heidi: good morning, welcome to

daybreak australia. we are counting down to australia's major market open. shery: the top stories this hour, u.s. stocks erased earlier gains, investors awaiting key inflation info this week. heidi: the consumer spending and rising inflation, missing estimates by more than $1 billion. shery: hong kong's reduced quarantine. heidi: u.s. futures are slightly higher after a mixed session in new york. raising almost a percent of gains and we have another 100 underperforming on nvidia's results. interestingly, we had oil gaining ground in the new york session, we had concerns about a radiant supply.

we are seeing a bit of pressure, after hours watch out for technologies, they could be selling some or all of its 9% stake in the online bank, softbank is suffering from its own concerns given its own massive losses in the previous quarter. we are watching memestocks, that speculative area of the market is coming back and we are seeing the rebound. almost rippling in a market value with nine sessions of gains. imc -- amc gaining. in terms of what we are saying in the asian markets today, there are not many positive gains. >> you mentioned the nvidia

earnings, that does not put a good note on the growth outlook. other chipmakers in asia, fairly light on the day. we are keeping an eye on where the dollar goes. the aussie dollar and the yen in a tight range following the chinese trade data and the rally in metal. let us change the text, the other major headwind facing the policy of the asian benchmark. the shift from global outperformance to laggard, that would be the first such move in a decade. the covid zero policies and the deteriorating growth outlook. heidi: inflation expectations

continue to drive market sentiment as we get into 58 u.s. cpi. good news for the fed and inflation expectations, inflation expectations in the u.s. are dropping across all parts of the horizon. look three years ahead, expectations and falling to 3.2% from 6%. the outlook falling to 6.2% from 3.8%. that will alleviate some concerns that the inflation mindset is becoming a self-fulfilling prophecy. shery: with those inflation concerns, we are seeing the stagflation. when it comes to earnings of consumer giants, when pepsico came out with results showing that there was no growth in unit sales, revenue growth because of

the double digit price increases, people felt let us wait and see what happens with all of these other companies. will it repeat itself? yes. consumers are pushing back, prices continue to rise. how much longer can consumers keep spending? we have no clarity over when the federal reserve could use more aggressive rate hikes. we had a gloomy forecast from a nvidia to date weighing on the sector already and traders watching for inflation data for more clues aware the rate is going -- on where the rate is going. kathleen hayes, let me start with you, how are we reflect -- how reflective are

those of the global economy? >> we have intel's numbers and nvidia's numbers. it points to a weakness in consumer device shipments and lesser spending on consumer devices. this validates that because of the weakness is really focused on consumer focused laptops that use their gpu cards. it came up quite strong, the negative i think investors are trying to figure out is around the gross margin guide. they took down the gross margin guide. the last time we had a downturn, nvidia's gross margins compressed. they are seeing some weakness in times of the higher costs to get these chips made.

pricing wise, the demand has fallen off of the cliff on the gaming side because of overall consumer weakness. heidi: we went through those consumer expectations, does that provide something that could be soothing to the fed when it comes to worries about inflation expectations getting baked in? >> any time you talk about the federal reserve, they thought inflation may be transitory. we are watching inflation expectations, prices getting higher than what people expect, they expect to pay what they be paid. when you are buying from expected inflation over the next year from 6.8-6.2, that is a big improvement. going from 3.623.2 is pretty good -- 3.6 to 3.2 is pretty

good. gas prices are down sharply at the pump. what people expect in gas prices, 1.5%, that is down eight percentage points. rental increases are seeing less than 10%, that is the first time that they have dipped. remember all of those rate hikes? look at a rates -- mortgage rates. another thing that has happened is people expect things cost more, will they keep spending at the same rate? that is down from 9% in may, all of this is hanging over the cpi report in two days. the poor is set to rise a bit -- core is set to rise a bit.

we get expectations on friday, that is a survey that has been going on since 1946. i think that is the one week watch even more closely. the san francisco fed, they are looking at inflation expectations and they found that one year inflation expectations could have a significant impact on wage inflation. they are confirmed -- concerned about what this means for inflation going forward. shery: we had at treasuries resuming gains, we had a mixed picture for equity in the u.s., or do you make of the market reaction so far? -- what do you make of the market reaction so far? >> of those are the main gains

this week, inflation. we have had plenty of experiences over the last six months, higher than forecasted. even so, if that happens again, look out, you will get a selloff in bonds and stocks because still, even after we had the strong jobs numbers and fed speakers saying that it is not much yet, there is an expectation that inflation metrics will come down and that will allow for a pivot. an interesting example yesterday is new zealand released its quarterly inflation expectations and that showed the first decline in expectations for nine quarters. that was enough for new zealand bonds to outperform and trade

late in the day too. following treasuries, you needed a decline in inflation expectations and that is what the bond market is really looking for. it is also the deeply inverted yield curve, euros are coming down and going up, the yield is inverting further and that is the design that the fed will be forced to hike rates fast enough and far enough to push the economy towards recession. tomorrow's release, the decline of the headline rate in line with economists' forecasts and hoping that this time we will

see a downside beat for cpi. shery: when we get the cpi prince on wednesday. let us go over to bonnie -- vonnie. >> hong kong's move to reduce quarantine has not increased the port look out growth -- growth outlook. airline cathay pacific is urging the government to remove the restriction entirely. joe biden says he is confident china will not further escalate tensions with taiwan after a series of military drills in the region. maintaining pressure today after nancy pelosi's visit to the island. taiwan says no more ships or

planes have entered into territory. south korea's education minister has offered to resign after backlash to reduce the school entry age by one year to five years old. the president is likely to accept the resignation after deciding to remove her from the panel. widespread cost-cutting after a record $23.4 billion loss, the tokyo bank company lost the money in a provisions of fund. following results, everything will be reduced for cost and they will sell to investment management. >> we have to control ourselves although we feel the urge to invest in a market that is tanked.

we will not lose big. >> global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: we continue to watch sophia as well in the after hours session. we hurt the softbank could be selling at least some part of the 9% stake in the company and this is coming after softbank is having a hard time with his own investments in different companies. -- its own investments in different companies. heidi: i have a couple of charts i want to run through talking about the context of this 23.4 billion dollars loss. their largest ever on a quarterly basis and they chart with the do perspective the magnitude of those declines for the company. bosses in the fund are the standout part of the earnings

announcement and the founder really speaking about this. a rare moment of contrition, this is someone who compared himself to jesus christ in the past. beyond those cuts, changing the way that they make their investment decisions. he is offering something else to investors, that is another $3 billion share buyback. we have seen a share buybacks in the past due are a share price. -- prop up a share price. heidi: hong kong is to reduce quarantine for incoming travelers. an airline says that is not enough.

the association of asian-pacific airlines points us this hour. a deep or prolonged recession is upsetting investors, next. this is bloomberg. ♪

>> two consecutive quarters of

gdp decline is the beginning of that definition. three consecutive month of decline in leading indicators which we have now would suggest the same. heidi: cathie wood there, let us bring in our next guest. the senior investment strategist at edward jones, good to have you with us, we are saying the right of stagflation story play out in corporate america. clorox and other big consumer giants seeing how the u.s. consumer is pulling back. we are seeing a stagnation in u.s. revenue. what sectors will be most resilient to this change? >> we have had a really tough first half of the year.

this quarter we are starting to rebound, the s&p 500 is nearly up 10%. do your point, a lot of the figures are backward looking, they have not priced in a lot of the fed rate hikes or quantitative tightening that is starting in earnest this month. what we see going forward is a lot of the economic softness may be ahead of us, we see further revisions until 2023 earnings, gdp growth, they continue to be sub trend growth levels. the good news for investors is this does not mean you will get another 20% downturn. a lot of the work to the downside had been put in in the first half. as we look for it, we do think still the value parts of the market and other parts of the market continue to make sense as we get through the volatile

months with the fat in play. -- fed in play. when growth is lower, growth parts of the market may start to work again. shery: expectations are calming down, -- coming down, how confident are you that prices will be reined in a by the actions of the federal reserve and can we see a sustained rally without prices being tamed? >> we do not think there is a sustained rally until the inflation story comes into check, there may be for inflation trends consistently downward. we have seen commodity prices, food, grain, all come down pretty nicely this month. if you look at the average of july, it is about 11 percent-12% lower across commodities.

that will lend itself to a lower headline figure. the parts of the question lies in the core cpi. it is core pce inflation. services inflation in particular, those tend to be stickier. if we look out 6-12 months, housing markets, softer consumer demand, that will help move those inflation figures lower as well. we will hit a headline figure around 6.5 maybe even sub 6.5 if the court starts catching up quicker. we will head back to the 2%-through percent the fed is targeting. heidi: what about the rising yields? does that risk disruption for equity markets? >> if we get a surprise to the

upside on wednesday we will start to see disruption in the markets and that will cause a knee-jerk reaction. hopefully the trend will be lower and moderating. our expectation is we see a lower print on wednesday on headline level in particular. hopefully we will get some good news to the downside this month rather than what we got last month which was the opposite. may june, we were looking at a 10 year yield. we are now about .280 in the 10 year. the fed continues to raise rates, we may see yields start to grind higher at which could cause a market volatility for growth tech stocks. that volatility could be the opportunity for investors to position themselves for the next few quarters ahead. heidi: you mentioned the outlook when it came to attack, particularly as -- tech, i do

see that rebound on tentacles at this point? >> we think it is a bit early to hold inflation back in growth and tech as we have a fed in play if yields start to move higher, when we do see the opportunity for a full rotation into growth in tech is when inflation moves lower. when yields move lower as well and economic growth is lower than average, that is when markets and investors look for the growth parts of the market, there is a longer duration as it in general. start to layer in quality parts of growth and tech and create a nice barbell so you are well-positioned for 2023. heidi: great to have you with us.

we will get you some details when it comes to the trading update from national australia bank at the moment. income coming at 1.8 5 billion australian dollars, that ratio at 11.6%, the productivity is at 400 million australian dollars. we saw some downgrades when it came to some of the analyst calls recently. we are following strict rate with what the fed does as we have seen with therba. -- the rba. they had particular strength when it comes to asset underwriting as well. we wait to see if there is more

details from the trading. much more to come, this is bloomberg. ♪

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after hours, we see nvidia has more civility after falling, they had a gloomy outlook and their revenue missed projections by more than a million dollars. we are watching sofi technology after a softbank is 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

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according to the pentagon, the package includes a long-range artillery. it equals almost $10 billion. a major expansion of iranian oil exports, negotiators drafted, and would see iran reduce stockpiles. the original deal was postponed after the prompt administration withdrew. prime minister says interest rates could remain high and more packages could be rolled out in the coming months to korean consumers are spending more relative to income than they were a year ago. olivia newton john has died

after a 30 year battle with breast cancer. she had some of the biggest hits of the 1970's and 1980's. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. heidi: hong kong will reduce hotel quarantine from seven days to three days. the roadmap of the complete removal of travel restrictors is needed to protect the aviation hub, our next group represents asian airlines, he joins us, it is great to chat with you. great news for travelers to have that level of flexibility for the last four days of their quarantine. is this what you are hearing from your members that there needs to be a clear roadmap and

set expectations going forward? >> this is always welcome news when measures are relaxed and hong kong has been on a tight travel restriction regime for too long. reducing quarantine from seven days to three days, it is not time to bring out the bubbly. there is a ways to go, the measures. heidi: we were talking about how you are flying back to singapore and the flights are great for singapore, is that the indication of how surprised volumes going to hong kong will be unless there is a broader opening up? >> we generated june 2022, over

one million passengers compared to just 7 million of the same period in 2021. there is a good sign, travelers are taking advantage of the places where restrictions have eased or have been completely lifted. your talking about -- you are talking about an increase in 2021. overall perspective, the asia-pacific region is only 28% of the demand we saw in 2019. compared to other regions of the world, we have already reached 90%, 80%. as in america is already at 85%,

africa is at 75%. a long way to go. china and japan. shery: a long way to go for hong kong, virgin atlantic will not be resuming full operations to hong kong untill 2023 despite the easing of restrictions. it will take a long time to really regain the footing of the financial hub again, if trouble hub as well? >> it is unfortunate. people can travel to so many places, to go to hong kong, he also have their quarantine for three days. people avoid places like that. hong kong is not the only one, greater china is having the single covid strategy throughout the region. japan is still slow in letting

restrictions, the japanese have indicated before the end of the year, they will soften. south korea, you find that you have to do a pcr tests before departure and a test on arrival. i think travelers are picking and choosing whether or not they want to fly and whether restriction varies. shery: can cargo demand offset the weakness coming from the lac k of passengers? >> chemicals are making use of the relaxation, and havcreased . cargo has been a saving grace for during the pandemic. cargo demand was higher than it was in 2019.

cargo has to boil a little bit, i would say that in june the cargo demand is 13% lower than 2021, but still higher than 2019. does provide good relief -- it does provide a good relief. shery: china is easing some of the suspension rules even though it is putting some cities under lockdown, what does that mean for the industry? >> china is a huge market and in terms of inbound and outbound of travelers. we want china to open up as soon as possible. the airlines in the region are thinking about low hanging fruit, india is a big market and it is completely open, australia is completely open.

we have already seen recovery of around 55% 2019. those markets are well below 10%. we hope that they will also see all of the others moving forward and open up their economies very soon. heidi: travel when it comes to the summer and u.s., even australia has been nothing short of chaos. how long do you expect to see this sort of disruption or when can we see a return to the seamless type of travel we had pre-pandemic? >> it is a specialized invest period. for people to come back, they need to have a background check, the need to have recertification

of their expertise and the airlines need to train and retrain them, unfortunately many left the sector because of the long period of shot down and lockdown. -- shut down and lockdown. i would say that the asia-pacific region has not brought back to the same extent we have seen in many western countries. even then, i think safety is the top priority. i think it would take another 3-6 months for things getting back to normal. shery: thank you. softbank ceo promises to cut costs following the record

losses of $23 billion. we have the details next, this is bloomberg. ♪

shery: china is signaling a will kickoff pressure on taiwan after nancy pelosi's visit last week, it is expanding military drills

that were set to conclude on sunday. we bring in stephen engle. what is beijing doing now? >> they have announced a more drills, those four days of drills was as nancy pelosi was leaving the island, those have expired on sunday, but the pla deployed units have announced they will continue more exercises and air strikes, drills are seen as the most provocative and sunday's drills simulated an attack on the main island of taiwan as well as shipping. taiwan says the drills well-designed to break taiwan's morale has allowed taiwan to do practical training against combat scenarios. taiwan is saying that the pla

flew 66 planes including 22 that crossed the median line of the taiwan strait, the number was more than 120 aircraft that crossed the median line. it puts greater pressure on the united states to craft some sort of response if any for the pla to pull back. president clinton sent two carrier strike forces into taiwan a straight or at least one of the carriers into the street and china pulled back. these are different these days and we have to see how far this actually goes. heidi: what about the economic side? we have seen retaliatory actions, could that be enlarged? >> it could be enlarged but we are also getting comments from the ministry of finance, the chief statistician is telling the media that the electronics industry of the two are highly

intertwined, that being taiwan and china. she does not think that there would be a high chance of further economic sanctions because of that interdependency. there have been sanctions put on exports of taiwanese fruits and some fish to china and china has banned the export to taiwan of natural sand. it has been limited, the chief statistician says we expect very little chance of china imposing stricter economic sanctions. we will have to see. beijing will use whatever leverage it can to continue to put the pressure on taiwan. heidi: one of wall street's staunchest equity groups is urging investors to shift to pop holdings. -- shift their holdings. >> one of the biggest stories

over the past hour, investors should be trimming their stock holdings on a modest basis and shifting money into commodities. the risk exposure does stay the same but there is a performance gap that they are talking about, specifically the performance of the s&p 500 from the june low. you can take a look at that, jp morgan sees a chance to capitalize on where we go from here, jp morgan is sticking with the risk, they see the prices of equities rising, because of this they are also underweight on fixed income and cash. shery: it is interesting to see the speculative part of the market come back. we are seeing that on trade. we hear about bitcoin, where is that going? annabelle: we did actually have

an exclusive interview with the founder of galaxy digital holdings, very well-known crypto bull, hate lost half $1 billion due to the overall declines in crypto, his call is that bitcoin will stay in this price range for an hour for around 20-30,000 dollar range, bitcoin has been tight -- tied to the direction of the fed because they are looking for any move with bitcoin, look at the performance of bitcoin over the past 30 days, it is rising around 12%, a far cry from what we had in november of last year. heidi: let us get more on softbank, the ceo says he is planning to cut costs after a record $23 billion loss in the last quarter.

our reporter has been covering softbank and she joins us in tokyo. bracing for some pretty bad numbers? >> the bottom line figure was way bigger than analyst estimates that we have been seen because softbank had aggressively marked down both its publicly held and privately held assets. the other surprises included the news of the extra share buyback program. it already had a one trillion yen buyback program, and another 400 billion yen buyback. the announced commitment to huge cost-cutting, he said will include potential cuts in headcount. the details will be closely

watched going forward. shery: he detailed problems, missteps in his portfolio which was interesting for an investor of his caliber. what are analysts saying looking at that and what do we think the outlook will be? >> he sounded pretty jarred when he was releasing all of these numbers. the response from the market so far, the market has not opened yet, the responses are pretty negative and analysts are saying that the results are mostly full of negative surprises. citi wrote there is no sign of a turnaround for softbank and that the decline in valuation is likely to continue to outweigh the increase in shareholder return in the near term. there are not a lot of positive things to look for in the

current environment. softbank did say it will try to sell off some assets to clean up its balance sheet. the details will be closely watched as well. shery: we continue to watch inflation with fed officials trying to manage at rate hike with growing economic risks. cathie wood saying that investors point to a u.s. economy that is in recession. innovation will be a critical investment theme as we navigate the downturn. >> two consecutive quarters of gdp decline is the beginning of that definition. three consecutive months of decline in the main indicators which we have now with suggest the same. -- would suggest the saint. we see an inverted yield curve,

that is a warning sign. this is going to be a severe inventory recession. we did not have the systemic excesses likely did in the mortgage market. inventory recession hits and while most economists are saying it is the inverted yield curve pointing to a recession next year, we believe we will be coming out of it next year. i think the big question is what is going on in china? some of the commodity price decline has to do with china unraveling itself from a single point of view. they have got their foot on the break in many ways, they are trying to let it off a little here and there. i think the real estate turndown -- downturn in china is 30% of

their economy, 30% of consumer savings, they are not going to be able to control it the way they thought they were. >> i asked twitter for some questions, i have a good one. if you believe the fed is going to go on a hike raising path, when i go to cash? white actively manage etf's? some people wonder when i do have more of a cash reserve? >> we will be invested in innovation, that is who we are, that is what we are paid to do and that is what we say we are. we think that innovation is going to be a critical allocation in the years ahead as the world moves rapidly. it tends to gain traction during tough times, innovation solves

problems. we have so many problems right now read have the supply chain problem, we have energy and food prices up because of the war, really hurting consumer purchasing power. so i think better, cheaper, more efficient, more creative is going to win. that is what innovation is. we think most asset allocators are short in innovation. i do not mean nasdaq 100, we do not think that is truly disruptive innovation. we believe art is more the old-style nasdaq than the nasdaq is today. that is all we focus on. heidi: be sure to tune in to

bloomberg radio to hear more and get in-depth analysis from the daybreak team. you are listening by the app or bloomberg radio.com, morehead, this is bloomberg -- more ahead, this is bloomberg. ♪

as a main street bank, pnc has helped over 7 million kids develop their passion for learning. and now we're providing 88 billion dollars to support underserved communities... ...helping us all move forward financially. pnc bank: see how we can make a difference for you. heidi: taking a look at the data head for australia, sentiment

has been on the decline for the last eight months and it is of rain or a historic low. conditions on confidence as well and a quick recap on the latest numbers on a cash profit for the third quarter, $1.26 billion in u.s.. our employment and a healthy household sheet will mitigate higher interest rates. shery: clear has subpoenaed larry ellison to make elon musk complete his buyout. the company subpoenaed an official that committed $1 billion. twitter has subpoenaed ellison himself.

investing in the consumer sector, carlisle will replace alan on an interim basis, carlisle has declined to comment. coming up in the next hour, a leader joins us to discuss efforts to discuss climate change. daybreak asia is next. this is bloomberg. ♪

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