>> good morning.

welcome to daybreak australia. we are counting down to asia's major market opens. >> the top stories this hour, fed officials see the need to scale back rate hikes. the minutes of the last meeting show risk from over tightening. new york stocks fall as investors digest those views and assess the fed policy direction. >> the first ever revenue to and cuts nearly 5% of the work underscoring the extent of china's economic role. u.s. futures muted at the open of the asian session. this after a volatile session in new york. we have the s&p 500 paring back some of those earlier losses. we have some nasdaq 100 companies with those tech times under pressure.

we are really following the latest earnings reports. we are in the homestretch. we did see a lot of volatility in the treasury space as well. they are nearing the 2.9%. they. back, those gains on expectations of potentially smaller rate hikes. we have seen a lot of pressure on oil prices. this is a little bit of a rebound in the new york session. we are following apple has well. people buying lots of iphones. look at the numbers we got today. we saw them stagnate. if you take out gasoline, you take out cars. they were pretty resilient.

we continue to watch for consumer spending, consumer power here in the u.s. and whether or not they can sustain the momentum we are seeing in markets. >> i think that is what has been really interesting about the retail numbers. we are seeing that drop in gasoline prices are giving people more money to spend. you mention those apple iphones but in terms of how we are looking ahead for the open, we will probably be a little bit more influenced by the fed minutes. we are seeing futures pointing to a week in stock. new zealand also trading online to the downside. otherwise, we did see that strength, the dollar terrorism of his early gains. enough to push the yen back above that key 135 level. the aussie dollar dropping by as much as 1%. we really are about the fed meeting. let's turn to this terminal chart. we have seen asian stocks pushing higher over the last

eight out of 10 sessions here. particularly with that rebound we are continuing to see in china despite the ongoing issues. they are testing the 100 day moving average. we could see that challenge today in the session but we are not just about the fed minutes. we are also watching some eco data from here as well. >> we are expecting hired momentum in july. we know this is on the back of some really unexpected the strong gains across the job front. we'll head wage growth coming through. they are losing at about less than half the pace of inflation. that put a big cloud over household spending and household finances. and the ability here in australia to keep up with those rising rates as well as red-hot inflation. we will be looking at the data

to see what the picture is when it comes to employment growth and some of that seasonality when it comes to absenteeism. in the middle of winter, there has been a lot of winter sickness. that is part of the labor market as well. >> here in the u.s., we are seeing a strong labor market. there were so many concerns about what the fed minix -- fed might say. it was viewed as marginally less hawkish than expected with policymakers dell impact -- daily back the pace of rate hikes. they seemed to want to see if tightening was working toward curbing inflation. they are pointing to the economy being pretty stable. for more, let's bring an kathleen hays as well as our asian editor. let's start with you and what we

got from the fed minutes today. the market reaction was pretty confusing at some point. >> the fed is open to smaller or bigger rate hikes, that is my headline. there was a lot of nuance. there were a lot of statements. not necessarily going in the same direction but the minutes reflect what 18 different people said. they tried to make it clear that there is definitely some leaning a little this way, some leaning a little that way. markets took that dovish fed view. they say as monetary policy tightens further, it is likely to become appropriate at some point to slow the pace of policy rate increases while seeing how it is affecting the economy inflation. they also said the fed sees the risk of hiking rates too much. markets remark that the committee could tighten the stance of policy by more than

necessary to restore price stability. when they say it could slow the pace of rate increase, they already indicated that is what will happen. they are not going to stay at 75. at some point they will level off. that doesn't mean they are going to start cutting rates right away either. when you look at the other side of the coin, listeners say the fed is getting ready to do everything they can to crush inflation. they say they are acting with resolve to bring down inflation. all 75, all 18 members voted for a 75 basis point rate hike. they said they need to move to restrictive territory. the ongoing rate hikes are appropriate. michelle bowman was talking about women in labor she says the labor markets are very strong, you would not think she is getting too worried about what is going on here. one more thing to think about is what happened to in u.k. today.

it was not exactly a surprise but the cpi year-over-year printed at 10.1%. the bank of england is now seen doing multiple 50 basis point rate hikes. it is global inflation. everybody is caught in it. most people are saying this up. at some point, you will slow down but i don't think the minister is adjusting the fed is ready to do that yet. >> it was a very volatile market reaction. does this raise the question of the peak of this fair market bounce? >> a very good question. i think what we saw in the fed minute is there was something in every corner of the market. every corner of the market latched onto something else.

they paired back those gains. there was a complete different picture at the longer-range with the 10-year treasury yield dropping about 10 basis point. it was a very nuanced report. the kind of compounded the global selloff we are seeing in asia today with the new zealand yield jumping. it is just a reminder that central banks will continue to fight interest rates. this is for increased volatility. >> how are we planning on setting up for the asian trading system?

>> i think we will have a pretty cautious open father what happened on wall street. another thing we are looking out for today in asia is something that will happen in china. you have the tencent earnings first decline in revenue underscoring that weakness and the chinese economy. any stimulus from their -- from that will be a driver. we are looking at a pretty cautious open as earnings come out. >> it is a busy trading day.

they can see marginal expansion in 2023. there is that final for your dividend per share of 16 australian cents day. we have seen a difficult outlook for the sanctions. and the trade actions that have been taken by china in terms of the bands across different number of australian types including impact on one. we have seen some of that outlook brighton and help in trying alternative markets for their product. treasury one continuing to see marginal expansion in the for year 2023.

other companies reporting as well. do stay with us as you get those. >> we are getting some lines from the federal governor speaking before parliament at committee hearing. saying that he apologizes for the monetary policy rule. he is saying the economy is in a robust place to handle high rates. this is for a fork -- for a fourth consecutive time already. this is the reason why inflation is so high. this coming on the back of graham wheeler bloom's central banks around the world for the high level of inflation. he says inflation rates around the world are because of the central banks. we continue to see kiwi inflation, multiyear highs, not

only in new zealand but also all around the world, including australia as well but we are getting those comments from them apologizing for the monetary policy rule. >> not the only central banker in the hot seat with the way it comes to the global central banks handled the force of the slowdown, the pandemic reeling back from the stimulus that was put in place. the reserve bank of australia also enduring heavy criticism. particularly when it comes to their inflation outlook being incorrect. let's get to another major economy that is struggling. the ongoing regulatory crackdown, all of this is taking a toll on the nation's most valuable company. tencent reported revenue decline after advertising sales fell. stephen engle joins us out of hong kong. we knew that advertising would be difficult given the slowdown

across the economy, what was the standout in these numbers for you? >> all of that that you just said. we knew the results were going to be pretty poor. shares were up overnight on the adr. maybe some of the numbers were a little bit better than expected but it was still a bad set of numbers. let me run through it quickly. the first ever court of the drop in revenue since the company went public here in hong kong. online advertising. the proxy for the health of the economy. it fell by a record 18%. but that was actually better than analysts had feared. maybe a reason the stock was lifted overnight. the company slashing 5% of its workforce.

this is indicative of this week economy. revenue falling. adjusted net income was better than expected. may be another reason why the stock was up. tencent has tightened his belt as the chinese tech industry embraces a downturn. request that earnings call is very much and focus. what did we hear? >> that was the big story yesterday. tencent was looking to stay off -- stave off much more of its mistake in this giant food delivery company as part of this

regulatory overhang. there is depression from beijing and tencent and alibaba. all of them to undermined their spaghetti will of investments because of competitive concern on the antimonopoly crackdown. james mitchell just flatly denied it, saying that report by reuters is not accurate. those other companies that we talk so much about yesterday, they did fall again. where there is smoke, there may be fire. >> we have more on the earnings from here. they are reporting therefore your earnings. that is coming from -- through a number of executive changes there. they are seeing a for your

distribution of 53. that is one of the indicators we have been looking at given that they have seen that recovery in post-pandemic traffic. they also have a number of inflation legs. that is expected to build white well for them given the current inflationary environment for the full year of $.26 there. we do have an exclusive interview, discussing those results. 12:30 p.m. and sydney. let's get you over to vonnie quinn with the first word headlines. >> opec's new head says the market faces high risk because of supplies this year as demand remains resilient. fears over consumption and china

have been exaggerated. they were appointed as the top diplomat. the banks economist now expects this. goldman also cited on this. i united nation's labor expert is claimed to be reasonable. the humans as the involuntary nature of chinese employment programs does indicate forced labor. the findings are based on victim testimony and government system accounts. 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. cuesta hong kong secretary is confident of a pickup in ipos after posting its fifth straight drop in quarterly profits. we have more from this list of interview with the ceo. this is bloomberg. ♪

>> u.s. futures struggling early

in the asian session. let's bring in our next guest who is the chief research strategist and portfolio manager . good to have you with us. >> the challenge has been as we have seen a massive correction in the equity market, there has come back about half of what we lost earlier this year and you are starting to see a lot of pressure on bonds as well. people are a little overly optimistic about how likely it is you can solve the inflation problem quickly. we don't have to include more policy and more rising rates. >> is that question when he will

-- is that why so many people are taking cover? >> yes, the dollar has been pushed for several reasons. the dollar is very strong because of the relative positioning of the u.s. economy versus other regions. we also tend to see this risk off trade being very favorable for the dollar as well. there has been a lot of things in the right direction for the dollar. let's be honest. we are really in a place where the dollar might actually be surging back a little bit in the next coming week. >> are we properly pricing and expectations of a worsening energy crisis? how do you trade around that narrative? >> that is a good question. one of the things that we are seeing right now, we have to remember in north america we are really in the summer season. it is not where we are going to see things get difficult. we start to see energy dependence and energy challenges

more during other parts of the year. what we have seen is a bit of a respite in our energy trade but we have seen some lost signals that suggest energy is still somewhat of a bullish trend longer run. >> when you talk about the fact that markets have gotten ahead of themselves, it is easy to be optimistic. as we await more prints, we know there are some key reports to the fed that would make any kind of next move. what do we worry about when it comes to these expectations becoming entrenched? >> the challenge is we love to hang onto positive data that confirms a narrative that is more pleasant. i think that is what has been a difficult situation now.

the first sense that something is getting better, people are really ready to move back to not worrying. that is understandable but if you really look at the situation and the spread between inflation rates and interest rates, it is really going to keep the fed and other central bankers from having to think about how we do this cautiously well not stirring the pot, not getting people to concern so that we can maintain some level of calmness in the market so that this can actually dissipate from inflation. >> great to have you with us. more ahead, this is bloomberg.

>> we are now seeing the dollar rebound and we are recovering some of those losses we saw in

the past few weeks. on the other side of the break the, we are seeing pressure for emerging-market currency. that has led to developing nations releasing that hole in their finance, spending more than $2 billion in foreign reserves every weekday to prop up their currencies against the decline of the dollar, draining reserves by $379 billion. >> we will be speaking is was allegedly executives of some of their some of australia's biggest companies today. we have companies starting -- conversations starting this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!!

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officials in the green last month on the need to eventually dial back hikes. some strategists say it might be a little early to price in the end of the tightening cycle. >> that is right. this is what we're are hearing from bank of america and the reason they are talking about this is they are saying rates are what they are focused on, still deeply in negative territory. even when you have seen tightening from all g10 banks except for the bank of japan. inflation has reached historically high levels here and central banks as well started hiking from negative or neutral rates here as well. these rates are really not high enough to be fighting inflation here. central bankers will possibly be needed to do a lot more moving forward. bank of america is particularly focused on what is happening in the euro zone as well as the u.k..

they are rising at the highest level in more than four decades. this is what the bank of america says. the bank of england will need to do a lot more moving forward. >> we are still worried about the outlook of china's economy as well. >> yes. they are starting to see even more gdp projections coming through. goldman sachs says that the for your gdp will come at 3%. the reason they are saying that is we did not have the july activity data. that was weak when it came in earlier this week. those covers your policies and china continue to take a toll. other areas focusing on the energy supply issues we have also been talking about. it is highly reliant on hydropower for its energy. very vulnerable to these drought

issues we are seeing. we can take a look at some of the more micro indicators, we are seeing companies having to adjust their production here. particularly the likes of toyota and the battery maters. they are being forced to make some changes here based on those issues we are seeing in terms of drought in that region. >> right. let's turn to the hong kong markets. the hong kong exchange says he is optimistic about the city ipo pipeline despite the lien year in 2022. profits fell 27% in the first half but listings are already picking up on signs of economic recovery. >> we saw a little bit of uptick in activity in june and the markets around this part of the world performed a little bit better. we saw that ipo's quickly picked up.

there was a very good performance. we had all of those ipos around 180. we still continued to see. it is hard for me to predict when the market will come back. the reality is it is much harder for me to project 10 years from now. >> bloomberg intelligence forecasts the ipo pipeline to stay weak through the second half of this year. there are companies that have to navigate the new listing requirements out of china, cybersecurity news, national security reviews. i think 5 billion dollars in ipos so far this year compared to 30 plus billion the year before. that year, you fell back to number four in the world and even shanghai. what is your best case scenario for 2023 given how poor this year has been? >> i feel confident in the number of ipos we have in the

pipeline. we have been talking about this for some time. >> they have been small listings. i think you only had one over $500 million. on monday, there are some out there that are very interesting plus a lot of companies are converting from secondary to primary like alibaba. that is a really interesting development. not only do i want to be listed in hong kong, i want to be primarily listed in hong kong. >> what about the homecoming? you talked about this as somewhat of a homecoming. they did a second primary listing here in hong kong but we are seeing the listings increase potentially in the united states where it is the state owned enterprises or the tech companies that have run afoul of regulatory scrutiny in the united states and china. are you actively putting a plan together to pursue these

companies to come here? >> we are always looking to attract new companies. but at the same time, you have heard me say many times that i want companies to have an option to live anywhere in the world. the best thing for markets overall is to make sure that companies have an option and they can list whether it is here , in europe, the u.s., we want to be competitive and we want to be able to attract them. i am excited about all the companies that are choosing hong kong as their ipo venue. some of them will be moving from the u.s. and to the extent that they meet our qualifications, it is welcome. >> nicholas speaking with our stephen engle. let's get you the first word news with hot -- first word news with vonnie quinn. >> thank you. they agreed on the need to dial

back interest rate hikes. the july meeting also shows officials worried about the risk of over tightening. they are now increasingly betting the fed will boost rates by half a percentage point. inflation and the u.k. has jumped the highest in 40 years. they were 10.1% in july, the worst result by both the bank of england and the private sector economists. private food prices may the biggest contribution. pressure is mounting for the u.k. government and central bank to take action. the biden administration is waiting iran's response to european union proposal and at reviving the 2014 nuclear accord. officials are signaling the possibility a could finally emerge after more than a year of false starts. former president donald trump withdrew from the accord and 2018. president biden has made restoring it a top foreign-policy priority.

japanese prosecutors say this man took nearly $380,000 from executives looking for sponsorships and licensing contracts. 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. >> pension funds are increasingly turning their backs on riskier assets and embracing bonds as the economic picture darkened. allen joins us with more. bonds have becoming a bit more relevant in the portfolio recently but what are we hearing from these big funds? >> they are very big, combined. when they moved, it is worth paying attention to where they move.

bloomberg spoke to six of the big funds. the biggest pension fund in the country really doubles as debt holdings in the past few months to 12.5%. it is selling stocks at the same time. the australian retirement fund says it is adding bonds prices that are more attractive. it is no longer underweight bonds in quiet the way they were. what does beg the question is the stocks and bonds back here. they are definitely de-risking their portfolios. >> is that because of a risk of a recession? what are they saying about that? >> definitely something that is top of mind although none of these funds that we spoke to our tsarnaev the alarms just yet. he said the fear of recession is probably going to be worse than the actual recession itself. some of the funds are you viewing this as an opportunity

for cleansing, getting rid of some of the deadwood. australian retirement trust echo that sentiment. singular session might even be tougher to navigate than an actual recession. amp thinks that the recession will be shallow. certainly in the macro environment, there is no sign from central banks and developed markets slowing down the pace of tightening. the pace of momentum definitely still will respond at the moment. cries coming up, we are looking at u.s. headlines but the underlying data projects thief consumer spending ahead. we talk about the outlooks and that of the fed. that is next, this is bloomberg. ♪

>> federal reserve officials agreed last month on the need to eventually dial back the pace of the u.s. interest rate hikes. they also wanted to gauge how unitary tightening was working toward curbing u.s. inflation. with us is the printable

economist. the fact that we saw the market reacting in this way, there is something for everyone response to those minutes, does that suggest we should wait for the further data that we know the fed will be looking at before they make the next move? >> that is right. we all figured at some point they will have to dial back the increases. it is just a matter of what rate and when. they said a number of times there looking to be the guidance. the next meeting is a little more than a month off. we still have quit a few data points that will be coming out that we have to watch. >> when you take a look at the

over tightening the recession risk but also the risk of entrenched inflationary points, what is your gauge of how sticky inflation is across this? >> sure. the issue of entrenched inflation, i don't think it has fully manifested itself in terms of consumer conflict in the u.s.. this is not as quickly as it has been. some of the reprieve we saw last week for july, the gas prices of course, they did dip down a touch. as long as i continue disposition early, it is a good

place to dial back the rate increases. >> we saw the u.s. retail sales earlier. when you take out gasoline and cars, the number was still positive. this chart on the bloomberg showing that sales actually rose .7%. what was the net effect of that reprieve from gasoline prices dropping oil prices when other parts of the economy seem to continue to overheat? >> we have seen week after week in the u.s., falling gasoline prices. overly for a lot of consumers. i think what we are seeing is the money they are not spending on fuel for their cars, their spending in other areas. i read the report as stagnant. one other thing we saw was the rate of change for services and drinking places. that felt to 0.4% month over

month. we are seeing people dining out continue to slow. that suggests the pent up demand may be fizzling out a little bit toward the end of the summer which does not bode well for overall consumer spending. >> especially when we were expecting that pre-pandemic shopping pattern to return. especially on the spending of services like you mentioned. we go through winter and it is going to be a bit difficult to get that spending pattern back. >> we have seen a return over the summer. we see a lot of travel happening over the summer in the u.s.. i guess the point i'm trying to make is it is starting to wane. that sort of pent up demand, that second wind for the services sector is losing a bit of momentum. when you add in the interest

rate environment, inflation does not offer a lot of upside in terms of spending on goods. it kind of suggest a consumer environment in the u.s. that is going to continue to slow. we think it will move negative toward the end of this year. >> it is a bit of an old adage but the cure for inflation is recession. that takes us to the place that we have been put into people. it is recession the necessary result of steadily raining and price pressures? >> i think this is what is seen in the most recent gdp prints. extremely elevated inflation. the fed will tighten.

i think the inflation story will have legs. i think we will still see elevated inflation rates all the way through toward the end of next year. that 2% targeted the fed is trying to get to can listen. even after the recession, i think inflation will still be a bit higher. >> it does get riskier as we are headed toward a recession. the fact that consumers are spending more on credit cards. this chart on the bloomberg showing how card spending continues to rise. >> sure. those have dipped quit a bit in

the u.s. over the last several months. interest rates for the u.s. are below the where they were in 2019. people are having to dip into savings and pull out their credit cards. that is the movement in terms of consumer spending we have seen over the last year or so. it is starting to fizzle out. >> do you think the rest of the world is adequately pricing the moment? >> with the chinese economy, there is a lot of pressure. that having been said, the fact that there has been monetary policy accommodation suggests they requite worried about the economic situation.

it is problematic in terms of how they are living. >> good to have you with us. be sure to tune into bloomberg, waiting to hear more from the day's big newsmakers. now broadcasting live from our studio in hong kong. from bloombergradio.com, plenty more ahead, stay with us, this is bloomberg. ♪

>> the president of the board for the brisbane olympics says they are committing to a net zero cost to taxpayers. he spoke with david rubenstein about the challenges of planning a global sporting event. >> i spent some good time with l.a. 28 people, casey wasserman and his team. i spent time with the salt lake people who are trying to win the 2030 winter olympics. they organize the salt lake olympics and i have learned a

lot about what makes olympics work and what makes olympics failed. and one of the most important things is something that is near and dear to my heart. that is planning and front end loading. that is the actual term for engineering. front and the means i am going to project them forward and then start to solve those work streams ahead of time so i can implement and change the plan. we have the luxury of 10 years but most olympus get six years. it is all planning with the governments, with the organizing committee, the ioc, all of that. >> is this designed to break bunny -- make money or break even? >> we will have net zero neutral. we will have $4.5 billion spent.

the majority of that is from broadcasting rights but i have to go fund raise 1.7 billion dollars with my ceo and my team. i am recruiting the ceo right now. anyone out there interested, please apply. it is on the website. we have the ability to actually do the fundraising right after paris so we get the rights right after paris is done which is 2024. >> that was andrew. you can watch more from that interview on the david rubenstein show. let's get you a quick check of the latest business flash headlines this hour. bloomberg has learned that the latest iphone line on september 7 in a virtual event -- other new products expected the season include low-end and high-end ipads and every apple watch model. they hit the shelves a week have after they are unveiled.

they declined to comment on the event. cisco has given a bose forecast using the supply of shortages. the company is projecting stronger fiscal 2023 revenues then analysts estimated. the expanding seemed to be as much as 6%. cisco shares gained in the trade. quarter profits have badly missed estimates. there is a dramatic rebound in the second half. the earnings/inventories with a visit to essentials. soaring prices have forcing shoppers to pay more for groceries. the chinese economy is still one of the biggest global risks to economic stability. plus, a look at the implications of china's power crunch.

stay with us later today for exclusive conversations with senior executives from evolution mining, the trans urban group and asx, breaking down their earnings starting from 10:00 a.m. sydney time and 10:10 a.m. in hong kong. that is a very daybreak australia. daybreak asia is next. this is bloomberg. ♪

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