>> u.s. house baker nancy pelosi heads to korea after her controversial was it -- her controversial visit to taiwan. china, conducting military drills around the island. >> and opec-plus increasing capacity by 100,000 barrels a day. saying capacity is severely limited. for japan, australia, and korea, we are looking for is comfort trading. in the bond space, we have the expectation coming back into markets. another big fed rate hike is

back in favor. we are also seeing moves in the aussie and the q. week -- the kiwi. let's see what we are earning in the earnings space. we did not see the armageddon a lot of analysts had been expecting. we are seeing equity futures pointing higher across the board for australia and japan. new zealand also online to the upside. we are continuing to see the dollar pulling back those recent gains. that also means that yen is fluctuating a little bit between gains and losses. >> take a look at u.s. futures. we are seeing a little bit of pressure at the moment after the s&p 500 actually gained in the regular session. we have solid corporate earnings from paypal, moderna. helping sentiment. you mentioned the sort of data yield gaining ground. we have positive economic data as well. the ifn services gauge,

rising to a three month high. leading investors and traders pricing and more rate hikes potentially. not to mention more hawkish fed speak. we are seeing a little bit of a rebound in crude prices at the moment. above $91 a barrel. we saw the pressure in the new york session, given that u.s. inventories were signaling more slowing demand. >> let's get more on what the markets are watching with our guest in new york. garth, are we seeing more conviction when it comes to this degree rotation back into growth? back into tech? >> well, so much this week has been about earnings. ultimately, there have been plenty of distractions from, you know, what is going on in taiwan, and also fed speakers,

reiterating their commitment to interest rate hikes. but the big fear coming in was that you were going to get earnings telling you that a recession is coming. either because they miss the actual profit report or there would be a lot of warnings about companies expecting to see worse conditions going forward. there was some of that. but not a huge amount. that has allowed the rally to continue. which was initially kicked off by the idea the fed would slow down. and also by the much lower yields that we have. even as the fed has remained very hawkish in its commentary, treasury yields are still much lower than they were a month or so ago. as long as you see a 10 year yield under 3%, or not much higher than that. or if the pace of increase is relatively low, that also sets

things up for people to go, ok, we can believe the fed when the say we are doing sir hike rates -- we are doing hike rates, but that will not lead to recession. the bond might be a little bit different. >> one read we are getting on oil prices, we saw the losses in the new york session, right now a little bit of a rebound. >> but oil prices have come down in a big way. you check out the action the last five days, a real come down. we've got oil prices having erased all the gains we saw after russia invaded ukraine. it has a lot to do with the fact that gasoline demand in the u.s. has plunged, as inventories have risen. on top of that you have the opec-plus move, raising output by the smallest amount in the

six decade history of the cartel by just 100,000 barrels a day for september. it is a meager output. it is a slap in the face to efforts by the biden administration. recently, going to saudi arabia to get promises from the saudis to do their part to raise production. it just didn't happen. you are looking at spare capacity. that is the question the opec producers keep. so they can always that produce a little more. they really don't have it, as you can see on that graph. one analyst says opec is basically nothing less than the tank. and you've got opec-plus saying in a statement that stark capacity is severely limited and we do know that in june alone, all the three opec producers pumped below their output levels in june. what the market is getting is there's is not a lot more oil out there but they are also getting the message that demand especially here in the u.s. for gasoline has plummeted. there's an old adage that the

only cure for high prices is high prices. the prices have gotten so high, particularly at the pump, people just cut back in their use. back to you. >> what is the outlook now when it comes to treasuries and divisions of a soft landing? >> -- the visions of a soft landing? >> if you look at the two-year, 10 year yield curve, there is no soft landing coming whatsoever. it is as deeply inverted as it's been since 2000. i was looking at this just this morning. the last three times the yield curve was inverted, a recession followed in the ensuing period. that even stands for the covid recession. which i don't know that you could really say that investors knew that was coming, but they did know that a slowdown was coming quite clearly. then covid made it an extraordinary one. you have investors saying that

they expect the fed will keep raising rates. that is due to your yields going up or staying up -- that is the two year yield going up or staying up. investors think the economy is going to be much slower in the long term. that signals a recession. that is the question on everybody's mind going forward. who was right? is at the fed? the stock market? the bond market? >> thank you to our guests with top market stories. china, conducting military girls following speaker pelosi's trip. let's bring are not -- let's bring in our north asia correspondent, stephen engle. what is happening right now? >> like any typhoon that comes sweeping through taiwan, it leaves its weekend moves on. xi has moved onto south korea now, for the next leg of the -- she has moved onto south korea now, for the next leg of our trip. -- of her trip. china has launched drills with

military exercises in the so-called six exclusion zones. state media and china is calling them danger zones. warning airlines to avoid the hotspots that encircle taiwan. there are going to be military drills through sunday at least. in past standoffs in the strait of taiwan, we have seen these kinds of drills go on for weeks, if not monthss. that is -- if not months. that is one of the biggest concerns. especially when state media is reporting that the pla conducted simulated strikes on major shipping targets around taiwan by land, by sea-based forces. essentially the drills have been conducted in the north and south west on southeast of taiwan. that does pose a potential -- potential threat to maritime shipping lanes as well as airlines.

pilots have been instructed to carry at least 30 minutes extra fuel for flights around the region. so far taiwan is it saying that the impact on airlines has been limited. >> with missile testing and the sanctions from beijing, i thought the reference to patients from china was quite interesting -- patience from china was quite interesting. that suggests that this will play out in the longer term. >> there's a whole otherconstituency of in china, ultranationalists, who have taken to the twitter like services and china to complain essentially that beijing's response to pelosi's visit did not match the rhetoric leading up to her visit. so essentially, that warning of grave consequences and the like, those will play with fire will get burned, ultimately did not

dissuade nancy pelosi from going to taiwan. so these ultranationalists, if you want to call them that, have claimed that beijing has had too much of a muted response so far. and we don't have the ministry of foreign affairs spokesperson, who appealed to the chinese public to have patience, she said, "we will do what we have said, so please have some patience about that." >> our chief north asia correspondent, stephen engle, and hong kong with the ongoing story. the biden administration is lobbing democratic senators to put the brakes on a bill that would alter u.s. policy towards taiwan. let's bring in our next guest for more. there's a scramble when it comes to nancy pelosi's trip. a lot has focused on denying there's been any shift in the taiwan policy. this bill could potentially change that. >> that's right. this is a bill by the committee

chairman, bob menendez, and lindsey graham have now spoken to china at half the republican party -- ad hoc the republican party. they are trying to encourage taiwan to participate in the national organization and change the policies they have had for 40 years. this was going to be given a vote in committee today. in the u.s. senate. but that was delayed, due to the white house lobbying effort. now we are told by senators there's going to be worked on over august break. probably a much more watered down form in december. lindsey graham tells me he is outraged showing weakness in the face of -- the white house is showing weakness in the face of china and they shouldn't be doing this. >> explain with the dynamic is for u.s. foreign policy in terms of how congress really

collaborates or does not with the white house, and what is the china policy at the moment? >> well, certainly we saw with the pelosi trip that there are people in congress who are china hawks like pelosi that believe they need to stand up to beijing. especially on human rights issues, on taiwan. their own approach to this, the white house is more cautious, they argue the geopolitical strategy in place here, trying to get china's cooperation with russia and ukraine and other geopolitical issues, that there is no reason for giving beijing a pretext to escalate things in the taiwan street. so there's a difference of opinion. -- the taiwan strait. so there's a difference of opinion. this white house request is an example of that. >> erik wasson, joining us from washington on this story. let's get to first word headlines with vonnie quinn.

>> the u.s. senate has given approval for finland to join nato. finland will join estonia and latvia as nato members, sharing a land border with russia. diplomats from the u.s. and iran are set to return to vienna for another attempt to save the nuclear deal. the u.s. special envoy says he will be discussing a proposal to rescue the landmark 2015 agreement. the accord collapse after washington withdrew four years ago and real post sanctions on iran. president joe biden will sign a second executive order to improve access to abortion services. the announcement comes a day after voters in canada rejected an amendment -- in kansas rejected a memo to the state constitution that would erased abortion rights. the present reiterated his calls

for congress to enshrine abortion rights into federal law. elon musk's lawyers are accusing twitter of exploiting and distorting court rules to keep the arguments and their disputes from public view. in a letter to the judge, they said twitter was demanding more time to review supposedly confidential material, as part of an effort to wage media campaign and heed musk -- keep musk's side of the story concealed. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ >> still ahead -- china conducting military drills around taiwan following house speaker nancy pelosi's trip. we will be joined by our next guest for more analysis. and next, more on the

banking strategy with vishu v arathan.

>> we are laser focused on getting inflation down, and whether we are technically in a recession right now or not does not change my analysis. i am focused on inflation and where it is likely going. my opinion is that is what we have to focus on right now. >> the president, adding to the

chorus of hawkish fed speakers we have this week. take a look at u.s. futures at the moment. under a little bit of pressure after stocks rose on the regular session. solid corporate earnings. more calm after speaker pelosi left taiwan. we also have more positive economic data, the ism services gauge, rising to a three month high. that led to traders pricing and more rate hikes. you can see the two year yield will slightly higher. let's bring in the head of economic strategy at mizuho bank. what are markets telling us right now? we will continue -- we continue to hear this hawkish fed speak that there is no such thing as a pivot, yet markets don't seem to be reacting that badly. >> yeah. we are in a strange place. here, i think it is the

[indiscernible] elephant. you get shorthand rates. reacting to the hawkish fed speak. recognizing that near-term, there are less chances of the fed capitulating from its hawkish stance. much less reversing. the longer and yields i think, to some degree, there are slowdowns for risks, the oil prices we have seen. the equity market believes they are in multi-lock -- in goldilocks land. aborting a recession yet -- avoiding a recession yet. that is where we are. >> that's all also seems to be a little bit lost right now. struggling for direction. where is it headed? and what will the market repercussions be? we continue to see more strength than we saw earlier this year. >> i think the starting point for the dollar is we can see it

was going to be a lot more volatile. for all intents and purposes, it is misguided to think the bullish speak is done for. not only will the fed continue to affect president -- p recedent, but we must also bear in mind that that ought to feed in bouts of dollar strength. whatever relief we have seen coming through in emerging asian currencies, those will prove to be short-lived. we probably have not seen the backup bullish dollar stressing currencies further.

potentially micro stability risks, as well. >> we saw the treasury curve adverting. the short dated deals, with big moves. take a look at this chart, when it comes to bond volatility. the side of the market remains very much elevated, when it comes to uncertainty. we are sitting at about 2020 highs. do you see that persisting, as long as there's this kind of coin toss uncertainty, as to what the fed will do? >> i think so. and i think, in particular, as you point out, a lot more volatility is going to aggregate around and crowd around the front end of the curve, because that is going to react to what turned out to be pretty fluid fed expectations and projections as we go through q3 and the end of the year, 2023. the fed expects --

the fed expects to back down in q3. i think the front end of the curve is going to remain volatile. interestingly, we have seen the two year, and the fed preferred measure, the three-month spread, those were fairly wide, they came in dramatically flattening. those could invert as well, pointing to recession risks. that's precisely what's going to keep the short and volatility in place -- -- end volatility in place. >> i've got to get your views on the u.s.-china politics peace. we have already seen some trade actions and bands taking place. are you concerned -- bans taking place. are you concerned this further contributes to some of the price pressures and supply chain pressures we are already seeing? >> absolutely, haidi,

i think you hit the nail on the head. we think, as a collective, the geopolitical pressures are going to give rise to stagflation type pressures on the overall picture. because of all the friction involved in demand and the necessity of excess capacity being built around and the cost associated. the strategic stockpiling, the costs going up, while demand may be strengthened. there will be more alleviated inflation down otherwise was thought and demand that is going to be somewhat missing, from what otherwise might have been the case. those might be the outcomes that we see. even if particular countries benefit from additional investments. as things hedge out of china. >> good to have you back.

get around about the stories you need to know in today's addition of daybreak. subscribers can go to tv and customize your settings so you only get the news that you care about. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines. in the trade after -- 2020 target to around 6000. the second time the company has cut its output goal. only about 1000 in the first half. revenue came in at 97 million dollars, well below the $147 million estimate. -- considering its first-ever ever bond sale.

they asked morgan stanley -- to arrange a fixed income investor clause on wednesday. but mainly offering senior unsecured debt. a aa minus rating, and a1. mgm resorts got a bump in revenue after it topped estimates. came in at $3.6 billion against an average estimate of $3 billion. it was driven by revenue based -- and regional operations. there was a big miss in macau amid covid lockdowns. plenty more to come. 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.

vonnie: this is "bloomberg

daybreak: asia." fed officials are planning to continue -- fight against inflation, even at the risk of recession. jim bullard favors frontloading with big rate hikes. his minneapolis counterparts say they are committed to lowering prices and a recession could happen. mary daly saying rates will remain high for up to a year. opec-plus will raise production, 100,000 barrels a day in one of the smallest hikes in their history. a blow for president biden after visiting saudi arabia looking to help cool fuel prices in the u.s. opec members said spare production capacity is severely limited and the excess should be used to respond to major supply disruptions. u.s. house speaker nancy pelosi will meet her south korean counterpart in seoul after wrapping up her controversial taiwan visit. issues include the indo pacific security and climate change. a meeting between them is

unlikely, according to a statement. she has to japan on thursday night -- she has to japan thursday night. sweden and finland approved to join nato, aimed at bolstering the military alliance after the invasion of ukraine. if it wins approval from all current nato member's, finland will join estonia and latvia as nato members who share a land border with russia. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quin. this is bloomberg. annabelle: let's take a look at one of the big items on the agenda in asia, specifically what could be the end of an era for chinese tech. alibaba reporting later, we could see the third drop on a quarterly basis ever. their expectation is revenue to come in at $30 billion on the year. the significance of this, we have rarely ever seen chinese

tech giants reporting slowdowns in revenue. they have faced significant headwinds. covid zero policies, the impact on consumption patterns, and the crackdown on the sector. alibaba has really been at the center of this. we are seeing the stock losing around 70% since the ipo with fintech on ant was pulled in 2020. that means investors are willing to pay a lot less for the stock. we had seen them willing to pay about 25 times earnings. now down around 12 times. more broadly, it has been an earnings recession on the tech landscape. in the hang seng tech index, in particular, earnings forecast firmly in negative territory. take a look at the next screen. the bottom of that is the big question. one of them saying we could be at the end of the earnings revision cycle and the reason

for that is we are going to see regulations stabilizing. that will be supportive of what we see in e-commerce, as well. haidi: getting back to the fed and central-bank leaders pledging to continue their aggressive fight to cool an inflation rate at a four decade high, even if it causes the risk of inflation. let's bring in gina martin adams. what does it look like, given we have had about 70% of earnings coming through. wasn't as terrible as -- the guidance has not been that great. a great deal of uncertainty, given the fed pivot likelihood is fading. >> the uncertainty is particularly focused on the growth sectors, in particular the tech sector, which has bounced back tremendously over the course of the last several weeks. it is one of the significant leaders in the equity market. why is it leading in an

environment where earnings are coming in damper than expected and the outlook is deteriorating more quickly? i suspect investors are trying to price in the fed pivot. when the fed guides us again that the pivot is not coming, we are not likely to see the fed ease up on rate hikes soon, we will see large-cap growth stocks, the tech sector suffering the most. valuations would support that. they are too high, even not reflecting the current level of the fed funds rate. shery: earnings beat expectations for the most part. i wonder if you take out the energy sector, how positive have they been? >> just barely positive. energy has done a little bit better. but we are seeing significant weakness emerging. particularly on the margin lines. it is the key to earnings.

margin expectations have fallen all year. it is one of the biggest reasons stocks have been so weak. not just the fed, but also the earnings outlook driven by margin weakness. one of the keys from this earnings season is the margin lull is not anticipated until at least the fourth quarter. this is a big change from where we were coming into the earnings season. analysts were forecasting operating margins to make the low in the second quarter earnings season. they don't anticipate it until the fourth quarter. with a few more companies yet to report, i would not be surprised if by this time next month, we talk about the operating margin low until 2023. haidi: nancy pelosi's trip to taiwan might be over, but it is a stark reminder that the long-term story of a potential u.s.-china decoupling continues to be a big risk. >> it is a pretty big risk. we see it exhibited in the

equity market. look at the correlations between u.s. stocks and chinese stocks, they are a big example of the risk that has emerged between the countries over the course of the last four years. really starting with the tariffs that emerged in 2018, but continuing with policymaking over the course of the last four years. correlations really have broken down. the markets perform best when u.s. stocks and chinese stocks are positively correlated. usually stock prices are rising, economic growth is generally positive, and we see limited geopolitical risk. over the last two years, and increasing the nations' equity markets. it shows us how distressed the markets are about geopolitics and the lack of cohesion between these two very large economies. shery: gina martin adams from singapore.

federal reserve leaders pledged to keep up their aggressive fight to cool inflation. but joseph is concerned the main goal -- it may go too fast and too far. he's expecting disinflation. >> it is mostly a supply-side inflation. think about some of the things that are really driving it. take the price of energy, the price of oil. it is way up. we have a war in ukraine, we understand that. but we know over the long run, it is not that long, that the price of oil and energy will come down. because the backstop, we know we can produce an unlimited amount of renewable energy. the equivalent of about $30, 40 dollars, $50 a barrel. that number keeps coming down.

that is the number energy is going to be at. so we will go through disinflation in the future. i can't tell you when it will happen. >> once inflation begins to disinflate, do you believe it keeps going? or do we come down and stay at a certain point that causes an uproar? is there a momentum to a disinflation? >> people used to think there was a momentum on inflation and a momentum on disinflation. but the forces for that momentum are much weaker today than they were 50 years ago. 50 years ago, prices went up, they demanded higher wages, higher wages went to higher prices. but unions are weak. we might go back to normal competitive forces. what we saw in the years before

the pandemic, supply was extraordinary robust overall. and prices were kept down. i think we are going to be returning to that kind of world. >> what is the fed's role in this. there is a belief it is a different moment and people point to not just oil prices, or commodity prices, but the fisher between the u.s. and china, and the re-shoring of supplies that are naturally inflationary. also the inflationary conflict by nature with russia and ukraine. how much are you looking at a fed that even if they don't want to, has to raise rates substantially to get ahead of inflation that may disinflate down the line, but not quick enough to avoid real threats to the economy? >> almost all of those forces are either long-term, or relatively small.

we are going to be re-shoring. we have low cost suppliers alternative to china. vietnam and asia. latin america has a lot of capacity. so costs are going to go up, and there will be a readjustment. but it is going to take a number of years, and it is not going to be that big. what i worry is on the other side. that the fed works too fast and too much. it takes about 18 months for the full effects of monetary policy to be felt. in that span of 18 months, if the war in russia comes to an end, the energy prices will come down. that will be a strong disinflationary force. food prices will come down, there are already signs of that. over the last 50 years, public

policy has been telling farmers don't produce. don't make so much food. and if we just reverse that policy, prices of agricultural goods will come down. shery: columbia university professor joseph stiglitz speaking with tom keene and ms. abramowitz. richard mcgregor will join us to discuss the escalating tensions between the u.s. and china. this is bloomberg. ♪

haidi: let's get you to our top stories. nancy pelosi's visit to taiwan, the powder keg response has shifted to ask for patients on threats of retaliation. our next guest says it is an ongoing crisis and china's response should be measured as an accumulation of actions over time. richard mcgregor joins us. we talked about he doesn't want the status quo changed. how does xi navigate the challenge of meeting to continue to hold his seat and deliver these threats, which play out well domestically? >> it is both the long-term and

short-term gain. we will not see a complete change in the status quo, but beijing's aim will be over this crisis. it will take some time. we will see an incremental change in the status quo in beijing's favor. we have seen trade sanctions, cyberattacks, the start of military drills, which are markedly different from 25 years ago because china is in a much more powerful position. over time, it will take some months. beijing has to be careful about calibrating the intensity. because xi has his party congress coming up. we will see a lot from beijing. people should not underestimate the reaction. shery: what do you see as the endgame? even if they don't want to push change in the status quo, and changing nature of china's power and military prowess means these threats are a lot more concrete than they would have been in years past. >> i think china would want to show it is able to effectively

blockade the island in such a way that the americans cannot respond and cannot persuade them not to do it. that is the big difference from 25 years ago. 25 years ago, it was initially in communications in china. it cannot push back against the u.s. aircraft carriers. this time the power balance has changed. it demonstrates that it is powerful of itself. haidi: you think the naval blockade is the real risk? >> certainly it is a risk. people will debate to call it a blockade. china will not want a genuine blockade that interrupts the economy in any genuine sense. i think the mere ability to do it is important of itself. haidi: how tricky -- shery: how tricky is the position u.s. allies are in? speaker pelosi went to korea and japan, and the president is not

actually meeting with her? >> i think speaker pelosi has her own reasons for doing this. it is a legacy post-trip for her. she likely won't be speaker at the end of this year. i don't think from her point of view, she would care terribly about one way or another if the south korean president did not meet her. it is not ideal, but that is not about the u.s., it is about china and south korea's caution in handling china. from her point of view, certainly the white house might disagree, her visit went off pretty well. shery: we are hearing the white house has been careful to try and mitigate the situation, persuading her not to make this trip to taiwan. what has been the messaging from the biden administration and how successfully have the pushback against china -- pushed back against china?

>> the thing about this trip, pelosi went over the objections of the white house. but she did not do what mike pompeo and mark esper, secretaries of state and defense of the trump administration when they went to taiwan. i'm sure the white house canceled her -- counseled her. she did say the one china -- she did not say the one china policy was obsolete, didn't call for a strategic end with ambiguity, she talked about democracy in taiwan and protecting it. she didn't burst through the guardrails of policy and the way republicans did previously and was much more measured in her comments. that is important. shery: we are hearing the biden administration is pushing back on democrats trying to pass the legislation that would bring more certainty to that strategic ambiguity. what is the role congress is

playing in the relationship between taiwan and china, and how does it impact the broader u.s.-china relationship? >> congress has always been important. it was important in 1978 when they brought on the congress relations act, the mid-1990's taiwan crisis was brought on when they give a visa to force bill clinton to give him a visa. i think congress has always been willing, perhaps now again, to be more radical than the white house. the white house doesn't want to push this issue in ways that force china to respond. so we will see whether they accept that legislation if it goes through. haidi: is decoupling inevitable? how critical is it in the domestic politics for xi jinping, given this is not the year for the consolidation to his power he was hoping for? >> it has been a bad year for china and xi jinping. covid zero, the impact of the economy, most economists think

the economy went into recession. we have a really sensitive domestic issue, the taiwan straits crisis on its plate as well. then we come to decoupling, official chinese policy. everyone knows in china where total decoupling is just about impossible. both sides are pressing ahead with small decouplin. it can force a much larger decoupling almost instantaneously. that is extremely dangerous for the global economy. haidi: richard mcgregor, great to have you with us. lowy institute senior fellow for east asia. china's announcement of military drills around taiwan, nancy pelosi's visit to taiwan really creating ripple effects across global supply chains. detours, delaying energy shipments. it comes at a time of high sensitivity. a lot of analysts say that the

risk at the moment is not necessarily that change militarily, but risk of an accident, miscalculation happening. tensions are extremely high. the economic and trade sanctions -- saying all of this pushing the deglobalization, adding further inflationary pressures and pressures on the global supply chain. shery: the taiwan straits so important, one of the busiest shipping lanes. we've heard some lng vessels are being rerouted or reducing's bead around that area, given china is carrying out military exercises around taiwan. we even heard some airlines also rerouting. we heard from korean air that they are flying through south asia to avoid taiwan's. not just the shipping lanes that are suffering right now. continuing to track the fallout from the global supply chain crunch.

these are the top stories. lng entered into an agreement with regulators to resume operations as soon as a program almost full capacity. they expected a more gradual restart. it shut down in june after an explosion and fire. it will move to natural gas by more than 2 billion cubic feet. roughly 2% of domestic output. natural gas right now training flat after surging yesterday. the week summer driving compels them to maximize diesel instead of eia data compiled by bloomberg showing refiners cutting gasoline yield to around 57% in july down from 60% a year earlier. haidi:haidi: the world's largest sugar exporter and the biggest sugar refiner have struck a deal to create the first fully traceable supply chain of the commodity under the d.l. rise.

they will dedicate a term enter that will then be shipped to europe and north america. a similar agreement may follow soon. shery: bloomberg terminal users can read more about the story on mi trade nl. plenty more ahead. this is bloomberg. ♪

haidi: nomura barely got a profit. first quarter net income fell 97% with fixed income gains. let's bring in russell ward for the details. 97% profit drop. what happened. >> pretty much everything wrong, fixed income trading. analysts called them -- a slump in a retail business. the business shied away from the choppy markets. the investment banking business also slumped, showing nomura was not immune from the drop-offs.

the deals have been leading banks globally. the investment decision also -- fixed income trading, client suggesting positions for inflation in the interest rate. they would have been staring down the barrel of a loss for the quarter. really not good. we will have to see how they react in a couple of minutes. shery: our asia finance editor with the latest. market opens in sydney and tokyo are next. this is bloomberg. ♪

shery: this is "bloomberg daybreak: asia." counting down to asia's major market opens with plenty more hawkish commentary from fed officials. continuing to watch house speaker nancy pelosi make away from taiwan to south korea. haidi: this as investors and market participants are trying to price in what is going on with the fed pivot. and we see this rotation back to growth. take a look at we are watching the start of trading. annabelle: just about 20 seconds away from the open in japan, south korea, and australia. a lot of focus in the treasury space. the big move in the short end in the previous session. we could have another supersized hike from the fed ahead. we do have the open of cash markets. also what we see for the yen. it has really been caught

between the hawkish fed rhetoric. the need to continue the fight against inflation. also the tensions with nancy pelosi visiting taiwan. we have seen the yen trading fairly range bound. for the equity picture, risk on across the board. optimism coming into the earnings space. there have been a lot ahead of the reporting a statement. an earnings armageddon. in japan, we have had a more positive surprises than negative. one third of the way through at the moment. still lingering concerns about the impact on profits. pressure on profit margins from the weakness we see in the yen. not many moves in the share yet. on the start of trading, we saw the nasdaq nearly up 20% from the recent lows. the biggest move high yesterday

in about three months. korean won continuing to reflect the geopolitical fears. a lot of that around the intensifying concerns are on the u.s. china relationship. earnings season upon us. inflation threatening to unseat the apple card. modest gains with brent crude. a lot of those losses recovered from the previous session, dropped around 3%. get that small production increase from opec plus. also we see a lot of concerns around the demand outlook. shery: let's bring in our next guest who says sentiment in asia is likely to suffer on nancy pelosi's visit and the ongoing pandemic headlines. he is olivier d'assier. good to have you with us. on a week like this where you have so many different factors for investors to digest from fed speak, setting up for the boe's

more aggressive tightening. not to mention pelosi's visit to taiwan. do you find opportunities to buy into a fire sale, or do you try and unload some of those shares that have rallies? >> i think the fire sale hasn't come yet. q1 investors were overly bearish and felt inflation was winning. in q2, central banks got more aggressive. by the end of q2, they fell it could end in a draw. that gave us the impetus for july to rebalance portfolios, position for a worst-case scenario, go back to a base case scenario. the earnings season we have now is confirming that. not as bad as people feared. consumers have been willing to pay higher prices. the big question is now what? the rebound we see, the

rebalancing of the portfolios go on for another week or so. with the problems are still with us. expecting the fed to raise rates by 100 basis points. still expecting the economic growth to slow down. and it will be uneven. i think the rebalancing rally now. but it gets worse especially with the unemployment front. then you get the fire sale probably towards q3 or q4. shery: where would you see that? what regions and what sectors? >> obviously interest rate hikes are bad for tech, the growth sectors. that will be one thing to look at. the rebound was to mid, nasdaq had its first strong day for a while. i think once you start to hear about layoffs, once you start to see the unemployment data or the payroll data starting to take a dip, that is when people think

consumers will not be willing to pay for higher prices, that is where more names will come under pressure and you see people devalue earnings outlook going forward. now they are too bearish, so back to base case. still room for the worst case to happen later in the year. haidi: when you take a look at the nasdaq 100, well above the 100 day moving average. about 19% from its low. is it a head fake when it comes to this rotation back into tech and growth. >> i think it is. i think people are over bearish. people will not confirm the base scenario. i think you see people rebalance that portfolio. we are not done with the interest rate rising cycle. we are not done with the economic growth slowed down. we are not done with inflation yet.

we are not done with ukraine and certainly not done with the u.s. china relationship. a lot of big question marks. but it is about earnings. but after that, there is a draft of company news. and that is going to affect it. now you have another week, we can to half of this rebound. after that, people will start focusing on the bed news. haidi: are we done with dollar strength? we have seen the dollar move off of that after what has been a few weeks of weakness. that was a major component, particularly with the impact on some tech companies. do you expect a strong dollar to be an issue? >> i expect the trend to continue slightly. i don't think you will hit that mark again, simply because it was a reaction to sharp interest

rate increases. now that the economy is slowing down, that is usually it for the global economic slowdown. i think you are going to see a more balanced supply and demand situation. we should watch the dollar stay around where it is or go sideways. haidi: always great to chat with you, olivier d'assier. let's get to annabelle taking a look at the movers. it was a horrible set of numbers for nomura. annabelle: seeing it come online to the downside. down around 4.5%. you can take a look at the energy space. with nomura around 4%, it did barely get a profit. even though we see the gains in fixed income trading. could not make up for the losses we saw from equities underwriting. underscoring the difficulties facing the ceo to diversify

their brokerage. in terms of what we see, nintendo was another company reporting earnings. echoing the woes we heard from sony. the software and the hardware sales declining in the quarter. production bottlenecks have been affecting a lot of companies. coming up, softbank's call, as well as toyota. waiting to see whether that company does revive upward its profit forecast. changing to the energy space this morning. the big drop in brent crude in the previous session. it is recovering this morning. opec-plus agreeing to a small hike. gasoline demand is waning. losses for the big energy companies in asia. turning to lithium shares, as well. the world's biggest lithium producers. reporting earnings after the bell. we saw the rise in the after hours price. they expect better than expected

earnings. operating cash flow expected to outweigh total expenditure for the first time in six years. very bullish for lithium producers across the board. shery: very critical. vonnie quin with the first word headlines now. vonnie: u.s. senate has given sweden and finland approval to join nato. bolstering the military alliance after russia's invasion of ukraine. if it wins approval from all current members, finland will join us dona and a lot of you as members who share a land border with russia. diplomats from the u.s., europe, and iran are set to return to vienna for another attempt to save their nuclear deal. the u.s. special envoy for iran discussing eight proposal to rescue the agreement. the accord collapsed after washington was due for years ago and reimposed sanctions, prompting to ron to ramp up its enrichment program. elon musk's lawyers accusing twitter of exploiting and

distorting court rules to keep the dispute from public view. in a letter to the judge overseeing the case, his lawyers said twitter was demanding more time to use the confidential material as an effort to wage a media campaign and keep his side of the story concealed. twitter says his team is trying to -- court rules. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quin, this is bloomberg. shery: still ahead, a preview of alibaba's earnings ahead of the results later today. we also discuss plans to move their primary listing to hong kong. up next, fed voices singing the same monetary policy tune with hefty rate hikes. still on the horizon. plenty more ahead.

>> we are going to go through disinflation in the future. i can't tell you when it is going to happen if the war with russia comes to an end, energy prices will come down. that will be a strong disinflationary force. food prices will come down. already signs of that. haidi: professor in economics, joseph stiglitz on the forces

that could bring disinflation. just over 10 minutes or so into the start of the cash trading system. we are seeing stocks drawing that strength in the rebound rally we saw in the u.s. the nikkei to 25 up by 1%. a concerted theme when it comes to lower energy and higher tech in terms of the gains and losses in this part of the world. shery: take a look at the treasury slump. a session in the u.s., but it seems the 10 year yield and the two year yield are both gaining ground. more than 60 basis points of hikes for september already. more positive eco-data, given the ism services gauge advancing to a three month high. quite the contrast from the manufacturing numbers we got earlier this month. we have quite the fed voices singing the same monetary policy tune.

inflation remains job number one, rate hikes are not over yet. kathleen hays is here with the latest. the president the latest to chime in. kathleen: he says he is laser focused on inflation. that is the way to save the message we have gotten. about 36 hours from federal reserve officials. he said yes, he doesn't think there is a recession now, or a recession could happen. but start cutting rates any soon. he says no. let's listen to what he said earlier. >> some financial markets indicate they expect us to cut interest rates next year. i don't want to say it is impossible. it seems like a very unlikely scenario, given what i know about the underlying inflation dynamics. the more likely scenario is we continue raising and we sit there. kathleen: one president striking down the expectations for a

pivot to any time soon. which would rapidly diminish. jim bullard repeating what he said 24 hours ago in new york city. the fed needs to get to an even more restrictive policy. markets are looking for a total of about 100 basis points more over the next three meetings. november and december. he said you have to get to three and a quarter, 4% by the end of the year. he suggests 50 basis points more than the markets expect. the president of the richmond fed speaking today. he says the fed fight to bring down inflation, the rate hikes having to continue to move, it is cause for recession. but the business cycle never dies. he says a 50 basis point rate hike could be reasonable at the september meeting. just a couple of weeks from now.

charlie evans from the chicago fed he might think 75% is possible. at the big rate hikes are in the works for now -- but the big rate hikes are in the works for now. haidi: they are expected to ramp up the hiking path to what are we expecting? kathleen: a 50 basis point rate hike. the bank of england got started earlier, more cautious on the way. it will be for the biggest rate hike since 1995. what is the reason? inflation. inflation is growing, 9% year-over-year. you can see from this chart, confirmed they keep passing on the cost interests. rising inflation expectations. that is what the central banks, including the u.k., are trying to avoid. that switches to the jumbo size rate hikes in hopes that they can catch up. another expectation is the overall inflation rates, a hefty 10%. now they are expected to be as

high as 12%. one more thing that is so important, they will announce a plan for the balance sheet unwinding. the u.k., the boe owns 850 billion pounds of outstanding u.k. bonds. so they have to get going on that path. they are expected for the actual sales to start as soon as september. andrew bailey, the head of the boe, said he expect about 50 billion, worth of 100 billion this year. but one more thing, adding to the picture, fighting inflation, pulling out stimulus. even in the risk of a potential recession. haidi: kathleen hays there. let's take a look at how futures in europe are opening, given the headwind potentially going into the start of trading in the

chinese equity session. as kathleen mentioned, we are getting the preview ahead of the boe. european stocks gaining as we had not just a rate pass, but earnings expectations. futures looking positive, a little bit of a pop, germany up by .3%. a little bit of a pullback when it comes to trading in euro-dollar. second quarter earnings season has been ok in europe. we also have gotten the better expected data from the u.s., passing the fed commentary that is ongoing, said testing a pivot would likely be fading. geopolitics particularly for markets, house speaker nancy pelosi has moved to the relationship with south korea. but the repercussions and the reaction still being felt. for more, let's bring our chief north asia correspondent, stephen engle, in.

what do we know about the military drills circling the island? >> there is a lot of wake following this. nancy pelosi's visit to taiwan, which has moved on to south korea. political wake as well as military. starting with the military. china is coming through with its promise of military drills as a show of force. in the island with six inclusion zones. calling a danger zone warning global airlines not to fly anywhere near these zones. they will be conducting joint military exercises between the navy, the air force, and missile teams from the people's liberation army from now until sunday, perhaps even longer. and again, simulated strikes on major shipping targets there. of course, simulations and drills. but again, a warning that their efforts to isolate and encircle taiwan are going to continue.

taiwan says 27 chinese military aircraft were detected in taiwan airspace yesterday. 22 of them actually crossed the midway point in the taiwan strait. taiwan issued warnings and deployed missile defense systems. so far, taiwan says the limited impact -- there has been limited impact on air traffic. 18 international routes have been affected, but cathay pacific among other airlines, instructing pilots to take an additional 30 minutes of fuel on board to avoid any potential areas of military exercises. i mentioned as well, the political fallout. we are hearing the white house is none too pleased with nancy pelosi going ahead with this trip. probably had to scramble to come together with a communications plan and at the same time, distance itself from pelosi's, some would call, political grandstanding trip to taiwan.

we are also hearing the white house is also lobbying behind the scenes against this bipartisan u.s. bill being discussed that could potentially elevate or change the designation, alter how the u.s. views taiwan by giving additional money and military support. that would anger beijing. shery: stephen engle hong kong. our chief asia correspondent. opec disappoints, announcing one of the smallest supply hikes in history. despite the blood medic efforts from president biden to help cool u.s. prices. the details next. this is bloomberg. ♪

>> we are calling on whether it is opec or it is here at home,

for increased production when possible and at the degree necessary to keep prices coming down. haidi: white house senior advisor for global energy. take a look at crude prices. very volatile. in the new york session, we saw some pressure given the u.s. inventory report signaled we see some slowing demand. in the asian session, working a bit of upside. this is the opec-plus, agreeing to one of the smallest oil production increases in history. su keenan has more. this goes against expectations. we saw president biden going all the way over there, even meeting with the crown prince of saudi arabia. there were expectations perhaps it could do a little bit more. >> this was not expected. 100,000 barrels a day for the month of september is considered the token increase. one analyst called it a rounding error, meeting it doesn't make any difference.

that is the surprise. goldman and other analysts were expecting a modest increase. not the tiniest increase in the six decade history of opec. green on the screen. oil climbing above -- below 90 close in the u.s.. 91 in asia after plunging to the lowest in almost six months. we will get to the drop in u.s. demand. but oil has given up all gains triggered by moscow. dropping the bloomberg, you will see what opec warned about, the severely limited spare capacity. what oil producers like to have if they have to produce more than they need to. it has fallen off of a cliff. that is why so many analysts say they are not unwilling to boost at the production of oil, they are unable to all but free -- three of the major oil producers pump below targets in june. crude production very much down.

haidi: in terms of the political aspect, does it come as a blow to the biden administration reaction to the increase? >> the reaction from the biden administration not surprisingly is this is fine. they believe the september increase works because they say july and august were fast tracked. but considering biden went all the way over to saudi arabia, which was a controversial visit to begin with, a controversial fist pump, and signaled the saudi's were going to do something, one observer said it is hard not to see how disappointing this is. an analyst called it the geopolitical equivalent of a slap to the face. biden officials are satisfied, their goal was for oil prices to come down, and we see oil and gas prices lower. haidi: su keenan with the latest in energy. let's get the latest business

flash headlines. the first ever bond sale considered. facebook's parent has asked morgan stanley, j.p. morgan to be -- to arrange a fixed income investor calls on wednesday. but mainly offering senior unsecured debt. a aa minus rating moody's and a one. mgm results got a boost -- a bump pose market after net revenue topped estimates. income of the casino operator came in against an average estimate of $3 billion. the gain was driven by a revenue beat in vegas and regional operation. but macau amid lockdowns. a lot more to come. this is bloomberg. ♪

>> as they bake it -- this is

daybreak: asia. we are seeing a lot of green across the board. reflecting these hawkish comments from fed officials we are going to need to keep up the fight against inflation. in terms of what is driving optimism, that is a lot of around what we are seeing in terms of earnings. broadly a lot more optimistic than what had been expected. that is driving or on the flipside we have alibaba. those earnings are due later. we could see the end of an era for chinese tech with the first drop in quarterly revenue growth for the company ever appeared we have seen the stock declining 70%. broadly if you change over, we can take a look across the earnings recession fears. we have seen those revisions down.

reflecting the covid zero policies, the hit that has had on consumption in mainland china. that has flattened. the question is whether we do see more optimism coming into the tech stock. haidi: we have seen the recovery when it comes to growth and tech. the nasdaq is sitting above the 100 day moving average. we are seeing it at 19% above its previous low. let's get analysis. gina martin adams joins us. is this kind of a rebound on the technicalities? or is this a genuine renewed confidence across tech? >> that is the million-dollar question. it seems to us it is a bit of a rebound after some oversold levels were reached by the end of june. you see a significan

outperformance by the start of the light to it is a little bit of in earning story. expectations were so low coming into the season to companies were able to be those expectations on q2. the big heavyweights in tech like microsoft and apple provided a little bit of solace to investors somewhat nervous coming into the season. i think the fed is having some degree of hand in this. we have seen valuation expansion drive the space. it is not as much about the outlooks for earnings improving as it is about the outlooks for rates being embedded into the stock. the fed is telling us they are not going to pivot anytime soon yet valuations are rising. the only reason valuations would rise is either expectations for earnings growth in the future are improving or interest rate expectations or falling. shery: our guest earlier was

telling us we only have a couple more weeks to go when it comes to the earnings story. after that it is going to be about the micro story. is that what is going to be driving markets for the next few months? >> i think that is an excellent point. what we normally see in particular environments during macro weakness is earnings seasons offer weakness to stocks. when we look at periods of fed tightening past, earnings seasons usually accompany positive returns in the s&p 500. what we are experiencing is an environment that normally happens. the earnings season gives us a bit of reprieve from the macro data. once we get through earnings season, you would expect as we head into the august doldrums, as the fed comes front and center, we might have a different climate for stocks to emerge. haidi: we have seen market shrug

off in a substantial way the house speaker visit to taiwan. the bigger picture of the decoupling story, does that still present a major risk? >> it may. we have seen correlations between the u.s. and chinese equity markets deteriorate. normally an environment where u.s. stocks are negatively correlated with chinese stocks. you do have lower or suppressed mobile return expectations. geopolitics has been a key part of the 2022 story first emerging with russia and ukraine and now the story between china and taiwan. investors are nervous about a lot of things mostly the macro environment in the u.s.. we cannot dismiss the idea geopolitical risk between nations are absolutely a part of

what is likely to be elevated risk premiums for the equity market. shery: bloomberg intelligence chief equity strategist joining us from singapore. you mentioned the geopolitical risks and not to mention the fed tightening giving a boost to the u.s. dollar while asian economies are drawing on vast fx reserves to prop up their ailing currencies against the u.s. dollar instead of going all out with interest rate hikes. let's bring in ruth carson. i find it interesting because we are seeing developed market central banks hiking really fast or trying to terrain in inflation but why aren't asian central banks also catching up? >> it is a very interesting observation. countries like thailand, india and korea have been drawing on vast reserves, basically selling their currency. they have sold about 150 billion in u.s. dollars to halt their

currency decline. they have been raising rates. it is nowhere near as fast. economists say selling dollars is key to tackling inflation. even more so than narrowing the rate differential with the fed. the key to all of this is wrestling inflation under control. these central banks are showing -- are hoping for a -- that will be enough to stave off a recession. haidi: your recession signal if you will is a version of the treasury yield. that deepened the curve on wednesday. the market proving pretty volatile in this respect. what is this telling us at this point? are people worried about this indicator? >> absolutely. it is being closely watched.

the treasury curve shifted to a fresh extreme. it is a level that has not been seen in 22 years. it is closely watched not just by bond traders but by economists and other investors. the gauge is telling us the fed is going to hike aggressively. inflation is at the forefront of their mind. that is why the 10 year part of the curve is not as much as the two-year part of the curve and people are buying bonds because they are worried and treasuries remain a key haven. shery: what is the bond market telling us? the u.s. junk bond market seems to be forecasting the economy could weaken but not necessarily slip into recession. >> it is an interesting dichotomy. two parts of the debt markets telling us vastly different things. on one hand you have the rates

traders saying the recession is coming. investors are voting with their dollars. junk bond gained nearly 6% in july. the biggest one-month rally in decade. still rising so far this month. whisk premium stand at levels not usually rent -- not usually linked with recession. it seems people are happy to buy risk assets and recessions for junk-bond traders is not top of mind. shery: let's get you to vonnie quinn. vonnie: fed officials are pledging to continue an aggressive fight against inflation. jim bullard says he favors frontloading with egg rate hikes while the richmond and minneapolis counterparts say they are committed to lowering prices. san francisco saying rates will

remain high for up to a year. speaker pelosi will meet her south korean counterpart later after wrapping up her controversial taiwan visit. issues on the agenda include indo pacific security and climate change. a meeting between pelosi and the president is not likely according to a statement from his office. plus he had to japan first and i. opec-plus will raise production to 1000 barrels a day in september for one of the smallest hikes in the group's history. it is a blow for resident biden visiting saudi arabia in july. opec members said their production capacity is severely limited and the excess should only be used to respond to major supply disruptions. a group of professional golfers including phil mickelson are suing the pga tour calling it an illegal malabo really. they say it is putting their careers by suspending them for joining the saudi arabia tour.

they say it is part of their plan to thwart the rival tour. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: coming up next, alibaba is expected to report its first contraction ever. we will discuss that with willard chan from forsyth next. this is bloomberg. sophie: -- this is bloomberg. ♪

shery: asian stocks following the wall street lead higher with check and health care leading the gains. the nikkei up 2/10 of 1%. ariel's and energy down. despite the fact we have wti and brent gaining ground in the asian session. we also saw losses in new york. haidi: we are watching alibaba expected to post its first ever quarterly sales decline when it reports sales later. analysts will be focused on signs of recovery in the second half and any updates on spending on new is in his ventures pit -- new business ventures. let me start with taking a look

at the revenue decline we are expecting. the first drop from the prior year. we are looking at a number of about $30 billion. it does not mean we are not seeing any growth but is this a structural slowdown or more temporary headwinds because we have had so much macroeconomic uncertainty for china. >> i think obviously we have seen massive losses down and everyone is getting perspective. i think the june quarter, we see analysts expecting a drop. this could be the -- this could be like a knock -- a lockdown.

get in control by the government and getting more confident about their consumption. the june quarter should be the toughest quarter. we should see a recovery in the coming quarter for alibaba. haidi: more confidence for investors. how much of it is tied to ant financial? do we really need to see a better story for ant to see the recovery? >> we see a lot of media and coverage regarding -- and applied for the financial licensing in the near future. in terms of the restructuring or

licensing behind the scenes but based on all the media reports, i do believe ant financial is working hard for restructuring. on the other hand, investors should keep in mind this will not happen in the short term. the pboc giving lessons to two companies. it took six to nine months to get the license. it could take one year for the end ipo in the future. shery: to the results we are going to see with alibaba -- are those going to reflect what we will see with the rest of the chinese tech sector? we still have tencent, baidu and others to come. >> alibaba itself is still one of the biggest tech companies in

china. it can partly reflect the advertisement part of the merger. probably can reflect the macro recovery of china in june quarter. shery: where are we seeing more of a boost for tech companies that actually rallied during the tender -- during the pandemic because people were still consuming while they were indoors because of all of this? the tech sector got a huge boost. why is it different this time around? >> i think a few look at in 2020, we see a lot of tech stock

rally when people work from home. this year is a little bit different. the lockdown is longer versus 2020. on the other hand, we are seeing not only the lockdown side but probably a slowdown in china. which reflects on the revenue of the tech companies. the online e-commerce. we also saw the jd retail ceo saying the situation as a little bit different from 2020. it is not exactly the same story for what we are seeing for the tech company in 2020. shery: asia research analyst on what to expect for the tech

earnings for china. let's turn to a take story -- our big take story. and e-commerce fashion icon led by a celebrity ceo who attracted the region's biggest investors. all of that came crashing down. we are joined by olivia. what happened? >> thanks for having me on. the cofounder was a preeminent leader of the company. a male dominated industry.

a shining example of the prominence of the region's startup potential. headline events like the world economic forum and harvard business school. she reached a level business leaders have not seen. the survival of the company she started is in question. in march, -- suspended her and the ceo of her complaints about alleged financial irregularity. she denies any wrongdoing. conducted interviews with more than 60 people. staff, investors, merchants. we hope this brings readers closer to the true story.

haidi: is there one incident or one issue that can be pinpointed in terms of how this all fell apart? >> i wish. i think many sectors contribute. maybe at the heart of the line, the solid relationship between both and longtime supporters who is the head. they fell out recently. pressures mounted. he lost faith in the one founder he wants championed. he betrayed her by pushing her out of her and company. we go into more detail in our story and talk about how the startup was run, how it guzzled

money and how she treated staff all of which contributed to the fall of this once prominent -- haidi: great story and you can read that on the bloomberg. lots more to come on daybreak asia. ♪

shery: here is a quick check of the latest business flash headlines. dvs has reported 7% profit rise in the second quarter driven by higher lending income. southeast asia's biggest bank reported the income of 1.3 billion u.s. dollars for the period beating average estimates. those gains were offset by the -- by gains in investment management. activision blizzard and eddies have torpedoed a wood of war craft smartphone game in development for three years. we are told that he's disbanded a team of more than 100 developers creating content for the title. two companies disagreed over financial terms raising questions about one of the industry's most lucrative relationships. haidi: we have got to talk about mikal and the casino operators

because we have seen some positive numbers. that was mostly on accounts of games across the u.s.. mikal just continues to be such a poor outlook. we saw mgm gaining but a big miss on macau because of the lockdowns we have seen. this as we see china reopening the border. we see those cases maybe. it will take a lot speaking to most analysts about how quickly the recovery can be staged given a lot of the structural issues. we did see shares of macau casinos rallying on the optimism we will see the resumption of the reopening of orders with china. shery: if you're talking about structural issues, we have to talk about china property. home sales continuing to slump. we have uncertainties

surrounding the restructuring of china evergrande. the bloomberg intelligence gauge falling more than 30% from a peak in april. some of the stocks we are watching in hong kong under the mainland in about half an hour for that open to alibaba, reported results. tech stocks, jd.com. as we mentioned earlier, nettie's and activision lizard having scrapped the one of war craft smartphone game and development for more than three years. our market coverage continues as we look ahead to the start of trading in hong kong, shanghai and shenzhen. standby for bloomberg markets china open. this is bloomberg. ♪

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