haidi: good morning and welcome to daybreak australia. shery: good evening. the top stories this hour, a lackluster session for stocks as traders look ahead to fridays jobs numbers. haidi: geopolitical tensions are adding to the cloudy outlook and the white house is condemning china's missile test. u.s. futures are muted. a mixed session today. the nasdaq 100 outperforming. yields falling with the 10 year yield breaking through 2.7%. at one point, 38 basis points below the two year yield.

u.s. jobless claims today rising slightly. we are watching for the jobs numbers. crude prices also under pressure in the regular session. below $90 per barrel. this is a level that we haven't seen since before russia's invasion of ukraine. there was positive sent in -- sentiment on abr's. we had alibaba posting. a slide in revenue. it was smaller than people had expected. we are watching meta because they just had the bond market debut with a big deal. their stance on borrowing seems to be changing given the challenging situation their business is in right now. >> market reaction to the

alibaba numbers. a huge sigh of relief that it wasn't worse. not that much of a strong leader from wall street. a lot of treading water getting into the payrolls numbers to give us further jigsaw piece of data to determine where it goes from here. sidney futures are a little bit up at the moment. the aussie dollar is hovering. also watching the yen. if we get a strong jobs report, that would intentionally add a rising dollar and higher treasury yields as well.

shery: the bank of england now carrying out its biggest rate hike in 27 years. 50 basis points. the boe warning that it is headed for more of a -- more than a year of recession. banks are in a precarious situation right now. today we are expecting a rate decision from the rbis. haidi: the question over the u.s. recession continues to loom over markets. the payrolls number will fill in part of that puzzle. look at this chart that shows what we are seeing when it comes to u.s. recession. the curve inversion, the age-old indicator. we will see if that changes with the neighbor market numbers.

shery: surprisingly, the markets seem to be less concerned about recession then they were in june. you have an interesting dichotomy perhaps because we have seen a strong u.s. labor market. investors are focused on friday jobs numbers. what that might mean for aggressive fed rate hikes. kathleen hays is here with more on this. we have heard plenty of fed speak already and the cleveland fed president adding to it. >> she is making it very clear. let's start with the job market because it seems softer on the payrolls numbers but still at levels that are healthy. in june, the number was 372,000. july, the number is supposed to go back to 250,000. that is considered a solid gain

in payrolls and it's enough to keep the unemployment rate low. wages are expected to rise 4.9% year-over-year. that is still healthy. it's true that job openings and hirings have slowed a little bit in the u.s., but services demand is still strong. today, she said she is committed to more rate hikes to get down the inflation. she said the u.s. economy is not in a recession. she noted in the second quarter gdp contracted not because consumption was negative, just because it slowed down. in terms of september, she said inflation will determine the size of the coming rate hike.

that puts a lot of emphasis on the cpi report. haidi: the boe, they had their biggest rate hike in 27 years. also warning that the u.k. is in store of -- in store for a long recession. >> bailey said inflation has to come down and he made it clear that they are moving ahead. being honest about the u.s. rate hikes. this was a unanimous decision. inflation is now expected to move up to over 13% year-over-year. nevertheless, listen to what andrew bailey said after the meeting. the committee will be particular

to indications of more inflationary pressures. it is necessary to act forcefully in response. opening the door to 50 basis points you would think. he talked a lot about gas prices. everything that is happening in europe is hitting them hard. he said that energy prices in october should rise 75%. that is a big hit to consumer incomes. he sees a long recession. >> the rise in energy prices was exacerbated by a fall in real incomes. gdp growth slowed and the economy is now forecast to enter recession later this year. >> it's interesting when you think about what this means for politicians. rig lytic changes in u.k. right now. -- big political changes in the

u.k. right now. just like in the u.s., one of the questions is can the central bank stand up against that. andrew bailey is sending signs that he can. >> nancy pelosi's visit to taiwan is still causing geopolitical waves. japan says china likely fired missiles over parts of taiwan as part of its large-scale military drills. let's bring in stephen engle in hong kong. mr. engel: it keeps being escalated with it saying they tracked missiles with four of the five likely flew over taiwan territory.

this would be the first time missiles landed in japan and the first time that the chinese missiles would have flown over the main part of taiwan. yes there were missiles over other islands closer to the mainland but these military exercises that started the day yesterday in six exclusive zones or danger zones began about midday. it is scheduled to last for three days until sunday. the risk of miscalculation increases. john kirby for the united states saying china has chosen to overreact nevertheless the united states taken precautions. the u.s. carrier ronald reagan and its strike force will be on station in the general area to monitor the situation and he says they will make standard air

and maritime transits through the taiwan strait in the next few weeks. that could escalate things as well. >> as we continue to see nancy pelosi moving through the region going to japan after south korea. we hear that beijing isn't happy with tokyo. stephen: the g7 putting out a statement saying that they were threatening activities around taiwan. the foreign minister of china was supposed to meet the japanese counterpart on the sidelines of a meeting in cambodia as early as yesterday perhaps today. beijing has canceled that in protest of the g7 statement. nancy pelosi is set to have talks with japanese officials on friday. >> let's turn to the markets

because in today's session, we are watching alibaba, chinese abr's pushing higher because of their earnings posting better results. a solid start to the earnings season for chinese tech. >> there's probably a lot of investors breathing a sigh of relief. the main headline was revenue that came in at $30.4 billion. that was better than what was expected. it is still the first ever decline on a quarterly basis. an indication of the impact of the covid zero policy. the other area we are watching was the cloud division. we saw the slowest ever expansion on record but still up 10% on the quarter. it's a key area for alibaba because china lags the u.s. and

other developed countries in terms of spending on cloud and digitization in general. the outlook is unclear. we heard from the ceo who spoke in the earnings call and basically said the purchasing power of chinese consumers is shrinking. he said that is noticeable in the cities. that was a time to recover. >> that's one of the reasons why we saw the relief rally, it was not a complete mess was the worst case fear. what are analysts saying? >> definitely focus on growth was a key area. a tie and was the focus on getting more wallet share for new consumer -- versus new consumers. citigroup saying this could help

overall perception of alibaba's fundamentals. there potential here to drive efficiency. a lot of lingering concerns around consumption outlook for china in general. overall, a start -- solid start. the reaction that we saw from alibaba's peers, other chinese tech companies rallying in the u.s. in the last session. what's going to be critical ahead is if the worst is behind us. for chinese tech companies, that means in terms of the economy and government regulation. vonnie: u.s. house officials have declared monkeypox a public health emergency. it is to facilitate more access to medication to fight the virus.

the cdc says the u.s. leads the world in cases. diplomats are meeting in vienna as part of the latest attempt to save the 2015 nuclear deal. we were told the divide between tehran and washington has grown wider. two new issues have popped up recently. citigroup says the government and regulatory agencies are investing securities. it is not clear which agencies are handling the matter. the bank said it was forced to write down on the value of russian sovereign bonds.

goldman entered the card business in 2019 with the launch of apple card. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, a chief economist gives us her outlook for the u.s. economy and the chances of recession ahead of the payroll numbers. up next, big tech is doing better than feared, but risks remain in the second half. this is bloomberg. ♪

>> inflation >> inflation gets worse. >> inflation is going to stay. >> peak inflation coming sometime in the second half. >> simple reality is we are seeing inflation everywhere. might fall into recession. >> we see a softening of economic conditions in the second half of the year. potentially a modest recession. >> we are watching central banks reaction.

>> a mixed of inflation and labor market circumstances. >> turbulent times as you have been saying. >> the shareholders meeting for tesla getting underway. shareholders have approved the stock split. you can see elon musk on stage. this was the big item on the agenda, the proposal for a 3-1 stock split. it has passed easily. the last time tesla split was back in august 2020. there are number of other proposals on the table including the assessment report on ongoing risks when it comes to labor as

well as materials. as well as policy when it comes to their culture and arbitration which has been a pretty big hot button issue at a number of tech companies. there are a number items. right now we are hearing that one has been approved, the 3-1 stock split. we will continue to get more details. elon musk is always a source of interesting comments. >> minutes earlier, we had twitter saying that elon musk is accused of fraud in a countersuit. tesla is gaining after hours. this has been an interesting shareholders meeting. you mentioned some of the proposals that are being passed.

a voting on them right now. the main one is the pre-one stock split. let's listen to what elon musk is saying. >> i'm proud of the fact that we have been able to produce more cash than we have spent. and have positive retained earnings. i think it's going to go up from here. [applause] [laughter] we obviously had some challenges in 2017.

our free cash has been very good. trending upwards. this is before autonomy kicks in. we had autonomy to some degree. but solving autonomy is what will be an amplification of free cash flow to the degree that if you run the numbers, it's like can it really be that crazy? it could be that crazy. this year i swear. [laughter] [applause] did -- is anyone here in the best program? totally totally.

>> you are watching elon musk at the shareholder meeting where they just approved the 3-1 stock split. shares are rallying. we know that the stock has really been rallying since october of last year. now it is most valuable in the stock market. $1 trillion. we're not only talking about tesla, we have seen big gains for the nasdaq 100 as well as we continue to see treasury yields down. our next guest is a portfolio manager with gradient investments. let's look at this chart on the bloomberg. >> it's interesting because the

forward earnings outlook has fallen 3%. is it all about where rates are going and how do you position? >> it is a big part of rates. when we talk about interest rates, we are talking about the cadence of the rates. as the growth in rate has accelerated to 75 basis points as was anticipated in the market, it was a bigger hit to valuations. now that the growth in interest rates from the fed is decelerating to 50 basis point, 25 eventually faces point increases, that eases up on the pressure downward evaluations and allows them to rise. i have to say that a lot of the tech stocks -- that is more attractive to us. we made a switch from the value

type stocks toward the growth or -- type of stocks more focus on the u.s. and mid to large cap. even on some energy sector rising demand coming out of china at some point in time in the future. we did quite rotation and that strategy. >> easy on the upside but sticking to the downside is how you describe it at the moment. >> i stopped wanting to use that word inflation. i'm just going to call it the i -bomb. it's easy to raise prices because it's headline news, the consumer accepts the higher prices. but we have seen a sharp downfall and a lot of the commodities particularly across the grain.

in a number of industrial metals and in energy, they are still up year-over-year. the pastor of the lower cost is going to be difficult to realize. we think several months it will be before it goes from the producer commodity side of things to the consumer price index. we think the i-bomb is going to be elevated for quite a while. >> where you putting your money? >> on the alternative side, these are situations where they don't move these asset prices in line with the stock market. gold is a good choice. we think these will move on their own merit.

that helps to offset some of the volatility that we expect to see. >> it was good to have you on. tesla just announced they have approved a 3-1 stock split at the shareholder meeting. among the things on the agenda was supposed to be -- we are now saying that after our reaction. plenty more ahead. this is bloomberg. ♪

vonnie: the bank of england has delivered its biggest rate hike since 1995 warning of a long recession ahead. all but one policymaker backed the 50 basis point hike. a governor says all options are on the table for the next meeting and beyond. japan says china likely fired missiles over taiwan during drills on thursday. if confirmed, it will be a major escalation. tokyo estimated five list missiles landed in an exclusive economic zone. beijing is conducting military exercises in response to nancy pelosi's visit to taiwan. president biden is calling brittney griner's sentence of nine years unacceptable.

he says the white house will work tirelessly for her release. >> it's a miscarriage of justice. the u.s. department of state has determined that she was wrongfully detained. nothing in today's decision changes that determination. together with officers from the u.s. embassy in moscow, i attended every session of her trial. we will continue to be closely engaged in this case. we remain infrequent contact with her and her legal team. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. >> the bank of england is said to raise interest rates by at least 50 basis points this year.

what are economists saying about this decision? >> they had the big hike overnight. that essentially took the key rate to 1.75%. it was backed by eight of nine policymakers with the boe. we saw a drop initially in the pound. that was also driven by the recession fears. that we could see a prolonged downturn. we also saw the 2-10 yield curve inverting. they are saying we could see more hikes ahead of the quarter point magnitude. the main reason is that the boe is not done fighting inflation. we heard from them in the decision boosting their forecast for the peak of inflation for more than 13% later this year. that underscores the cost of

living crisis we are seeing in the u.k. particularly with rising costs and energy. this move was echoed by the bloomberg economics team. >> a toxic mix for the ecb as well. what does that say about what they do? parks they are more focused on the jobs market. we do have unemployment at a 40 year low. that is being reinforced by slackness we could've expected to see from covid and the workers. there is also a rise in job vacancies. that suggests that new hires are hard to find. new hires are expecting higher salaries. in terms of what the bloomberg

economics team is seeing, 200 basis points move by midsummer next year. that will be split with hikes of 25 to 50 basis points. >> bloomberg is expecting hiring to have softened. payrolls have increased on form payrolls. >> so much hinges on this data. let's get some expectations of the job report. we are joined by a chief economist. great to have you with us. consensus is often off. what are your expectations and the level of significance you are assigning to this?

>> i think it's very important. there have been so many problems in data collection and delays over the last couple of years. you tend to get a big revision from the previous months and a complicates the whole thing. i can't overstate the importance of it. i'm going with 250 which is the consensus. i think that would be a good number meaning it would show a slowdown from the very big jobs number you have seen in previous months. it's still a solid jobs market. i think unemployment will stay at 3.6 or 3.7. the fed wants to see a better number, slower job creation than what they have seen in the last couple of months.

>> over the past three months, the payrolls number even though it slipped, it should come in stronger than analyst estimates. we are less than one million jobs shy of pre-pandemic levels. what is this tell you about the resilience of consumer households? >> it's a huge factor. even though inflation is eroding consumer spending power and a lot of ways, it is the job market and the wages that go along with it that allow the consumer to hope and keep the consumer spending up. if employment comes off too much, i think that's a recipe for how we get into a recession.

if it holds in around 250,000 for the next couple of months, it will be strong enough -- that the fed will continue to do what it wants to do which is rise interest rates. >> how closely are you watching the yield curve and for parts of it. heidi mentioned that different parts of the yield curve, but the one that chair powell watches closely, this chart on the bloomberg showing three-month 18 month forward, it hasn't inverted yet but it is still below -- basis points and that's far away from where we were in may. >> it's hard to not watch these relationships that have always been key indicators for what comes next in terms of economic growth and normal relationships. there is so much that is

abnormal about the last two years. we are all a little bit -- what i'm watching is the 10 year treasury in the united states. that has a big influence on the mortgage rates which influences the housing market which is a key part of the economy. it's hard to ignore that the treasury market is indicating right now that they are worried about recession. the yield has been coming down. i'm watching this closely to see what stays and where it goes from here. >> why are markets so sanguine right now? are they getting ahead of themselves because they already priced in the recession or are they said the wrong? -- are they simply wrong? >> i wouldn't call them wrong, but there is a view out there that i hope is right which is that inflation is starting to

come off in the united states. that things are coming down. then there is the view that the fed will bring rates down. i am not one who subscribes to that. i would be very happy if they can raise rates to see the economy move along but not hit a brick wall. then they will keep the rates there. i have a different view than what's going on in the equity markets right now. it's a certain amount of having priced in the absolute worst and not seeing it yet. >> we continue to watch the meeting at tesla. elon musk saying he might be

announcing another factory location later this year. tesla already has a couple of factories around the world not mention shanghai. he is now talking about a potential location for another factory this year. >> elon musk saying tesla market close to 1.5 million cars made this year. they made 3 millionth car to date recently. you can see by the stock price is keeping to go higher after hours. the bank of england today unleashing its biggest rate hike in 27 years warning that the economy is heading for a long recession. a governor said they will keep raising rates if prices cannot be tamed. >> a very big shock since we did

last report the beginning of may. that comes from russia in terms of the impact on gas prices it has been huge. we highlighted the risks as we see them. i think there are risks internationally and domestically. it is unpredictable what can happen. we have seen things happen. many other commodity prices have gone down. >> given where we are now, couldn't get much worse and can fiscal policy help at the margin at the downturn? >> fiscal policy, we condition our view but what has been announced, what the last budget was. i'm sure there will be new

fiscal policy determined with the new prime minister. we will take it when it is announced, but that's the right way to do it. >> how ugly is the recession going to be? >> the real ugliness is the combination of high inflation and a recession. the recession that we forecast today by historical standards it's not one of the deeper ones. but it comes with high inflation and that is a very difficult combination. >> it has been so difficult to predict, do you think your models are -- >> i think the approach is very much for purpose. it emphasizes why central banks are important. this is the toughest challenge we have had in 25 years. this is when our framework is most put to test. we will get inflation acted target, there is no question.

that is my message to people on the street. of course, it is very hard particularly for those on lower incomes that are much more in fact -- affected by inflation. particularly energy. if we don't get it under control, it will get worse and we will have to raise interest rates by more. >> the bank of england governor andrew baker -- andrew bailey speaking. coming up next, we will talk about the tesla stock split. this is bloomberg. ♪

>> watching the ongoing shareholders meeting with tesla. elon musk speaking saying they have approved 3-to-1 stock split. let's bring in ed ludlow. it wasn't long ago that they did this, only two years ago. how significant is this? ed: significant but not a surprise that the resolution was approved. we are up modestly. this stock split which is a 3-to-1 stock split brings it to $300 per share. it was first tweeted in march. when this meeting was confirmed and scheduled a month ago, we knew it was coming.

a lot of people thought it was unlikely that it would not go through. the thing that's missing for investors watching this is we don't know more details about the date that it becomes effective. you're right, we have seen this before. there was 5-1 stock split in august 2020. tesla has a massive retail investor based. >> talking about intentionally adding a new factory. hitting new highs when it comes to production and output of cars. how rosy is the outlook? >> this is pretty vintage elon musk you are seeing on the screen. he is giving a bullish outlook. he is talking about how painful the road to profitability was. you saw the chart where you had the spiky column in 2020 when tesla got profit under control and he said expected to be better from this point.

he said they expect to announce factory location this year. he did not say where. many people in the audience shouted canada and he said i'm half canadian so maybe but he was joking. this is what he does, to keep investors looking to the horizon. much of what he saying now he is set before. -- he has said before. >> the ongoing saga with twitter, musk is counter claiming. tell us about the countersuit. >> if you are a terminal user, bring up the twitter ticker and there are endless headlines. elon musk is arguing that twitter acted fraudulently and -- in the twitter agreement. twitter pushed back and said it is not plausible it's ridiculous to argue that they hoodwinked

elon musk. elon musk is saying the active users number is 65 million below what twitter says it is. he also argues the number of users on the platform that can see ads far less than twitter has told investors. twitter pushed back to nine that saying that they have been transparent, they have referred to their sec filings. we have seen this tit-for-tat number of subpoenas in the run-up to the trial. i wish it was sooner. [laughter] >> this continues to play out as a sideshow. looking forward to becoming a main event when the trial begins. you can get or of this on bloomberg. we have plenty more ahead.

this is bloomberg. ♪

>> lithium minors are getting strong interest. paul allen joins us with more. demand is ramping up for lithium when it comes to electric car when you factors. elon musk teasing about a new

factory. >> i used to make the annual trip out for the form. nobody talked about lithium. copper was one of the main focus is. gold which is huge and western australia and iron ore as well. bloomberg spoke to a ceo out there about how it takes 5-8 years to get a lithium mind producing. he said when he started developing that there wasn't a lot of interest in agreements with car manufacturers. that has all changed. they signed an agreement with ford last month for one third of the lithium production as well as $210 million facility to keep

expanding the mind. >> is this because of a supply issue given that -- how so many people have veered towards ev's? >> definitely. we are hearing elon musk speaking at the moment. an of the things he has complained about in the past was the elevated price of lithium. it has gone up 500% in the past year. he talked about the need to get into lithium mining and production himself. it would take $42 billion worldwide to get the production that they want to bring online. plenty of investment needed to make all this happen. right now, china dominates the lithium supply chain. >> here's a quick check of the latest headlines. meta sold $10 billion and debt.

bonds were sold across four parts for the longest part offering forty-year security. it was one of the few companies without debt. credit suisse is said to be discussing an aggressive plan to reduce its headcount. bloomberg has learned the company is examining inefficiencies in its that all and back office and it is expected to finalize plans over the coming months. credit suisse began trimming last month. according to one report, bankers on wall street can expect their bonuses to be slashed from 2021 levels. it says incentive pay for those underwriting debt and equity could plummet by more than 45% this year. while those in m&a could see a 25% fall.

blackrock is teaming up with coinbase to make it easier for institutional investors to trade going. the asset manager will allow clients to use the aladdin system to maximize exposure to crypto. it says the focus will start with bitcoin. coinbase shares jumped on the news. >> we continue to watch moves in tesla as the shareholder meeting continues. there's a lot of treading water before the payrolls numbers on friday. dow futures are looking flat at the moment.

in the asian session, futures are dipping in japan, heading -- holding steady for australia. the yen is intentionally vulnerable to future downside. coming up, we will be talking to -- talking through all of the market moves with our guest who doesn't think the recent rebound in stocks -- the bottom of the rebound. also -- daybreak: asia is next. this is bloomberg. ♪

millions have made the switch from the big three to xfinity mobile. that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network, with the carrier rated #1 in customer satisfaction. that's a whole lot of happy campers out there. and it's never too late to join them. get unlimited data with 5g included for just $30 a line per month when you get 4 lines. switch to xfinity mobile today.

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.