heidi: good morning.

we are counting down to asia's major market open. >> kathleen, the top stories this hour, take adding to the downbeat mood. heidi: a warning from micron as demand falls rapidly. kathleen: the justice department is suing google for its dominance over the digital advertising market. micron technology pulls back on orders. one day after nvidia, another big tech -- chipmaker said things are falling short that hit s&p and nasdaq and the dow jones industrial average. after a 10% rally to the lows in

june, the s&p has four straight days of losses. the philadelphia semiconductor index was down 5% today, all 30 stocks in that index are down as well. nasdaq is underperforming. having a bit of a rebound, it may have their small selloff. the cpi report is weighed on stocks and bonds. the cpi report is bothering people. the 10-year note sold off to about 2.78 percent. with the two year at 2.7%. there was a $42 billion sale in good demand, maybe some people are betting on weaker than expected report tomorrow? for oil, that was volatile, it rose on news there may be a big

slowdown in a major pipeline. a shipment from russia going to europe and by the middle of the day it turned around. it will be back on port. the cpi report looking for a stronger headline, a weaker core. i do not know if that will be enough to please the fed. annabelle: we are waiting ahead of the cpi release. a weaker start in asia, new zealand coming online, that is pretty do the downside, trading volumes expect to be pretty thin today. while all of the 20 day moving average. one stock we are watching his commonwealth bank, this is the largest bank in australia. that was a beat on estimates,

the dollar is in tight range. the ozzie and the yen, little change, the cpi also has data from china later. heidi: the inflation feature is different compared to the rest of the world, japan reducing prices as well. we are seeing a distortion in the slowing of japan producer prices. going back to china, it is likely to see this kind of push pull factor of we are expecting to see food prices accelerate, driven by the pickup in pork prices when it comes to the food inflation bus. you do have waning household demand, the demand will keep the cap on service prices. we know with covid zero there is some uncertainty, this is different, then inflation

wednesday in the u.s.. kathleen: it is the pboc of chinese inflation versus almost every other economy in the world. for the federal reserve, we are looking for the headline number to go down to 8.7%. the core takes out food and energy and gasoline prices. the federal reserve, several officials have made it clear that what they do will rely on four numbers, two jobs numbers and two inflation numbers. we are getting the july number. this will be feted and talked about on top of the very strong jobs report we just saw, there will be a lot of back-and-forth.

a big debate in the market. let us get more on the key inflation numbers and the plume in the tech sector. we are joined by anna, and tom child. let us talk about the u.s. cpi. what are we expecting? what are we really expecting in terms of what will make a difference here? >> i think people are looking for the peak inflation numbers today. as you mention on the headline number, looking for a slowdown of 8.7%. that reflects the big dip in gasoline prices, might i suggest u.s. prices are turning a corner? the core number is expected to take a little higher, the right story, and i will add the fuel to the fire. citigroup saying that they may

have to move by 100 basis points. even though the numbers suggest the u.s. inflation may be turning a corner, there'll be a lot of focus on the amount of fed that the fed has to do. heidi: we have been saying how there are divergent past when it comes to the pboc, what signals are we effect -- expecting? >> it is uptick risk, pork prices rose by 20% on year, headline cpi has driven about 2.5%, core inflation in china remains subdued. that is because of the ongoing effort to contain covid. this inflation does come around 2.5 percent today, that will not cause the central bank too much angst, they look to support the

economy, they are not in a tightening cycle. it will take an upside surprise out of china to turn heads today. kathleen: micron, demand, or day after nvidia. the fourth biggest chipmaker in the world, they are warning about demand, how dire is this warning for the entire industry? >> a leader when it comes to memory which is the integral part of computers. they came out this morning issuing eight hour warning saying in the past that their fourth-quarter revenue was going to come in far lower than they had previously expected. they came out and say it will be on the low end of that projection if not lower. they talked about a few things, demand, the fact that their customers have been stockpiling chips. during the pandemic we talked

about how customers could not get enough chips. there was a supply chain crisis, there were not enough chips. those customers really stocked up on them and some of them say we have too many. we are going to cut back on our orders. combine that with a global economic slowdown possibility of a recession in the u.s., combine that with signs of inflationary, you are talking about cpi, inflation. all of those things taken together are perfect storms when it comes to chip demand. my current issues this morning very early in the u.s. hours today. it sends shockwaves across the chipmaking sector. heidi: perhaps the unfortunate environment around chips can be fixed with the law signed into law today. independents for the u.s.

production, is this something that is relevant given the supply and demand dynamics we are looking at? >> remember that what the chip act is trying to address is a long-term trend whereby the u.s. accounts for less of the global chipmaking pie. that is what the chip act is meant to rectify. it is a long-term investment. this is investment that is going to take place over years and years. this instance, what we are seeing in the chip technology industry is going to even out. the chip sector goes in cycles, there are these booms and busts. that will go away. what remains is whether the u.s. chipmaking sector can get anywhere close to where they were decades ago when the u.s. was at the forefront in terms of production and innovation. you have seen that bloom come

off of the u.s. rose and seen the rise of countries in asia, taiwan, south korea. that is what this is about. it is an interesting timing on this. president biden signed that act, my current issues this dour warning -- president biden issues this dour warning. heidi: we are going to stick with china and the $3 trillion trust industry under scrutiny, this comes with risks to financial stability. for the latest let us bring in stephen engle in hong kong. we know that the whack-a-mole nature of the adulatory crackdowns, was this expected? -- of the crackdowns, was this expected?

>> it is not a surprise given the exposure that the widening trust fund industry exposure to the property sector and we know about the issues in the property sector and their inability to pay back their dollar bonds. they are also finding increasingly difficulty in paying back the loans or getting paid back from developers because of the loans they have exposed to the developers. they face 72 billion u.s. dollars. trust firms this year have defaulted on about 8.6 billion u.s. dollars of investment product linked to developers. this has caught the attention of the national audit office. we are hearing from sources that they have launched an

investigation. they want to assess the risk that they oppose to the defaulting sector. a critical political time in china, these trust firms are also reporting their risky loans to property developers. disposing of them, this is according to sources. it is unknown what type of regulatory action, right now it is just an audit office investigation. it shows how losses are mounting. there are other regulatory actions underway as well. we were talking about semiconductors, the domestic chip industry has not reached some of the success that national investment in other areas has and the has caught the attention of senior leaders as well, a slurry of anti-graft

probes have begun and they have been expanded. on tuesday, three more executives of the national integrated circuit industry board or investment fund known as the big find in china have now been -- the big find have been involved in the investigation. let us face it, they have not reached the kind of success that was expected. heidi: interesting. we look at the chip act signed, that is the concern of the u.s.. let us get over to the first word headlines. >> nancy pelosi says chinese president xi jinping is acting like a scared bully over her visit to taiwan. her trip was meant to reinforce u.s. focus on the region, the

white house has tried to distance itself. this is a made a wave of criticism from china and a up that congress will not be intimidated. donald trump has intensified legal pressures after a raid on his home. this is part of ongoing legal patterns as he -- legal battles as he is ready to run again for president. russian accrued flowing to the ship republic was halted. -- russian crude flowing to the czech republic was halted. the pipeline was shut down last week. there has been no effect on the northern leg that runs to poland and germany. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries.

heidi: we are expecting earnings from commonwealth bank of australia later this hour. we will get you the details on those results and analysis from the markets as well. a ceo joins us to talk about the focus on phonetic investing. this is bloomberg. ♪

>> inflation expectations. >> consumer inflation expectations are dropping. >> we are and an important inflection point in the inflation story. >> what does that tell us? >> we are going to see inflation decline, but to what level? >> will then fall down to the 2% target -- will info down to the 2% target? >> 2% inflation rate. >> it is hard to achieve. >> we are experiencing inflation. kathleen: talking about

inflation expectations. a report gave some relief but u.s. stocks are trading today with many traders unable to make risky bets before the pivotal cpi reading. that is bring in sylvia, ceo and cio at defiance ets. you are watching closely because in one of your notes you said you do not know if we have really had bottom. you said it depends on the inflation readings and if the fed can help. >> i think it is interesting that everybody is so focused on wednesday's report. even if it surprises us to the downside, i think we will get a rally off of something like that. a does not change the picture in the short term -- it does not change the picture in the short term.

the issue is that will take some time. i think the recent market pullback has represented a great opportunity for investors to start dipping into the market. could we had those lows like we did back in june? we could. we have seen the lows around tech. kathleen: wise, experienced traders and investors say you cannot pick the bottom. >> you would like tech, i wonder what you might say about chips, what part of tech looks good to you? >> are like the general in terms of tech, google, microsoft, amazon. these companies can absorb inflation. the outlook is rosy and more positive. i also think that the big tech

has so many big levels in secular trends. you have subscription, data warehousing, data centers, e-commerce, you have products for apple, amazon that is going to be an ad company. as we come out of the bear market pullbacks and stock start to recover and generate revenue, they are on sale and will off of their eyes. -- highs. people are buying those stocks, far higher than they are not and they are too tepid about getting in now. it is wise to get into those trends. i know it has been a terrible week for semiconductors, the report that has come out from the companies, i think they are part of a future secular growth trend in innovation. you need to semiconductors and

chips for 5g. you need it for data processing, automating factories. look at what happened during covid, you need chips to automate and have robotics to replace the problem. there is a big need for all of this in the economy. kathleen: i understand the about in some segments of tech, talking about earnings were not as bad as expected. thank you look at this chart showing the rebound we are seeing in basically the memestocks. not profitable tech and we are sitting close to a three month high. we are only about a week of trading in, but the s&p 500 in comparison is flat. this is as we have a fed that is more hawkish, further away from the pivot that at the beginning of the month. does that mean there are some silly market sentiment at the moment? >> i think this is a little bit

of silliness, these stocks come and go and they enter the market and get attention and go away. in terms of my mind that as an investment, i am looking at long-term opportunities. in the short term you may see some technical levels, generate a quick profit, for longer-term investors, the average person is looking for appreciation in their portfolio. that is not where i would go. versus some of these meme stock traits, but they are fun to watch. heidi: kathleen touched on what you are doing, on how you are positioning around chips, given we had a string of mostly pretty terrible guidance out of these chipmakers. the design of the chips, domestic investment into getting a more u.s. manufacturing. do you invest around the theme for the longer-term? >> this is one of the catalysts

that will move things forward in the future. it is not something i am investing on on its own. i think it is a positive catalyst. the reason i like chips is i like the theme of innovation technology and the future of technology lies in things like 5g and automation and changing the way we live, work, learn and play. if there is a slowdown in gaming, there is so much beyond all of that that leads us to an essential growth story for chips. ev is interesting for chips in the near term, you need chips too out enough disclose -- to bang out enough teslas. heidi: it is great to have you with us. more to come on daybreak australia, this is bloomberg. ♪

heidi: micron has become the latest chipmakers to declare a slowdown in demand, senate industry -- sending industry stocks tumbling. but previous guidance. coinbase posted a $1.1 billion loss in expected revenue, the largest crypto currency exchange . coinbase has lumped -- slumped in what it has labeled the crypto winter. this is bloomberg. ♪

>> president biden has signed

legislation that will give the semiconductor industry subsidies. it will allow u.s. chipmakers to create a new manufacturing facilities and reduce reliance on other countries for advanced chips and prevent u.s. companies from expanding in china. >> we produce 0% of these advanced chips. it is no water at the chinese communist party actively lobbied u.s. businesses against this bill. the united states must lead the world in the manufacturing of these advanced chips. >> reviewing the post industry where losses from property loans are mounting, looking for risks to financial stability. firms have been asked to report

on any loans and dispose of them. beijing may use the results to make future reforms in the sector. six people are missing after one of the heaviest rains in seoul. it caused black across the cities, three of the eight victims of drought in their basements. -- lock out across the city, three of eight victims died in their basements. serena williams wants to have another child and was to focus on other things and her capital firm. china's officials are amending flyovers over taiwan, there --

breakthroughs. u.s. companies have been able to contain beijing's penological ambitions as a result. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. heidi: donald trump is facing political pressure following the fbi raid on his mar-a-lago home. let us get more from our political news director. what more have we learned about this search which is basically what it was? quite a surprising one i am sure too many people who learned of this? >> it did not leak out to the media and it was donald trump who told us about this. his mar-a-lago home in florida had been searched by fbi agents. he called this a raid but it was a search warrant and they searched looking for documents

that he may have taken with him when he left the white house before he left office. what were they looking for? what did they find? what are the political implications of this? donald trump has been setting himself up as a kingmaker for republicans running for the house and senate. also, he has not made it coy about wanting to run in 2024. he has to turn over tax records to the house committee that is looking at them. how significant this will be politically is the question we are exploring in the weeks and months to come. heidi: there is fury when it

comes to the gop response to this? >> they are saying that this is a witchhunt and that he has been unfairly targeted in a political kind of way that they are saying that merrick garland and the attorney general is going after him and kevin is the house minority leader could be -- kevin mccarthy is the house majority leader, basically said that donald was a victim here and that merrick garland and others should be careful that when the congress changes hands and the republicans control the house after the midterms, they could face investigation. a lot of words right now and the republicans are standing by donald trump. he does not seem to have lost any support, at least not publicly. that could change. kathleen: we do not know what

comes out of this search, investigation. the tax records is surprising. i do not understand what part it plays in the january 6 investigation? >> it has been something the houses been fighting to get a hold of from donald trump for a long time. he has not released his tax records and they put this into the wrinkling of the court and donald trump has fought. the appeal court says he must. he can appeal to the supreme court, they are unlikely to want to deal with this. there is the teen way sixth investigation and -- the january 6 investigation and there may be

charges affecting donald trump. the documents do not necessarily appear to be connected to january 6 since he left the white house. the committee is going to be continuing to meet during the congressional recess in august and they say there may be more things that are under investigation. heidi: the latest, the bloomberg has learned that there is another case against google. this is about advertising. what is the back story? >> this case is a long time in the making, the department looked into the business three years ago, they have brought one case related to search and there in the home stretch in a case related to the advertisement tech business, how google prices

advertisements. this could come as soon as september. kathleen: what is at stake for google? is it a matter of being forced to make a fundamental change in their business? >> inc. would be quite significant, we do not know what revenue -- remedy the justice department would see, this is similar to another case that was brought by the attorney general in the state of texas and there they are seeking to make google break up its ad tech business. they are arguing it cannot continue to serve advertisers and publishers and run the marketplace it needs to sell something off. heidi: what does this tell us about the antitrust enforcement under the biden administration? >> if the doj does come through with a case it would be an other

side of the very robust antitrust enforcement that we have seen from the biden administration last month and the ftc brought a case against facebook for the virtual-reality app which surprised some people as it was a relatively small deal and the congress is also having a bill that would limit the extent to which tech giants can advertise on their own platforms. they are ramping up enforcement on numerous fronts. kathleen: we will have more on the big beat by the biggest australian bank. this is bloomberg. ♪

kathleen: we are seeing a growing split on the s&p 500. let us get to morning calls. even forecasters do not seem to agree. annabelle: keep questions for investors in the market, s&p 500 moving from the june low, it is

signaling a bear market rally? this is the from here, they could not even agree on this. the head of technical analysis here, he said that the bear market is over and he is pointing to reasons for that. also clues from inflation and consumers and investor sentiment, he says the next move on the s&p 500 will be to the upside. on the flipside he has has a quantitative strategist and the market could test fresh lows. if you have the terminal chart you could see that is the level that the s&p 500 has been averaging here over the past 200 days, it does depend on what happens with inflation, the report later today, it comes in harder than expected, that is

not a good signal for u.s. stocks. heidi: what about the yield curve inversion? >> that is a sign we are watching closely because we have been getting close to the inversion, it has been deepening significantly. the widest gap we have not seen since the dot com bubble first. it does depend on what happens with the fed policy rate and that is a function of inflation. the bank of america is saying that the expected peak is rising .4%, the current move is on the fed rate kicking around 3.5%. we could see the curve inversion deepening 285 basis points. this has been a very watched metric since we have started to

see that inversion again because it has been a very good signal of recession ahead. heidi: commonwealth bank has reported the highest cash earnings in four years. coming in at 9.6 billion australian dollars, agreed to have you with us, we are going into this, we need momentum from the previous period. what racks are you starting to see? there is commentary on the weakness of the household and the drop in the interest margin. >> today's report is a possibility of a slowdown in the growth, it has increased by 11% compared to the previous 19%.

a slowdown is happening to the bank. one thing that surprised me is the net margin, their interest margin comes down to 1.9 and the 2%. these paths go for to consumers, the margin is up, we are seeing a down number, particularly coming from the competition in the market as housing market -- the housing market. i think shareholders will appreciate the increase of around 10% which shows that banks have confidence for the future give it of the headwinds. heidi: they do still expect

margins to continue to increase as the bank continues to tighten. how do you balance that outlook with the fact we are going to see further stress on the property market? >> shareholders will strengthen the size of the property market, particular leverage from the sales side, the banks margin wise. one thing the shareholder can be short of is the quality of the -- [indiscernible] the bank has to be reducing the

size of that including the quality of the bank's fuel. they have to have the confidence that they will not encounter that for the next year. kathleen: there is some debate for expectation that the reserve bank of australia put continue to be fairly aggressive -- could continue to be fairly aggressive as a rate hike or. r. what will that mean for them? >> i think it will mean on the broad market, we are expecting a bit of a downfall as they mentioned, they are expecting a 10% drop in the property price. for the market acquisition, --

given that we have already seen the downside play on the lending side, it has decreased. however, we also heard that there is a fixed interest rate. actually kind of looking forwards for next year, they are expecting the interest rate to be going down and boost the property market towards the second year. kathleen: what we see them in the same position? >> i think pretty likely. the home lending market is quite fantastic with is why they have big interest margins. they will be quite competitive in operates in trying to get a bigger share of the market.

heidi: great to have you with us. watching the commonwealth bank of australia, that was a relief beat. we have pressure from households facing higher rates. we are watching in particular some of the big movers related to earnings, we are seeing relative stability when it comes to the bond market at the moment. signaling more of a recession risk, that seems to be spreading from the move we have seen in treasuries. we have seen that yield curve flattening accelerating in markets like here in australia and in new zealand as well as u.k. gilts. we have seen some pretty big moves in the aussie in the

recent days. kathleen: be sure to tune in to bloomberg radio, you can get in-depth analysis from our daybreak team, you can see the now broadcasting live in our studio. stay with us. ♪

kathleen: the volatility continues, we have a pretty depressing news from coinbase, revenue misses and trading volumes missing the spot on poor retail users -- core retail users. looking at trading when it comes through the biggest u.s. crypto currency exchanges, down by 4.5%. but coin is sitting up of 23 thousand dollars, we do see the slump -- bitcoin is $23,000, we do see the slump. we have given at times bitcoin and crypto performing as an inflation hedge.

we talk through the company's latest earnings when it comes to coinbase. take a listen in an exclusive interview with the president and coo. >> reporter for both companies -- a rough quarter for both companies. some of the asset prices impact things like the platform and other numbers. >> the monthly transaction users actually beat but coinbase is losing market share. what do you do to stop the decline? >> there are different pieces to this puzzle. our core retail customer is sitting on the sidelines. they want to huddle for a little bit and they will engage with certain figures -- features.

there were some episodic bankruptcies that happened this quarter, we were untouched by that. we have incredible risk management and zero exposure. there was an aspect of that that we do not benefit from the liquidity flows. there is a reality that during these cycles you have market makers and traders making up the bulk of the activity. a lot of that happens offshore. you may not have participated as much as others in the -- we may not have participated as much as others in that ecosystem. we participate in the upside and we earn heavily in products like derivatives. >> where is your take on where we are in the crypto winter? are you seeing signs of starting to thaw or are we in a deep freeze? >> what i can say is that

coinbase has been through four major cycles, 10 years of operating this company. we know how to run a long-term business. we know how to preserve cash to operate it so that we are investing in the long-term. >> how much of what is happening is tied to overall economy versus the crypto industry factors? >> it is hard to say what comes from the macro and the crypto winter. in some places they were intertwined. the macro caused the run that caused the bankruptcies. the way we approach the market condition is we think about how do we drive higher revenue generating activities, how do we cost cut in these environments and how do we also make sure that we have the absolute risk management in place so that we avoid any of the contagion that happened which is exactly what

we did. kathleen: speaking exclusively with coinbase's ceo. coming up in the next hour, wells fargo institute's global strategist shares his views on the micro economy and markets and we take the in-depth look at the u.s. chip bill with keith krach. we will keep our eye on this cpi in the u.s. on wednesday and get ready for the big china cpi report in the next couple of hours. that is it for daybreak australia, daybreak asia is next. this is a bloomberg. ♪

heidi: