kathleen: good morning. >> we are counting down to the major market open.

>> welcome to daybreak australia, the top stories this hour. the central bank has a unified message to curb inflation, interest rates will continue to rise for a while. >> was one price stability will require a scripted policy stance for some time. the record caution strongly against premature loosening policies. paul: the bank of korea is keeping the door open for outsized hikes. high u.s. rates may further weaken the won. traders turned to havens. kathleen: breaking news from the bank of korea, and their new governor saying that the policy decision coming up next in the bank of korea has two axles of

interviews, they have to be data-dependent. he does say that higher u.s. rates will spark higher korean inflation. that could be another factor that they are responding to. there is too large of a rate gap between u.s. and korea. it will have to keep up with the fed. air china, the biggest factory of the world is not worried, they are not worried about their current slow down, he thinks that their place in the world is shifting. he did say that what jay powell said it was in line with their expectations, mystery -- he is not surprised. this is what he said. >> inflation rates continue to

be well above 5%. like a chairman powell made clear, the bank of korea. kathleen: dependent, they got to see what goes on there. we will have more from their interview in a few minutes. we are watching for the reverberations from the jackson hole speech. annabelle: we are watching the korean won quite closely. slightly negative correlation between local rate rises and the performance of the currency. it is a good barometer of global risk sentiment and the greenback has been easing slightly or has been easing slightly against some areas. we see a pick up a bit slightly. take a watch on the euro as

well, another great interview with the ecb governing council member and he says that it is action time for policymakers in europe and the week europe is adding to inflation as well. we look at equities in asia and we are at risk off ahead of the asian trading day, new zealand is online, sydney and japan close, the yen's trading weaker here. the dollar is the most obvious way for an increasingly determined fed. paul: s&p 500 futures pointing down although not quite to the degree that we saw on friday. we are seeing the s&p 500 is off by .85%. we are trading off of the highs, then they will change as we get

to curbing supply. kathleen: what speech in jackson hole, wyoming, jerome powell's speech was powerful. it was short, the same length as the gettysburg address. the market heard the message loud and clear. they have to keep raising rates, they are going to move into restrictive territory, it may cause some pain, there was another thing that calls people's ears to pick up. he has spent a lot of time wr iting to make a speech so concise. >> restoring price stability will require maintaining a restrictive policy stance for

some time. the historical records conscious strongly against prematurely loosening policy. kathleen: it is interesting, one thing about jackson hole, the chatter on the sidelines, so many people said that he nailed it come out there among current and former fed officials, it was a success. paul: even as long as you say, if you are among the world's richest people, that is $78 billion worth of wealth which was wiped out for the billionaires. just to give you an idea, elon musk's network declined by $4.5 billion, jeff bezos is down by $6.8 billion. that was a very expensive eight minutes for the world's wealthiest people. the world's bankers declaring

that the price pressures are here to stay and that they require forceful action. let us bring in our editor. we saw some pretty -- what we expect to see across the asia pacific today? >> going into jackson hole, markets had somewhat a dovish message tied that would be tempered but it was the opposite and you saw the u.s. stocks fall quite significantly on friday. that pretty much set the scene for how we will study asia on monday. we heard from jerome powell, the same assertive policy and prematurely losing -- loosening policy. we have the yield curve, playing

with expectations with higher rates, fears of recession. risk off, there are some numbers coming out this week that are going to be obviously very closely watched and especially the u.s. jobs report and the manufacturing survey. all of this data, will be closely watched to see where the fight goes. it is pretty clear that rates are going higher and all of the enthusiasm going into the markets is down from the areas is going to be tempered. this is day by day, we are going to be off to a negative start in asia today. whatever happens among currency pairs is going to be very closely watched, too. the dollar has been down since

friday, a very threatening potential to the euro. the ecb meeting is this week. >> that is right. the pound, euro is doing better but the gains have been erased. this move to havens is going to benefit the dollar. the euro we also have to closely watch. we heard from the ecb that they are very determined to lead those rates and the euro has been one of the worth -- worst-performing this year. that is one to watch. i think it is safe to say that the beneficiary and the flight to safety will be the dollar. kathleen: getting ready for the

trading day in asia, for more on the bank of korea, let us keep the door open for another outside interest rate hike, he said he would join jerome powell in bolstering inflation if prices remain out of control. >> the interest rate cap is not our prime objective. the higher interest rating will have a depreciation pressure in korea and that depreciation will increase inflation rates. i think a large difference in rate difference will not be ideal but we have to allow it to move and we had to focus on our own inflation and exchange and depreciation. >> you said the bank of korea will reach 3% by the end of the year.

how does that look to you now? reasonable or higher? >> i think the market is in line with our expectations. i do not think we need to devise our projections -- revise our projections at this moment. kathleen: will you continue to opt for more gradual hikes or will you consider to do another 50 basis point hike? >> i do not want to pre-comment. our decision has to be established. you mentioned with inflation, we have continued to be well above 5%. i like chairman powell, does bank of korea has prioritized -- the event of korea has prioritized price stability. paul: let us get over to the first word headlines. >> elizabeth warren has taken

aim at the federal reserve saying it will tip the economy into recession. she renewed her criticism, saying that she does not believe raising rates can contain inflation. this is following jerome powell's speech. ecb olli rehn says the bank looks to keep future price growth anchored. consumer prices in the euro zone has been rising at about 10% with a surge in energy costs. policymakers must intervene. >> we have a high inflation, and our mandate is price stability and we will work accordingly. >> they latest quarterly survey

says investors are turning more bearish on china. it is down from 3.9% as as a property market and covid outbreaks persist. the first three quarters of next year have been lowered slightly although the median for the whole remains unchanged at 5.2%. u.s. warships have entered the taiwan strait for the first time since nancy pelosi's visit. the u.s. navy said two ships were conducting a routine transit beyond the territorial sea of taipei, ensuring a free and open indo pacific. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. kathleen: still ahead, we have a jackson hole debrief, and

university of chicago professor following jerome powell's hawkish speech. and look at the trading week ahead with wells fargo who sees no surprises in jerome powell's speech and no pivot on the horizon. this is bloomberg. ♪

>> the focus right now is to bring inflation back down to our 2% goal. >> i think we have to move up, above 4%. probably need to hold that there next year. >> inflation is extremely high, it is unimaginable, 18 months ago. >> we have to get interest rates higher to slow down demand and bring inflation back to our

target. >> we get above 3.4% at year end, we are at 3.4%, we have to that some of this play out. >> it could be over 4%, i do not think that is out of the question. >> by the end of this year i would like to get to the level and sooner is better. kathleen: speaking about the outlook for rate hikes and inflation, they are going up. we look at the week ahead, the latest jobs report after the september policy meeting, healthy payroll data with unemployment holding a 3.5%. in china, pmi's are set to be released. the property slump and power shortages hamper the recovery. we have projected to hit a record and get key gdp data out of south korea and india. paul: china's bank is watching

for the mortgage payment boycott, this comes with some banks inflating their loan volumes as they struggle to meet government demands to pump more credit into the system. that is your week ahead. let us bring in paul christopher, head of the wells fargo investment institute. we saw u.s. equities close out the week as we stand on the cost of a new trading day, would -- which sectors are looking most vulnerable to you? >> they enjoyed themselves in this rally, primarily small caps and a lot of the cyclicals, those are the ones you need to have had, we are going to go back down below 4000 here and in short order. this is where you want to

emphasize quality, from cyclicals into quality. paul: kathleen mentioned a moment ago one thing that all of the fit officials agreed on that there is more tightening to come. how much more tightening do you see coming down? >> we take the fight at their word. the short speech by powell was intended to communicate a point very clearly that was misunderstood at the july meeting. the july meeting gave the impression we would get back to a neutral right, we will let things go, that is not what the fed has been saying. they know that they have to break the back of inflation, rates move up aggressively and will be held there. the pivot is not by the fed, it will be markets that accept the idea that fed will remain aggressive. kathleen: where are the markets

right now? one european central bank i was talking to was explaining how much the s&p 500 fell off during that speech. it is enough price in? is there more that has to be done? >> that is the question for investors. we think the answer is no, not enough has been priced in. we have to squeeze the much more out of this rally that is taking place since june. investors have a chance to lighten up on cyclicals. we like the quality, we would go for information technology for the longer run. energy and health care forecast generators and good cash to debt ratios here. defensive in fixed income and move somebody out of cyclicals. kathleen: where do you think -- is the bottom going to be about how high the fit hikes rates? well it be about how long it

takes for the fed to start cutting rates? the way that they are talking now, they intend to hold them for as much as last year, may longer, it depends on inflation. -- maybe longer, it depends on inflation. >> the bottom will be determined by how much that new understanding of the market in terms of what the fed is going to do, second-quarter earnings, better, a lobar to be short. earnings slow again, focus on quality as earnings slow and the impact on earnings will have to be determined over the course of the next several months as we cut a deal with the solid labor market, good liquidity still in the system. that make cushion -- may cushion the blow. investors have time here to make

those transitions paul: -- those transitions. paul: the situation drags on as inflation stays high? >> the strength of the economy is eroding. the liquidity will go away as the fed continues to raise rates. the fed is going to pull liquidity out of the system and the labor market has some perks along the surface. the economy is starting to show's contracts as well, spending, housing is turning lower, consumers are moving away from brand names and into off brand names, purchasing power, inflation running ahead of wage growth at the fastest clip since 1980. below the surface, quite a lot of damage being done here. kathleen: i know you are

concerned about the economy in europe, maybe even a worse recession there. i spoke to olli rehn who is the central bank governor of finland about the ecb. that is one of the things that made him hesitant about leaning towards a more aggressive rate hike. he is concerned about the growing cost of gas prices and how it is going to hit the economy in the cold winter. >> if the interest colder than expected, those gas supplies that are being accumulated may not actually end up being enough. if europe ends up in precarious position, oil prices are higher and looking at a difficult winter coming, we have been unfavorable on europe and japan for quite some time. we would not be looking to put money back in there anytime soon. a difficult decision for europe. kathleen: thank you for joining

us. you can get a roundup of the stories you need to know in today's addition of daybreak. -- edition of daybreak. get news on the assets and industries that you care about. this is bloomberg. ♪

a quick check of the business flash headlines. business in mainland china is part of a revamp. the top executives are meeting in singapore to discuss plans. the articles -- there are doubts if it is worth expanding the operations. bloomberg has learned another morgan stanley executive is has been placed on leave i made a u.s. investigation into how wall street handles big stock trades. he has part of the block trades, the superior was put on leak five months ago. -- leave five months ago. paul: let us take a look at the day ahead. we are watching all of the earnings, a full year cash

result of one billion australian dollars, that is higher on the year, full year result is also due today. we get a read on july retail sales and expecting to see a .3% rise over previous months according to a bloomberg survey and at head of australia's main business lobby. we will have more on the results with elizabeth at 3:15 p.m. sydney time. this is bloomberg. ♪ pst. girl. you can do better. at least with your big-name wireless carrier. with xfinity mobile you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill over t-mobile, at&t, and verizon. wow. i can do better! yes you can! i can do better, too! now you really can do better! switch to the fastest mobile service - xfinity mobile. now with the best price on two lines of unlimited.

just $30 a line. >> you are watching daybreak

australia. the economy continues to grapple with covid destruction, the bureau of statistics says the july period dropped 3.1% from a

year earlier. retail sales and investment all missing economist estimates. a partial locked of covid-19 infections -- a partial lockdown in beijing after covid-19 infections. they go through mass testing. a northern port city will conduct tests monday. state media divided the cause three -- defended the costly tests. power prices must be addressed with the utmost urgency, an overall result to the market is needed, this comes as the energy crisis a means that germany may shoulder an extra burden of 200 billion euros next year or 5% of gdp. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries.

this is bloomberg. kathleen: as we look ahead of the sort of trade in asia, here are some of the highlights from jerome powell's speech. >> breast one stability will mean maintaining a restrict policy stance for some time. the record cautions against prematurely loosening policy. the open market committee's focus is to bring inflation back down to our 2% goal. price stability is the responsibility of the federal reserve and serves as the bedrock of our economy. without this price stability, the economy does not work for anyone. we will not achieve a sustained period of strong labor market conditions that benefit all. as a burden of high inflation falls on those who are least able to bear them, we are

taking steps to moderate demand so it comes in better alignment with the and keep expectations anchored. we will keep at it until we are confident the job is done. kathleen: let us bring in someone with a uniquely shaped perspective on all of this, randy, a professor of economics and he previously served as a governor at the fed. i am sure you were not there physically, you are missed. you were there in spirit and i am sure you are watching this as closely as everybody else. a lot of people thought he hit first base with this speech, do you think this is a homerun? >> he wanted what he wanted to hit, the markets who did not believe him, there will not be much here, they thought about it

a little bit more and said this guy is serious. we spoke for eight-nine minutes and he had one message, we will keep at it until we are done. kathleen: what did he realize between his the july meeting, his press conference, and jackson hole? >> i think what you heard was a series of speeches by fed officials including some officials like kashkari who has been dovish. a bit more cautious about raising rates. even he said we are raising rates and we are not pivoting anytime soon. i think it was a clear disconnect between the markets and what the meeting result was and what the members believed the meeting result was and they were clear and i think he was super clear and jackson hole.

paul: what is the risk of a tightening? you do not know what it is until you see it. >> as my predecessor of many years of said monetary policy has been long and variable legs. this has been taking the punch bowl away about six months ago and we are starting to see more of an impact in terms of housing markets and -- my guess is we sourcing the over the next six months and so that is why it is more of an art than a science because we do not know exactly when it will have the impacts and what impact it will have. i think the fed is micah j said, bringing rates up around 4% or so.

-- like i think he said, bringing rates up around 4% or so. paul: elizabeth warren is worried this will tip the u.s. into recession. is that a concern that you share? how deeply the recession potentially be? >> there could be a recession. he has said that they will have a low trend growth, this could include a recession. people forget that the fed's mission was to take the punch bowl away when the party got going. they have always revised support , that is what the central banks do. they had to take the punch bowl away. many policymakers have forgotten that is ultimately the move the fed needs to do. if they are in a recession, there is a heightened chance of recession. how deep it will be depends on

the mr. putin and as a geopolitical sphere. kathleen: in terms of how high the rate has to go, it is going so that 4% is kind of middle of the road, a can above 4%, they said it could, do you think they may have to go that high? do you think that jerome powell has the will to lead them that high? >> i think it is clear that they are on a path to get close to 4% by the end of the year unless there are other talks come in or get wildly different prints on inflation over the last few months of the year. they are on track to raise rates a little bit more in the first quarter of next year. how much they have to go, i do not know if that will depend on

inflation. i think jane made it clear that they will leave the fed there and hold the fed there. they will wait until their mission is done. kathleen: a lot of the discussion about -- it is not that hard, it is simple to do quantitative easing. getting around is much more complicated potentially. how will that play out and will it be one of the elements of the fed says we are using this to tighten? >> the fed likes to keep monetary policy focused on interest rates and leave the balance sheet in the background. i think there has been little discussion of the balance sheet since they started the production earlier this year. they are likely to keep it that way unless there is a liquidity crisis, they will gradually come down.

keep monetary policy primarily focused on interest rates. kathleen: thank you so much. it is always great to speak with you. more on my conversation with the bank of korea governor, he says higher interest rates could weaken the won further. decisions on future deals must be data driven. >> we are not targeting results or the interest rate gap. it is not our prime objective. the higher interest rate in the united states as a depreciation pressure and that depreciation will increase our rate. i think there are two large differences. one, the idea, we have to allow it to move and we have to focus

on our own inflation rate, in exchange rate and appreciation. kathleen: you said the bank of korea will reach 3% by the end of the year. how does that look to you now? >> i think that the jerome powell is minding our expectations, i do not think we need to revise our projection at this moment. kathleen: if it stays above 5% this year, will you opt for more gradual height or would you consider doing another 50 basis point hike? >> i do not want to pre-comment, i think it has to be databased. if you mentioned inflation, it continues to be well above 5%, like a chairman powell, the bank of korea should also prioritize

price stability. kathleen: markets want to get ahead of central banks. they will start cutting, market rates in korea have been reflecting expectations that rates could come down in 2023. is there any possibility of that? >> it depends on how persistent inflation will be. inflation remains from 5%, that could be a normalization period. if inflation does go down, we expect inflation will go down to below 3% at the end of last year. if that happens, yes. kathleen: tip exports falling, exports are weekend, is in the any red flags on the economy? >> there is a cyclical element in the chip prices. we are very much concerned about

the destruction of the global chain. especially china, they are advancing their technology, it is becoming our competitor too. as period that we benefit from the -- the period that we benefit from the chinese factories and work is coming to an end. kathleen: that has been a broader trend, right now, china is forecasting a downgrade most of the time, the covid outbreak and the insistence on covid zero, what does that mean for korea? you are a strong, exporting nation. 25% of your trade. >> one of the important detectors for us, you are seeing what happened to the covid policy, after the congress and also we want to see how they

alleviate the slowdowns. paul: that is the bank of korea's governor speaking with kathleen at jackson hole, wyoming. be sure to tune in to bloomberg radio and get in-depth analysis. you had listened by the app, radio plus, or bloombergradio.com. -- you can listen by app, radio plus, or bloombergradio.com. this is bloomberg. ♪

>> the bank defendant governor says they have to keep prices anchor. i spoke with olli rehn at jackson hole. >> the reality is that we have high inflation, globally, also in europe and that is caused by the war in ukraine. and the subsequent energy crisis we are suffering from. that is why our mandate is working accordingly. kathleen: does that mean a step

on the gas? -- does that mean step on the gas? >> it is clearly feeding our target, energy inflation, roughly half. it is springy and do the rest of the economy. it is important that we contain inflation expectations so that we can keep them anchored. the -- in fact we started monetary policy over december and we are continuing consistent and orderly policy. kathleen: where do you stand or sit on 75 basis points on the september meeting? do you see more pressure there or not more pressure but may be to do something?

or at least consider it? >> rates in july by 50 basis points, and next step will be a significant raise in september depending on the incoming data on the economic and deflation. kathleen: the number one thing, maybe it is time to go for 75? >> i think it is important not to jump the gun. in september, we get the next economic projection exercise in front of us as part of the meeting. we will have the latest incoming data in september. we will see, we have high inflation in europe now between then. we have to act now. monetary policy on one hand,

maintaining inflation expectations and anchored and on the other hand, avoiding the push. other reasons that may have that happen not monetary policy. paul: that is the finish central bank governor. let us get some reactions from jackson hole, we are looking at a risk off day ahead for the major market open in asia? annabelle: that is right, we are taking a look at futures, open in japan and australia, new zealand is trading to the downside as well. it is dow's reaction we are getting from jackson hole, the call we got from powell that rates will stay higher for longer to tackle inflation and there are more catalysts for volatility because not only do you have the critical u.s. job data coming up, they're also the

two fed key programs pick up. there are concerns around risk of recession. a lot of australians assigned the bounce we are seeing in the global stocks is going to be tested. we are on another drop on a weekly basis near the levels we last saw during the period. not a lot there for the optimist. kathleen: chinese stocks, what is going on there? economically, how about in terms of equities? annabelle: it has been a diversification play over the last few months. the open today, there are a few positive catalysts. the chefs one province had -- a province had major factories who had power outages, the most manufacturers there. it does other big catalysts with the u.s. and china's agreement

that could mean that chinese companies listed in the u.s. could stay on the american exchanges. we have earnings results from more than half of chinese companies have beat their forecasted earnings. it is he not -- it is not enough, we are seeing our paste headwinds coming through from traders here and what is driving that could also be what traders are doing as well. a bit of an opportunity, we have makers, posted more than 80% jump in profit. the stock was down around 6%. a lot of investors saying that there is not enough reasons to stay here. paul: let us take a look at how the bond markets are reacting. we see bond yields push higher, yields on the 10 year there, creeping up.

we have the three and the 10 here in australia, both looking to test key support levels. the land also creeping up. -- new zealand also creeping up. the rba which we will hear from in next week. this is bloomberg. ♪

kathleen: bitcoin has dropped $20,000 in a concern about the rate hike past, and move in tandem with u.s. stock fall off, su keenan joins us. the wider crypto market, crypto lovers was hoping the bottom was in but it does not look like it. >> that clearly is what is driving the most recent volatility. markets in general did not like what the fed chair had to say, let us drop into the bloomberg, we have been struck around the 20,000 level which help support over the last 8-12 hours, a two day drop of 7.5%. look at the screen, we have dropped back into the 19,000 level. that is for a lot of the technical strategists, the high

19 thousands, support is holding as many of the bitcoin enthusiasts will say. the gyrations have come amid uncertainty about the magnitude of fed rate hikes and there could be a riskier outfit and you have to look at the bigger picture. you have already been through a big retreat in the crypto and they are distorting to find footing once again. 20,000 is the key point, a lot of focus around the next couple of days, bitcoin had a lot of companies, look at the other crypto's, a lot of red on the screen. the second biggest guy was holding steady around 1500, you can see it has dropped below that. it was 1500 in the past 12-18 hours after dropping 13% over the last two days. it has been fluctuating and a lot of focus on ethereum head of

the software upgrade. paul: how do you position for the merge? >> the immerge or software upgrade, the has been a huge discussion -- the merge or the software upgrade, the discussion has been huge. how to play it is the discussion. we saw the recent volatility, our chief market strategist retail investors are getting nervous, look at the chart and see why, we enter another risk off period, they have taken a pretty big beating, some investors are down 70%-80%. they could be taking some chips off of the table. the institutional investors are a little bit more sophisticated about taking advantage of the dip to add. paul: let us get you across some

breaking news on the bloomberg terminal. a pure play on iron or miner in australia, coming in as expected, $6.2 billion, it is down 40% on year. fortescue is putting down a dividend of $1.41. maintaining and shipping guidance. we have no buy rating on that at the moment, we will hear from the ceo a little later on. the interview 3:15 sydney. ♪

- [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music)

>> watching "bloomberg daybreak: asia dear: coming to you live from new york, sydney, and hong kong. haidi: