shery: welcome to daybreak asia. the top stories this hour -- easing some concerns about waning global demand. san francisco fed president mary daly says the central bank is far from done bringing down inflation. a blowout jobs report making the cases for bigger rate hikes. and investment coming under increased scrutiny. some analysts are expecting liens and losses. u.s. futures under pressure, extending declines beside friday's session. but we are talking about three weeks of gains. a positive earnings season. most companies that report on the s&p 500 and three quarters of those companies have beat profit expectations. we have a 10 year yield

surpassing that expectation. don't forget the jobless rate falling to that lowest level since 1969 having people priced and more aggressive rate hikes. but we continue to see concerns about recession. not surprising, we continue to see uti under pressure, after having come from the worst week since april already. annabelle: a lot on the dip in asia this morning. they are moving at the longer end of the bond market but meanwhile, the shorter duration as well moving the aussie as we have the chance of a 75 basis point from the fed following that strong jobs report. let's move to the equities region because we are setting up for a weaker start across the board as traders digest those jobs numbers from friday. at the start of trade, japan and australian futures pointing to a

weaker start. keeping an eye on the aussie dollar fractionally lower against the greenback but we will be keeping and i for how investors react against the trade data. a solid headline number but our bloomberg economics team is saying a lot of that move is just playing catch up on business that had been delayed. turning to that yen, we did see a massive scrub on friday following the jobs report. the dollar not doing a lot but it seems to be catching traders off guard. really all about that fight on the fed against inflation. haidi: the fed is far from done bringing down inflation, also on that surprise upside, let's root

-- let's bring in kathleen hays stephen engle. let's start with what mary daly had to say because you've got parts of the market considering if we might see a move between meetings. kathleen: that would be highly unusual. we talked about this last week. this is the longest interval between two federal ridge -- federal reserve meetings. usually the interval a six weeks. when i heard that story, i thought no way. i talked to one of my favorite fed watchers on this and he said they made it clear they want to be credible on inflation. you maybe can't rule it out. that's why there's so much focus, particularly after this jobs report. look at payroll -- more than double the estimate of 250,000. it's back to its pre-pandemic low. wages are rising faster in the

month of july. and you've got the year-over-year rates surpassing the estimate. if you analyze that monthly number, it comes to 6% according to bloomberg economics. a former treasury secretary at harvard university fester is very worried about the jobs report showing the economy is overheating in the fed might stop hiking rates too quickly but mary daly made it clear they are not going to stop hiking rates anytime soon. >> we are far from done yet. that's the promise to the american people. we are committed to bringing inflation down and we will continue to work until that job is fully done. >> will it be appropriate to raise rates by half a percent in september? >> absolutely. we need to be data-dependent. kathleen: mary daly said she is

open to 75. the inflation numbers, how hot they are is going to determine the size of the next rate hike. michelle bowman at the federal reserve board of governors south chief thinks he's barger rate hikes, which convened 75, are going to be on the table until they see inflation coming down on a monthly sustainable focused so much on the cpi report. the headline, the court is expected to rise bit. that number it's not going to be enough to get the stop hiking rates anytime soon. beyond that, this idea could be so hot the fed would call an emergency meeting, when i first heard this, i said i don't think so. i talked to one economist who said you can't rule it out. shery: no wonder we are seeing the reaction in the treasury

space. we continue to see the yield curve flattening. the most inverted in decades. what asset classes are you watching for potential early moves from the fed or what might come as a bigger move in september as well? garfield: first of all, that if she did what pressures are worried about, i think that's about the absolute to scramble across a fixed income space to adjust to jobs numbers nobody really expected this sort of a green light to the fed for potentially a 75% basis point hike in september. the fed does have another set of data it can get before it actually meets, so you would need to get something. extraordinary at this week's inflation meeting to contemplate

going for it. but we had the strong selloff across the board and treasuries, a lot of people have greatest concerns treasuries were looking fall 2 -- four looking far too complacent. at reaction function, as we were just talking about, the idea the fed is giving to pivot today more dovish case without very rapid come down and inflation, was very much thinking. when you get jobs numbers like this which means the fed is going to be less willing to look for a reason to pivot because all those jobs, on the one hand, it's good for people to cut jobs but it reinforces the danger of a wage price spiral which is something central banks across the globe are looking for. the yield curve is likely to flattening further.

it's not quite as deeply inverted as it was around the year 2000 when that was the lowest it had gone for a long time before or since. coincidentally, the jobless rate was also at similarly low levels back then, so we are getting that set of circumstances that is raising the dangers the fed will go further and faster than most are expecting and that helps to push the economy into a recession because probably the economy needs intercession to get inflation under control. haidi: the trade numbers are a surprise to the upside. what is there a base effect here we are talking about? how do you rate this? stephen: the export started with due largely to pent-up demand for exporter to perhaps had

their business curtailed because of the lockdowns, whether in shanghai or other lock downs. we can talk about that in a little bit but one of my colleagues will be on to talk extensively about that. there is a fragile economic recovery in china, yes. the good news is exports beat expectations, absolutely. fears of a slowing global demand for chinese products? yes. the longer-term outlook at pent-up demand ease it, the bottom line is imports are not picking up. they were below expectations and that's where we saw this record trade surplus in july of more than 100 one billion u.s. dollars. exports doing very well, imports still lagging because you have property sector workers and waning consumer consumption demand in china and this fear of

potential lockdowns that could curtail business. the exporters trying to get stuff out the door to customers abroad but longer-term, bloomberg economics south strong exports are based on pent-up demand, basic lee catching up on business delayed by the lockdown. that has masked overall weakness in external demand. that is the picture. a record trade surplus complex good, exports look good for now. shery: stephen engle, garfield reynolds and kathleen hays talking about the chinese covid restrictions. we do have an alert on the bloomberg -- the beach resort city reporting 413 covid cases. this resort city was locked down this weekend after the number of cases spiked to more than 200 on friday from just 11 two days earlier. they are talking about the

static management and that's code for a lockdown. we know about 80,000 tourists are stranded in one of china's most popular holiday destinations, reporting third -- porting 400 13 cases. let's turn to vonnie quinn with the first word headlines. vonnie: the u.s. has passed a landmark tax and health care bill -- climate and health care bill. it was passed after a year of democratic infighting the white house wasn't able to control. the vote is now headed to the house. the democratic majority is expected to pass it on friday. taiwan says it will not bow to pressure from china after days of military drills in the air and water assimilating attacks on the island. china's people's liberation army says it conducted operations focused on joint long-range air and ground strikes. they did not say if the drills would be extended. antony blinken says tensions

need to be de-escalated. a cease-fire between israeli and's -- and palestinian militants is in place after nearly three days of violence after israel launched a strike against islamic jihad militants. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: still ahead, china locking down a resort city, leaving about 80,000 tourists stranded at the popular beach destination. more on that later this hour. coming up next, carlos casanova joining us to preview the points he's looking out for in asia this week. this is bloomberg. ♪

>> i don't think the fed has the bread right now. now when we are seeing wage inflation unambiguously after this number decelerating after this number, after the eci, after the atlanta fed, we have, by every reasonable measure of core inflation, inflation

running somewhere plus or minus 5%. that is not acceptable by any dimension. shery: that was former u.s. treasury secretary, larry summers. with inflation in focus, we look at the week ahead. economists expecting sky high inflation. could be finally approaching a peak. this is global growth spotters but the sizzling jobs numbers from last week is seen keeping the pressure on the pet -- on the fed for more aggressive rate hikes. we are getting inflation data from china, expected to show a benign picture. cpi figures out of india and japan also coming later this week. we are watching tylan central bank, expected to hike 25 basis points after holding rates that half a percent since may of

2020. haidi: we are joined by carlos casanova. always great to have you with us. let's start with this chart looking at the huge amount of diversions when it comes to u.s. inflation expectations. you look at the gap between what we are seeing between university of michigan, new york fed expectations and the trading we are seeing one year breakevens. there's a lot of uncertainty but would you say we are starting to see monetary policy take effect and there's some level of deflating happening? carlos: good morning. we definitely see some level of it having an impact in the u.s. but it is muted. we like to look at ism pmi manufacturing indicators.

it is now below zero and typically it indicates all the pmi numbers. we do expect we might see a move down in terms of activity in the coming month, which should imply or should be a signal for those who have been watching fed policy. on the other hand, we have a very strong labor market and the other side of the mandate for the fed is unemployment. we do see an increase in wages that does impose more outside risk to the inflation number. although we do expect inflation will begin to cool in the coming months, unfortunately, because of these diverging trends and structural factors we've seen on the labor markets, the fed may

have to consider producing before the inflation number is below target. haidi: the other big pressure point is weakness out of china. we are still expecting any kind of inflation read to come out of the read to be benign? including the china trade numbers, export numbers. does that alleviate some of the fears to do with demand or would you take this reading with a grain of salt? carlos: i would take this reading with a grain of salt. inevitably, it's the second record trade surplus. we saw better exports then imports. that means in terms of q3 gdp numbers, we should start off on a solid footing, so there is pressure on activity as a result of the trade surplus.

however, the pickup in exports was not reflecting strong demand from the u.s. we are starting to see cooling on that front. we are looking at pent-up demand or delays in export orders. anecdotally, many manufacturers outside of china, zippers and other electronic components, as many manufacturing hubs in the country, you have the island entering the lockdown. that has helped factory activity to pick up and we are seeing export orders going through. that's outside risk in the long term and we expect the pickup in export growth will cool and a worsening external environment is one of the main reasons china

argued to drop it gdp target. shery: what does that mean for the inflationary outlook? we have this huge divergence in china's cpi numbers. carlos: the huge divergence will likely narrow and we will continue to see some upside and inflation. that upside is going to be strong enough to offset the likelihood the pboc might do another universal rate cut. but of course inflation won't be as high to warrant a change in accommodation. we are seeing outside pressure. the development with domestic supply chain, we will see that cpi number heading toward 3% this week. haidi: we also have the overlay of geopolitical tensions with speaker pelosi's visit to taiwan.

are these geopolitical tensions they potential for more supply chain disruption? do you factor that in two-year economic forecast as we continue to see the financial and economic decoupling between u.s. and china? carlos: absolutely. from the beginning of the year, we've mentioned tensions would be one of the main factors driving not only downward sentiment in china but also globally. we are seeing that clearly with geopolitical risks last week. in terms of the economic sanctions, the impact will be fairly muted. we are talking about less than 3% of chinese -- taiwan's exports to china. those have been exempt from this ban for obvious reasons and it only accounts for total exports

-- 10% being electronic components. the 2002 products are a drop in the ocean compared to the impact on the economy and chinese cpi numbers because it's such a small proportion of the fresh fruit and vegetables china imports. the impact on the global economy will come through short term disruptions to the supply chain. we did hear some delays to shipments due to military drills. 88% of the largest vessels in the world go through the taiwan strait. so do expect to see an impact on global supply chains. longer-term, we think the economic risk has been relatively contain. they do not account for a large proportion of the time when he's economy. it's more a deterrent than anything else. haidi: that is the shorter and

midterm, longer-term, is what we are looking at and uncoupling between the two biggest economies in the world? is that ultimately going to be a strong inflationary force? carlos: absolutely. if we do indeed see a trend toward decoupling, that would be a structural shift toward inflation. in many cases, it's more comfortable to manufacturing in china given the level of investment but increasingly, we are going to see an acceleration of supply diversification which implies medium-term inflationary pressures. but if this is not successful, we see decoupling and reassuring, that would be a longer term trend. it's never good for u.s. consumers. shery: good to have you back.

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shery: u.s. futures extending the declines we saw on the friday session. traders upping their bets of a potential 75 basis point rate hike in september. we are watching july's cpi numbers on wednesday as well. we have plenty this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes.

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>> q4 is always difficult to

navigate. however, as far as investing -- >> the only thing that has affected us is having a diversified portfolio. we are taking advantage of a broad platform. >> i think it's more a case of staying away from those cyclical exposures. >> as a business, you need to improve it so you are at down saieh's -- downside risk. haidi: that was from the mliv survey. let's get some of those results in more detail now for what has been ugly year for corporate bond investors. it's only going to get worse from here. the prospect for a 75 basis point from the fed and that

strong jobs report. nearly three quarters of respondents said fed policy is the biggest risk to fed policy over the next six months. .20% said banks. we had over 700 responses to these questions. let's look at what the majority are saying for the outlook for fixed income investors. three quarters say the yield for junk bonds were widened to treasuries at the same time the downside is fairly limited. the spread is going to hold well below those levels we saw during the march 2020 covid crash and financial crisis. as for where to put your money, bonds or stocks, the vast majority of respondents saying equities are the better bet. some urging extreme caution and that was reflected in the survey.

some analysts saying the rate impact will be a lot more pronounced in high yields. let's get more on that with vonnie quinn. vonnie: san francisco fed president mary daly said a 50 basis point rate hike is not locked in. they stay data-dependent with the fight against inflation far from done. fridays job report has buoyed support for another 75 basis point rate hike. >> we are far from done yet. we will continue to bring inflation down and continue to work until the job is fully done. >> so it would still be appropriate to raise rates in september by half a percent? >> absolutely. we need to be data-dependent. vonnie: china's trade deficit hit a record in july. it's trade balance claims,

beating the previous record set in june. imports slightly below the medium -- median forecast. india's vice president has been elected, giving the prime minister control. the coalition makes the victory widely expected. the vice president serves as chairman of the upper house of parliament. the u.s. secretary of state, antony blinken is seeking to strengthen american is alliance with the philippines. he reiterated washington's commitment to the mutual defense treaty. manila has quarreled with beijing over the past two years due to their presence in the south china sea.

global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: china has locked down a resort city leaving about 80,000 tourists stranded at the popular beach destination. the city, often called the hawaii of china added 400 new cases on sunday. emerald ryan -- emma o'brien joins us tell. cases will be alleviated in some parts of china and then pop up again as they continue to keep to the covid zero strategy. ,: you really see a whack-a-mole approach. it does come up these more contagious variants, pop up elsewhere. and right in the middle of the peak season, the summer holiday season, schoolchildren already

gone on their school vacation, it's the latest hotspot. one of the other tourist hotspots of the provincial capital is also going into lockdown. a total of four cities in the province going into lockdown with all trains and planes there canceled. shery: when it comes to the mainland action, interesting they are easing some of those restrictions on chinese flights. , -- m a: that's an interesting move. you still see a suspension of a week. if more than five cases are brought in by plane, it's sort of six of one, half dozen the other. it's a bit of an olive branch by china to some of those airlines, many of which were refusing to even fly to china because of the

previous war which saw them suspended for two weeks. it is a step forward in some respects but you are still going to see suspensions, if a minimum amount of covid is brought into china on this plane. haidi: we were expecting an announcement unchanged quarantine restrictions. are we expecting anything this week? emma: they are still discussing what the parameters would be. we see 3, 4, even five days in quarantine, it seems as though they are making that discussion and sources tell us the decision won't come before today. haidi: -- shery: we are counting down to the start of trade in japan and korea. an economic meeting will be held to discuss measures to curb inflation.

we are also watching the end of an ipo lockup time and we have earnings coming out of south korea, including korea aerospace. haidi: we talked about this earlier -- softbank shares facing another tough quarterly earnings report -- concerns over economic recessions and battering valuations. our bloomberg tech editor joins us for more. a record loss in the quarter that ended in march. that has been ongoing that past couple of years. are there any expectations we might see any improvements? >> it's hard to find expectations for improvement. how bad things will be, we don't know how bad they will fake --

fix hundreds of technology stocks. what we do know is across the venture capital sector, we've seen down rounds of prominent startups. shares of bytedance has lost more than 25% since last year. a swedish bank had its valuation slashed by 85% in a recent funding round. a lot depends on discussions between saw bank and auditors and how much they will asked to write down the values of these companies. haidi: we have seen them taken a hit from these companies given china's crackdown. what are some of the ways softbank could turn things around? could they go into new or markets perhaps? >> it would be much more backward looking. it's important to remember softbank is still the number one

shareholder in alibaba and at its peak, it made a $20 million investment and that paid thousand fold in return. it could dip into that alibaba piggy bank for the funds to wait out this current slump in its portfolio of companies. if it can wait long enough, what it hopes to do is lift its chip buying unit arm and tap into that for funding and liquidity so they can seek investing making these big bets going forward. haidi: what are the biggest risks going forward? >> as you mentioned, this rain drain, what has happened is the founder is free much all alone

now. he's seen a series of high-profile departures and we've heard from sources he's looking for his next big thing, the next alibaba. sources are skeptical he will be able to play it safe like he promises. he sits on this big potential cash pile of alibaba shares and the biggest risk going forward is he is a man who has been obsessed about his legacy and he wants to have one big lasting hitch to him on par with bill gates and steve jobs and now there is no one who can even stop them. that's the single guest risk for softbank going forward, this temptation to try to make this

big bet going forward. shery: we will be looking forward to that earnings report. you can watch that live to get commentary and analysis from bloomberg's expert editors who will be following those results. coming up next, crypto leaders in japan want the government to ease its ruling on tokens after a call for tax reforms. this as we watch bitcoin and other cryptocurrencies lose ground for the first time in four sessions. we are talking about the $23,000 level for bitcoin. it has really lingered around that level for a while after we got those swap numbers that came in strong and potentially leading to the fed aggressively tightening. we continue to see if it will

linger around the $19,000, $20,000 level. we've seen crypto up 3.8% as well. this is bloomberg. ♪

haidi: we are seeing the

japanese yen moving steady at the 135 level after seeing significant weakness against the u.s. dollar in the previous section. -- previous session. in just a few minutes, we will be getting the japan current account number, so hang in there for that. haidi: expecting current account data in the coming minutes. earnings do from the likes of softbank and tokyo electron. shery: our next guest is a startup entrepreneur and one of the most prominent crypto innovators in japan. crypto lobbying groups have been asking to ease corporate tax moves which they say stumped the growth of the industry. it will be a test for how committed the government is to developing their business.

let's bring in the founder of the network. give us an assessment of where your country is at when it comes to development and what the government wants to achieve and whether or not this is feasible. >> i think we will see the opportunity for the japanese government to grow and be on the right track. shery: what more do you want to see to make those changes? i know you left japan because you wanted to see those changes for crypto assets as well. how close are you to getting what you actually need in order for these businesses to thrive? sota: i think taxing is one of the most difficult things to change. it takes time.

in terms of the corporate tax which is slightly easier to change, i hope it will change next year. but regarding the individual tax, it takes time. may be more than three years. haidi: if it happens, would you move your company back to japan? sota: i am asked that all the time. we have people from 16 different countries and right now we are in singapore but i would go back to japan because i am the japanese founder. haidi: you have worked in other jurisdictions in the same space. in terms of competitiveness, how would you compare what japan is trying to do and how much catch-up is there to do? sota: it's not clear compared to

singapore but the japanese government finally makes with the national strategy, so it is very clear, it is necessary to change. i think it takes time but this is driven by the japanese government which is very strong compared to the other countries. shery: but it does take time as anything else in japan. i want to ask what the change japan needs the most right now and most urgently? i'm not just talking about what the government can do but perhaps the corporate culture and entrepreneurship and innovation in the country? sota: one of the things we have to changes the corporate tax. if the company owns crypto at the end of its term, that can be taxed.

let's say we issued our token and if we own 50%, this is 500 million. that tax rate is 30%. the next year, the company has to pay more than $100 million worth of japanese yen, which is crazy. we have to change the corporate tax immediately. in terms of the individual and the company, we have to change the mindset. we have to make a global company in global business from day one. we need to change the mindset. haidi: so much of the push behind web free and this inc. components is about the democratization and assets. does that ultimately sit

uncomfortably with the role of government and regulation? sota: i don't think so. decentralization is not a trade-off. right now, society, especially digital society is super centralized. i believe we can find the best way and the government is a centralized authority by nature. but right now, it is to centralized. that's why the government is very slow. it might be interesting if they delegate part of their tax to the citizen so we can get a fair id. haidi: great to chat with you. you can watch us live and catch up on past interviews on our interactive function, tv go and dive into any securities or functions we talk about and join

in the conversation, send us instant messages during our show. it's for bloomberg prescribers only at tv . shery: we are getting breaking news out of japan -- we're getting the current account numbers and it did deficit of 132 point ¥4 billion. this is going from a surplus to a deficit. perhaps not surprising given we've seen high oil prices and a weaker yen. these numbers for the month of june. it has gone from 120 ¥8 billion surplus in the previous month to 132 billion yen deficit for the june current account. we will continue to watch the japanese yen. we see weakness continue at the 135 level. this is bloomberg. ♪

shery: here's a quick check of the late business flash headlines. macquarie group's had to be close to a deal to buy a -- that transaction could be announced as soon as monday. another investor group still has to match the price. they acquired a large part of their assets this year, raising concerns in the u.k.

cvs health is reportedly 78 bid to buy signify health. cvs is seeking to submit ids this week with signify exploring a possible sale. the state bank of india has hosted -- has posted an unexpected profit drop. net income fell 6.6% from a year earlier to $766 million as smaller local rivals have supported rising profits in the surgeon private growth and easing pressure on bad loans. india's biggest fuel retailers have suffered the worst quarterly losses in years after holding down pump prices since early april to curb inflation. they all posted losses in the copter ending june.

the three state run companies provide more than 90 percent of india's petroleum fuels. haidi: these are some of the stocks we will be watching when trade begins. bhp having been rejected in the unsolicited takeover approach to oz minerals. strong demand for lithium fueling an investment boom in australia. we are watching stocks. npp and tokyo electric also expected to report results today. when it comes to the south korean market, they have invested 3.3 billion dollars in vietnam. it already uses smartphones and other products there. shery: take a look at the fx markets because we continue to watch the japanese yen holding at the 135 level after seeing weakness against the u.s. dollar on friday. there was a lot of positioning

in the currency space before the u.s. jobs number. trading will be interesting. you are taking a look at the aussie holding steady after falling in the previous session. we have the rba forecast for wage growth helping to boost the aussie dollar. we see the aussie dollar steady at the 1275 level. we've seen significant weakness lately, so that has given a boost to the greenback as well. the offshore one not doing much. we have the market opened in sydney, so and tokyo. that's next. this is bloomberg. ♪

shery: this is daybreak asia. another week when we are focused on inflation concerns. we have the cpi numbers, the headline numbers expected to ease. we are getting ppi numbers. we haven't even touched we do have numbers for asia. >> there is such -- there is just split in the market. there is this even as we continue to see some indicators. >> we are expecting those treasury yields to come online. we actually saw the tenure yields were passing on the t-1 & level.

we see them bracing for more aggressive fed tightening. take a look at the nikkei under pressure at the open as we are holding steady on the japanese yen. 135 level against the u.s. dollar. we continue to see the divergence when it comes to where the doj is going, where the fed is going. we already saw that result from that week yen with the current account numbers actually falling into deficit just a few minutes ago. for the country for the month of june. we are seeing weakness across the board. will we see the current accounts grow month over month in the previous week. that actually lead to more strength when it came to the korean one but this is done

holding as we are entering a new week. inflation is another concern. whether the fed and other developed economies will have to do more. >> we're looking ahead to a very big earning. some of the biggest companies reporting their earnings this week. it is admits this fear of the impact of inflation. take a look at how we are making beds either way. you can see that pretty much flat at the moment. the tenure yelled really joining as we await for that key inflation number out of the u.s. this week. the aussie dollar is holding pretty firmly. they are seeing wage browned -- bound trading. even in the aftermath of that taiwan trip with nancy pelosi, we see beijing really telling them not to point fingers when it comes to who is to blame in

this dispute. we are watching to see if there is any reason -- any -- anything else. also, more broadly, some of those materials that could get a bit of a bust -- get of up -- that could get a bit of a boost today from the robust trade numbers. >> we watched that economic meeting happening in south korea. the finance ministers is saying the markets are relatively stable. they will be working to help activate exports. we continue to see global demand concerns. the finance ministers saying the economy is being affected by global risks. let's discuss all of this with stephen. it is good to have you with us as we continue to watch for this market risk. policymakers getting a bit antsy right now. we have inflation numbers out of

asian economies including china. what are you expecting as far as what this will mean for asian equity space? >> i think it is important to keep our eye on what is happening on the inflation front. i think the employment data caught the market off guard. also, the wage component was higher than expected. this plays into this higher inflation. i think it would definitely pass the peak inflation narrative in the sense that all price pressure has been driving all of the supply driven pressure around the world. oil is quite low. they maintain the sticky inflation there. i think that plays quite negatively into global equity markets eventually when rates have to go up again. this is the biggest problem right now.

not necessarily when we look at the rate hikes but when we feel them going through the economy. i think this will be a problem for equity markets as we move through the remainder of the year. quite so much more problematic is the fact that across asia, we continue to see week currencies. the be ok has been pretty aggressive in trying to rein this in but you have to rate differentials and there for the pushing increment it down and making inflationary concerns even worse. >> you have to take the currency into consideration. markets still playing for weaker you on right now. that could make some investment inflows and could help us understand the geopolitical risks we had to go through last week. a lot of headphones left china last week after joe political

risks started to peak. i'm not sure if that will come in quickly. i think people are going to take a more wait and see approach to see what the u.s. reaction is. remember we are coming up to the midterm election. china trade is quite popular among the americans. it is bipartisan anyway. if the administration continues to play tough with china. that will be negative for asian sentiment and for global sentiment. you have to keep your eye on that also. >> where does the u.s. dollar go from here? we did not really see that weakness going into last week. i wonder what your assumptions are about where the dollar goes from here and how that flows into asian ethics.

>> i think the dollar could move into your end but we are still looking at this around the world. the euro and the pound especially. i am not sure how much weakening the dollar will have. especially as we move into the winter and northern hemisphere when gas problems will start to come to the forefront again. i don't think this is great for the road or any european currency for that matter. especially the pound. >> could you see as being the biggest beneficiary in asia? -- who would you see as the biggest beneficiary in asia? >> even some of those high-yielding currencies are exposed to oil prices.

that is a negative because oil prices are still high. you're dealing with inflation pressures and the bank is being forced to hike interest rates. theoretically that will slow down the economy. we started picking numbers out of a hat here about what currency to go into here. i think the safepath right now is the wait and see approach that we saw here. argue i think we are close to the peak narrative but we have to relate definitively to see that peak narrative get played out in lower court inflation and weaker job growth in the u.s.. >> great to have you as always. let's look at some of the early movers. quite a bit of action premarket when it comes to this for minerals. >> there is a really significant jump in those men was there.

a very strong rebuke of that. bhp offered $25 per share in cash. that osman will said the takeover bid significant undervalued the company and as such is not an interest for shareholders. they did report operating income for the first quarter they missed the average estimate. shares are down this morning. we are seeing trading volume very much elevated. around four times higher than usual. these are the stocks that are linked to the renewable energy bill. the senate is passing a key bill. it is projected to help cut greenhouse gas emissions by about 40% by the end of the decade from levels of 2005. that is $374 billion that will be put forward to climate and

energy spending. asia will be looking at silica makers over in korea. they did some of the key stocks that we are watching so far. >> let's get to vonnie quinn with the first word headlines. across the u.s. senate has passed along -- landmark health care bill. it was passed after a year of democratic infighting that the white house was unable to control. if you want democrats voted in favor versus 51 republicans. the democratic majority is expected to pass it on friday. taiwan says it won't bow to pressure from china after days of military growth in the air. john's liberation army says they focused on testing long-range air and ground strikes. the u.s. secretary of state says

tensions need to be escalated. they have imposed more lockdowns with 413 infections reported on sunday. about 18,000 tourists were stranded. authorities say movement will be restricted for everyone except essential workers and people currently in kenya are barred from leaving. the prime minister of india is given control of the two highest constitutional posts. the coalition had a comfortable majority. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

>> china's exports have risen to a record. easing some concerns over winning global demand. we will have more on that data plus, challenges to china's recovery given covid zero policies. we have achieved china economist at goldman sachs. and we will look ahead to inflation data due this week and what it could mean for the fed. this is bloomberg. ♪

>> let's look at the fed and early trade. 15 minutes into the start of the major markets coming online. there are some asian data points as well here. look at the nikkei 225. we are trading pretty flat right there. we are seeing downside of about half a percent for the cosby. a big earnings week for softbank. some of those big companies continuing to report this week. inflation as well as that pressure on margins will really be in focus. he was knocked down by about 20%.

good news out of china. that record trade surplus in july surging more than expected. imports continuing. stephen engel joins us now from hong kong. the chinese economy has a lot of concerns. how much does this uptick in export growth help? >> it gives a shot in the arm to the sputtering economy in china as exports grew better than expected. 18% in july. also, it kind of eases the fears about winning global demand for those products. but bloomberg's economics is saying it might be a bit short-lived because there is a lot of pent-up demand. pushing product out the door by exporters who might not have been there during the lockdown. they are just making up for lost time. strong exports are based on pent-up demand. they are catching up on the business that was delayed by the lockdown. that has masked weakness in

external demand. exports poised to slow, leaving the economy more vulnerable. we are seeing covid flareups in high-end island. that is a tourist destination, not a big export manufacturing center but it shows the risk in the chinese economy with multiple cities in one province. they are all facing some sort of lockdown over the last 48 to 72 hours. there are those risks and the chinese economy. the reason they had a big surplus, the surplus was a record. 101 -- $101 billion in july. that is because of that flowing chinese economy. imports rose just 2.3% year over year, below has been 4%. it really is the indication of

slowing domestic demand. we did have increases month over month in crude oil but soybeans, natural gas, copper, all declined on a monthly basis. the numbers in the headline. the headline is also a export surplus, record high. the bottom line is imports are not picking up as fast. the chinese domestic economy is still stuttering right now. >> o.t. of north asian correspondence with the latest on china. look out treasuries are trading at the moment. yields are continuing to see that rally that we saw. we have the 10 year yield topping that 2.8% level. 284 right now. in the friday session, we continue to see that rate higher to 326. this after that very hot u.s. jobs report. really upping the ante on the federal reserve debate over how aggressive rate hikes need to be from here.

traders already pricing in that 75 basis point hike in september already. let's bring in kathleen hayes, i will global economics and policy editor. we had more fed officials coming out. >> they made it pretty clear that they will do whatever it takes. request the really the only question is by how much. they said the fed was not yet that far from any rate hikes. >> we are not getting your mic properly at the moment. kathleen was just telling us about what was happening with the u.s. jobs report and what happened with the federal reserve officials. we are trying to get kathleen back but for now, we do have plenty more to come on daybreak asia. do stick around. this is bloomberg. ♪

>> we continue to watch the impact on the bond space as we have a very hot u.s. job number continuing to rally in the asian session. let's bring back kathleen hayes. we are counting up what mary daly was saying. >> if there was any doubt about the need for the fed to keep documents and consider a big one, that friday jobs report, much hotter than expected. the president of the san francisco fed on friday made it very clear the fed is nowhere near done with this task. >> we are far from done. that is the promised to the american people. we are far from done. we will continue to work until that job is fully done. >> it would be appropriate to

raise rates in september by half a percent? >> absolutely. we need to be data dependent. >> both mary daly and michelle bowman also speaking on friday. they are open to study five basis points in rate hike. michelle bowman sang the larger rate hikes will be on the fed table until inflation is declining. not just peeking but declining on a monthly basis. sustainably. we are also saying that inflation will determine the size of the september rate hike. in fact, many fed officials including jay powell who looked back in last couple of weeks say that they are waiting not just for the monthly reports before the fed meeting, to month integrals between the july and september meeting. it will get to job supports.

to inflation reports and that is why they are so focused on this wednesday report. it is another reason they are hearing talk about how they will do an emergency rate hike. if that report comes in superhot, way harder than expected. 91, 8.7. i think they are saying that would be unusual. it is not expected. some are saying that you can't rule out anything lately. >> it will be over in just about three days but that jobs report already tells us some jet -- some valuable information about the population, particularly when it comes to wages. >> what it tells us is not what is happening right now but the payrolls themselves -- the fed wants to slow down demand so appointment arises, and i not happen at all because you have payrolls of more than doubled the estimates. it was the biggest increase in five months. employment was down to 3.5.

a 52 year low. average hourly earnings, average hourly earnings on a year-over-year basis, 5.2%, that was unchanged for the month before. but we are worried about a wage price spiral. inflation is moving up faster. that is like larry summers wondered if he thinks it shows the economy is overheating. he things the fed will have to stop hiking rates and that will be the biggest mistake they can make. they did in the 70's and 80's and what that meant was they had to come back with even bigger rate hikes that would last longer. that is the tricky path for the fed but at this point they seem to be clearly on the side of let's keep going until we know we have done enough. >> that was kathleen hayes. let's look at our european futures. this is a picture off the future

sessions. they are up by just about .5%. we are also watching these inflation indicators coming out of the u.s. this week. there will be some risk aversion going into that. they're looking modestly higher by about half a percent. we can see a decline toward the end of the week as we have that blowout jobs report. spur these -- spurring these concerns further of monetary tightening. >> we are seeing the markets further. as a to earnings reports. all of this after recording operating profit in the first quarter. that beat estimates. we are seeing canon rising. that is because they announced a share buyback. they gained more than 9%. rising as much as 12%.

take a look at that plunge given that they actually missed in the first quarter. they missed with a really difficult quarter. they fell about 60% or something. guess who came to be an active participant of this? berkshire hathaway. we are talking about $3.8 billion in purchases. this is according to results released on saturday. >> barely making a dent when it comes to what they still have to spend. there was some concern about one of the companies in the portfolio. really, when you take a look at the numbers themselves, they led

to a lost of 48 billion. he lost about 53 billion on the portfolio but the focus is really on that cash horde. they reported over $105 billion compared to 106 billion at the end of march. we have plenty more to come on daybreak asia. look ahead to a week that will be filled with a great deal of uncertainty and volatility. we do have a lot more ahead. this is bloomberg. ♪

>> the beijing government is

trying to manufacture a crisis over a practice that has been ongoing for decades. it is up to beijing to decide if their rejuvenation, if china's rejuvenation will evolve with international respect. >> let's get more on that with cindy. taipei is refusing to bow to pressure from beijing. what are we seeing as the latest? >> hello. taiwan refused to bow to pressure from beijing. we continue to see provocative chinese military action as company's target against the taiwan. china continues to set worships around taiwan.

taiwan said china spent over 60 over taiwan's region as a 5:00 p.m. on sunday. china has its largest, most provocative reaction to taiwan. the most provocative in decades. so far, we have not seen china say that the drills are over as expected and as of sunday noon. the drills are targeting the capabilities of joint biopower's and ram strikes. we will continue to monitor very closely to see anymore of china's provocative military

action in targeting taiwan. >> what does it mean for a people? -- taiwanese people? quite they are largely unaffected. people are not panic buying food. their lives are largely remaining the same because chinese bread has been ongoing over years if not decades so people here are largely very used to these kinds of military threats or drills. it is the most provocative in decades. the chinese also reiterated that taiwan will not bow over to pressure from china and it is not only taiwan but also surrounding countries, they have protested. now the against china's provocative actions and other

freedom loving and democratic countries around the world like the u.s. also urged china to stop immediately. such provocative acts around taiwan that actually sabotaged stability in this region. that is not just rounded taiwan but action as well. that will cause the disruption to the sea or air traffic around taiwan and telestrate. the taiwan strait is a very important waterway. any disruption in the region will cause a big impact to not only just the region but possibly to the world as well. >> that was the latest on the chinese and taiwan tensions. >> the u.s. secretary of state, antony blinken is seeking to strengthen america's alliance with the philippines. they visited the new philippine leader and manila has quarrels

with beijing due to china's increasing presence in the south china sea. a cease-fire between israel and palestine powers has taken place in gaza. that holds nearly three days of violence after they launched an airstrike. they have killed dozens of people in gaza including 15 children. the san francisco fed president has suggested that a 50 basis point rate hike is not locked in at the policy meeting. the central bank would need to stay data dependent where the fight against inflation far from done. >> we are far from done. that is the promise to the american people. we are far from done, we are committed to bringing inflation down and we will continue to work until the job is done. >> it would be appropriate to

raise rates in september by half a percent? >> absolutely. we need to be data dependent. >> powered more than 2700 journalists -- global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> sopping phase and other tough quarterly earnings report and global concerns over high error rates and economic recession better the valuations -- better the wishes of its investment. our technology reporter joins us with the latest. we are not really expecting this quarter before stopping so what are we watching out for? >> it is looking like another big quarter for softbank. we have to wait until the actual release is out to see but given how poorly the stock market has performed during the june quarter, hundred falling more than 20% which is actually the worst performance since 2008.

a lot of analysts are expecting another poor performance. of course, we don't know how softbank has been marking his privately held assets so we have to look out for any disclosures on that front to be sure of the results. >> what is the outlook? they keep losing top executives. >> right. apart from the continued weakness in stock markets. softbank is also facing a number of other challenges. we will see if there are any announcements, maybe not today but going forward about whether there will be any replacements of people who have left softbank and another thing to watch out for is what happens to this planned ipo.

it will be a very important cash source for softbank if it is successful. >> let's look at those numbers from softbank. let's go back to what we are sitting across the markets. >> just taking a look at what we are seeing in the bond space this morning. we did have those very strong u.s. jobs numbers on july. that set off the chances of the 75 basis point move from the fed back in play here. we are seeing a shorter duration jumping here. also, the long and as well, reflecting these concerns that the fed would hike spot far enough to trigger this possession. let's see what we are seeing in the equity space. stocks really facing some headwinds here. the other factor is the china's trade data we had.

we have exports and growth jumping around 18% in july. a very strong reading but still, some headwinds facing the chinese economy as well. we have the growth in the property sector as well as the ongoing covid flareup. let's look at us after we are watching in australia. this is what the company rejected here. a take over from bhp that had valued the company at $25 per share in cash. that is a significant undervaluation and it rejected the proposal. >> over some of the concerns that you talked about in china's economy, they provided covid outbreaks and the property roads, coming up next, china is going to be easing some of those fears. this is bloomberg. ♪

>> asian equities under pressure on this monday morning. we are seeing real estate consumer staples leading those declines across the board. interesting, energy materials are gaining ground but every market right now trading across

asia in the red. perhaps really factoring in the markets are pricing in a more aggressive fed rate hike given the very strong u.s. jobs numbers that we had. we are watching some possible upside and optimism given china's trade surplus. >> that is right. that was faster than expected, using some of these concerns over money global demand. let's get some analysis. this is the chief china economist at goldman sachs. we had to look at the fact that the year to date trade surplus for china continues to be coming and so much stronger that we have seen in previous years. how encouraging is this in terms of suggesting that global demand continues to hold up or that these numbers are looking at elements of seasonality or the fact that there are distortions because of the number of lockdowns and disruptions we have had?

>> i think the record trade surplus is having to do two things. -- imports are not that strong. it provides a glimpse of global demand and if you're worried about china falling into a recession, maybe this is an encouraging prank. but at the same time, the record trade surplus also benefited from this import. this relates to your earlier comments that china's domestic demand, whether it is covid related downward pressure with the imports, that did is very strong. >> it is that domestic consumption where worried about. covid zero, given that is here to stay and the ongoing drug or is of the fact that we are

seeing the property sector bubbling away? >> whenever there is a lockdown, request consumption is under pressure. it will continue to suffer whenever we have outbreaks. the property sector is important. this is the single largest item on the balance sheet. not only is that hurting the jobs and the economy but when you have a property sector that is deep and it is highly uncertain how long we can see these property sectors by out, that will increase sentiment. question wonder we are seeing

automakers trying to boost credit in the economy. supply and loans but i wonder how much the take is, just because you have a large low supply, does that mean this is filtering through the economy? >> that is a tough question for policymakers on multiple fronts. what you said is corrected. you are pushing the strain on monetary policy -- the strength of monetary policy. there is no way to transmit that into longer-term activities. then there are the policymakers themselves and they are not trying to steal everything at this moment. i want to emphasize that the properties slow down. even though the policymakers --

the direction is by design, they did want to rake in the property sector numbers. to some degree, you don't want them to have a lot of leverage buildup. you have a certain sector that you want to help in other sectors you don't want to help. they were cutting interest rates and rrr during this. cries if you wanted to but chinese policymakers could do it. how much leeway do they have given the inflationary outlook in china is still more benign than other places in the world? >> china, you look around the globe and inflation is not

nearly as high as many other parts of the world. but at the same time, i would say policymakers in china are more cautious. we are getting the inflation for july this week and forecasting 3% headlines. i think that 3% is a ceiling for chinese policymakers. they are going to be more cautious as they had three handles in june. that is another reason why we don't think they want you to implement high-profile using measures for this. >> was that -- where does that put the renminbi? >> given that is a very strong trade surplus, there is still a fundamental driver against the dollar. in the near term, we are

expecting kind of a neutral target. in the medium-term, we are expecting some strengthening. 650 is our six month target. >> what is the endgame for the property sector? we have not -- we have seen things continue to percolate. this has become ongoing. particularly when he goes to the psychological plan for the border. >> i think that is a great question. i think our understanding, if you look at those 20 or 30 years down the road, china simply does not need as many new properties per year as what we have seen over the past 10 years.

in some sense, we need to see all of this over a longer time. both in terms of the contribution to gdp and leverage and the financial market implication and the psychological mentality among households that everything is so tied up to the property sector. i think over the longer term, we need a smaller property sector. requested to have you with us. goldman sachs's chief china economist. >> next, returning to global performers and laggards and others challenges we just talked about. we will discuss if investors may react to china's trade surplus at a record high. this is bloomberg. ♪

>> here is a quick check of the latest business/headlines. cvs health is reporting to plan to submit a bid to acquire signify health. according to the wall street, cvs is seeking to submit initial bids this week. the state bank of india has hosted an unexpected profit drop

with investments hit by losses. smaller local rivals on the other hand have reported rising profits and a surge in private growth and easing pressure on bad loans. india's biggest retailers have suffered the worst quarterly losses in years after holding down pump prices to curb inflation. we all posted losses in the quarter and these companies providing more than 90% of india's petroleum fuels. quite close to a $2.5 billion deal to buy the waste from the environment. the transaction could be announced as soon as monday but other investors would have the right to match the price. the only acquire the --

all of this after raising antitrust concerns in the u.k.. china's equities have quickly turned from global up performers to laggards. take a look at this. this is something the u.s. has done to recoup some of their losses. let's go to charlotte young. there was always concerned about the longevity of the chinese stock market rebound. that july trade, can that be an upside catalyst? >> the july did is a pleasant surprise. too many items here, we are going to lockdowns.

these covid cases are rising as well as tensions with taiwan. , investors are closely watching. that is a big thing on investors' minds. >> let's talk about the ipo market. we have seen that activity really dry up globally but it seems that mainland china is still pretty busy. >> yes. despite equity markets, the ipo market is actually seeing some activities with the technology sector seeing shares with some of the big deals. what we are hearing from market watches is some of these stronger companies will get listed in the first half of this year because they have a wicked outlook for markets ahead. there could be more earnings as

conditions are worsening and going forward. that provided some of this today with the non-ipo side. >> with the positive market reaction, is there a sense that we are about over the rest when it comes to china tech and the regulatory headache? >> alibaba figures definitely. it is still too early to say that. also, they are deftly focusing on the big tax results as well as on the record. it is also different how this will come up. it is a little too early to say that. investors have turned more cautiously optimistic, particularly with signals on the consumer side. symptoms are actually better than expected. >> we will see how these tech

earnings come out of china. and some of the other stocks we will be watching today, airline -- airlines have been talking to each other after theirs had been -- after there has been a spike in covid-19. >> that is some of the stocks we are watching, coming up his china's export numbers. investors are watching that inflation and credit data. also, navigate a market volatility and finally value. this is bloomberg. you may have heard of cove -- ♪

the people i would like to have managing my money. >> i think the business is evolving to have much more customer innovation on client portfolios and that is a good thing.