>> your "bloomberg daybreak: asia," that's coming to you live from new york, city, hong kong we are counting down to the market open. a downbeat mood ahead, opening up markets after the worst is

often two months. there is a property crisis -- special for developers and urging banks to open money. the most extreme volatility and the oil market may cause opec-plus to cut. u.s. future is rebounded slightly in the asian session after a really tough trading day in new york, apple, -- losing billions of dollars in the past few days, this is tough positioning ahead of jackson hole. we are talking about the 10 year yield topping that 3% level for the first time in about a month. we are also talking about a fatigue over the rally we saw with earnings season wrapping up. oil under pressure in the new york session, a little bit of a rebound in the asia session, above that $90.

. a barrel session. we heard from the saudi oil minister talk about the disconnect between the future space and where supplies are. he was signaling perhaps opec-plus could be forced to move. >> he did use that will -- word disconnect. there is a bit of an underpricing of where the fed goes here. we are looking pretty risk off at the start of trade, particular what we saw at the last trade of the aussie contracts, the futures, what you saw for the yen or dollar rather , we see it gaining about 3% over the yen over the past weekend. we are looking at that 140 level back in focus. giving you what we are seeing in the rate focus the three year moving higher. you mentioned the 10 year, the twos and threes moving in the

previous session as well. let's look at the broader outlook for asian stocks. you did see the test of the 100 day moving average recently. if you bring up the terminal chart, essentially had that 100 day moving average. we tested that, failed that, we have the 50 day moving average back in focus. if we do fail to get to that we have the two-year lows we in june back on a watch. >> for more on the markets and the positioning we see ahead of jackson hole, that spring and chief rates correspondent for asia mliv contributor, and the stephen engle. with all of the unraveling of meme stocks, bitcoin, the speculative corners of the market, tell us a low bit of how investors are positioning ahead of jackson hole and what? -- why?> >> there very much positioning for a hard hit from chairman powell and the other speakers.

central banks will double down or triple down on hawkish rhetoric and action. hopes that blossom for a while there that there might be a pivot from the fed because of recession fears. those have faded away. there is very much a feeling -- a year ago jerome powell push back against the idea that inflation was your to stay and explain why it would be transitory. there is a feeling that this time he is more likely to urge the other side, being more attuned to the dangers of inflation than he has been recently. if that is the case, most assets are expected to get cheaper after he unveiles that hawkish turn. >> the pboc, we are getting more and more elements of how they are trying to prop up the sagging economy.

more encouragement for banks to lend even though demand has been week. >> absolutely, the july aggregate financing a new loan numbers were pretty bleak. obviously this other the big banks are on willing to lend -- unwilling to lend or cannot find the borrowers kumutha headwinds in the economy there are -- with the headwinds in the economy, there is trepidation among borrowers given covid zero and property. we have a silly have the big drought in southern -- obviously have the big drought in southern china and the power outages adding to concern. this news that we got that the central bank is demanding banks, it in particular policy banks lending more to the real economy. we are hearing from sources that the special loans package that was announced late friday, and

never got more illustration of it from the pboc yesterday -- we got more illustration from the pboc yesterday to the tune of $29 million to -- billion dollars. what happened to xi jinping's three red lines from the developer to contain the debt? they said it was essentially a backstop right now. this is to boost confidence. homes that have not been delivered, that our projects in disarray, cannot be completed can be completed. there is a societal element to it as well. if you will boost confidence it is for existing properties. what about stimulant and demand for future projects? that is the big question, that is when the reasons we get the loan crime rates cut --prime rates cut, particularly five-year. that could stimulate mortgages,

confidence is very weak right now in a very troubled sector. we hear from lady -- larry who, who estimates average mortgage rates could be cut down as low as 4.3% as same as the five-year loan crime rate that could be unprecedented -- prime rate that could be unprecedented. >> how much more needs to be done given that we have seen some of these trickle measures coming from authorities? what are analysts saying about what they want to see from china? >> we could definitely see some more easing coming forward. the five-year loan prime rate, this is the second major cut since may. in may it was 15 basis points and we have another 50 basis point cut -- 15 basis point cut yesterday.

the one-year had a five basis point cut from the pboc to maintain stability of borrowing. long-term loan prime rate act tied to mortgages could be cut even further. we could see rrr cuts at the bank to get more lending out there. we will have to see how these initial measures play out. clearly, this is the biggest move so far since this housing crisis are updated august 2020 when those three red lines were first initiated. the biggest move so far from beijing and i would expect more moves to come down. >> when it comes to the asian trading day, are the bears in control? we saw a reversal of the momentum trading reseller the rally. >> very much so. the fed, jackson hole is looming over everything. that makes it harder for traders

to go along. four investors to go long. people are busy adjusting their positions and nobody wants to start anything new unless it is a short right now -- assured right now. who have rough trading conditions for the rest of the day in asia, the china situation is hanging over everything. it has been a burden for a while. there was a brief bit of hope when chinese stocks turned around. there was a sense that may be china was started to get on top of its problems. that has broken down and the lack of confidence that stephen was referencing within china is being felt by investors outside of china. as go china stocks and the yuan, those are very important markers for the rest of the asian asset space. >> will be see more currencies, particularly in asia, in europe

where the focus has been start to follow up -- all apart as well given the strength we see in the u.s. dollar? >> we have the euro go under parity with the u.s. dollar overnight again. there are concerns a good break substantially lower -- it could break substantially lower still. that 140 mark is back on the radar, and that fragility around the developed market currently is also feeding through asian emerging market currencies. the yuan dropping for a fifth day yesterday. quite steeply. we have had the aussie and the kiwi hitting near fresh lows in the case of the kiwi. the kiwi, it has been falling even after the rbnz raised by 50 basis points last week and gave

a more hawkish outlook than had been expected. at the moment there is no standing in the way of the dollar. >> bloomberg garfield reynolds looking ahead to what is a difficult training day and stephen engle with what is out of the pboc and china, you can follow all of the trading action on the markets live blog. commentary and analysis from our team of expert analysis -- editors here at bloomberg. you can get the effect on your investments at any given point. let's get the vonnie quinn in new york for the first word headlines. >> saudi arabian energy minister says opec may be forced to cut future markets as they become increasingly disconnected from fundamentals. he told bloomberg harmful volatility is starting functions in the market. the group meets next month to consider targets. the u.s. data permit says, it is

closer than ever to being revived, the spokesman for the biden demonstration says -- the iranian position is reasonable, it is encouraging that they have dropped the man's including listing as a nation of the revolution regard as a terrorist organization. israel's central bank has a surprise most economist by delivering the biggest rate in two decades, they have increased rates at four straight meetings. officials have been rating -- racing to get ahead of inflation. the top u.s. infections disease expert will be stepping down at the end of the year, dr. anthony fauci who has been head since 1984, and my -- advising

presidents since the hiv a break, saying he is leaving to pursue the next chapter of his career. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> still ahead we discuss how the power crisis of citroen can hit the production of other battery materials. we are joined later this hour. this is bloomberg. ♪

>> markets, on how hawkish the central bankers will be as they gather this week at jackson hole. we spoke to john taylor who was at the very first conference for decades ago, he says the fed should be more commute to give

about where -- communicative about where policy will go. >> if they say sunday five basis points, they do not know, there is some discussion about, -- 75 basis points, they do not know, there is some indication on the way. the more the fed can communicate, the more effective it is. it would like to get back to 2% inflation it needs to go to a monetary policy that reduces growth. that communication, that stipulated about what the policy will be like is very important right now. i hope the fed does that. >> when it comes to where we are at in the markets we are exceeding extreme looseness -- bullishness, not so much today, over the years for you, what will have financial positions played, or should the fed pay more attention to this to bring down the bullishness we are

seeing? >> they have to pay attention to the markets, obviously, they have an impact on the markets in a market have an impact on them. the more they are deliberative, that this is what needs to be done this is what has worked in the past. this is how we will do in the more convincing will be. what the markets do not like is an certainly -- is uncertainty. one of the reasons the market went down. the more the fed can commute kate the more can be done. that is why these are advantageous, the says we need to move further, hopefully that will cure the problem rapidly than people expect. >> when you write about this, you flagged this scenario, early deceleration it risking the issue around credibility and the risk of inflation causing a recession.

given the policy errors before does that mean we are at a point where recession will be a likely cure for the inflation? >> i do not think it needs to be part of the cure. we let inflation build up over time like in the 70's. it was seven years of higher and higher inflation. if we nip it in the but, which i still think we can we do not have to have these negative effects that people worry about. they are right to worry about as they have seen in the past. this is what we need to do, this is good monetary policy this will make the economy healthier. it has not grown that well recently. this is what we should emphasize is better for jobs, economy, i would also pension the world economy we inflation over the place -- mentioned the world economy we have inflation over the place. >> we will be live at jackson hole later this week. we will have interviews with the

presidents of kansas city, philadelphia, cleveland, and to atlanta. you'll want to stay with us our conversations with rbn governor and the banks career governor as well. coming up next the saudi energy and minister says oil is increasingly distant -- disconnected from the fundamentals of demand, advising opec-plus to cut production. this is bloomberg. ♪

>> we are seeing west texas intermediate rebounding slightly in the asian session, it investors trying to address the saudi comment that the disconnect between the futures and the markets could change whether do.

we ask energy unfold in europe, they are soaring to a 14 year high. for more on those comments by the saudi oil mr. let's bring in bloomberg's su keenan,. >> these comments coming to written questions posed to the minister posed by bloomberg news, he said that there was extreme volatility and lack of liquidity together is because the futures market to move in a manner that is disconnected, in his view from the fundamental supply and demand picture. in other words he saudi oil minister says a future market is increasingly disconnected from fundamentals and they may be forced to cut production as a result. the nymex market plunged on comments, they went close to the $90 market and a bit of a

rebound in asian trading. brent also saw a lot of volatility, paring losses after the saudi comment, up to 92. we have seen the benchmark oil futures, moving since early june, west texas intermediate, wti had a $13 price swing just in a month of august so far. after searching the first five months of the year, crude's rally has been in a reverse motion. that has to lot to do with the drop in volume for trading. the concerns about rate hikes. concerns about inflation. the rising price itself. the best cure for high oil prices is high oil prices is playing out here. >> was this all to do with the price pressures and the panic in

york? -- europe? >> yes, european energy prices at surging, this has once again to do with the fact that the nord stream pipeline is in maintenance once again. it will being in maintenance until the end of the month, dutch gas surged to a new record, european natural gas rising 20% across-the-board. that drove natural gas prices here in the u.s. up to about a 14, 15 year high, for gas prices in europe are up 150% year-to-date -- in the u.s. are up 150% year to date. there is already been a surge. the concern is if it is a temporary maintenance fix for the extreme pipeline or if it is -- maintenance fix for the nord stream pipeline. you will see how much of europe

depends on russia and gas for their gas supplies. they are trying to get europe to be less dependent on russian natural gas. right now they are very dependent. the winter is coming and we are seeing a surge as one trader said, the market really caught off by this latest news. a lot of speculators were forced to take bearish bets exacerbating the moves we saw. >> this coming at a time when we have not seen china become a big player in the gas markets as of yet because of the ongoing lockdown and restrictions. we have the dynamic energy space for chinese demand be an issue, we also see iranian supply coming back into the market. tells about the broader economic factors playing into the energy sector? >> you saw biden talking about iranian oil, there is efforts to get that nuclear accord together

that would put more oil on the market. china is a major factor not only because it is a large consumer. there is a lot of concern about demand with the renewed lockdowns taking place. there is also concerns about the chinese economy, everything going on with the real estate issues. it is a very difficult picture to determine, for long-term traders i've talked to, veterans in the market that have been there 30 years or more. some will point out there is a lot of near-term bearish pressure. long-term there is still many bulls out there that believe structurally the market is at a different place. it is a very difficult commodity to call right now. it is difficult to get visibility. >> in the near term you have the power shortages as a result of the heat in china, bloomberg's su keenan, let's get you the business flash headlines. japanese truck maitre -- maker

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>> this is daybreak asia, vonnie quinn with the first word headlines. chinese authorities are taking steps to shore up the property sector, the pboc in the finance ministers say they offer $29 billion in special loans to troubled developers to complete unfinished mission -- unfinished properties. they are calling on major

financial institutions to increase loans to the real economy. japanese lawmakers in the u.s. and say governors are making over and out -- overlapping trips to taiwan, despite a backlash from beijing. indiana's governor is also visited to discuss economic partnership. it comes week ats -- weeks after nancy pelosi's visit. marine one -- meantime, taiwan's exports fell as demand from chinese customers plunged. the median asset was for an increase of 16 -- 6.2%. officials are warning of further decline to come. across major product categories with exception of semiconductors . pakistan central bank has cut its central -- benchmark target rate. they may be close to an imf loan approval for $1.2 billion,

authorities expect imports to decline reducing stress on fx reserves. the central bank has raised rates by 525 basis points is year. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> let's get a look at how we are setting up this asian session, and a lot of volatility and caution going into this session. >> that is right. we are 30 minutes out here from the open for japan, australia, korea volatility is there. we are looking ahead to a fairly muted start, weaker for the futures, big moves and treasuries as we discussed in the previous session. the 10 year yield topping 3% for the first time in about a month. we are seeing similar moves in the aussie debt space moves higher for the three and 10 year

yields. the magnitude of the rise of these yields has taken them by surprise. they say could be hard for markets to meet, the fed to meet the expectations of such a hawkish message later this week. it has been hitting sediments of bitcoin trading, taking a look at the terminal chart, losses of 10% over the past few sessions. technical indicators we could see a further downside from here. this is the momentum gauge, now turned negative, it does indicate we could see a decline over the next two sessions. another headwind with a dollar, it has been a fairly short term history with bitcoin, so far it is had a relatively envoy -- inverse relationship of the dollar. >> sherry, haidi can always call us shidy. we have an established name.

shidy. with researching dollar and the possible difficult winter for europe, touching that to decade low again, let's bring in mark. morgan stanley calling the euro to $.97 this quarter. not a a lot of positive news that could support the currency of this point. >> it is something of a perfect storm for the euro at the moment. you have a potentially more hawkish fed, there is a lot of work to do in terms of raising interest rates. the u.s. gains are surprisingly strong. the u.s. economy is going along extremely well. the employment situation is strong. on the flipside, europe, the energy crisis is getting worse. german really -- especially is in a difficult situation with gas prices that record highs. recession risks are extremely

prevalent in europe. that makes the job much more difficult for the ecb, they may want to raise interest rates but they probably will not bill the do it at the kind of pace they would like to. simply because of the risk of a slowdown is too high. all of this is building up against the euro, higher u.s. interest rates on one side, the risk of the ecb taking a pause on the other side. the safety valve is a wiki -- weaker euro. you do not see anything to help without. traders can see a relatively easy win for them to push the euro down. there is not much the ecb could do about it. you can easily imagine it would not be too difficult for it to go back to the record lows. >> the dollar gains ahead of themselves going into jackson hole, we do not get that level of hawkish nose from the fed, we see some of that quit out especially when it comes to dollar-yen? >> not just in the dollar, you

can see the way people are ganging up against equities, against bonds. there is certainly a risk that by the time jerome powell speaks on friday, the market will be so bearish, positions short equities come along on the dollar, short on bonds. just think on a positioning basis jerome powell may not be able to live up to the expectations traders have. there's is -- it is still a few days away, still time for traders position if the news flow continues to support the kinds of moves they have done the past few days. just today if you look at the yuan for example, the chinese yuan, there is more talk that pboc may need to lower the rrr rate again. that is just fueling expectations of a stronger dollar, weaker yuan that will be over to the euro and other currencies. for the time being the news flow is fairly consistent expecting the u.s. dollar to get stronger and we still have a bit of time,

positioning can be built up ahead of jerome powell. >> bloomberg's mark cranfield, coming up next on daybreak, we will talk about how the power crisis in sichuan, can hit lithium and battery many factors. this is bloomberg. ♪

>> their worst drought and more than half a century has forced the government to extend our great -- power cuts affecting many factories for air conditioning, that is affecting -- how bad is the power outage in china because of the impact on hydro? how did we get to this point? >> it is very bad power shortage. manufacturing has been influence the most. because the government has temporarily shut down power supply to many factors so i has enough power to make sure the household -- any fractures so that the household has enough power. it is still possible of the

household power supply could be interrupted. this is because of the extreme weather conditions, the temperature is 40 celsius. everyone is running the air conditioner and the power demands have sort. the peak is 25% higher than last year. on the surprise side the drawer has -- drought has costed a lot of hydro production to go lower than last year. this is disastrous, or than a percent of the local generation -- 8% of local generation comes him hydro. >> we have seen other regions potentially impacted as well, what will be able to improve the situation? >> so far this situation will only get better when the weather condition -- they are hydro rich , they do not have enough gas to cover the gap due to the hydro

production drop. one third of their annual generation is sent to other providences, you do see them exporting providences that do not have the infrastructure to receive production from other regions, in terms of influence it to other -- to other providences, the drought conditions has made the power output to -- the export to others less. all those receiving providences, they have more than one line for their power supply. they also have local capacity. the overall situation, it is still ok under control right now. >> went to the power outages mean for commodities in the broader supply chain? >> commodity side is apparently fine. the company's local supplies very adequate. it has more impact for the

supply chain that adduces a lot of materials for the supply chain. pauly, imported material for the market, represent 20% of the supply production. the power outage was -- the key is the macro that is important for the important -- manufacturing batteries. it is part of their can -- production capacity and supply in china. >> with the latest on both power outages, and sichuan. for the into -- for her take on the impact and market analysis of all this, tells about the

power energy crisis we see in southwestern china and what it means for the battery mellow -- metal space and all the commodities need for that transition. >> good morning. along the battery supply chain, lithium would be the most impacted due to power structure and at the moment. this is one of the crucial raw materials to produce, lithium ion batteries. it is used in the reduction, used to produce ev batteries. the adjustment indicated, lithium production accounts for 20% of the total lithium output of china. it is -- it's market share -- of lithium.

4 of the top leading lithium producers in china are located there. with all of these operations, have ended for 11 days. it is estimated five to 7000 tons of lithium production or impact at the moment. even if there is no extension of current power rationing from friday, it may not be able to resume to its full operational rate ahead of fall prices. >> can you at this point age how much that would effect ev output --gauge ev output for companies that purchased lithium from the region? i know it will depend on how much inventory they already have. is a review right now about the

ev impact would be? susan: so, basically, for now the power shortage may resolve very shortly, still depends how long we can stop this power crisis. if the lithium production in the province, or the production disruption that we see now continues for more couple of weeks, some lithium downstream consumers might be forced to scale back from their production because they cannot get enough lithium ontime. in the worst scenario this could effect battery production. for the automakers of ev's, i think the most direct responsys from the -- response from the right side in the current -- price side, that we are seeing

right now we are estimated price momentum of lithium will last for a while. as you might know lithium prices have been a historical highs for a couple of months because of the tight supply in the past one year. basically, the prices, in the chinese market has been up since the of this year. in the asian market has been up by over 100% already compared to the beginning of the year. with the searching of prices, will of course add to the overall battery cost for the manufacturers and oems. at this moment the oems and manufacturing went to deal with the high cost for a while.

>> susan, how do you read the investment cycle at the moment? at what stage in the cycle are we at when it comes to these future metals? susan: energy metals, overall to make the battery, the new energy demand should be accelerated paces of the production facilities not only in china but globally to ensure we have the cost for ev battery and adoption. >> the tax credits with the u.s., does that tell us the concerted move away from the reliance on the supply chain that involves china, will that be successful in the short and medium-term? >> i think it is quite crucial,

especially if we are taking a look at current power restriction and lithium production suspension. it tells us that market might want to diversify the production location of the supply chain. it can be diversified from china and placed globally, the u.s. inflation reduction act is actually encouraging such localized supply chain. and i think, it is also like the ev market, needs to localize better supply chain in case of prices in certain areas. >> what about the diversification of sushi on -- shuchan, it is the clean energy

they have been relying on, but it comes with risks. susan: that is right, they have many resources. it has already been building up in the supply chain. like i said it not only lithium producers. there are some oems there, there is a cluster of the supply chain. it cannot be changed. the thing for china, they only account for 20% of the lithium production. for this time, even without, two weeks how polk -- output from the province, there are other places making lithium for the supply chain. there is a chance, if the power crisis continues there might be a challenge for producers to

come up with enough lithium. in general, they could get some kind of support from the lithium producers outside of the providence -- province. this is the importance of diversified locations in terms of the manufacturing hubs of battery materials. >> susan, i appreciate your time with us, we appreciate -- make sure to tune in to bloomberg radio's to hear more from the days big newsmakers. we broadcast live from our studio in hong kong, you can find the app. let's morehead. -- lots more ahead. this is bloomberg. ♪

>> we are watching "bloomberg daybreak: asia," china's earnings season is underway. jd.com and -- are among some of the companies posting results. there suggesting the market contracted 12% of made -- and amid covid lockdowns during the second quarter. alabama's revenue, the consensus

called for a contraction. >> at the start of trading in tokyo and seoul, some of the stories we are watching today japan a delegation of japanese lawmakers and the u.s. state government are making overlapping trips to taiwan pushing back against chinese efforts to isolate the island. the cross party delegation from tokyo arrived monday for a two-day trip and our meeting with the president. on the data front we are getting jibun bank pmi numbers and see if they stay above the expansion territory of 50 and keep an eye on the yen after resurgence ahead of the dollar ahead of jackson hole. traders are leading -- leaning towards a view that the worst is over for the. the bank of korea and the expectations of price increases the next 12 months has fallen to 12.3% after hitting a record last month. clean energy companies in south

korea could be the major foreign winner, solar clement maker saying it expects more than $200 million in tax credits annually next year. the highest inflation and years triggering a fried chicken price war. the second largest retailer slashing prices as much as two thirds to lure hungry customers, or should i say hangry, hungry and angry. korean five dragon, my note to comfort -- fried trick in, my go to comfort food. i am headed to career this week to see family. i -- korea this week to see family. i will let you know how expensive it was. >> i can already hear several producers saying -- is better, it is a great story that goes into the macro picture. it is such a big component of

the inflation basket, it is a bit like pork when it comes to the chinese and inflation market, a canary in the coal mine, a chicken. in the coal mine. . we are seeing. a survival of the fitness. the numbers is something to contend with, 200,000,001, when it comes to these chicken franchise, we are getting discounts of local supermarkets. it does not seem the chicken franchises are suffering much from the supply chain crunch. british air wise is -- airways is scrapping flights, taking up 13% of its recent schedule. the passengers that have been affected can regroup to other flights or seek refunds. hbo's house of dragons, drawing

nearly 10 million viewers making the best a series debut in history. the streaming service crashed as thousands of viewers and customers when the episode dropped, we have the markets open in sydney, seoul, tokyo next. this is bloomberg. ♪

>> we are counting down to asia's major market opens. we are getting more rhetoric coming from china's central bank , the pboc calling on major lenders to stabilize credit growth. lower the ltr in order to follow

the pboc's rate cut last week. >> we are seeing a lot when it comes to the markets. the dollar index sitting at a 20 year high. how is all this playing out for the asian open? annabelle: risk assets on shaky ground. just a few minutes from the open in china and australia. the 10 year yield topped 3% for the first time in a month. the direction for trading in asia is based on the pricing in the market, the moves that we have a very hawkish bid later this week. they are not close to the end of the rate hiking cycle. that's putting pressure on the yen, losing about 3% of ground against the greenback the past few sessions.

japanese stocks this morning are lower. we are checking on domestic factors at play because the government according to local reports could be considering changing its covid travel policy for no covid test to incoming travelers and could end the cap on arrivals. we saw the performance of big tech names in the u.s. in the previous session. a huge watch in the previous session, the 13 year low against the greenback. our bloomberg intelligence team saying this currency could be undervalued against the greenback by 21%. we still are in the midst of earnings season. one of the big companies we are watching. we are tracking the move in treasuries, keeping an eye on the energy sector because we had

huge moves as well. oil looking a little bit volatile this morning. a lot of it is weighing on the comments we get from the saudi oil ministry as well. >> we are following the latest on the energy space, as our next guest sees potentially stabilization in asian stocks until mid-september. jim mccafferty joins us from hong kong. could this stabilization become a sustained rally and what would it take? jim: i think the economic indicators are not strong enough, nor are the company fundamentals strong enough to indicate a sustained rally. it's worth looking at asia within a holistic global context. the u.s. and europe account for more than .75% of the global market. i was talking yesterday to nomura's chief economist and she

is looking at inflation data for asia. the numbers for asia are less than half markets like the u.s., europe, and the u.k.. not always is inflation much lower in asia, but also levels of consumer and corporate debt. going into jackson hole on friday if the fed is going to increase rates and a lot of central banks do the same, these squeeze affect on the european consumer and impact on debt repayments will be much more than we are seeing in asia. we are seeing asia is cheaply valued as investors put money into global stocks. >> what should investors be watching out for in asia when it comes to jackson hole? is that a narrative that perhaps asia will not have to go as fast when it comes to tightening, given price pressures are not as strong as western economies? jim: i think that's a really good point, but if you look at

asia's major companies, they happen to be in the technology space chair durbin: i can't talk specifics. you think about taiwan, korea. the biggest stocks happen to be large exporters in the technology sector. what we are hearing from our analysts as there is a big decrease in the demand for things like books, smartphones. that means the chip industry in north korea and taiwan will be affected. having said all that, if you look at other markets like japan, i saw a clip talking about the fact that covid tests may not be required for inbound visitors. there was huge upside for the numbers in japan. >> do you see more opportunity for tech leadership in asia? jim: for tech, the memory cycle is signaling the recession is in

play. there are companies that have strong balance sheets and decent dividend growth. money will go back into these stocks. for now we expect investors will want to avoid that space. >> the growth stock outperformance we have seen, we are starting to see that fall apart, particularly with these tech names. in the medium to longer term, do you see opportunities within the and growth space? jim: if you look at asia, there are various components of the markets which have some exposure to tech and some less, but on the whole it is much less in terms of u.s. markets. if you think about the u.s., you have a number of companies which don't make any money. we don't have that in asia. the big chinese names are old domestic names.

if you look at a market like japan, the single biggest market in asia, you have a much more balanced portfolio. a lot of consumer stocks. i would say asia has more insulation from that kind of meme type stock you were referencing. >> when it comes to the dollar index, there is some concern asian pears are going to start falling apart when it comes to things like dollar-yen. where do you see the most impact on the fx front feeding into equities in asia? jim: japan is the market we feel is most exposed on that front. we have had yen weakness for a big chunk of this year. down in double-digit terms. if we look at inflation data

coming out of japan, we had a conversation with a japan strategist yesterday and he was saying companies such as food producers are beginning to increase prices. the doj has this target of 2% inflation. we are now above that, going into a new year in 2023 when there will be a change in governor of the boj, a change in management of the central bank of japan. that might mean a change in policy is possible. we could see rates going up in japan. if rates go up in japan, that could offer stability for the yen, something investors could root for in 2023. >> always good to have you with us. number a joint head of a pac equity research. we are hearing that south korea will manage risks on the strong dollar and week one.

south korea will manage the risk so there is no negative affects impact. this is coming at a time when the korean won has fallen to a 13 year low. we are talking about the longest losing streak to the u.s. dollar since april of this year and the weakest level against the greenback since 2009. we have this weakness as we have dollar strength, also ahead of jackson hole, potentially more hawkish fed speak. this week we got the trade deficit for the first 20 days of august at the largest shortfall we have seen since bloomberg kept data since 2003. that doesn't help inflationary pressures either. we have the president commenting on the currency. let's hand it to vonnie quinn with the first word headlines. bonnie: e saudi arabia energy minister says opec and allies may be forced to cut output as the market has become disconnected from fundamentals.

he told bloomberg harmful volatility is disturbing the market. saudi arabia is the largest oil producer in opec-plus. the group meets next month to consider output targets. d iran nuclear deal is closer than ever to being revived. the biden administration will soon make a proposal to the eu. the eu says it is encouraged to ron seems to have dropped demands. israel central bank has surprised most economists by delivering its biggest rate in two decades. the bench rate was raised to 2%. it is the longest cycle of hikes in israel since 2008. officials have been racing to get ahead of inflation, accelerated amid an economic upswing.

the pakistan central bank has kept its benchmark target rate at 15%, close to a loan for $1.2 billion. pakistan is grappling with one of asia's top inflation rates, which prompted the central bank to raise rates. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. >> we are watching the commodities space with asian gas prices jumping following the bell. how are those stocks related to natural gas right now? >> look at the contract on the screen. that was the move for the european gas contract. we are seeing the big names in asia moving higher at the start of trading. a lot of panic as to whether we will see enough supplies into europe. politicians warning a for a tough winter ahead, one of the

starkest warnings coming from the belgian prime minister. still in the energy space, let's change to another mover we are watching in australia. it was one of the companies reporting this morning as we get the earnings season underway in australia. net profit around .5 billion dollars aussie. the company and focus for its lithium supplies, critical for batteries. also keeping an eye on the cement maker. turning to japan, travel related stocks higher this morning. local media reporting the government could be changing its travel policy, so no covid tests for incoming travelers. the cap on arrivals also lifted, very different to the outlook for travel in china. >> we will get more on that still ahead. the foe tourism group chairman

will be joining us. reporting those first-half earnings. next, we get more on china's property crisis, plans to ensure housing projects are delivered to buyers. this is bloomberg. ♪

>> china's central bank is backstopping troubled real estate firms with $29 billion worth of loans as beijing steps up. let's bring in stephen engle in hong kong. combined with rate cuts, what's the likely impact of these moves? stephen: we will have to see if it restores confidence. it's been a couple years since xi jinping launched his redlines terrain and overleveraged property sector. whether it is evergrande or others who have defaulted, now we have mortgage boycotts by people refusing to pay their monthly dues because the properties are not being delivered. that's why this move is interesting from the pboc, $29

billion to developers having a hard time finishing their projects. it's also a societal issue. people have been boycotting in some places, even protesting. is it going to solve the housing problems or exacerbate it? with the loan prime rate cuts, that could likely reduce mortgage rates going forward, but will it stimulate demand? banks somewhat being strong-armed to lend. some have been unwilling to lend in an uncertain economy. of course all the other headwinds, covid zero, the issues in southern china with the power grid, and the ongoing pressure on the economy. lots of issues. >> stability is key particularly

in a year like this for the chinese leadership, but there is an issue of moral hazard when you see these kinds of bailouts. stephen: we have to be careful to say whether this is a bailout or not because that would signal xi waving the white flag on the three red lines. this is a longer-term project of xi jinping to wean developers offer risky borrowing practices. the problem is they need cash upfront to meet the demand and build. they have been essentially cut off from financing and selling bonds and the like. i think the bigger question is after this backstop of $29 billion to get these projects delivered, what's next? does the three redlines continue as it is or will there be a different iteration?

>> she stephen engle there. markets also watching the pboc and the fed. how hawkish will the fed be? we spoke earlier with a stanford university economics professor, john taylor, who was at the first conference four decades ago. he says the fed should be more communicative about where policy has to go. >> if they move the way that's anticipated, maybe 75 basis points the next one. that will indicate they are on the way. what's most important now, we have learned from history, the more the fed can communicate what its objective is and would like to get back to 2% inflation and needs to do this by a monetary policy that reduces inflation, not the growth of the economy. that communication that

stipulated what the policy will be is very important and i hope the fed will do that. >> when it comes to where we are at in the markets, extreme bullishness, not so much today, but we see the rally continuing to build. over the years for you, what role have financial conditions played and could the fed be paying more attention to this to bring down this bullishness? >> they have to pay attention to the markets obviously. they have impact on the markets and the markets impact them. this is what needs to be done, this is what has worked in the past, the more they say that, the more convincing it will be. the markets don't like uncertainty. there is more uncertainty today, i think one of the reasons the markets went down. the more the fed can communicate where it needs to be going, that's why these rules are

advantageous. it says we need to move a little further and hopefully that will cure the problem more rapidly than people expect. haidi: when you write about this, you flagged this scenario, early deceleration risking the issue around credibility and inflation causing a recession. you have unpacked the policy errors before. does that mean we are at a point where recession is a likely cure of this bout of inflation? >> i don't think it needs to be part of the cure. we have experienced if we let inflation build up over time, like the 1970's, if we nip it in the bud, you don't have to have these negative effects that people worry about. they are right to worry about but the more there can be a stipulation -- this is what we need to do. this will make the economy healthier.

it hasn't grown that well recently. that's what we should emphasize, this is better for jobs, better for the economy. also the world economy with inflation all over the place right now. shery: professor of economics john taylor. for our bloomberg clients, he is on the terminal at tayl. let's bring in global economics and policy editor kathleen hays. this was a wide-ranging conversation, very timely. according to the taylor rule, you can see the fed funds rate should be about 10%. what else stood out to you in this conversation? kathleen: i think we asked john specifically, there are a lot of things you have to adjust. that's a very simple reading and i think john would agree the fund rate doesn't need to be 10%. at the end of the interview i asked to clarify where the fund

rate should get to. he said they should be aiming for 5% and if inflation doesn't start coming down more quickly or at all, they may have to go higher than 5%. i don't think john thinks you need to take his model that literally. i think it's important that he said they cannot avoid recession. that was very important. they need to communicate to nip it in the bud. some people say if that couldn't happen a year ago, is it going to now? you can find that conversation on bloomberg.com and the bloomberg terminal. the next central bank in focus is bank indonesia, meeting today with their headline inflation rate well above their target. they are expected to keep their key rate at 3.5%, a record low. you can see the headline inflation moving up, almost 5%

year-over-year. they are focusing on the core cpi, below the top of the 1% to 3% target. there is some sense that the growth is picking up. there was pent-up demand when the economy opened after the pandemic. now these things are pulling back. they are expected to wait at least another month to see if things slow down a bit and start taking the pressure off the headline inflation. for now sitting tight at bank indonesia. it would be a surprise if they did make a move today. >> we have had a lot of surprises so not ruling anything out. we will be live at jackson hole later this week for the crucial jay powell speech as well as interviews with the fed president from kansas city, philadelphia, st. louis, cleveland, atlanta. we will also have big interviews with the asia-pacific central bank.

interviews and conversations with the rbc governor. this is bloomberg. ♪

shery: take a look at how asia is opening up, given the caution we are seeing ahead of jackson hole and the weakness below parity when it comes to euro-dollar and the increasing energy risk from the shortage and the crisis exacerbated over there. we saw that in the open price for natural gas. euro stock futures up by about .10%. msci europe lower by about 1%. dax futures up by about .10%.

shery: we saw the benchmark finishing at the record high and taking u.s. gas futures higher. we are talking about the 14 year high as we continue to see energy prices rally, asian gas prices also higher and the rebound in gas prices a little stronger in the recent session wti up .8% haidi: it is not just the euro we are watching, it is also the one. the south korean fx authority saying they are expecting offshore factors will move fx. they will be closely monitoring trading and looking at whether speculative factors will move fx. we have heard from a number of policymakers, including today, we heard from the president talking about south korea managing risks to the currency

that comes from a strong dollar the week won doesn't pose. this is a big part of all of this ahead of jackson hole. take a look at what lies ahead. this is bloomberg. ♪

>> we are getting preliminary august numbers for japan's pmi. services and composite both falling into connection every -- into contractionary territory. the services number falling below 50 for the first time in five months. the pmi composite falling to

48.9 for the first time after five months of expansionary territory. these have been very volatile numbers. we are seeing downside pressure. manufacturing has still stayed at the 51 level, easing from the previous month. we continue to follow this closely given that the weaker yen has helped japanese manufacturing. we are seeing these downside pressure when it comes to pmi numbers in the country. haidi: we are seeing some of these numbers when it comes to the covid situation in china. hung on reporting 725 local covid cases for monday, signaling they are struggling to get control over this major outbreak for china, which aspires to covid zero. we have seen a lot of coverage of the lockdown around tourist towns.

a lot of them have been unable to return home. this is a popular island for beaches and resorts and duty-free shopping. we have seen the downside when it comes to duty-free related stocks. let's look at how this is leading into market sentiment. annabelle: these covid curves and china, one of the major headwinds facing the economy. there are ongoing issues in the property sector. in terms of the fx space, we are eyeing the 6.9 level on the offshore yuan. you see that on the bottom of the screen. we could reach that given the moves we saw on friday and monday. we have not really seen much of an issue from the pboc for the weakness in the offshore and onshore yuan. let's have a broader look at the market space. risk off trading across the board.

most of the losses here, the only dangers are the energy index. some material moves to the upside, a reflection of what we are seeing in the natural gas contract because we did see a lot of concern around supplies of gas from russia into the market. in terms of dollar strength, that can be a negative for asian stocks, particularly with the korean won this morning. haidi: we did just hear from the fx authority in korea saying there are speculative offshore factors moving the won. we did see a gain after authorities made that comment. the won trading at the lowest in about 14 months. let's bring in bloomberg senior reporter for fx. what do you make of these moves? we had research from bloomberg intelligence saying the won may be undervalued by 21%. >> absolutely.

the won is one of the weaker performing currencies in asia this year, just above the japanese yen. the won is incredibly sensitive to risk sentiment, almost a bellwether. when the clock ticks over to tokyo time and people start trading currencies in this region, what do you do? it is not surprising to see it fall more than 10% against the dollar. and not surprising as well to see authorities in korea getting worried about japan and basically sounding out the message to investors saying we are watching this space. shery: especially given the economic ramifications. they are already suffering from decades high inflation. this could exacerbate that. in the broader emerging-market

conflict, how difficult has it become for policymakers to support their currency against the ever strengthening u.s. dollar at a time when we saw the korean won under pressure because of? the growing trade deficit? you have china as well slowing down. ruth: korea is getting hit on all sides. as i said earlier, it is so vulnerable. investors finding very little reason at the moment to buy the korean won. in terms of emerging markets, it is very much a wider story of which the won is just one component of. when king dollar is reigning, when everyone is worried about the fed, energy prices in europe , when they are worried about things like japan's average monetary policy and the war in ukraine, emerging markets as a whole would get filled up, of

which the won is one of the best under the line of fire in asia. shery: ruth carson there with the won and emerging markets currency. as we get a stronger dollar, that ways on oil prices, not to mention we have more volatility. the latest from the saudi arabia energy minister, who told bloomberg that opec-plus may be forced to cut oil production. he cited concerns about the increasing disconnect between prices and the fundamentals. su keenan us with more on this. we are seeing a rebound in the asian session. su: we are seeing oil rise toward 91, a big difference from new york trading where west texas intermediate plunged as much as almost 5% because of the comments from saudi arabia. the saudi arabian oil minister

basically saying he believes the extreme volatility and lack of liquidity we are seeing in the market is causing this huge disconnect between the paper market prices and the fundamental physical market, and as a result it's likely they will cut production when they meet next month. you look at texas intermediate, brent crude also fell back. it's interesting the volatility has been extreme as we have seen last trading in the market due to a number of factors. you have seen west texas intermediate in a $13 swing. saudi arabia is the largest oil producer in the world, also the most influential member in opec-plus, so comments coming from the saudi minister clearly moved the market. since we have had oil in a tumble does situation since russia invaded ukraine, we are

starting to see a reversal of that. oil was soaring for five months and now retracing. a big part of that is the potential nuclear court with iran. that would put a lot of oil back in the market. various sources in iran are indicating that could be as much as 4 million extra barrels a day. he has been talking with european leaders about reviving the agreement. the latest word from the state department's we may be close to reviving an iran accord, but gaps remain. a u.s. state department spokesperson said hours ago it's encouraging iran appears to be dropping a lot of what they said to be nonstarter demands. the u.s. has said they will not be offering concessions. haidi: the bans on russian oil fill a big part of this energy story. we were getting an update from a u.s. official warning of moves in the coming days, the u.s.

official saying they have information russia is stepping up ukraine strike efforts in the coming days. we know they have warnings from president zelenskyy of ukraine that russia may do something particularly cruel as ukraine prepares to celebrate independence day this wednesday, which will mark six months since the invasion, which began on february 24. vonnie quinn with the first word headlines. vonnie: authorities are taking steps to shore up the property sector. the pboc says they will offer $29 billion in special loans to developers to complete properties that have been sold. the pboc is calling on financial institutions increase loan issuance. the top u.s. infectious disease expert will step down at the end of the year. dr. anthony fauci has won -- has run the institute since 1954,

advising seven presidents on everything from hiv to ebola and as he got. japanese lawmakers are making overlapping trips to taiwan despite possible backlash from beijing. indiana's governor is also looking into economic partnerships. this comes after nancy pelosi's arrival to view chinese military drills. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: we will delve into the outlook of the tourism industry as a travel surges. lockdowns in china continued. we will speak to the president and ceo of posen tourism group next. -- of fosun tourism group.

shery: fosun tourism posted a net loss for the first half of the year. the company said it saw a recovery in europe and the u.s. but it didn't compensate for continued steep losses across its travel businesses due to restrictions in asia and the resurgence of covid cases and

china. let's bring in the chairman and ceo. let's start with the latest outbreak in china, where covid zero means a lot of lockdowns and impacts on resorts like atlantis. can you tell us about the impact on your business from this? >> we can feel the market is coming back. results go by 336% year on year. china, still we have some areas with covid-19.

overall we are very international business now. we have strong business results in the first half of the year. china business, we had very good results in the first two months. atlantis resort has a volume of 362 million, increasing by approximately 40% year on year. our business in china was still impacted after march.

however the situation has improved in the last two months. haidi: we are still seeing lockdowns in china, travelers who can't get home. do you think you have to downgrade the revenue forecast for atlanta? do you think this uncertainty contributes to a lack of confidence for domestic travelers to make bookings? >> in some provinces -- in shanghai since the end of march, it's very difficult, but now it's under control.

they are ready to spend the budget. they can choose different destinations. china has now suffered from the covid-19 budget. we just opened one last year. shery: when you say consumers are ready to spend, what are you seeing in terms of post lockdowns? shanghai, for example? do you see revenge spending taking place? >> people are ready to go out.

we see the manner of consumer behavior is changing. we have developed years ago -- we developed a new concept in china. this is very typical for the

chinese market. i do see a lot of chinese consumers now -- shery: you mentioned earlier you are a global company. what does a strong u.s. dollar mean to you as we are facing a weak chinese yuan and other currencies? is that having an impact on your business and also tourist mindset when they decide to go abroad? on top of that, you have covid restrictions. >> one benefit from our international business, because we are very --

especially now that the european american market is going well. on the other side, one strategy we called localization. human because of the covid situation, many countries open, but still it is not compared to pre-covid times. we see more potential for growth . haidi: i wonder when you think china will reopen its borders. when do you think they should reopen borders?

>> i don't know exactly when it can be open, but i hope for it to work, not for a long time because i do believe in china you can see the situation is changing. the number of the vaccinated has increased a lot. the first one is already improving condition now. i do believe in the future we have a chance to open the borders. if the border is opening, tourism growth is very strong in the international business.

shery: good to have you with us. thank you for your time. fosun tourism ceo giving us his views about the industry during the pandemic. we are hearing the deputy secretary of state, wendy sherman, will be meeting with the chinese ambassador at 10:15 a.m. eastern, at a time of heightened tensions between the u.s. and china, given the recent speaker nancy pelosi's visit to taiwan. this week a delegation of a u.s. state governor and japanese lawmakers also making trips to taiwan, at a time when the biden administration is trying to continue trade negotiations with china, perhaps considering lifting some tariffs on chinese imports. we have plenty more to come.

this is bloomberg. ♪

shery: 300 companies expected to report this week in china. we are watching the impact of lockdowns, ongoing drought and power issues. for more on those earnings, let's bring charlotte young.

the battery giant earnings are releasing shortly. what story are we expecting from this company? >> it's a big day for the chinese battery giant. analysts are expecting the company to report earnings for the second order -- second quarter and paint a rosier outlook for the second half. remember how the company reported significantly declined profitability and that was a big disappointment? and challenged the widespread belief among some investors that the chinese battery giant is more immune to changes in raw materials because it has investments and stronger bargaining power. seeing how this company has improved its margins, especially after they announced a battery price increase in march. shery: interesting to hear what they have to say about the drought in citroen, given they

have plants there. we also have jd.com reporting today. charlotte: a positive note, analysts are expecting the company to report revenue growth for the quarter. alibaba reported a revenue decline. the average is 2% for the revenue growth and they expect the company to deliver more results because of its rising market share as well as government support on spendings and the like. they think the company is well-positioned to capture accelerated growth in the second half when covid is away from us. shery: charlotte yang with a look ahead at what to expect today. the trading day starts in china soon and we will be looking ahead to the open with fidelity international, which expects more downside in earnings.

also we discuss the outlook for china's auto sector. that's it from daybreak asia. markets coverage continues as we look ahead to the start of training and hong kong, shanghai, and shenzhen. standby for bloomberg markets: china open. this is bloomberg. ♪

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david: morning from home:. -- good morning from hong kong. let's get to your top stories. equity markets under pressure on fears the fed made not