shery: you're watching "daybreak: asia."

>> we are counting down to asia's major market open. haidi: mounting signs of a sharp economic slowdown way on the asian session. commodities retreat. bhp warns of headwinds overshadowing record earnings for the world's biggest miner. and singapore's next prime minister says the wealthy may face more taxes to promote inclusive growth. >> it is a system that must underpin a society where we ensure that growth is inclusive. shery: u.s. futures under pressure, after the s&p 500 rallied to about a three month high. we've had the nasdaq up. dismal empire manufacturing numbers, and china's numbers

disappointing, leading some to think the fed may be less aggressive than thought. it really did not translate to the bond space, treasury yields also falling on that economic data, the 10 year falling below the 280 level. we continue to watch oil prices. they are still under pressure. below the $90 a barrel level. we perhaps had some positive sentiment we might get the iran to clear deal and more supply in the global market. annabelle: in this part of the world we are still keeping and i on what central banks are doing as well. the next couple hours we will get some key information from australia, the minutes from the rba. the rba has said it is not on a set path, markets are expecting a half point move at the next meeting, and a quarter-point hike from there until the end of the year. let's look at the equity space

as well. we are setting up for a little bit of a mixed picture. there are day to effects from china's big data yesterday. also the rate cut as well. that has been playing in the dollar, strong dollar strength that has interned been a negative for currencies in this part of the world. we are seeing futures for japan looking lower for the start. we saw the stocks are raising the year to date in the previous session and now looking a little bit overbought. haidi: getting s'more indicators when it comes to australia. you minute -- we are getting some more indicators when it comes to australia. they beat expectations, the month-to-month numbers also a little bit better than expectations. this is a little bit of a relief given we've had consumer

confidence really deteriorating. let's look at the set up for the asian session. we are joined by garfield reynolds and su keenan. you have these divergent views, is the rally going to run to the end of the year, is it a bear market pause? it speaks to the ambiguity of the outlook, doesn't it? garfield: it does. it is particular to the extreme interest investors have in working out what does the fed do next? morgan stanley, they feel the recent softer cpi print is something of a head fake, they don't think inflation has really gone away, that is a direct burden for companies if inflation will stay, and indirect because it means the fed will stay hawkish. jp morgan is focusing on the

idea that the hardest yards have been done in the inflation fight, and if you do think the fed ends up hiking about 50 basis points in september and then starts to slow from their, given some of the resilience -- from there, given some of the resilience we've seen in the earnings space and how stocks of bounced back very strongly, even for a bear market squeeze, then you would think it would be a good time to buy equities. a lot depends on the timeframe. if you're thinking and a couple of years time, it is unlikely equities will be significantly lower and that is your timeframe, you might want to go without because the bond market honestly is more volatile than equities at the moment. equities almost look, dare i say, safer. haidi: yeah. more than 100 basis points already this year.

we've seen it translate to dollar volatility. remember when we were talking about the dollar peaked perhaps because we saw some weakness. we have haven flows again supporting the greenback. garfield: we do. there was a lot of concerning news in the recent few days and also a big fill up for the dollar, a sudden and surprising switch to stimulus, and headlines in a pboc-backed paper and china today saying they need more stimulus. that is pushing up against the yuan. the yuan is a fairly strong trading partner for the u.s. despite the tensions. also china has an effect on the us trillion dollar and new zealand dollar so that improves sentiment -- on the australian dollar and new zealand dollar so that improves sentiment for the u.s.

leveraged funds have gone short the dollar after being long so long. if they are off on that call, that could turnaround and fire up the dollar for its next big run higher, given they would get forced out of those positions they have just taken and that is often when those positions can be the most vulnerable. you don't have any profits to lean on. shery: the strength does not bode well for oil prices. we saw them under pressure today as well. su: yeah, what we saw was week data out of china. they are the biggest importer of oil in the world. their oil demand is a two-year low, a 10% year-over-year decline in july is what the data told us. we saw west texas intermediate down some 3%. and in asia, losses extending down to about $88. that is almost a six month low.

as mentioned at the top of the show, iran has signaled a nuclear deal could be just around the corner if the right guarantees are made. the prospect of more oil in the market is weighing on price in addition to demand concerns coming out of china. you are looking at the bloomberg terminal. it shows us oil has broken down below key support. one energy trader said most traders are now looking at more oil on the market. $80 could be the new support. there is a lot of recalculation going on. we are really seeing where china's economy is, and to quote one analyst, it is a lot less rosy. haidi: not so rosy for copper, and a lot of commodities on the back of the weakness in china's economy. su: yeah, china a giant when it comes to a consumer of metals

and they were hit hard as well. iron ore down 3% and copper down over 2% at one point. gold also showing weakness. demand is a big issue, again, also the outlook. bhp group, as we just heard in the past hour, has come out with earnings. it blew away profit expectations because of the big run-up in price. but there outlook is where the focus is, they are warning about local growth, headwinds from slow growth. also rising costs and geopolitical uncertainty. all of that indicating the pressure on metals will likely continue near-term. shery: su keenan and garfield reynolds. you can get more on the markets live blog. you can get a market run down in one click and there is commentary and analysis from our expert editors.

let's get to vonnie quinn with the first word headlines. vonnie: iran has sent the european union its official response to the proposal for revising the nuclear record. the broker-deal would ease sanctions, potentially restoring iranian oil exports to the global market. they expect a here back in the next two days. iranian officials signaled earlier an agreement can be reached if the u.s. shows flexibility. hong kong's financial reporting council is stepping up an investigation of china evergrande. they are looking at accounts and audits of the company and subsidiaries. it is the second review of the embattled company in months. evergrande defaulted in december. myanmar's depots leader has been sentenced to six more years in prison. according to sources, a court found her guilty of four corruption charges related to a

charity named after her late mother. the total time is now 17 years, and that ends any hopes of a political comeback. china has new military patrols around taiwan on monday as u.s. officials visited the island. the american delegation met with the taiwanese president and other local officials. they also discussed supply chains and investments in the u.s. and chipmakers. 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 am vonnie quinn. this is bloomberg. haidi: still ahead, even as price pressures appear to be easing, it might take a whale -- a while to get inflation back on target says our guest. why he still sees risks rising. plus, singapore's prime minister

discusses changes in taxation to shield the most vulnerable. this is bloomberg. ♪

shery: you're looking at live pictures of singapore, the government trimming the growth forecast for this year to reflect an increasingly challenging global environment, including a fight against inflation that has had a 14 year high. singapore's next prime minister says the government expects prices there to peak in the fourth quarter and begin to ease next year. lawrence wong spoke exclusively to bloomberg television, telling us more relief measures they be on the way. -- may be on the way. >> some of the measures are being ruled out and in the coming months we will monitor the situation and the assurance we give to everyone in singapore is the inflation situation, if it were to worsen, we could provide more assistance. for now, we expect inflation to probably peak at about a fourth quarter of this year, toward the

end of the year. it will start to ease thereafter. the big uncertainty is the extent of easing. and where will the new inflation rate stabilize at? i think it's more likely it will not stabilize at the rates we were all used to over the last decade or so. 0%, 1% inflation. that in itself was a historical anomaly because inflation rates never used to be so low. so it may settle at a higher rate and we will put out estimates in due course, but i should also say we do worry about the risk for growth next year. it is not just an inflation risk. the growth risk is starting to increase as well for next year. it is something we are watching carefully too. >> you talked about great risk, you talked about the difficulty of making sure particularly the

poorest in singapore get things. famously, next year you are increasing the consumption tax. are you still committed to doing that? >> we have to because of the revenue shortages that we face. we want the government to do more in singapore. everyone wants the government to do more in singapore and we have already spent a lot more in the last two years and we expect spending to continue to rise in the longer term with a rapidly aging population and an increase in health care costs. i think we have to do what is right to spend more but do so in a way that is sustainable and responsible. >> you have to pay for this money that has been spent, and as you point out, probably rightly needs to be spent delivering services. that brings us back to inequality, a subject you have

probably made more fuss than other politicians about. a question for you, are you planning to introduce new forms of wealth taxes like on dividends, capital gains, or even an inheritance tax? >> it is not the favorite bloomberg question for me. [laughter] you have asked me this three or four times already. we always look at updating our system. it is a system that is fair and progressive and it must underpin a society where we ensure that growth is inclusive and everyone benefits from the nation's progress. that is our fundamental objective. >> singapore has become a magnet for rich people, a lot of investment. we mentioned hong kong's problems that led to another lot

of rich people coming here. surely that is the correct target for you to aim for. >> it has to be a system that is fair. everybody does their part and pays some form of taxes. certainly the ones of greater means, the rich and higher income will have to pay more. it is not only down to the taxation system but we can do it through chain -- through transit and spending. make sure spinning is targeted at a lower income for those with greater needs. when you combine those together, we have a very progressive system. haidi: lawrence wong speaking exclusively with our editor-in-chief. futures at the moment, after we saw some resilience in the u.s. equities session, vanished eke out a second day of gains despite poor manufacturing data

out of new york it as well as of course those dire china domestic activity numbers as well. driving strength across the bloomberg dollar index. s&p and nasdaq futures all looking on the softer side at the moment. our next guest says it is premature to get excited about a peak in u.s. inflation. shane oliver joins us. the amber gideon uncertainty is the biggest problem. -- the ambiguity is the biggest problem. is this a pause in the bear market? no, the rally could run to the end of the year. what do you see? shane: i am probably in the camp that thinks the markets have run too hot and we will see a pullback. i think the risk of the markets going below the june lows is quite high. we have seen a good rally though, and that rings with it

the possibility that we could see -- inflation numbers are rolling over and that's good news. we have a while before we get back to desired levels. more action by the fed. meantime, we are seeing these numbers, the new york manufacturing survey. i think that presages weaker earnings and downgrades. we are going through a difficult time of year, this august through october period is known for this. i would be cautious at this point. i think the risk of a pullback is quite high. haidi: investors when it comes to china seems more interested in the pboc rate cut and what it means, the willingness to support the economy, pushing aside how about the numbers were

and they are dealing with the twin drags of the covid lockdown in the property market. is the market being too optimistic about a recovery in china? shane: possibly. the china market, don't think it has gotten to ahead of itself china is a big risk factor in terms of global growth and the numbers were very weak. the policy easing we saw as a result of that is not enough to arrest that. we've got ongoing uncertainty in china regarding potential covid lockdowns. and you got europe, at very high risk of recession as well. the outlook is somewhat fraught still at this point in time. the question is, that 20% or so

decline in share markets in june, whether it has anticipated all of that. if we go through a period where bond yields still stay high and you go into recession, i think you have to say we've got a lot more downside to markets. shery: take a look at the 10 year yield in china, we saw that plunge after the pboc rate cut. is this an opportunity for foreign investors in the sense that it now seems to be uncorrelated to treasuries in the sense that we are seeing policy divergence coming from the pboc and federal reserve? and we seen the relative stability, if you look at the yield movement over the past couple of years. shane: i think it probably is an opportunity for investors. we are seeing different directions for the chinese economy or the chinese policy response compared to the u.s. obviously china is ahead of the

u.s., it started tightening earlier in the pandemic and it is seeing results of that in weaker economic data. this is an opportunity for investors. it is a more difficult one given the complications about investing in china these days, the political risks associated with that, especially when it comes to share markets. that makes it difficult for investors compared to before the tensions arose. shery: the aussie earnings seasons, compared to the u.s. earnings seasons? shane: i think it will be good. the last six months generally, australia has been pretty strong , despite a lockdown last year in some states. i think that is propelling profit higher. it is not uniform, some companies are struggling with cost pressure and so on, warning

of slowing demand ahead, the numbers that are backward looking are quite positive and that is providing a little bit of support for the markets, much like it did in the u.s. as a win through its reporting last month. shery: shane oliver, good to have you back. we have plenty more to come on "daybreak: asia." this is bloomberg. ♪

shery: a quick check of the latest business flash headlines. bhp group has posted its highs ever profits, with total underlying earnings at 23.8 billion dollars, beating forecast. the world's biggest miner will pay a record final dividend, but bhp warned of headwinds as the mining sector faces slowing global growth, and weaker prices

for iron ore and copper. a delaware court has ruled that twitter doesn't have to hand over names of employees in their ongoing legal battle with elon musk. elon musk had asked the judge to identify the workers responsible for identifying bought -- bot accounts. the court did order the social media giant to hand over some documents. the nikkei is nearing overbought levels. this is bloomberg. ♪ millions have made the switch from the big three to xfinity mobile. that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network and most recommended wireless carrier. that's a whole lot of happy campers out there. and it's never too late to join them. get $450 off any new purchase of an eligible samsung device

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annabelle: this is "daybreak: asia." we are 30 minutes from the open

in japan and australia. looking at the japan market this morning, we have seen a big rally in the nikkei, and the previous session came very close , they are now at the highest levels the for the january. could they stay this way? we are nearing overbought territory, some of the key pillars of support could also be kremmling as well. when you look at what is happening -- could be crumbling as well. when you look at the yen. also the yuan, one of the biggest moves yesterday, against the greenback. we had the week financing data, the data misses, geopolitical tensions, rate tensions and a lot going on. the next level of resistance looks to be around 6.85 for now. a lot of activity in the options market. we will look at that as well. what we saw yesterday, options trading, dollar yuan was the

biggest active traded pair in the previous session. the heavy demand for dollar call spreads indicates we could see a move to seven by the end of the year. a lot more yuan bids entering the market. shery: let's bring in our next guest, who is seeing the yuan trading in a range the next few months. great to have you with us. seeing a little bit of appreciation toward the year end, but given the surprise policy moves, where you stand now on the yuan? >> i still think the yuan will continue to range, but it will trade at the weaker end of that range. i think 6.85 will signify the key resistance in dollar see ny terms. -- cny terms. obviously they cut interest rates to provide as much support

as they could for the economy but ultimate china is running very large trade surpluses and exports are holding up reasonably well. there is still the debt support factor. shery: on the others have the trade, also sing haven flows toward the u.s. dollar. where is that headed? >> i think the u.s. dollar in terms of the cxy has peaked. the fed rates are baked into market pricing. going forward, other central banks other than the pboc will continue i think to normalize policy. the dollar is extremely expensive, overvalued by most measures. i anticipate the dollar will eventually start to fade some of its strength through the end of the year. haidi: does that mean we could

see more upside for the aussie? the fundamentals for the australian dollar in terms of trade are pretty strong. >> i would agree with that. if you look on paper, it should be a lot stronger. the one major factor holding you back is obviously the weakness in chinese economic growth. in particular the property sector, which is important for things like iron, crucial for the australian economy and the australian dollar. that is one factor that is holding the us trillion dollar back and preventing it from being stronger -- australian dollar back and preventing it from being stronger. a lot of it really hinges on the outlook for the chinese economy and how long can china persist with their covid zero strategy, which it is very obvious is having major repercussions for its economy.

haidi: a similar position when it comes to the kiwi dollar as well. ahead of the rnz, do we see further upside for the kiwi? >> i think the topside for the key we will be quite limited. the rbnz is very well advanced in their tightening cycle. they were one of the first central banks to really begin policy normalization. i think by virtue of that, they will be much closer to its terminal rates than other central banks. it is very clear the housing market in new zealand has already turned. we are seeing concerns growing about downside risks for the economy. i think that will put a cap on how strong the key we can go from here. even though expect the rbnz to deliver a 50 basis point hike, i think that's already well

priced. i don't think that will see too much support for the kiwi if they were to follow through with the hike. shery: we are really not expecting a lot of policy action from the bank of japan. where does that put the japanese yen? >> for the yen, it will largely continue to be influenced by the yield differential between the u.s. and japan. the boj certainly will continue to stand pat. they will maintain yield curve control, which means the fortunes of dollar-yen will be determined by how the u.s. 10 year yield will go. i think it could rise a little bit further from here if the fed continues to maintain their hawkish rhetoric and continues to hike rates. that spells potential upside for dollar-yen, but we are conscious that positioning white, the market has taken dollar-yen a lot higher. there has been a divergence between where dollar-yen and yield differential has gone to.

if we have any bouts of risk aversion on the back of china growth concerns were global growth concerns in general, there we could see haven demand return and dollar-yen pulled back slightly. for now, i am maintaining a trading range for dollar-yen for now. shery: how about the current account deficit situation? it was mentioned that trade deficits, with rising commodity prices, japan still reliant on imports of energy. will this make the yen even weaker? >> i believe that's been factored in. if you look at where commodity prices are and oil prices and brent, it's: below $95 a barrel, particular after yesterday's china data. the broader commodities complex has really come up quite sharply. i think you will start to see some relief and improvements in the trade balances. not only for japan, but for the

other major commodity importers across asia as well. i think the second half of this year you will start to see some improvement in the trade balances across this region thanks to the recent declines in commodity prices. haidi: always great to have you with us. let's get you to vonnie quinn with the first word headlines. vonnie: singapore's prime minister in waiting told bloomberg that raising taxes on the wealthy is an option as the government looks to shield the most vulnerable from the impact of high prices. singapore's key inflation gauges jumped to a 14 year high in june as the economy flatlined in the second quarter. >> we always look at updating our system. it is fair, progressive, and it is a system that must underpin the society where we ensure that

growth is inclusive and everyone benefits from the nation's progress. vonnie: an economist sees only two possible outcomes of for the u.s. economy, a hard landing or uncontrolled inflation. the ceo says the fed would need to turn more hawkish than current projections. he also says expectations of a dovish turn next year are out of touch with reality. >> markets expecting the rates year, are delusional. even 3.8 with inflation well above target, around 8%, falling only gradually, you are still in negative territory. that rate should be well above 4%, perhaps 5% to really push inflation. vonnie: the winner in kenya's presidential election by a razor thin margin.

he pledges to support entrepreneurs and foreigners. chaos erected shortly before the results announcement as four of the seven electoral commissioners rejected the outcome. the justice department of the united states says it opposes the release of an fbi affidavit justifying a search warrant used to remove documents from donald trump's mar-a-lago home last week. the doj says it contains highly sensitive information about witnesses and should remain sealed to protect the integrity of the ongoing investigation. releasing an affidavit at this stage would be highly unusual. 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 am vonnie quinn. this is bloomberg. haidi: bhp group has posted record earnings but also warning of headwinds from slower global growth, rising costs and geopolitical uncertainty. that's bring in david stringer for his take.

what were the drivers of these record numbers? david: morning. as you say, record profits, 23.8 billion dollars, the highest since the current company was created in 2001. really driven by higher prices of things like coking coal, so extraordinary gains in the prices of that commodity. also relatively good prices of iron or, the key earning unit. also higher prices of things like copper. all of that contributed to this huge profit number. the company also paying out a record for your dividend. it does see some -- record four year dividend. it does see some headwinds on the horizons, but it sees a more positive outlook for china, the biggest commodities buyer. it is expecting relatively stable demand from that key market in the year ahead.

haidi: very interesting, particularly in light of the data yesterday. what are we seeing in terms of the outlook compared to its rivals? david: it is a fascinating divergence. we've seen other big mining companies, rio tinto group for example, they reported last month and really showing caution, cutting dividends, not talking about growth or expansion too much. bhp forging ahead with expansion plans. it is reviewing options to even increase its volumes of iron ore production. iron ore to china. it does indicate dhp is seeing something that maybe others disagree with -- the hp is seeing something that maybe others disagree with, about the strength of china's construction sector or the strength of property. that's something that people definitely want to dig in more through the day as we hear more from bhp. shery: this comes only about a

week after its takeover approach for oz minerals was rejected. how was the company positioning for growth? david: i think it sees an opportunity as well. if there is that interior rating external varmint -- that deteriorating external environment. bhp certainly presenting itself as a low-cost company that will be able to prosper through any down cycle and take advantage of rivals in some difficulty. last week, that takeover approach to add copper and nickel, that was rejected. let's see if there is any revised bid. it is looking for opportunities in those commodities tied to clean energy and electric vehicles. it senses sign of weakness in

key rivals, i think we can expect the hp to exploit those. -- bhp to exploit those. shery: bloomberg will be first to speak to the ceo on the company's full-year results. we will have that at 12:10 p.m. in sydney. next, how japan's cabinet reshuffle will impact energy policy and transition goals and what it means for the future of nuclear power. this is bloomberg. ♪

shery: japan's prime minister is challenged with a difficult environment as he sees a sagging approval ratings and as japan faces an energy crunch. he recently reshuffled his cabinet. joining us to discuss the outlook in the region is david. what is the impact on energy policy and climate ambitions? david: one of the main agendas of the new cabinet is ensuring stable energy supply. the new minister of economy, trade and industry hopes to achieve this by maximizing nuclear capacity and maintaining a stable imported lng supply.

we are likely to see the government's target of nine nuclear reactors online this winter achieved. as an extension of the strategy, we could see japan accelerate the restart of the long dormant nuclear reactors even beyond this winter. all of this could certainly help the government achieve the long-term 2030 emissions reduction target of 40% below the when he 13 levels. haidi: what is the near term outlook when it comes for the energy balance for the country and implications on pricing? david: looking at the energy balance, we expect things to get worse before they get better. even with the nine nuclear reactors online, the supply reserve margin in japan could falter just 1.5% this winter, especially for tokyo and another region, according to the operator. this is less than half of the already tight margin we've seen

this summer. if this continues, things could get much worse. adding onto that, additional challenges on the elegy supply side of things. we expect power prices to continue to rise in the coming months and stay elevated at least until the middle of next year. we are already starting to see power prices decouple from the existing cheaper long-term prices and move closer to the more expensive spot lng prices. this trend we think will likely continue given the rising competition between the japanese and korean lng buyers. haidi: you mentioned korea, and we saw one of the worst rainstorms in decades for south korea. have we seen an impact on the power market? david: the flooding certainly caused multiple blackouts across south korea last week. they have mostly been restored. what is happening right now is

the mild rainfall continuing is a the power demand for cooling this august. we expect to see the supply reserve margin for korea stay well above 10% in the near term, which is relatively sufficient. similar to japan, korea will face higher fuel prices in the coming winter. we estimate korea gas corp. to secure more than 20 cargoes of expensive lng, well over early dollars, in the past few weeks, and this will hit the market this winter. they are looking to buy even more. this will apply upward pressure on prices in the coming months. haidi: david kang there. nouriel roubini sees only two paths ahead for the u.s. economy and neither very positive. we hear from the man once dubbed dr. doom next. this is bloomberg. ♪

haidi: nouriel roubini says the u.s. economy faces a hard landing or out-of-control inflation. he spoke to bloomberg about why he thinks the fed is not tightening fast enough. >> the fed having a real rate on the policy side highly negative,

i don't think monetary policy is tight enough to push inflation. some similar views in the past in the u.s. whenever you had inflation above 5% and unemployment below five, the fed targeted a hard landing so that is my baseline. david: we got some data last week the markets found encouraging. does this indicate we have peaked? >> yes, we may have peaked, even if there could be further inflation from china's zero covid policy. ukraine could get worse and we could have commodity tightening. there are plenty of upsides. inflation could go down, wages are growing much higher.

even if wages are growing less. we are still in an inflationary environment, not just in the united states but around the world. david: you mentioned the negative real rate. in your opinion, what does the federal reserve have to do? how much hiking do they have to do to put a stop to inflation? >> they are already saying the dot plot by the end of the year should be 3.4 and 3.8 by the end of next year. markets expecting that are delusional. even 3.8, we could have core inflation around six, still negative territory. the fed rate should be well above 4%, perhaps 5% to push inflation. if that doesn't happen, inflation expectations will get -- and we will have a hard

landing. either you have a hard landing or inflation out of control. haidi: nouriel roubini there. -- shery: nouriel roubini there. paramount has reached a deal with walmart to offer its streaming service to subscribers of the retailers membership program. walmart plus members will have access to an ad supported subscription at no additional price. turquoise heel resources has rejected a rio tinto buyout offer. it is trying to gain control of a copper mine in mongolia. they say it doesn't reflect the fundamental value of the project. mahendra has lost five electric sports utility vehicles designed

in the u.k. as it seeks to help its battery-powered cars in india. mahendra currently sells only one electric car despite having an advantage with its purchase of an indian electric automaker in 2010. annabelle: asia is energy -- haidi: ages energy related sales could be on the move. negotiations with iran could be easing pressure on crude markets. also watching japan petroleum and santos. front and center will be the hp, set to -- bhp, set to start trading after reporting record profits, also morning of headwinds from weaker global growth. in the next hour, we will discuss the slowing momentum in china and opportunities in risk assets. plus, a preview of indonesia's

fiscal plan to protect southeast asia's largest economy from surging inflation. an economist joins us. the market opens our next in sydney, seoul and tokyo. this is bloomberg. ♪

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shery: we are counting down to

major market opens. we continue to watch for further action. haidi: positive outlook maybe on expectations, certainly that's coming amid the record set of results. that will be one of the names we are watching at the open. annabelle: we are watching bhp. the opens for japan, south korea. we saw the move back into the 10 year. the 10 year yield is approaching 2.8%. we are watching the yen, bit of concerns that they could be

losing key support pillars. we are seeing weaker commodity prices. the yield gap we are seeing between the u.s. and japan. also, the yen weakness has been one of the main drivers. the relative strength index is approaching the key level. let's turn to the opening. the kospi was closed yesterday for public holiday. looking more positive this morning, particularly because we did see investors in the u.s. returning back into those mega cap tech plays. the korean won is moving away.

turning to australia, we have bhp, the big stock we are watching and trading. we set the record gain for the full year with rising commodity prices. the asx 200 is a little bit higher. oil is still to the downside. shery: let's bring in our next guest who is bullish on risk assets. the head of global microstrategy. good to have you with us. will the underperformance in chinese assets be helped by any of these policy moves we are finally seeing? guest: good morning. great to be back. it is somewhat of a relief for broader risk assets. china included. the recent easing we have seen from china is insufficient.

that slow down or economic headwinds are really multifaceted. the property market continues to deteriorate. the inflection is being pushed back further and further out. we are seeing and slowdown, china is exposed to supply shortages of strategic foods, and china has been exposed to significant capital outflow. it sets the rebalancing back towards consumption. a lot of challenges, the market shery: the standard deviation,

something we have not seen any diversification? guest: how it's manifesting are those interest rate differentials moving away from the favor i have played into the capital outflow picture. not so much manufacturing in the exchange rate, but relief is on the capital outflow for want -- front and there are signs the federal reserve is putting its pedal to the metal. especially after the easing and cpi inflation report has been very aggressive in pushing back on market expectations of an earlier than expected pivot. that does suggest some morning to investors about embracing this pivot. haidi: there is so much

divergence in the markets. they are gauging inflation and rate outlooks as well as parts of the markets, the nature of this rally or a pause in the bear market. where do you position yourself on that spectrum of expectations? guest: what explains a lot of the divergence is perhaps tactical versus strategic. we have been expecting someone of a relief rally, the s&p 500 has always been the 200 day moving average. some of the factors underpinned the short-term rally has been an improvement in global liquidity conditions, funding as well, market volatility has reversed course from risk-averse territory to risk speaking.

the remains cautious. the market is underpricing the duration of the material growth slowed down. we can dither about recession, the market is underpricing how long the. will be will be. the bank of new york does not expect positive gdp growth until 2025. haidi: you talk about the ways the market has not properly priced a recession. whatever that looks like. how do you think that's reflected in the guidance we have been getting? guest: the drawdown we are seeing from the january highs has largely been one of multiple compression. slower growth outcome, what you expect in tightening cycles. very limited in two earnings

expectations. that could very well be the catalyst for the next leg lower. we are more courses in terms of the medium-term outlook. haidi: before you go, let me take you to the question for this week. his recession the here to inflation? is it necessary? guest: i'm going to pop out a little bit. it depends on the starting point. the recession is largely supply driven.

this is something the global economy has not seen in decades. the elixir or medicine is probably supply-side related, solutions. driving a recession is a poor and suboptimal outcome for the conditions plaguing the global economy currently. haidi: great to have you with us. let's get you to annabelle. annabelle: taking a look at some of the energy players in asia because we are continuing to see brent crude can -- decline. softer economic data in china, iran is commenting on the prospect for a deal in negotiations.

that gives the prospect of more iranian crude, energy players are moving. bhp is still moving higher. we are keeping on peers as well in the iron ore space. bhp posted its high ever -- it's looking at growth options. options to expand copper and nickel production. we are looking at some peers here has well. shery: we will have that conversation in sydney and hong kong. let's get to vonnie quinn. >> the justice department it opposes the release of an fbi affidavit justify a search warrant.

the doj says it should remain sealed to protect the integrity of the investigation. i read -- iran since the european union its response to a proposal for reviving the nuclear accord. the deal would ease sanctions, restoring exports to the global market. they expect to hear out from negotiators in the next two days. official signaled an agreement could be reached if the u.s. chose flexibility. myanmar's deposed leader has been sentenced to six more years in prison. according to sources, a court found her guilty of corruption charges.

the winner of kenya's presidential election has been declared. they pledged to rein in debt and support farmers. they gain 50.5% of the vote. 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. haidi: we preview the indonesia fiscal plan to protect the biggest economy from inflation. the chief economist will get us later at the hour. singapore's prime minister says the u.s. and china could sleepwalk into conflict if they don't engage with each other. more from the exclusive interview, next. this is bloomberg. ♪

shery: calls for policy support are getting louder in china. for more, let's bring in our chief north asian correspondent in hong kong. even a surprise rate cut has not

been enough. stephen: the markets latched onto the stimulus. the minimal cuts in the loan rate as well as the reverse repo rate. it was on a big news, but markets shrugged off the low growth numbers. anybody who lived in china knows momentum is weakening. we mentioned the pboc putting a front-page article this morning in asia, essentially quoting a number of economists say more policy support is needed. more tools. tools must be adopted to boost growth.

again, a are not tied to the pboc but the fact the newspaper is putting this article for support is an indication the pboc may be working on other things. one thing they mentioned is another newspaper in china is calling for a cut in the loan prime rate in the coming months. bloomberg news is latching on to a number of the policy moves that could come. we are patient they are quite blunt. economic data is alarming. authorities need to deliver full-fledged support we can go

back, they are focusing on policy news. marginal benefits. the economy is in trouble. more policy support is needed. haidi: beijing says the delegation met with a taiwanese president. they discussed supply chain

investments in the u.s.. american lawmakers are visiting taipei. pelosi is the first sitting speaker to visit and a quarter of a century. singapore's prime minister told us in annex list of interview could sleepwalk into conflict. >> relations have become more strained. tensions have gone up. that is the risk that can happen that we are starting to see. decisions can lead us into dangerous territory. the consequences may be more difficult to manage. we worry about accidents and we certainly hope the leadership can continue to engage one

another. rational decisions can be made to prevent things from worsening or deteriorating how likely do you think it is? it's one flashpoint. it can easily become very dangerous. it can escalate quite quickly. both sides don't want to go into conflict. as they say, no one wants to go

>> if you want to get countries on the side of america, surely the way -- >> we have been encouraging america to do more in the region. we understand american domestic politics have been constrained. many countries have come forward to be part of this framework. as we have told the americans, this is only the beginning. very few signs of joe biden

wanting to explained a neither blood or treasure. he won't even go that far. >> as we deal with the more uncertain environment. we have to deal with this reality. i would say from our engagements from the administration, they do understand the strategic importance of engaging this part of the world. i am sure they will do everything they can to strengthen engagement. from singapore's point of view, we want to create a framework in the asia-pacific, particularly in southeast asia where all of the powers have stakes in the region. we think it will contribute to a stable or friendship. >> do you worry about

protectionism? >> we do. the world is at a turning point. the logic used to be with more trade, we can tamp down geopolitical rivalries. now there is another logic at play. geopolitics can undermine trade. we worry about that. this will lead us to a more divided and dangerous world. shery: deputy prime minister from singapore speaking exclusively to bloomberg. coming up, we take a look at big-name investors. we will delve into the latest findings, next. this is bloomberg. ♪

shery: filings have come in for the second quarter. u.s. stocks entered a bear market. su keenan is here with the highlights. what were some of the key themes? su: reducing risks. stocks took a big drop in the second quarter. so many funds were exchanging, adding, dumping. alphabet was bought by major funds. it's really interesting. these are just a snapshot.

many investors like to look at trading giants. amazon scale back, microsoft. uploading tech was a big theme. eli lilly, crowd strike was quoted in early june saying the guests with six months into a bear market. interesting to note david tepper added to his stake in metal. they added alibaba among other things. we mentioned amazon, some companies were adding tesla on the downturn.

blue pool capital, alibaba adding but sold a tech holding. haidi: michael burry rose to prominence after mending against mortgages in 2008. su: the big short. some view him as infamous. he was featured for of another epic downturn could occur, so he dumped almost everything as the market was dropping. he sold off 11 different stocks, major moves there. another fund that had one point had done extremely well but lost a most habits value for bets on

big tech. we saw that electronic carmaker, coinbase. haidi: let's take a look at how european futures are opening up at the moment. this is the picture as we get into the start of trading in asia. we are seeing pretty positive sentiment. modest gains, really following on the fact we saw a pretty

>> the markets are expecting a fever.

inflation is well above target. core inflation is around 6%. the fund rate should be going well above 4%. shery: we're seeing a mixed picture in early asian trading. annabelle: he also told us it expects either uncontrolled inflation or an extremely hard landing. quite a lot of negativity. it points to the contrasting views in markets because earlier, we were discussing jp morgan, they are saying u.s. stocks can move higher. we have seen the rebound.

bonds, commodities. the session risks are close on the horizon. taking a look at this chart, well below historical averages, not just what you would expect, northern hemisphere, lots away on holiday. speaking to their broader uncertainty we have in the markets. let's take a look at asian stocks. this is what we are seeing in energy. we are seeing oil still declining this morning. i ran saying there could be prospects of the deal ahead, that could bring more crude in the market. on the flipside, we have the materials space moving higher one third of a percent, what is moving is bhp. record earnings, the highest ever. again, >> interesting are the

mixed messages we are seeing, they are more positive on the outlook. a lot for traders to contend with. haidi: the dollar is likely to be a top beneficiary. guest: the dollar got a pickup yesterday. that showed us a severe slowdown. investors are rushing to reprice it china slowed down that was maybe a bit under the radar.

bonds are rallying. it's unusual as those bonds open with a similar decline. instead, they have gone further and the yield curve is inverted. those two countries are tightly linked. direct strength from the yuan in indirect strengths from the china slowed down on other high risk currencies such as the aussie and kiwi. we are seeing an impact on the canadian dollar by a what is going on with crude oil.

all of those factors are feeding into the stronger outlook for the dollar just as people are starting to think the bull run was over. shery: we discussed pay dollar already. as you mentioned, we have seen a lot of volatility including with treasuries in australia, new zealand. not necessarily with chinese bombs. it's been relatively stable, trading within a margin, are we going to see increasing assets for diversification purposes? guest: a lot of investors did go into chinese bonds because of the diversification factors, because also there was a long period where chinese bonds were offering higher yields.

those china yields are under u.s., you also have the concerns about capital controls. various tensions between the u.s. and china, taiwan in the background. that is going to put a limit. shery: let's get to vonnie quinn. >> the hong kong reporting council is stepping up an investigation on china evergrande, looking at otis they fell short of delivering a restructuring plan.

the u.s. says it has no plans to release thumbs to the taliban. the assets were frozen a year ago after the u.s. forces withdrew and the taliban took over. it follows revelations and al qaeda leader was living in kabul before he was killed. the state department says the u.s. will look for ways to benefit the afghan people directly. singapore's prime minister told bloomberg news raising taxes on the wealthy is an option. that is is the government looks to shield the most vulnerable from the impact of high prices. >> all of us look at updating the system. it's a system that is fair, progressive. it is a system that must underpin a society where we

ensure growth is inclusive and everyone benefits from the progress. >> china says it held new military patrols around taiwan as lawmakers visit the island. beijing says the move is to fight back against the trip. the delegation met and discussed supply chains with tsmc. 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. haidi: and you don't asian president is set to unveil budget plans to restore fiscal discipline. we will get a preview, and. this is bloomberg. 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. ♪

shery: the indonesian president will deliver his annual budget speech in the next two hours, unveiling plans to protect the southeast asia lodging economy. -- largest economy. what will investors be watching out for? reporter: it will be about

subsidies. it's the same strategy they want to pursue for 2023 and said we should expect large subsidies. that strategy has paid offer indonesia. inflation is pretty low. the bank has been able to keep interest rates at record lows, everyone else's tightening. haidi: how sustainable are these energy subsidies? reporter: probably two things that could make the strategy more difficult. first would be commodity prices. export of coal, palm oil. prices have been elevated for much of this year. that is expected to come down.

they will likely have to curb spending for next year. he has told ministers, let's not focus on new projects. let's focus on finishing up the projects we started in 2024. haidi: the indonesia economy reporter. central bankers stood out among peers. for ordinary indonesians, motorcycles have been soaring. you take a looking to see inflation starting to pick up like it may linger. let's bring in the chief asean economist. great to have you with us as always. we have seen the bank of

indonesia as being one of the last holdouts. is the pressure building on prices? guest: morning. i think so. inflation was already above the target, and i think it's going to keep going higher for the rest of the year. i think we are going to get to 5.5%, maybe even more. what suggesting is, all of these prices are being fixed. they are still preaching the headline target. that tells you that pressures are broadening elsewhere, not just energy costs. talk about food, the other parts of the basket will increase further out. haidi: rising inflation.

rates are still low. we know there is a desire to curb soaring energy subsidies as well. guest: it will be challenging in the next several months, especially to get commodity prices rolling over. global growth is coming off which adds to commodities. from the perspective, physically, bringing down the deficit will be challenging, that's probably what will your from the president today. might be difficult to achieve next year. at the same time, because of inflation, it's difficult to keep the stanza, do. at some point, they will have to raise rates. they were probably have to raise rates several times this year. shery: another central bank is the philippines.

what are you expecting this week? guest: i am expecting another 50 basis points hike. i think they are more concerned on headline inflation. in addition to that, the country is running record high trade deficits. in the context of the fed being aggressive in its hiking cycle, i think that will cause them to keep hiking. shery: we recently spoke to the singapore prime minister. take a listen to what he had to say about price pressures in singapore. >> now, we expect inflation to

probably peak at about the fourth quarter of this year. it will start to ease thereafter. the uncertainty is, what is the extent of easing? shery: surprise moves already. who is more vulnerable to price urges across the region. we have seen asia not as affected as western nations have been with soaring prices, it seems it is catching up now. guest: that is the way we are thinking about it. inflation is starting to pick up in a significant way across the region, and singapore is kind of the front runner on the

category, mainly because it's not just supply-side drivers, but also demand-side pressures. recovery has been strong. if you look at core inflation, i think it will go faster than the authorities expect. the minister, authorities are saying it will pick from here and plateau given again how tight the labor market is an core inflation is picking up. haidi: the other thing he talked about is the idea of using tax reform and a progressive tax system to address pressures. are you seeing more consideration?

guest: no, not really. authorities are playing the long game. they know expenditures are rising because of the asian population. they will have to find revenues to fund that. in the near term, they can provide targeted measures. they have already been doing that. i think they will have to be forced to do more with these measures. when it comes to revenue raising, that is the game plan and they are sticking to it. shery: when it comes to the u.s., we continue to ask whether a recession is necessary in order to tame inflation. in asia, price pressures are not as severe. i want to ask this question to you. will there be a necessity for a

recession in order to tame price pressures across asia? guest: it's difficult to paint the same picture here in the region. mainly, because a lot of the pressures are coming from the supply side. energy, food. has to be a combination of things. reducing the accommodation of policies which we have seen in the last couple of years with the pandemic. fiscal policy. to the extent it's possible, providing targeted measures, certain types of assistance or subsidies. shery: good to have you without. the chief asked fiona economist with his view on the region. coming up next, china's local

credit market is flooded with cheap money but a growing number of weaker borrowers are struggling to obtain it. more details, next. this is bloomberg. ♪

shery: here's a quick check of the latest business flash headlines.

bhp posted its highest ever full-year profit, with underlying earnings at $23.8 billion, beating analyst forecast. they will pay a record final dividend of $3.25 a share. bhp warned of headwinds as the mining sector faces slower growth, rising costs and weaker prospects. ken griffin is said to have raked in a record $4.2 billion of net trading revenue in the first half, amid high market volatility. sources say that makes 10 consecutive quarters of net revenue above $1.5 billion. we are told settle dealt has been floating numbers as it seeks a $400 million incremental loan. a company forecast revenue below estimates despite a faster than expected recovery. sales were boosted 75% less

water. they see third-quarter revenue coming in at $1.3 billion and expected to deliver 29,000 units in the period. haidi: china's $12.4 trillion local credit market has been flooded with cheap money, but a growing number of borrowers are struggling for access. funding is getting cheaper four-time -- chinese companies despite the property prices. what are we seeing in terms of riskier borrowers? reporter: that is correct. last month, we saw cheapest funding, but in the real estate sector, we see a further divergence between the companies that are considered high quality , these are often state-backed companies and we have privately owned developers that have not been able to issue any bonds for

the past year. shery: what about stress in the offshore market? reporter: what we are seeing is a continuing divergence between onshore and offshore. stress has stayed elevated, and that is because in july, we have seen this rising wave of mortgage boycotts so homebuyers have refused to pay mortgage loans. that has led to the offshore china high-yield dollar bonds reaching a record low at the beginning of august. stress has continued to pile up. the boycott is assigned that the stress in financial markets have spilled over to the real economy which has caused further worry. haidi: do we expect to see any recovery? reporter: actually, in the past

month we have seen the chinese government showing signals it's going to help beleaguered developers, there might be a potential real estate fund to help developers finish projects. however, we do not actually see any measures materialize despite support that we keep hearing. investors are quite pessimistic. if you look at the prices where bonds are trading, there is a majority trading well below $.50 on the dollar suggesting there is a low expectation on payments going forward. investors still want to see more concrete measures from the central government and more importantly, they want to see a recovery in home sales which are key to helping developers recover these liquidity.

-- this equity. shery: we are watching some key stocks at the open at hong kong and china, anything related to energy even though we continue to see oil prices under pressure. weak economic data from china, talking about it all day. a potential breakthrough in negotiations with iran that could ease pressure on crude markets. haidi: we are watching some of those names. coming up, we hear from j.p. morgan, expecting china's activity to recover in the second half of 2022. we are talking through the food and agro outlook with goldman sachs. ♪

>> hello