>> welcome to dave brat

australia. i am haidi stroud-watts in sydney -- welcome to daybreak australia. i am haidi stroud-watts in sydney. >> u.s. stocks rise for the second day in a row. the dollar is up and oil under pressure on concerns over china's economy. >> failure results reported of our plans as the dividend outlook in the spotlight. and china's military lunches around another u.s. congressional visit. singapore is likely the next prime minister that may sleepwalk into conflict. >> we are starting to see a series of decisions being taken

by both countries that will lead us into more and more dangerous territory. >> u.s. futures under pressure. this after the s&p 500 actually rallied in the new york session. we have the nasdaq 100 outperforming. we have some weak economic data not only from china but new york. manufacturing numbers were down. we have oil under pressure. continuing to fall. there is optimism about a potential uranian -- iranian nuclear deal. we continue to see that stock market optimism.

we are talking about the s&p 500 for the first time since may.

approaching 70. a key watch for us. broadly, we are looking for most markets in asia to open hi. we had aussie futures closing here. we are still monitoring that reaction to china's big data missed yesterday or the data dump. also, that rate cut. we have that strength we saw in the dollar. that is turning commodity link currencies lower. back at the $.70 level. let's take on the commodities to another big company reported earnings this hour. this is bhp. let's look at the key watch points here. anything we get on m&a opportunities, we did see that bid last week that came through for aussie minerals. we did see rio tinto. another key watch point for us. a very big interview as well on bloomberg television. >> very much looking forward to that conversation. we do want to know about the economic outlook and what he sees in the broader market. this as we saw that manufacturing print in new york plunging by the second most. data going back to 2001. we are talking about the empire manufacturing print and what that might mean about the slowdown we are seeing on the

sector and more broadly across the world as well. >> we keep talking about whether the session is the only clear -- whether recession is the only cure for inflation. inflation may be continuing to run rampant and out of control. the fed funds rate should be going well above 4.5 or 5% to really push inflation. if that doesn't happen, we will get unhinged inflation expectations. a great deal of ambiguity when it comes to that front. u.s. equities rose for a second day in a row. with the economic growth in china, u.s. crude is sitting at $90 a barrel followed by a drop in copper as far as -- copper and other metals as well. let me start off with you.

even morgan stanley, jp morgan can't agree whether this is a sustained rally. >> there is a lot of confusion out there. the u.s. market defied those -- the u.s. manufacturing data which came hot on the heels of those very poor numbers out of china. we are looking at whether or not this is a bear market rally. a lot of people think it is. the tightening inflation is not coming down. at the end of the day, this still very much feels like a bear market rally. >> we have that economic caution transferring over the commodities space.

>> it does back to china weakness. we heard that china's apparent crude demand fell 10% year for july. that is a huge got pushed to the oil market, west texas intermediate crude fell. they briefly fell below $87. that is a six-month low. they also signaled a nuclear agreement could be reached in the next few days. the prospect of more oil on the market put further pressure on the bloomberg. you will see that oil has dropped below key support level. energy traders saying many traders are betting there probably will be in iranian deal. there will probably be more oil on the market. >> we saw the breath of a lot of

commodities falling. >> china is the largest consumer for a lot of these metals. metals drop sharply across the board. we saw our worked on more than 3%. copper down 2%. there was major pressure. to quote one analyst, we are seeing what china's economy is doing right now. there is a lot of recalibrating on the part of traders and investors to rein in their bullish positions. demand has fallen.

>> china's military says they have held off rush patrols on taiwan. this comes more than two weeks before live drills following nancy pelosi's campaign. there is an exclusive conversation that the u.s. and china could sleepwalk into conflict. >> after the ukraine work, the religions have become more strained and following the visit -- relations have become more strained. we are starting to see a series of divisions -- decisions being taken that will lead us into more and more dangerous territory. if an accident would happen today, the consequences will be more difficult to manage. we worry about these near-term accident and miscalculations and we hope the leadership on both sides can continue to engage one another.

especially at the highest level. and that rational decisions can be made to prevent things from worsening or deteriorating further. >> the biggest worry is a chinese invasion of taiwan. how likely do you think that is? >> i think taiwan is one flashpoint. it can easily become very dangerous. as we have seen in recent events and it can even escalate quickly. not because either party deliberately wanted to become a flashpoint. both sides understand the consequences and really do not want to go into conflict. the leadership on both sides understands this but as they say, known deliberately wants to go into battle but we sleepwalk into conflict. that is the biggest problem and danger. >> if nancy pelosi really wanted to stand up to china and get

emerging asian countries like yourself on the side of america, surely the way to come into this vision is to come with a trade pact, not with the way she proceeded. >> we have been encouraging america to do more in the region and that has been our consistent message but we also understand america's domestic politics and its constraints. in that sense, we encourage america to do as much as it can, as much as his domestic policies allow. from that point of view, we welcome the economic framework and it is good that many other countries have come forward to be part of this framework at the lunch but as we repeatedly told americans, the launch is only the beginning. >> there are very few signs of joe biden want to expand this.

>> especially as we deal with more uncertain environments and economic slowdown with inflation. these are pressing challenges for countries everywhere, governments everywhere. i would say from our engagements with the administration and people in the u.s., we do understand the strategic importance of engaging this part of the world. i am sure they will do everything they can to index -- to strengthen and enhance the engagement. from singapore's point of view, we look at it this way. we want to create a framework in southeast asia where all the major power -- all the major powers have stakes in the region. we think that will contribute to a more stable configuration. >> do you worry about protectionism being on the rise

in this region? >> we are entering a new scenario, a new world order where increasingly, these are being used in geopolitical contests. i think there is now another logic at play which is geopolitics can undermine trade. we worry about that because this will lead to a more divided and dangerous world. >> let's get you over to vonnie quinn in new york with the first word headlines. >> iran said the european union the official response for reviving the 2015 nuclear report. they brokered a deal with eu

sanctions, potentially restoring exports to the global markets from iran. iranian officials earlier saying an agreement can be raised if the u.s. shows flexibility. hong kong's financial reporting council is stepping up its investigation of china evergrande. the watchdog says it is looking into accounts and audits of the company. it is the second review of the books in nine months. evergrande defaulted in december and fell short of delivering a promise on a restructuring plan. sentenced to six more years in prison. according to bloomberg sources, a special report found her guilty of corruption charges related to a charity named after her late mother. the latest verdict brings this to 17 years. the u.s. says it has no plans to

release $3.5 billion in funds to afghanistan to the taliban-controlled central bank. the decision follows revelations of the fact that the leader had been living in kabul before he was killed in a drone strike. the data department says the u.s. will look for ways to enter if it afghan people directly. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> we will be discussing earnings with gavin. he says that the dividend is much more significant to markets than the overall profit. we will be breaking down those results as they get to us later this hour. we will take a look at the market outbreak -- market outlook. we will find out what they say as we have not seen a true capitulation in markets just yet. this is bloomberg.

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>> let's get you your earnings crossing the bloomberg now. the underlying for your profit is $24.8 billion against $26.1

billion. that final one coming in. that is going to be key because investors will want to see the level of fiscal conservatives. especially on the back of those troubling interesting activity indicators from china. when it comes to for your net income, that was handy. as well as that for your dividend per share there. a little bit of a mess against expectations, capital and expiration expenditure at $7.5 billion. they will be watching any sort of guidance for m&a. as we get more of that, this

will be the first to join your own bloomberg. you can watch that live at 10 past 12 here in sydney. >> of course, earnings season in full swing here in australia. in the u.s., we are almost done. it actually went pretty well for the second quarter. let's bring in the next guest who says they don't think we have seen a true market capitulation just yet. julie, good to have you with us. i mentioned the second quarter earnings season here in the u.s. -- stocks have been rallying in the past month. why are you more cautious? >> it is hard to be u.s. consumer. you have such high pricing for rentals and for food. it is a huge ability to have lower oil prices but that is not everything that is in the bag.

if we are starting to see more layouts happening, particularly with the middle income consumer, i think the low income hourly employee is fine but i think there is trouble in the middle. >> yes. at least for now we continue to see spending by consumers on this chart here on the bloomberg. credit card spending has also risen recently. tell us a little bit about not only individual bottom line pockets but the impact on the dollar. >> i think generally speaking if you look at earnings forecast for larger businesses who have a lot of exposure, i don't think numbers really have come in materially enough. we want to see what the business is doing because it gives us a sense of momentum but at the end

of the day, that is not very helpful in terms of the cash you are generating and bringing back home. verb -- constant currency results are more helpful in terms of engaging the business. >> they are continuing to be rampant and unhinged. is that the worst case scenario as well? where do you see pockets of the stock market that can weather that kind of situation? >> i think he is right but i think it could be worse. i think you could have rapid inflation with very minimal growth. and if the fed is not what able to tackle it, the cautionary

tale, they are in south america or argentina with 70% inflation. i think it is important to keep in mind that inflation can get worse and it is really important to break the back of it. but we don't want to see is what happened in the 1970's where they would raise rates and then kind of pause and hold back and then inflation would wear its head again. -- rear its head again. ways that you can stay out of trouble is investing in businesses that typically just serve other businesses. i also like software because they have high levels of recurring revenue and very good profitability. i think that makes them more durable. >> you mentioned software but how do you feel about the broader rebound into tech and even nonprofitable tech? >> and i think this is the time to be investing in unprofitable businesses. i am thinking about fintech were crypto. most of these businesses are

highly unregulated. they are usually run by younger people who have not had experience running through a recession. i think they are at very great risk. people will tell me all the time they contracted 70% or 60%. are they de-risk? you can't have a stock's but not fundamentally. there is nothing that prevents these businesses from contracting further. >> good to have you with us. we are hearing the record is $4.2 billion of net trading revenue in the first half of 2022. we had a lot of market volatility. this coming from people with knowledge of the situation. the revenue surge about 23% a year earlier.

the citadel has posted 10 consecutive quarters of net trading revenue in excess of a billion dollars with eight of the surpassing $1.5 billion. they seem to have done pretty well. we do have plenty more to come up daybreak australia. this is bloomberg. ♪

>> a quick check of the latest business flash headlines. the delacorte has billed that twitter does not have to hand over names of employees as elon musk believes there are key witnesses in the ongoing legal battle. the court mostly denied the request. activists and investor say that

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>> strategists are split on the outlook for u.s. stocks.

let's bring in annabelle to tell us the morgan stanley rivalry and opposing calls. what are they saying now? >> you have the good and the bad news. this is coming from jp morgan. it had been one of the standouts on wall street. they are saying the rebound we saw in u.s. stocks is going to be extended here. it will be driven by growth stocks and for that pullback we are seeing in bond yields. let's look at what the bears are same. this is being led by the team of michael wilton. we are looking at a few factors for u.s. stocks to slide into the second half there. the move we are seeing higher is just a bear market. they're looking at the macro backdrop. you have earnings at that corporate backdrop as well. that is looking a little bit weaker. it is also about tightening ahead.

cross quantitative tightening is something that bank of america is looking at. >> they have been looking at this bond repurchase program. what it means for the u.s. stocks and where we go from here. all of this as the program extends. the reason for that is down to the historical relationship between the fed program and u.s. stocks. they are saying the fed balance sheet has taken a bit of a backseat as other issues have come to the forefront. that could change your as growth slows. just a quick look. other strategists tend to be agreeing here. the reason we have not seen any sort of weakness creeping back in is mainly that it could also be a little bit more prized in. >> let's get to the first word news with vonnie quinn. >> thank you. singapore's prime minister tells bloomberg news that raising

taxes on the wealthy is an option. the key inflation gauge down to a 14 year high in june as the economy flatlined in the second quarter. >> we always look at updating our tech and transfer system. it is a system that is fair and progressive. it is a system that must underpin a society where we ensure the growth is inclusive and everyone benefits from the nation possible progress. -- nation's progress. >> beijing says there moves to fight back against the trip -- they met with the taiwanese president and other local officials. they also discussed supply chains and investments in the u.s. with recommended chipmakers. they see only two possible

outcomes for the u.s. economy. a hard landing or uncontrolled inflation. the fed would need to turn more hawkish than suggested by current projections. he also says expectations of a dovish turn are out of touch with reality. >> even if we were at 3.8, we have inflation well above the target. the fed funds rate should be going well above 4% to really push inflation to work soon. >> william ruto has been declared the winner of kenya's presidential election by a razor thin margin against raila odinga.

chaos erupted shortly before the announcement. 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. >> findings are coming in, showing how tough money managers are positioned as stocks enter the bear market. we have the highlight. what caught your eye? >> a number of significant investors have been bringing down their risks. they are reducing exposure to the stock market and we have seen that across a number of significant investors. we see that from endowments which liquidated a six minute long position and only holds basically to the etf's in the long side. what we are seeing is from those hedge is that he exited almost

all of his long positions only added one new one. and they really brought on their equity exposure a great deal. >> was there any sector of the market that was a popular by? -- buy? maverick, lone pine. all of these were buying up stakes in this tech giant. they wrapped up their investment in amazon. making it one of their biggest holdings. stanley took the opposite position, the exited amazon entirely. >> what were some of the less popular names? >> netflix and and microsoft were not favored among the group. maverick liquidated their assets.

and then looking at microsoft, apple is a, all of these guys reduced the stake in microsoft. a bit of a mixed bag but generally some consistent trends here. request coming up next, joining us to break down hp's full record -- record full-year earnings. we will have the full details. this is . ♪

>> let's get back to those full-year results for hp. a record final dividend of 3.25 per share. a good result but it is really delicate we are looking at. >> bhp had some interesting comments. there is perhaps a slowdown in those bigger economies but really pointing to china as being an emergent source of strength when it comes to commodities demands. there is some optimism when it comes to china. mike henry saying in a statement

that bhp aims to deliver a greater value for shareholders by growing the business, exposure to the future facing commodities. we did see a bid for aussie minerals knocked back. that could come up when he joins us a little bit later on. to your point, very robust numbers. the dividend of 3.25, that was expected to underwhelm, especially after we saw these dividends. growth scare, down by $4.6 billion. bhp wanted to cost rising and the copper mine and shall exchange rates, covert issues as well. there are still some headwinds there. bhp maintaining its guidance. a very robust set of numbers. >> let's get some analysis here.

25 years, focused on the resources sector. let me start off with the china point. they are really optimistic that china will be the source of price and demand stability going forward. just the fact that they pushed for infrastructure and investment but the lockdowns are really preventing that demand from being taken up. >> i'm not surprised that bhp is talking positively about china. we will outline more detail about expectations in terms of what china might do in terms of stimulus measures. china in the past has been very aggressive in terms of boosting economic growth. it has very incentive to do that now because of the negative

impact. the disastrous negative impact of these lockdown measures. china is the biggest commodity consumer in the world. it is in bhp's interest to see a more robust demand outlook coming out of china. medium to longer term, i think myself and dhp are still very positive on china. it has a very strong domestic growth engine. that has been hamstrung by the covid lockdowns. it has the biggest dv market in the world which is a huge relevance to bhp as the commodity producer. this has been increasingly around the renewable energy roots. >> what do you make of the dividends? i know there were some expectations -- maybe we would have expected a more conservative release there? >> i think it will please the

markets. the markets in some regards might have been expecting a higher number given the overall level of profitability which is on the upside in my opinion. i think that is a very strong profit number indeed. it is outstanding given the volatility in commodity markets over the last 12 months. normally dealing with a war situation like ukraine and russia would be enough to dislocate markets but on top of that we have had the china covid situation, rising interest rates, inflation and a strong dollar. there is a cocktail of negative factors impacting the resource sector. the number is a very strong one within that context. having said that, it is clear that bhp is adopted more conservative's tragedy with regards to the dividend. it is not as high as it could have been.

it has paid down more debts, that is really encouraging. it has maintained the theme of restraining the supply side which all the big miners have done during the current bone. -- boom. they maximized the efficiency of their existing operations. bhp is going down the corporate mood and building a war chest of future acquisitions. >> we will be looking forward to any commentary on those purchases but what you make of the latest saga when it comes to aussie minerals? >> it surprised me in the way that bhp went hostile with respect to this takeover. i think the best way to go about these things is to engage with the other party. but it does create a situation where bhp is determined to move

on lost minerals. it has compelling assets when it comes to providing a lot of synergies and being very synergistic with bhp's existing operations. bhp outside of iron ore is very focused on copper and nickel. it is looking to expand its interests. the potential tie up with those minerals would be perfect in this regard. highly complementary. i think at the end of the day it will all come down to price. i don't think bhp wants to bid against himself. this is probably nowhere near its best bid. we could consider a lowball offer with plenty of room. i think bhp does want to get his hand on lost minerals. -- aussie minerals. >> how much of the sector move has to do with what is happening in chilly and the copper royalty being imposed there?

what does that mean for the stability of the sector and perhaps the supply-side concerns? >> bhp and rio tinto have existing copper operations, major mining operations in chilly. they have been made aware of the risks for some time. having said that, there is a neat solution if you like with regards to the takeover. bhp diversifies his dependence on copper or copper operations. it already has some large operations in the form of the other victim. i think it diversifies its political risk. historically, chili has been a very good place to operate. but it seems as though it is the way of the world. all countries to some degree are becoming a little bit more problematic.

mining is becoming more difficult in the est environment. i think in this instance, it is probably not so much a comment about location as much as the fact that these are very bold assets and the location happens to be a bonus. i think a company like bhp would go anywhere in the world if it had comfort in its ability to operate. >> what do you make of rio being robust? what you see as being fair value for that asset? >> that is a really difficult one. it is difficult to put evaluation on that asset. what i will say is that mongolia was looked on as a couple of places where major mining companies were moving out of north america, out of europe,

out of australia. some places like mongolia, central europe, south america, some of the deepest and darkest parts of africa were explored. the problem has been that there hasn't been a strong follow-through in the ensuing decades. in terms of establishing mining operations. some of those locations are prospective in terms of their expiration opportunities. developing and running of mine is a different story. -- running a mine is a different story. there are obviously differences of opinion between the company and the government as to how that project should go forward and the cost associated with that. you don't have those sorts of injuries -- issues in western australia. it is a big trade-off for

companies when they go looking for these large-scale deposits. >> great to have you with us. we appreciate your time. thank you, gavin. we will have that live interview in sydney. that is 10 past 10 in the morning if you're watching out of hong kong. >> we are seeing sovereign bond yields across asia right now with yields under pressure. sort of what happened with the treasury space today. we have the bond crew remained deeply inverted here with the 10-year yield back below that 280 level. bond yields are dropping to below that 3.3% level. the same thing for the kiwi tenure. -- 10 year. we are awaiting the rba minutes from the august meeting.

also, we have seen kiwi bonds creeping higher. a fourth consecutive basis point -- 50 basis point hike. this is bloomberg. ♪

>> despite the cooler inflation

reading for july, the fed battle against rising prices is far from over. the central bank past mistakes may help navigate their way to sustaining economic growth and achieving that desired soft landing. david wilcox joins us with more on this. looking at the history of the federal reserve, have we learned from past mistakes? what was the biggest one and what were the consequences? >> it is great to be with you. the fed made no shortage of mistakes like any organization that is populated by human beings but what sets us apart in my view is that we learn from the mistakes. we did much better with similar circumstances on the road. this highlights to catastrophic

errors by the fed made during its earlier history. first, during the great depression, the fed never engaged the full range of tools after disposal of a central bank. they did not understand what to do. instead, banks failed in droves. they did not have the wisdom to step in and prevent the terrible hardship that was inflicted. the second catastrophic error i would point to is the failure to control inflation in the 1970's. it was a failure of ideas. the leadership of arthur burns who was chair at the time -- they felt they did not have the capability to control inflation. paul knew differently.

he took over from burns and brought inflation under control. it was a victory over inflation. the policymakers understood just how important is to control inflation in the medium-term. >> is this really the issue here? what is the biggest take away? >> one big takeaway is the imperative for central banks to deliver on their inflation job in the medium-term. without that, the rest of the economy just doesn't function well. we are seeing that play out in the united states and many other countries around the world. i think the other big takeaway is any organization is doomed to fail and where they have to distinguish themselves and their ability to pick up, learn from that experience and get better

down the road. >> there was david wilcox with that big take on the fed. paramount has reached a deal with walmart to offer its streaming service to subscribers. walmart plus members will have access to paramount plus at no additional cost. they have rejected rio tinto's buyout offer. it blocks rio's efforts to gain greater control of the copper mine being developed in mongolia. mahindra has launched five suvs in the u.k.. the atv's -- suvs will be sold under two brands. they currently only sell one electric car. >> coming up in the next hour, they say it is to mature -- premature to get excited about

this chain. plus we take a look at the yuan following the people's -- pboc's on expected rate cuts and that said, china needs to make broad policy changes to avoid another economic downturn. this is for daybreak australia. daybreak are -- daybreak asia is next. this is bloomberg. ♪

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