heidi: good morning. annabelle: we are counting down

to asia's major market open. kathleen: the top stories this hour. modest gains under a roller coaster session, concerns over slowing growth. heidi: the rbn set to raise rates, investors want to for signal of further half-point moves. shery: tencent may report his first quarterly revenue growth with online giving -- gaming under pressure. we have the s&p 500 slightly higher as the end of the session, this is after turning sharply lower, we have conflicting forces in the markets today. earnings from retailers, we heard from walmart, home depot. when it came to u.s. eco-data, and also great.

housing declining to the lowest since early last year, new home sales, more cancellations in the data. we saw the 10-year yield surpassing that 8.5 level. we are seeing a bit of upside on the oil prices. this is after falling to the six month low for wti. we are seeing the indications we could see a supply back in the market with the nuclear deal seeing some progress. given the market bullishness and credit spreads rallying, but is raising concerns about what the fed will do. you take a look at this chart on the bloomberg. financial conditions are easy to levels we have not seen since mid-june. easing to levels we have not seen since mid june. you can get inflation easing even with financial conditions easing, it will be hard to get to the fed's to percent

inflation target if you have financial conditions easing in the way that we do. we will continue to monitor what the financial system looks like, this may actually be hotter productive for -- counterproductive what the central bank is trying to do. annabelle: is extremely difficult to read the tea leaves when you have so many different signals across asset classes. sitting us -- setting us up across asia, we have earnings season well underway here. in the dollar space, keeping an eye on volatility. that loan supported factor for the dollar. we have the qe dollar, a key decision for the central bank, let us take a look about in detail. all analysts predicting the same

move, a fourth straight 50 basis point hike, so i take the key right here, the expected rate in red. we do get that, it will be the aggressive tightening cycle we have seen from new zealand since it actually pioneered inflation targeting more than three decades ago. the question is where do we go from here? more hikes are they perhaps take cues from the fed and signal smaller hikes in the future? heidi: this market sentiment, investor sentiment remains more important than ever, this latest bank of america survey, showing that investors are never quite apocalyptic late bearish fish apocalyptic late -- apocalyp tically bearish.

they are looking at a profit taking, 80% of the surveyed individuals aside inflation will be lower over the next 12 months. he look at the nasdaq, it does feel like sentiment is improving, the resilience of the rally, even the likes of jp morgan cannot agree on where it goes from here. shery: even the meme stocks are back, bed, bath, and beyond surging. this is a retailer, the retail sentiment is improving as well. remember in the spring we were concerned about inventory buildup? things may be concerning when it comes to the guidance, these big names. walmart is beating expectations, the expectations were lower, and indicating -- they are indicating higher demand.

perhaps there is a more positive sentiment out there. heidi: let us get more on the markets. we have a u.s. retail reporter 20 us now. -- joining us now. what do you make of this? >> it is really patchy, the earnings from the retailers are positive, they are encouraging investors they u.s. consumers seem to be resilient. that is why we saw those gains in the s&p 500 yesterday. we have to remember there is a lot of had went out there. for us here in asia, what is going on the market here is technology stocks which we saw they fell last night, we have bonds yield rising, but does not

bode well for technology stocks. we are contending with a lot of crosscurrents. the signs of resilient u.s. consumer which is good. at the same time, the fed will keep hiking rates, inflation is going higher. bond yields are going higher and that is not good for the technology stocks. in asia, we have seen the technology stocks trending to weigh on the market, we see minimums coming up and that will be a key for investors on what the feds are thinking going forward, especially with the different facets of data -- sets of data. the fed may not be as aggressive. this is a market that wants to go higher.

as you said, is it the resilience? that is definitely a question. shery: there was a sigh of relief when we got walmart's results. >> walmart had a big move, less bad. they absolutely slashed its profit forecast, what is it today if that they told us things are going to be awful, they are going to be pretty bad, but not as bad as expected. the does carry some pretty big significance along with it. three weeks ago people were pointing to walmart's warning as evidence that there is a recession coming. what you can are white with today is the understanding that consumers are under a lot of pressure. they are struggling to make ends meet, they are struggling to keep up with inflation, they were hanging in there. people are still spending money, especially on essentials. >> is that the same narrative

with from home depot? we reaction in that stock. >> despite the pretty significant slowdown in the u.s. housing market, what home depot said is that even though the housing market is cooling off, they still have a lot of contracts for home renovation, how equity is so high for so many homeowners about people are still spending money on their houses and places like home depot have a big exposure to contractors as well as ordinary shoppers like you and me. as people keep pouring money into their homes, home improvement, home depot says that it is well conditioned to keep reaping the rewards. shery: going to home depot last weekend as well. -- i went to home depot last weekend as well.

>> the rbn fed rate decision which you mentioned is going to be something that the markets are going to be looking at closely. expectations of a 50 basis point rise. we are looking at a muted open, the rbn's decision will be a key to watch ahead of the fomc minutes. shery: cross asset editor and mark with our case today. a key decision we are watching out for today could be boosting their key rates by 50 basis points. this could be for the fourth straight meeting already, the big question is what he sees coming for the rest of the year. our editor is here with more on this. kathleen, it is expected, what happens next? >> let us look at what is

expected. it is pretty impressive, it is in the vanguard, a global policy, tightening ahead of the fed, head of the ecb and others. 50 basis points, it will take their key right up to 3%, you can see it right here on this chart. it will be a total of 275 basis points they have done what would be the most they have done, the most aggressive since they started targeting inflation back more than 30 years ago. the moves will be more aggressive than what the fed has done. as we see them doing all of this and we expect to get to 4% by the end of the year, what else are they going to signal? if they have done this much, will they start pulling back a bit? could they go 50 basis points? let us look at the reasons why people are posing this question.

the housing market, there has been a major question for the head of the rbn, unemployment is down from a record low, still rising. maybe a one your expectation has flattened out a bit, look at another chart, look at inflation, seven .3 percent year-over-year, a 32 year high. wages are rising, there is a lot of pressure on them to keep moving. at the last meeting, a new policy, in the pandemic when they were worried about heading off a recession if not depression, the policy was not doing too little and letting the economy get so weak, their new policy is not doing enough with interest rate hikes to slow down inflation and change the path, that will be starting their

policy and annie over this meeting. a lot of questions about this coming after the meeting itself. shery: kathleen s following the decision today, you can turn to your bloomberg for more on this monetary policy decision from the rbn. that is tliv . let us go to bonnie -- vonnie. >> president biden is signing the tax bill into law, it will change how medicines are priced and a minimum 15% taxable corporations. the inflation reduction act is the biggest commitment to climate change in u.s. history investing $274 billion. >> we have not wavered or flinched, we have not given in. we are delivering results for

the american people. we built up. we did not look back, we look forward. today, offers further proof that the soul of america is vibrant and the of the future -- and the future is bright and is just beginning. >> china is warning washington against underestimating a paging's results on taiwan. dr. ambassador says nancy pelosi's visit has created a series fallout and that trips by u.s. lawmakers violates agreements between the u.s. and china. he also said that lawmakers should abide by u.s. foreign policy. the eu sees the nuclear deal as constructive, the eu is consulting with the u.s. on the next steps, salvaging the deal could see you writing -- uranium export return.

big issues have been largely settled. ukraine says it is beginning a series of attacks against russia in occupied crimea, the statements came after an explosion tore through a russian ammunition depot and after a similar blast at a russian airbase. russia is calling the act sabotage. 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 not just getting numbers from cso, the four year net income is under, this is australia's third-largest listed companies and what of the biggest drugmakers in the world. final dividends are one dollar -- $1.15 there. the net profit growth is a

contraction of 6% for the year. this year is up 1.7 percent, the broader market has been down by 4.6%. as a broader focus is on the details of this result, the level of blood collections and the dell settlement. we have been looking at as well in the four euros all. so ahead, we get more on the right call, widely expected forthright height we are seeing, review that decision with kiwi banks later on in the show. the latest in the markets, value stocks linked with shorter duration, still a good place to be. this is bloomberg. ♪

>> there is a lot of uncertainty in the fort horizon, we are focused on the global threat that we face including the energy markets and the implications of the war in ukraine. if you look at the policy actions we are taking, the inflation reduction act, we passed a while ago, that will

help meaningfully in this transition. heidi: the economic director on the outlook for the u.s. economy. shery: our next guest takes a defensive posture in the short term. the cow cio at invest -- cow cio at invest. the s&p 500 has recovered its loss, we could see higher prices. why are you still cautious? >> it is great to be here. we have seen the s&p down, markets are reacting the way that they are, today was great news on the retail front. we are out of the woods here are i would say it is hard to say that we are. we have pretty about inflation print, very modestly declining

on a year-over-year basis. extremely high relative to the fed. the fed has to continue with rate hikes. you see a talk of decrease in early 2023, i would not be betting on that. as markets continue to absorb rate hikes, i think a defensive posture of you are thinking short term and worried about how i sleep at night? stocks probably feel good overweight. shery: we had an economic counselor talk about the economic inflation -- the inflation act, do you intend to see all of the intended effects to help in the price pressures? >> i think clean energy is the big winner here. it is called the inflation reduction act, we have to hang the hat on politics a bit on that one. i do not know if there is a lot it will do for inflation, it

will have to do with the fed. we do expect this act and signing is a smaller than what they were planning to propose will have a good impact on clean energy. that is a huge sign for democrats to transition and will help that. heidi: what do you see in terms of the regulatory risk? that is something that you fly they we need to keep an -- value that you flag as something we need to keep an eye on as well. >> there has not been a lot of good clarity on regulations in the crypto space. there is a lot going on, washington will go slowly, you see congress but for these bills to say the ftc should be the primary regulator. if one of those bills passes,

crypto regulation will not be stringent. the ftc is also buying the america movil regulators. they are taking a harder stance on crypt out. heidi: there is a lot of uncertainty in these markets at the moment. whether this is something that can run through for the next few months and into next year. how cautious do you need to be and are you looking for pocket that will whether further downside? >> investment is catering to the retail client and what it is going to be best for their needs. volatility, defensive postures. if you have long-term assets you are investing, it is not a bad idea to look at emerging markets

that may be struggling, in a risky environment, they will struggle, but over the long haul, you are buying it a night of valuation -- buying it at night valuation. heidi: you can get around about the stories you need to know to get your day going, terminal subscribers can find that i dayb . you can subscribe to get news on the assets that you care about. ♪

heidi: china expects a net loss of almost 20 $8 billion in the first half of the rebounds being a sprawling, the compeers with a

23 billion dollar profit in the same period last year. the bond loan manager says that they did not reach expectations due to the real estate downturn. a bigger loss than expected, a company prices for a slowdown in all my shopping, the tencent bank company posted an adjusted loss of 506 million dollars in the june quarter. a certain man of -- this is part of a sudden ban on their game in india. heidi: new zealand is spearheading a tightening cycle, the rbn says it is set to deliver its next 50 point basis rise today. the cpi for the second quarter, the biggest increase since 2008. in australia, wage prices are in

focus later today, the leading index is lower since june on a weaker economic outlook. tencent may be about to report his first negative revenue growth ever as covid restrictions way on earnings. we get those numbers next. this is bloomberg. ♪ this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app.

shery: you are watching daybreak australia. bond traders could be saying i tougher road ahead. barclays predicting we could see

even weaker performance for credit now. annabelle: not a great year so far, if you are a bond trader. especially in the investment grade space, we are down around 12% so far. there has been a move in treasury yield and the fed tightening is a key factor there. barclays is saying that we will see more credit payment ahead, they are very what we see now with periods of high inflation and growth comparable to what was in the early and late 70's. we are watching in particular, specifically the period of high inflation and low growth and barclays process during the

1970's we ended up seeing excess returns in investment-grade credit. -15 basis points around 9% now, other strategists are saying that investors should be wary of significantly slower growth from here on in. they are expecting investment grade rights to tighten from current levels against treasuries and whited out into the your end as high growth slows -- year end as high growth slows. there are watching in particular, heidi, this is something called operating leverage, the relationship between a company's fixed and variable costs. morgan stanley says that is weakening from the 2021 high and is eating into the earnings pitch. you can expect investors to be

celebrating the fact that inflation is coming down. morgan stanley says we are underestimating the negative impacts of this. we have seen the changing in the ratio as the earnings come through. morgan stanley says actually the trend could moving forward. the ason for that is if you have lower demand on a lower price pressures you look at what is happening in the later market, your expansion is unlikely because basically if a company has to continue paying workers the same rate but have less demand for goods, it is not good for the earnings picture. heidi: let us take a look at the broader chinese tech space, shares of tencent back technology companies sank over 90 following the report that the social media giant intends to sell much of its stake in a food delivery night as a regulatory crackdown persists -- delivery

company as a regulatory crackdown persists. will tencent go ahead with the sale? >> the speculation has been mounting for quite some time, we heard about the possible off of a stake in jd.com and the limited, i sent a result earlier. -- i will get to the result earlier. tencent well or can sell much of its stake, a 19% stake in the chinese food delivery giant, surprisingly some of these other chinese or tencent back companies sank and that continued in the adrs overnight. meituan is down 40%.

it got caught up in the sinking tide of tencent back companies. tencent is the biggest single investor. it also posted a larger loss than expected and withdrew its 2022 e-commerce forecast. it has been dealt with a series of blows including its ban of one of its most popular mobile games in india. the potential brought out for the companies and the stoking of fear that these other investee's will be suffering if tencent is being forced, we do not know the regulatory body in china and whether they are forcing that, again, i will give you the statistic of all we get to a preview of the earnings. tencent controlled 89 .2 billion u.s. dollars of listed company investment as of march. it looks as if they are being

strong-armed to sell down those stakes because of the influence that they have over those companies and the date of the comes with it. -- data the comes with it. heidi: i talk about the impact of covid zero -- talk about the impact of covid zero there. >> ad spending in addition to the regulatory presence, earnings are not likely to look good. the first ever revenue decline in the second quarter after the markets close. of course, earlier this month, alibaba reported its first quarterly revenue drop ever. the result ended up being a bit better than expected. the big driver of revenue for tencent as you can see is games. there has been a moratorium on new game approval. that has started to be lifted,

some games have started to be approved, new game titles. tencent, the biggest of the game makers have not received a new game approval for more than a year. they have been rely on the old cash cow like honor of kings. without those new games being approved, it is difficult to get the revenue momentum. total revenue is expected to fall to .7%, limited catalyst. i've cells may fall 29% amid a weak economy. cells may fall 3%. heidi: let us get you the first word news. >> chinese provinces have asked to bolster measures. there has been a meeting with provincial officials to boost

consumption and offer more fiscal support through government bond issuance. they told officials to strike a balance between virus control and economic growth. the weld storms lashing australia's eastern seaboard unlikely to be followed by another wave of severe wildfires next year. that is according to meteorology says a system has developed in the tropical pacific. that is bad news for firefighters as the season following the money in your are worse for -- following our course work brush fires. a constitutional step to challenge result, odinga has secured 49 point 8%. swearing in a new leader poses a risks to south africa's biggest

economy. chain analysis estimates that there are $1.9 billion worth of digital tokens stolen in hikes this year. 58% in the same period. north korea affiliated groups have stolen a billion dollars of crypto so far this year. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. heidi: the australian prime minister is taking legal advice over revelations his predecessor swore himself into five ministerial positions in secret during the pandemic. morrison undermined australia's democracy in an unprecedented move. let us bring in paul was more. >> extraordinary, there are calls for scott morrison to withdraw from parliament,

including within his own party. this came out in a book that was a chronicle of the pandemic reaction. we knew that he assigned himself as the health minister. a signed himself in as treasurer, finance minister, resources minister and did not tell his colleagues he had done it and did not tell the public either. he defended his reasoning say that there was -- it was an emergency. he said in hindsight it was unnecessary. shery: you guys are calling it extraordinary, i find it really bizarre, the justification is that it was because of really extraordinary circumstances because of the pandemic. that may be the case, why do it in secret and what does that mean in terms of a potential fallout? did he break any laws here? >> he did not break any laws but

it illustrates how dark the corridors of power have become. the only exercise is to cancel a natural gas explosion contract all of the close of news healthwise -- new south wales. it was attempting to shore up electoral support, the government ended up losing those seats in the election. the issue is subject to a challenge of the high court from asset energy. it calls the do question the -- it calls into question the head of state in australia, he knew all of this, why did he do nothing? there are calls for the governor general to resign as well. heidi: further developments to come on this story. coming up, the reserve bank of new zealand poised to hike for a third straight meeting. mary jo vergara joins us next. this is bloomberg. ♪

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the rbn is hiking rate hikes. when we -- kiwi bank says

they are facing pressures. mary jo vergara joins us. thanks could over tighten in this scenario -- banks could over tighten in this scenario? >> there is a chance they could deliver a fitness i'll 60 basis point hike. will most likely see a move higher in tort and bank rights and the qe dollar. i think in terms of our call this afternoon, we see the reserve bank deliver its third consecutive 50 basis point hike and a company that with some pretty hawkish commentary -- i don't accompany that with some pretty hawkish commentary. heidi: are they rising recession risk?

>> the risks are rising locally and globally. we see consumer confidence heading recessionary level in an increasingly expensive environment. i think the yield inversion is indicative of the tightening the bank putting pressure on the downside risk on recession expectations. shery: tell us a little bit about how much attraction this aggressive tightening is really having on the new zealand economy, especially when it comes to tightening credit conditions? >> has a consumer confidence is at recession levels, it is at record lows, households are in an increasingly expensive environment. it is eating into discretionary

spending, the is truth -- that is true for businesses. it is concerning to see the investment intentions are in this territory, and is not a good sign for economic activity -- it is not good for economic activity. we expect to fall further with these higher interest rates coming through. shery: tell us about where the credibility of the rbnz? >> these rising inflation expectations or inflation expectations above the reserve bank's target rate are testing and weighing on the credibility in terms of fighting inflation. we were the first bank to fight

inflation in the 1980's, that is coming in check and it keeps the pressure on the reserve bank to continue tightening and bright expectations down. -- bring expectations down. heidi: we could see a statement that gets further upside to the kiwi dollars or will echo beyond $.66 -- it go beyond $.66? >> they repeat their resolute to tighten at pace. i think all of this hawkishness in maintaining their aggressiveness in terms of tightening monetary policy conditions is an upside. heidi: good to have you with us. previewing the right decision to come. up next, president biden signed into law a sweeping tax,

climate, and health policy bill. we look at the act. this is bloomberg. ♪

heidi: new zealand's data coming through,: quarter on quarter, through .1 percent from the prior 3.6%, the output number also a bit softer than 2.6%. the biggest increase since 2008 on energy costs as well as electricity supply. the main drivers of the price increases, capital goods being pushed up by the most on record with the new building construction activity underway in new zealand. we are seeing a bit of a pullback when it comes to the producer price and put. -- input. sticking without that inflation theme, president biden has signed into law the new bill. it is the biggest climate investment in american history. >> the bill i am about to sign

is not about today, it is about delivering progress and prosperity to american families. join the american people. democracy still warns not showing the american people. democracy still works -- showing the american people. democracy still works. heidi: a surprise breakthrough deal with chuck schumer. shery: among the voices that helped to clinch his deciding vote was bill gates, let us bring in erin for today's big take on this climate victory. tell us about what went behind this action and what we saw from bill gates. >> the climate bill have been a part of the democratic agenda for the past year and a half, we saw people step four to influence the discussion. -- forward to

influence the discussion. we wanted to note the network of people in joe manchin's ear to keep a very chaotic and -- it almost led to the death of the bill, trying to keep back together. bill gates began trying to influence joe manchin where he may be brought to bear, a decisive vote in the legislation. heidi: bill gates is a high-profile individual, this is on the back of a lobbying blitz back on it over the line? >> there were a group of senators who called themselves university caucus, they arranged for people who might able to persuade mansion, you saw the former treasury secretary, to speak about inflation.

you saw a lot of companies with interests in the passage of the bill try to demonstrate not just what the toxin centers that were a part -- tax incentives work, or what it would do for west virginia which is where joe manchin is from. he saw copies part of the solar supply chain that have operations -- he saw companies part of the solar supply chain that have operations in joe manchin's home state. shery: how involved will people be implementing these changes? >> we are looking at how these tax incentives to get written and implemented by the bureaucracy. that will be a big part of this story. we were already starting to see people discussing the consumer rebates for electric vehicles, which models for sale right now will qualify under the new rules which are going to require there to be a lot of parts in the

supply chain, being in north america or batteries that are not part of a tiny supply chain. it will be interesting to watch in the near term how that shakes out. i think that it is going to mark a big change from where we are now. heidi: let us get you a quick check on the latest business flash headlines. walmart shares searched the most ever two years after surpassing profit expectations and raising its for your forecast. the retail giant is finding is footing after slashing its outlook three weeks ago. the ceo says walmart will be well positioned in the coming holiday season after making good progress on inventory growth and supply chain costs. home depot's second-quarter result beat expectations. topping the average estimate of

4.6%, home depot says project backlog be rain -- remain healthy. the result in california is resuming -- the disney park has been trying to raise prices at peak times i don't require reservations. park division climbed last quarter. shery: let us look at how futures are trading at the moment. we are nothing of a movement in the early asian session. we had a volatile session in new york. losses to gangs, u.s. stocks, slightly higher at the end. turning down after the s&p 500 fell to push through -- failed to push through the moving average. there were retail earnings versus weak economic data.

declining to the lowest since early last year and more home sales being canceled. investors are already a loss -- have a lot to contest with as we have will prices rebounding slightly. after closing in six month low, you have really dynamic demand concerns and supply issues as well. coming up, a market outlook from a global cio, he said the fed already destroyed its credibility. oil with gdb energy services director john. daybreak asia is next. this is bloomberg. ♪

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