage for some of the most provocative action we have seen in decades. this will be playing out when it comes to safe havens. the rally installing near a full week high, we saw some of the additional tailwinds coming from the pelosi trip in addition to global recession concerns, helping gold rebound. we are watching dollars, china as well.

a bit of weakness when it comes to the dollar. take a look at the further upside, penson worldwide -- the wild ride on the golden dragon index. shery: it was interesting to see the market action today. there was a sigh of relief after nancy pelosi actually landed, the buildup really helping markets a little bit. the capital markets are warning that we could see april and out reaction when it comes to the -- we could see a drawn out reaction when it comes. to the treasury space. the press conference with the taiwanese president, speaker pelosi will visit parliament on wednesday morning as well, have lunch with the president. plenty of twists and turns to expect from that meeting. heidi: hello see -- pelosi's

visit has prompted military growth as well, some of the most serious actions we have seen in decades. a spokesman said washington is prepared to manage beijing's response. >> the united states will not see or want a crisis. we are prepared to manage would beijing choose to do. at the same time, we will not engage in saber rattling, we will operate in the seas and skies of the was in pacific as we have done for decades. heidi: let us bring in jodi schneider and steven engle. we have seen the white house perhaps with some level of utility tried to push back on the idea of is a provocative move. any change when it comes to the u.s. position when it comes to cross strait relations, what is the latest reaction we are getting from d.c.? >> what we are hearing is

basically what john kirby said and trying to be calm about this, china should not view this as anything different than the china policy, and the taiwan policy that the u.s. has engaged in for decades. china had already said before nancy pelosi went to taiwan, that they would if they -- if she did go, they would have unspecified military action, trying to use taiwan as part of their territory and they have made it clear to the u.s. before that. after she landed, they said they would conduct military drills and missile tests. a some of the most significant in decades. they are following through on their word and the u.s. has fallen through on its continuing to have its statement and

posture that this is nothing different. in those statements, you see worry from the desk this could escalate and they are trying to de-escalate the situation and standby nancy pelosi's decision. a number of lawmakers on capitol hill clearly -- including republicans came out in support of her decision to go saying it was not for china to decide who visited taiwan and who did not. she will be meeting the president, the substance of what she is going to do is expected to be significant, it is more the fact that she went and that she will be missing -- meeting with leaders of taiwan. shery: we have heard about plans for military drills, a joint exercise has already begun but also missile tests and potentially much more? >> they have talked about long-range missile tests off of taiwan, possibly the taiwan

strait. they will have these naval and perhaps air force as well exercises that will encircle the island. the last time they did that was back in 1995 when the taiwanese first president was elected, they did exercises that a disrupted maritime transport and air travel. we will have to see how this plays out. state media saying that joint naval and air force exercises have already begun. they had put out a statement, the ministry of foreign affairs, i will read it to you. we do not want to parse the words. china will take all necessary measures to resolutely defend national sovereignty and territorial integrity and all consequences must be borne by

the u.s. and taiwanese dependent forces. taiwan also is saying that they have received a number of new and very robust cyberattacks, 200 times the normal level. last night, i'd like many people, -- last night, i did track nancy pelosi's flight and it was interesting because of these potential threats of military action or as a potential threat of some sort of miscalculation or accident, you could see that pelosi's flight, military 737 flew south and the north across borneo and up the east coast of the philippines to taiwan, avoiding china's part of the china sea. shery: carefully planned trajectory there.

you can also turn to your bloomberg for more on this visit, go to dv live go -- dv live go. we have mentioned hawkish fed speak today, let us bring in emily and kathleen, let me start with you. it was interesting to see the sigh of relief, a lot of anticipation and pessimism over this taiwan trip. u.s. and china tensions and some relief? >> it was a really volatile day in new york in the trading session. i was interested in the bond market. before nancy's point in taiwan, we work cracking a flight to safety, a safe haven bid and after the plane landed, we had a number of fed speakers come out with increasingly

hawkish commentary. we saw yield really sore higher, really large double digits. i was speaking to one of my sources today and she said that move in the bond market risks geopolitical tensions, it does not help the sentiment but it did have to do with the fed speak. heidi: we dedicate more of the fed speak overlayed on concerns we see the u.s.-china decoupling and that would be even more inflationary. >> the whole idea of a pivot which the markets talk themselves into it, they looked at data and assumed something that was obviously incorrectly listed. let us start with that the has to get inflation under control and yes, you have to slow down the economy to get there. listen to what she said earlier.

>> we have to talk about recession, are we growing below or above trend? my forecast for this year is we will be growing below trend. that is necessary in order to get price increases, inflation under control. >> and i was mary. inflation is far too high, let us look at a specific quote from her, we are completely united on achieving price stability which does not mean 9.1% inflation, it means 2% inflation. a long way to go. we are not ready to pivot. as a of the chicago fed sees 50 basis point hikes in september, maybe even a 75, after that he says that they will move to 25 basis point rate hikes because they will have frontloaded. will that be a pivot?

he does see a move towards a 25 basis point rate hikes which would take the funds rate up. i a lot higher than many people in the markets are expecting. let us go to one more point, we spoke to a guest and she said it again today, she has to see compelling evidence of month-to-month inflation declined to think it is time for the federal get off of the rate hike path. the leader of st. louis fed speaking in an hour. we will hear what he has to say. shery: not to mention mixed earnings, weighing on the markets today. annabelle: the fed pivot erased now, people thought we have reached peak fed hawkishness and you saw those expectations unwinding when you look at the move in the treasury yield. the 10 year moved more than a

points today. one of the largest daily increases in the yields in the last five years. they have only two days during covid and one day before we heard of the 75 basis point rate hike. we see large moves in the market and traders are trying to figure out where the fed is going to go and how aggressive it is going to be and with each new bout of fed speak we are seeing, we are seeing these large movement in yields as the market is trying to figure out. heidi: let us get you over to bonnie. -- vonnie. >> the deep eoc has withdrawn -- dboc has withdrawn as a demand for loans leaves a lot of cash in the system. it has pushed the seven day repo

rate to the lowest level in two years. hong kong's new chief executive has gotten the low's rating for a new leader. he has faced with tough covid research is a on the economy, 52% say his -- his predecessor had 52% approval rating. those who had the rmn eight vaccine mrna vaccine -- those who got the mrna vaccine are less likely to get covid. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. shery: we get more analysis on speaker pelosi's arrival in

taiwan and what it means for regional security. all spring global investment assist the fed aggressive tightening leads to a slower than average economic growth. more on that next, this is bloomberg. ♪

heidi: u.s. treasuries drop after i signaled that the fed is

-- u.s. treasuries drop after the fed signaled an increase in the rate. it is great to have you with us, are you getting any hints from earnings what will be right? all the fed have to continue to hike rates given inflation -- will the fed have to continue to hike rates given inflation? >> it is always a disappointment, plus and minus. a good earnings report. i think the market made a huge move in sentiment from mid-june where they were saying the fed would be done and we could look forward to the fed lowering rates. today, with the talk of but not so effective the market the willies.

i feel the fed feels comfortable about their plan, they are not concerned about the economy. two negative quarters do not mean it is a recession. what they are focusing on is the fact that they labor market is in such good shape. unemployment is low, we have seen signs of layoffs, but basically, there is more labor shortages rather than excess labor. as long as the unemployment rate is low, they will feel confident raising rates. one day that will change when the unemployment rate goes up and we see the course of the fed takes than. shery: perhaps we may start seeing the job openings falling to the lowest in nine months. are there any sectors that i could withstand any scenario that unfolds from here -- that could withstand any scenario that unfolds from here? >> if we have a modest growth,

we had such a collapse in price-earnings ratios from what you want times to may 15 or 16 times. that is a good backdrop. i think we will only start to see the economy reflect the slowdown due to the fed raising course. that is what the market is looking at. what is so important today is the market reaction to the talk we may keep on aggressively tightening. heidi: how much risk you are signing at this point to the geopolitical tensions over taiwan? when the worsening of the uncoupling story between the u.s. -- what the worsening of the uncoupling story between the u.s. and china create our price measures? >> i think it would reflect on the real economy by disrupting trade between the two countries. it may actually be negative for the economy and not cause inflation. our inflation was caused by the

massive stimulus of the last two administrations. for trillion dollars poured into the economy in four years resulted in inflation. any negative scenario would be negative for the u.s. economy. negative for the global economy. heidi: when it comes to the credit market, where do you see the biggest risk right now? >> the credit market looks great. it has accepted that the fed rates are in a trading range. the fed cannot afford to have things to actually go up a lot, two percentage points, it would put a burden on financing the federal deficit. there is a lot more talk than actual action. look at the credit market, you see good value in the below investment grade high-yield market where you get yields that essay 6%-8%, those bonds are

trading at a discount. because of the treasury market, supply is low. only 25% of what the issuance was last year. this is a real shortage, higher yielding bonds out there for the marketplace. heidi: good to have you with us. you can get around up all of these stories you need to know to get your day going in today's edition of daybreak. subscribers can get that at dayb . this is bloomberg. ♪

shery: catl is said to have

delayed announcing a multibillion-dollar north american plant. according to sources, it is due to tensions raised by nancy pelosi's trip to taiwan. it was supposed to supply batteries for tesla and ford, the agreement will be pushed back until september or october. amd has given a lukewarm sales forecast, revenue will be 6.7 billion dollars compared to estimates of 6.8 billion. the market share gains against intel, it will not make up for the declining pc command. shares fell more than 5% following the announcement. robin hood is cutting almost a quarter of its workforce as part of a reorganization. the ceo said the dismissals are concentrated in operations, marketing, and program management. it eliminated about 9% of staff.

caterpillar says the bottom line is being hit by slowing sales in china and the demand in asia overall. as a company reported $13.5 billion in revenue. still ahead, nancy pelosi has become the highest ranking american politician to visit taiwan in 25 years, prompting china to perform military drills around the island. an analysis of that, next. this is oomberg. ♪

>> fed officials say they want

to see strong evidence inflation is on a downward path before declaring victory. the fed has a ways to go until reaching price stability. slower growth may be necessary to control inflation. >> we talk about recession, are we growing below or above trend? my forecast for this year is we are growing below trend. that is necessary in order to get price increases, inflation under control. >> russian president vladimir putin will meet the turkish leader for talks friday. this includes a deal to unblock exports of grain from ukraine. it comes after the first ship carrying legal grain exports from odessa on monday.

as a, says the leaders will discuss. the situation in syria joe biden has chosen that u.s. officials lead the monkeypox efforts. original administrator for fema will be at the monkeypox coordination unit. rising cases is causing the declaration of an emergency. it rose to a global high of more than 5800 on monday. u.s. is moving ahead with font transactions. two key financial regulators are asking for comments on the proposal, an step that involved the securities and exchange. gary gensler said the reduction could bring more transparency to the market. 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: if pelosi arrived in taiwan, she plans to hold a joint press briefing with the president in a few hours time. way go to natosha, great to have you with us. i want to get your top line views on what you make of this entire situation. what is the u.s. is hoping to get out of this trip, what further retaliation we may see from beijing? >> it is great to be here. it is the big question, what is the real purpose of this trip? it is a long history of delegations visiting taiwan, showing support for taiwan and the diplomacy that has flourished there.

including a democracy protest in tiananmen square. it has been not supported by everyone in washington and now that it has actually happened, i think the speculation has been the most unhelpful part of this visit. heidi: when you talk about the endgame, beijing is not a preferred tactic. the psychological attrition warfare in a sense, isn't that what beijing is going for? do we get to a point where all of these provocative actions, we are running the risk of a miscalculation or a mistake? >> there is a risk, beijing is stepping up its efforts to intimidate taiwan.

all of those arenas, we see a response right now to this pelosi visit. it does mean that tendons are running high and there is an risk of an accident -- there is a risk of an accident. the u.s. and china have continued to speak, the governments are in pretty regular contact. they have talked about putting guardrails in place and crisis communications. hopefully, an accident is not the situation but continuing escalation on both sides does make the situation dangerous. shery: what does taiwan want? even if they wanted to maintain the status quo, what would that necessarily even mean? >>

decision which has been taken by the speaker and by americans is going to have the toughest consequences by the taiwanese. they are getting hit by cyberattacks, it is taiwanese businesses facing export bands. they take the brunt of u.s. and china competition. i do not want to speak for anybody, there is a lot of support in taiwan, there are amazing videos speculating and people cropping -- clapping and cheering. most taiwanese people who you talk to do not think they want to be a political football in this. heidi: how provocative or aggressive are chinese actions right now? the military drills we are seeing, the way that they are positioning for those drills, surrounded taiwan.

what happened to ukraine, a lot of people are wondering, if we are going to end up in a normandy style invasion of taiwan. >> i do not see that as being likely. china's priorities are domestic, dealing with covid, starting a war now in taiwan i think would be disastrous for absolutely everyone. particularly for the taiwanese people. having said that, these live fire drills over the next five days, that is close to the crisis in 19 96 and the united states will be calculated in its response to ensure that is the end of the particular episode rather than the beginning of a more attracted -- protected crisis. heidi: how do you see the messaging over the past few days?

strategic ambiguity or is it being perceived as such by beijing because of the way it has been communicated? >> i think most of the voices we had out of the white house is that they were not supportive of this visit and they would have preferred that it had been deferred to a later time. i think any beijing, we have to -- 80 beijing, we had to pretend there is a separation between the branches of congress. there is a long history of congress applying a separate and activist role when it comes to the taiwan relationship from the white house. the taiwan relations act which underpins the relationship between taiwan and the united states driven by congress. this is another example of this congressional activism imports taiwan. it is not the best time.

this is not unprecedented and i do not think washington's position has changed. shery: it does not help when you have two superpowers trying to mend ties. even talking about potentially the u.s. lifting tariffs on chinese goods, this pushed the time i on any sort of -- timeline on any sort of warming of ties. >> i think it does push the timeline a little bit. summed depends on the response from china right now. if some of these sort before nancy pelosi has loved taiwan, the united states will feel the need to react. if they wait until she is gone, things resume in their tence but stable situations, there are forces looking to warm u.s. and china ties.

it is not like it was a straightforward path. i think that this may slow things down but we should not pretend we are on some kind of an excellent and improving contradictory. shery: thank you so much for joining us. chinese ev battery giant catl is holding back plans for a multibillion-dollar planet in the u.s. over speaker pelosi's visit to taiwan. this is bloomberg. ♪

heidi: china has announced a series of military drills near taiwan after nancy pelosi right on the island. let us continue our analysis of the market reaction with annabelle. what are you seeing? annabelle: we have been here a lot about this from a different investors, they have been looking at a lot of different scenarios in the ways that china could respond simply an invasion of taiwan. these are some of them. for instance, take one of the islands in the taiwan strait that would limit taipei's response or exploit a key

vulnerability there. they could impose a fuel blockade as well. they have also raised the possibility that they could take control of the taiwan's border. these are some scenarios we are looking at here. what that means is it would really have serious ramifications for the relationship between beijing and washington. it would reset their relations. they are looking at what that means for taiwan, take a look, taiwan's key partners are china and the u.s.. this would also have ramifications for the country itself. we have been tracking the reactions which turn already is imposing bans on key products. heidi: china could constrain its response? annabelle: this is another view, the weakened position that china is in economically. they are less likely to let its

relation or relations with the you as get out of hand -- u.s. get out of hand. their expectation is that will refer more or rely on signaling actions rather than it taking something that is more coercive. towards taipei. if beijing does take aggressive action, we have been looking at this as well. it could erode the growth outlook. this chart shows in a full decoupling of scenario, growth for china would be down 1.6%. time is on china's side because they could take a long time to respond to it. they could wait until a bit further into the future, and he would be in a much stronger tradition -- and they would be in a much stronger position.

heidi: speaker pelosi's visit showing that u.s. is playing the taiwan court to limit china. shery: we note the communist party tutorial reflects beijing's views and they are coming out with this editorial saying that the visit shows that the u.s. is applying a taiwan card to curb beijing. we have learned that the chinese ev battery maker catl has decided to push back announcing a multibillion-dollar north american plant due to this trip to taiwan. ed ludlow joins us for more on this. what were they planning to do? what are they holding back on? >> catl was in the advanced

state is to find a site in the u.s. or mexico to provide u.s. manufacturers of ev's. what sources tell us is they didn't want to get in the middle of this geopolitical tension between the united states and china. this is not them canceling the project, this is them delaying the project. they are basically saying stay out of the way. it is already a key supplier for tesla. there are a lot of makers who want to see them come to the u.s. or north america to localize the supply of cells because there is not enough supply of battery cells to go around too much the ambitions of all of the countries who want -- companies who want to build ev's. heidi: where do we see an ability to be able to break the situation and given as you say, the supply and demand situation requires a different outlook?

>> the sources underscore that this is still the plan. catl is eyeing a $5 billion investment in more than one site. there are a lot of pros and cons to choosing a site in the u.s. and in mexico. there are two sites that they are looking at in mexico that are close to the texas border anyway. the wildcard is they are looking at the progress of this federal package to support the ev industry and infrastructure. the negotiated -- they negotiated over it, in order for an ev manufacturer to be eligible for a consumer incentive, the minerals will go into the battery have to be processed in a country that has a free-trade agreement with the united states. don't make it a benefit to bank -- that want to make it a benefit to bring catl to

america. tesla and fort had interest in this. we saw both tesla and ford take a leg lower. this is how important this story is to feature supply globally, let alone here in north america. heidi: we have breaking news when it comes to new zealand labor market data, a lot of it is harder than expectations. take a look at the employment rate coming in at 3.3%. that is slightly worse than expectations of 3.1%. accelerating from the first quarter, that change quarter on quarter is flat, when it comes to the second quarter, that is slightly worse than expectations. the unemployment change year on year is a gain of 1.6%. missing expectations there as well. when it comes to average hourly

earnings, we are seeing a faster clip of gains, 2.3 percent is what we had for the second quarter. picking up from just under 2% in the previous quarter. this is as we were already expecting which to cause growth to accelerate and come up at the fastest pace since 2008. we are seeing the move in the unemployment rate. this is the wage cost of growth. potentially, we could see a bit more of a move from the rbn fed stepping up their rates. wade costs are rising as well. amd has given a lukewarm sales forecast indicating their market share gains against intel will not make up for a decline in bc demand. -- pc demand.

what does amd results tell us about the broader market? >> there is a lot of pessimism around the pc market right now. concerned about the matt, how quickly that will drop off, there was a lot of demand for pcs during the pandemic. everybody wanted something to watch that netflix on and to do their work from home. that demand is dropping off. the ceo of amd is becoming more pessimistic than she previously had been about the pace at which the demand would drop off. that it will happen in the mid-18 single digits before -- mid-teen single digits. it shows that all of the things that lisa sue and amd have going for them, there is not enough to get them to get that forecast for current corporate revenue as

high as analysts had predicted. shery: we saw south korea's chip stockpiles jump. what are we saying on corporate inventory from amd -- seeing on corporate inventory from amd? >> we have come through this period of a big supply chain problem where people could not get enough chips. the concern is the pendulum will swing and that we will start having the stockpiles. we have too many chips, not too few chips. that comes from an acquisition of the amd mate, we are starting to see inventories creep up for amd as well. shery: the broader tip industry as well, tune in to bloomberg radio to hear more from the big newsmakers, get in-depth analysis, and broadcasting live from our studio in hong kong, plenty more head, this is

bloomberg. ♪

heidi: we saw double digit gains after a second-quarter result be analyst estimates. he is confident that the company's fuel a missions is working. he told bloomberg that the company is firing on all

cylinders. >> when we look at the environment, the number of new drivers we are adding in the u.s. is up over 70%. surge is down, eta's are down. the business is hitting on all cylinders and it is reflected in the stock price. >> i hear people say uber is expensive. how do you think about this dynamic longer-term? do you worry about alienating customers when they are already getting squeezed given this is the worst inflationary environment in uber's history. >> inflation is hitting all of us. fuel is a big component of our driver cost. that affects uber prices as well. you see it in our results. trips were up 34% which is healthy growth, bookings were up

faster than that would indicate some inflationary effect on our results. i think the good news is surge levels are calming down, eta's are calming down. we actually see strength in terms of trip growth going forward and we are hoping if we do our jobs and so far so good on on boarding more drivers, prices on verbal ease going forward at the same time, drivers will make really strong earnings as well at the same time. heidi: let us get a quick check on the latest business flash headlines. emsg, the largest lender in japan assess a net prices fell 17%. income growth from a year earlier does not match. higher prices help starbucks offset lower traffic in china.

it came in at a $.1 billion, above estimates. the average cost per order rose 6%. starbucks 44%, worse than expected as covert rules restricted the demand. -- covid rules restricted the demand. shery: a reaction from taiwan's defense of china's plan rails. they have planted military action to speaker pelosi's visit to taiwan having announced the military drills around taiwan not to mention it, even missile tests off of the island. we will watch the reaction. but is it for daybreak -- that is it for daybreak asia. ♪