♪ >> good morning.

welcome to "daybreak: australia." >> we are counting down to asia's major market open. >> good evening from new york. now, the top stories. traders recalibrate expectations. neel kashkari says investors realize the central bank is serious about tackling inflation. >> the e.u. plans emergency measures to ease inflation concerns. >> shares of the chinese e-commerce giant soar after a signal in consumer rebound demand. futures have just turned positive. the second day in a row at the close the s&p and nasdaq both closed lower fractionally. that started friday after jay powell made his speech. it carried over into the asian

trade last night. now we are finding there is still a lot of negativity although in the last 36 hours. j.p. morgan chase saying he has one foot on inflation and one on the banana peel. a note of caution. turning to the bond market, the selloff and treasuries -- and treasuries took the 2-year note up to a high of 3.8%. we were at 3.4% last night. traders are starting to price in recession risks. we have the dollar climbing another .5%. oil futures up to $97 a barrel. violence in libya could increase

the european energy crunch. all these markets studying but we have hours to go. annabelle: that is right. the question is whether we will see reaction to jay powell's speech at jackson hole. this morning in asia, we have futures coming online looking like this. new zealand fractionally higher at the start. goldman sachs says the tightening pain is the dollar's gain. the aussie trading like this. the yen approaching the key level. let's look at the magnitude of the moves. you can see the volatility index . bitcoin sticking around the key 20,000 level. investors unwilling to take any big risks. also keeping an eye on the offshore yuan. the pboc has signaled it is not happy with what is going on in the currency with recent depreciation.

it really does contrast to the more jubilant reactions we are getting from a fed official to the market moves. kathleen: neel kashkari, president of minneapolis, is now saying he is happy to see the stock market route after jay powell's hawkish. speech. . he said they will not quit the inflation fight until the job is done. neel said i was happy to see the stock market rallying because i know how committed they are to getting inflation down. i think the markets are misunderstanding. you think? it is not surprising to me neel kashkari is saying he is happy. it also shows they have been trying to get a strong message across. this is not an accident. this is what they want the markets to hear clearly. haidi: is he liking the markets

are starting to reel from a reality check? he will might like we will see tightening. some looking to offload treasury yields. look at the chart. typically when the tightening happens and the fed pulls liquidity, stocks will struggle. this is part of the broader plan to reduce the chilean dollar portfolio. -- the trillion dollar portfolio. the t-bills will be used as coupons below the monthly level. september will be the first month the coupons will fall below the new monetary authority cap. kathleen: a lot going on.

let's bring in senior vice president at wealth enhancement group. great to have you with us after the hawkish speech. i know you have a conservative view as to how you look at your portfolio and how to position with the uncertainty. did jay powell's speech change your outlook and strategy at all? >> no. we actually never bought into the trending narrative over the six weeks prior that we were at the forefront of fed engineering in the easing cycle. we remained vigilant in our belief that there was no end in sight to the inflationary environment we were living in and will likely continue to live in. we don't believe the fed has hit its own markers on the fight against inflation. we anticipate a tight fed through the end of the year and into the new year. this notion that wall street already started to price in

easing toward the back half of 2023 seemed a little shortsighted of something coming to an end to soon. peak inflation, we hopefully have hit it. but bringing the american consumer back, we probably have a ways to go. haidi: if prices are rising, he would say this is great for companies and profits and revenues. when the fed is determined to get rates up high enough for inflation to come down sustainably, what does that mean for where i could make money? >> i think we look back to the late 1990's and early 2000's and anticipate a choppy broad

market with lingering inflation. we are looking for areas of dislocation and adoption. you will continue to hear a lot about investment in the cloud in companies that have mission-critical platforms. i think you will hear a lot about investing back into dividends, paying value stocks, under the guise that it will remain choppy to flat until there is the fed engineering of a reversal, the easing back to a neutral market that pulls higher short-term. haidi: we have seen big tech extending another rebound after we saw significant gains across tech. do you see a return to tech leadership? >> it is hard not to in some capacity. just looking at free cash flow

liquidity and balance sheets, and also the wide reaching enterprise owned and operated in mega tech names. we do believe technology has a place. as we saw with the early onset of covid, choppy waters and the notion it is hard to find pockets of growth and opportunity may play well into the safe haven narrative of negative cap tech. i think the notion of rounding out the weighting of the s&p 500 towards technology companies, being duration sensitive, will play well for consumers who are focusing more on equal weighting yourself versus predominance of technology. haidi: between the iran nuclear talks and the worsening crisis in europe over energy, it does

not look like we will hit a peak for oil anytime soon. does that inform your view when it comes to positions in energy stocks at the moment? >> i have been asked frequently how we feel about the energy sector as a whole and if we are going to pull back due to the cyclical nature of it. in terms of energy trading in the u.s., we see growth on the investment in energy sector so we believe there is still an opportunity for investment with the three-year five-year time horizon. i'm seeing value in investing in energy enterprise. specifically the pipeline infrastructure around oil and natural gas where we have not seen that investment by energy companies onshore in a long time. annabelle: david said he advises people to steer clear of big cap

tech. and to move to value. do you share any part of that view? >> the phasing in and out of growth versus value over the last three years has been a strong line for positioning. i will say from our perspective, for any investor holding the long position of the s&p 500 in any part of their portfolio, the best way we think to round that out or complement it is through the value sectors. yes, we do believe in the strong momentum value trend going into the end-of-the-year. very similar positioning to the end of the year last year. i do believe technology will continue to be painful for investors in terms of

sensitivity to the interest-rate environment. the short-term outlook, the fed is going to stay aggressive fighting inflation before switching over to more of a growth narrative. we do start to worry about going into a profits recession and then seeing that trickle through affect unemployment. all of that plays into pockets we are looking at for programmatic investing now through the onset of q4. haidi: always great to chat with you, nicole webb. let's get over to vonnie quinn with the headlines. vonnie: optimism about china falls to a new record low. the results suggest china's covid-zero policy has caused more than half of companies to cancel investments. 51% expressed optimism about the

five-year business outlook. it is also seen as a major challenge. they overhaul visa rules to attract workers. from january, foreigners earning more than $21,000 a month can get a five-year work pass. the government says it wants to submit his position as a global talent hub. pakistan has secured a bailout from the international monetary fund as deadly flooding threatened the nation's economy. pakistan can withdraw about $1.6 billion. the funds will be key to stabilizing the economy after surging energy costs and inflation. flooding in pakistan has killed at least 6000 people since june and caused more than $10 billion in damage. the company have been hit with the highest rainfall in 30 years.

an estimated 30 million people have been affected. for the first time, the navy has been deployed to help. the government says it is eight catastrophe -- a catastrophe. global news 24 hours a day. i am vonnie quinn. this is bloomberg. haidi: the austrian chamber of commerce called for reform on migration as we count down to the jobs and skills summit this week. the e.u. prepares to intervene in the energy markets. we get more on the plans of decoupling gas and electricity prices. this is bloomberg. ♪

>> the european union is preparing emergency action to take controllable interesting prices that have soared nearly tenfold in a year. can they break the link between electricity and gas? >> that is what they hope to do. the e.u. commission president said it is an urgent issue and has to come up with an instrument that decouples gas from electricity.

that is something they are going to do in the next couple of days or weeks. drop into the bloomberg annual see the urgency involved. high gas prices have card power prices to increase tenfold and increased the burden on businesses and households still recovering from the pandemic. the e.u. feels compelled to intervene and halt the price rise which they see being driven by nervousness in the market and speculation. how they will do that is not clear. the instrument will come in days and weeks. as the week kicks off, let's look at the one-week natural gas price for european nations. it plunged the most since march after the gas storage filling up faster than planned. futures fell 21% partly reversing last week's jump of almost 40%. you look at the big picture and

we can see the soaring price. the e.u. appeared to be considering the option of capping gas prices if they limit or cut off the flow of gas. that is a concern. there's a meeting at the end of the month that has a knighted more fears. -- ignited more fears. that has put pressure on e.u. leaders to do something quickly. haidi: oil prices rebounding. we are still poised for a drop in crude. what are the dynamics we are dealing with? >> immediate dynamics are there are clashes in libya that threatened to cut off supply at a time when opec meets september 5 and may cut monthly outputs for the first time in a while. there is a concern about tightness in supply.

that is why you see brent crude higher. new york crude rose, west texas intermediate rose to the highest since july in the latest session. pulling back a little in asia trading but still holding close to $97. what is also going on is traders are watching to see any signs of violence that could halt shipments at a time when europe's energy crisis is worsening. ran negotiations could drag on until september. that is undercutting the idea that libyan oil back is imminent. supplies are likely to remain tight. crude is on track for the third straight monthly drop. goldman sachs is saying use the pullback to buy into commodities longer-term. they are saying don't worry

about recession for now. they don't see any major recession outside of european nations. there is an energy conference in norway. elon musk among others said the oil needs more oil and gas right now, stating the obvious, but saying we need more supply while also pushing to get more renewable supplies on the market as well. haidi: su keenan with the energy wrap. you can find more stories to get your day going on the bloomberg. you can also customize settings so you get the news on the industries and assets that matter to you. this is bloomberg. ♪

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haidi: let's look at the day ahead for australia and new zealand.

they say they will implement tax cuts legislated by the previous government despite costing billions in revenue. we will be getting billing approvals for july. the group says your risks falling behind -- europe risks falling behind the u.s. on building the green industry. the company says despite a 40% drop in profit, demand from china remains strong. he told us despite that, they are staying focused on controlling costs. >> for the year we just reported, the average price over the year was about $140 a ton. we realized 72% of that. it was $100 a ton margin for us. we stay focused on the things we can control.

we generate strong margins throughout those cycles. we do continue to see strong demand for our products. we have been shipping to customers in china for a long time and we are very close to our customers. we do continue to see strong demand for the products. roughly what is at chinese ports is 7% for must pray we continue to see strong demand. >> when you get the stimulus program the chinese are enacting , one trillion yuan in stimulus, is that the kind of qualitative impulse you want to see? will that shift demand for companies like fortescue? >> we see the stimulus measures

tend to be investment in infrastructure. one way to stimulate the economy is to invest in infrastructure. that drives demand for steel which drives demand for iron ore. we have seen over the years that the government in china had a number of levers available to stimulate the economy. one of the beneficiaries tends to be steel and iron ore. there is strong demand for iron ore. it has come off from record highs. we think china will probably produce about one billion tons this calendar year which is consistent with the previous year. given there has not been significant news for the market, that is a balanced proposition. >> do we get to a scenario where we get back close to the highs for iron ore that we saw last year? >> i never like to predict the

iron ore price. the last several years have demonstrated how difficult it is to predict. obviously, supply is a key factor as well as demand. we are seeing a strong environment from the results reported. iron ore is generating cp3 dollars per ton -- 63,000 -- $63 per ton. >> for the first time, a clear succession plan for india's largest company. he will outline the businesses each of his three children will oversee. he is seeking to prevent the battle he was involved and when his father died without a will. they sold more cars in the first

seven months of this year than in 2021 and 2020 combined. the chinese giant closed up 15% after beating estimates for revenue and profit. revenue of five point $4 billion in the second quarter was up 36% from a year earlier. attributed strong results to the shopping festival. keep it right here. we will watch the markets and at news from australia. plenty more to come on "daybreak: australia." this is bloomberg. ♪

>> you are washing daybreak australia.

the european union is ready to step into its energy market. dampen soaring power costs but eventually it basic to break the -- 62 break the energy prices. >> we are going to have to reform the electricity market, the electricity market, many of you know that there are different sources of energy. gas dominates the market. that has been the case for a long time. with these high gas prices, we have to cut. >> documents cast doubt on records. authorities say materials may pertain to information about trump.

the latest moonwalk -- the of the latest -- to send the first woman and it has woman of color to the moon in 2025. >> it is not going to fly until it is ready. and are millions of components of this rocket and its systems. needless to say, the complexity is daunting. we bring it all into the focus of a countdown. 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. haidi: the u.k. chancellor is in the u.s. to meet janet yellen

and make officials to discuss enjoy solutions to the cost of living prices. he told bloomberg television at new measures are coming. helping homes and businesses scope with soaring energy bills. >> gas as a way of getting back at us, germany and the rest of europe the gas supply -- europe the gas supply and that is something that is weaponized. we have to remain resilient. the ukrainian people are facing a really tough time. illegal invasion of their country. we have to make sure that back home in the u.k., people have the help that they need. we have 37,000,000,000 pounds we

put to work to help people, everybody gets 400 pounds off of their energy bill from october through december. that effectively solved the increase that is coming through the price cap. we know that we need to do more, by december and january and into next year, this bill will probably go up further. i am preparing options for the new, incoming prime minister to do even more. actually, what we ought to do is work together to make sure that the markets remain functioning and stable. we have to make sure that we coordinate with our allies including the united states of america. i am here to see senator yellen but also new york's banks.

we have not had a chance to be in new york for a couple of years now, introducing financial services bill into parliament which takes advantage of opportunities. the economy is resilient. if you look at where we are, unemployment is at a record low. about 70% of people have a fixed mortgage. >> are you worried about the housing market? >> yes. we see gas prices increase by 13 fold. >> we are looking at 2000 pounds in general average for energy bills going up. 3.5 thousand. that is a hard amount of increase. this is still a consumer that is

incredibly painful. the electricity prices and prices in germany, how frustrated are you that you cannot enact anything now because you are in an interim stage? >> onewest you say where we -- one is where you can say where are we? we are midway through the hundred pounds for every household. -- 400 pounds for every household. that will come through if you are a pensioner, you get 300 pounds, if you are disabled you get more pounds. there is more to come for the parcels who have no cushion at all. the moment i walked in, we know putin is going to continue to use this. we have to withstand this and send a message back to mr. putin that this is not going to work.

we have to look at every option. what more we need to do come december and january and into next year. we are working on all of the options. nothing is off of the table. >> let us take a look at the cost of living crisis. the bank of america solving europe's energy crisis. what are the details? annabelle: basically, it is not good, really. the bank of america saying that the eu energy crisis has no end in sight. they are focusing on the level of demand destruction. a 10% drop on the year to date. in terms of energy demand from industrials, commercial, households, that is really not enough. what is interesting is they are being quite mesh pinpointing

subsidies as a big issue here because that is not leading enough to demand being vanquished. it is a banking balance. not only do governments need to do more, they need to do face -- phases where they continue to -- if they raise bills too much, that causes unrest. inadequate action can exacerbate the economic crisis as well. haidi: elon musk has a solution in mind. annabelle: he was speaking at a conference with the ukrainian president and with the iea director, he made a case to stick with traditional fuels while the energy crisis is out of control because we do have pressure restricting supply. what is going on with the bridge of nuclear power plant's, they

will take a few more weeks to get back online. take a listen to what he had to say. >> i think we need more oil and gas, not less. simultaneously, moving as fast as we can to a sustainable energy economy. annabelle: having a look at where oil prices are going, we have seen wti and brent crude spy gate to multiweek highs with concern around supply in the market. we see production outages in libya. brent crude still starting, we get to the trade in 90 minutes. it is looking a little flat. paul: we can -- kathleen: we can see what happens next. the company handled delete beat expectations, for more on

chinese openings let us bring in stephen engle. these results? >> the stock absolutely surging as much as 25%, high-volume in new york on this result we are seeing far better than expected. we are getting the adr is up 15% by the close. this is up 44% over the last six sessions, revenue surges 36% year-over-year. net income is more than tripled from a year ago. essentially, this is good news for those who watch the consumer space, in july, those retail sales really dropped below estimates. essentially the company is saying that they see every -- they see a recovery. you have to keep in mind that is a june shopping festival. all indications of the chinese

economy is that the economy surged in june because of the pent-up demand following the shanghai lockdowns. the numbers, the broader numbers all fell below expectations in july. that is technically our third quarter. we need to look for to see whether this momentum was carried over from there will carry over from june. keep in mind, pbb will enter the north american market and will be its first cross-border venture. there is a lot at stake for this company. they are raising pbb to a buy rating with a price target of 93, a 41% upside premium due today's close. it was also up 44%. this is a good picture for the technology space. i need to move over to the technology space and is exposure to property.

act bank without after the markets are closed, number three bank by assets in china. it posted a small gain in the income but in faces 1.2 3 billion yuan in overdue loans from the mortgage boycotts on unfinished projects. that has doubled its previous estimates. anti-o is nearly 4%. 3.97%. the overall ratio is 1.41%. that is double or more than double in the real estate sector. you see the company like ag bank which has a lot of mortgages on his books, it is exposed to the sector was. haidi: what is on cap today? -- tap today? >> the bank of china will

probably see a similar story that we just got from ag bank. i want to stick to the tech space. you have to pick and choose which of these companies you believe is going to power through the environment and through the consumer slump. although there was a recovery in the consumer, we are watching baidu for today. the first negative sales growth in a couple of years. the covid zero restrictions. there will be a pickup scene in the june month because of the pent-up demand. can they carry that forward into the third and fourth quarter? credit suisse has trimmed its 2022 expectations for baidu. you have to pick your own technology stocks if you believe the recovery is on its way. as a food delivery giant was out yesterday, it had a good set of

numbers, better-than-expected second quarter. they raised their price targets and the expect for the company to continue recovery in the second half. haidi: we get a closer look into australia's labor market ahead of a major jobs summit. we find out what they think will increase salaries. this is bloomberg. ♪

haidi: australia is holding restaurants and skills summit, argus will be the big. he will be representing the interests of 400,000 members. we have the ceo at the australian chamber of commerce and industry. what is the priority going into the summit? one needs to be addressed for the labor market -- what needs to be addressed in the labor market? >> some shorter-term pressures and i think there are some longer-term priorities in the short term, the issue is the skills shortages we face. we are at or beyond full employment. we need solutions and

quickly. we need to get productivity going again. haidi: we have seen a suggestion to raise the salary floor. singapore launching a visa for basically anyone who is earning above 35,000 singapore a month. i do think the lower is going to be a better and what does that mean for migration? >> what it illustrates is that australia like many countries are in an intense competition for skilled labor. we are seeing the same thing in canada, the u.k., very strong, trying to get people in who do not know that they have skills and singapore is doing the same. you have to reduce the red tape and make it much easier for business to access those skilled migrants and give them a pathway to get here. encourage them to come to australia. otherwise, that is not going to happen. haidi: do we need to have more

enticing policies? >> we need to make it much more attractive, we are in an intense global competition for talent. that is the only way we are going to maintain our position. kathleen: this makes so much a sense, who are you trying to convince? >> we are hearing from all sides that they understand the problems. the government is on board with this. i think the question is what are the rules of that go with it? we should make things easier, i think the concern we have when we talk to the movement is they want to put more conditions on and i think that would be the wrong step. kathleen: the rba reserve bank of australia, watching wages in australia so carefully. how much are they going to rise?

how much they push the rba into rate hikes. 160,000 associations, what are you hearing and seeing? >> i think there is undoubtedly -- wages in australia have been operating in a low inflation, low productivity environment. we are saying inflation pushing up above 6% now. we does remain quite modest between 2%-3%. it is going to increase with the market pressure. we cannot afford to chase after the inflation numbers we are seeing at the moment. that would be a mistake. what we have to do if we have higher wages, we have to really invigorate productivity growth in australia. we have to make enterprise bargaining work again. haidi: the government has a responsibility, businesses have a responsibility to make their

own investments. they let go of their workers but as we have seen across aviation? >> at the moment, australia labor market -- at the australian labor market is at a full employment. there is an intense competition from labor. we have a strong demand in the economy. i do not think we are in a position where we face the problem of letting people go. i think we are in the opposite situation. haidi: the short-term decision that was made during the pandemic. >> i think the amazing thing is we have come through the pandemic and we have not incurred about damage that happened in past crises. we had to take advantage of that now and that means we have to focus on the supply side of the economy. that is where the focus of policy has to be. haidi: what is the biggest

challenge? is it rising rates? rising costs? >> costs, energy, access to reliable, secure, sustainable, affordable energy supply. we have seen some real difficulties with that. electricity and gas, i think getting the investment in place is a long-term challenge. make sure that our infrastructure is productive at port. that fades into a longer-term narrative if we are going to get or maintain and increase the australian economy in the next few years. haidi: we appreciate you coming on. you can also tune in to bloomberg radio to hear more from those big newsmakers of the day, daybreak team is broadcasting live from our studio in hong kong. you can listen in via the app, or bloombergradio.com. morehead.

this is bloomberg. ♪

haidi: some pretty impressive numbers coming out, we are watching the numbers to see if they are a record high but they are looking pretty good. profit at $8.2 billion,

operating revenue almost on par with expectations from analysts. there is seeing an interim publisher of a dollar and nine cents. net income at 1.6 billion dollars. those issuers have rocketed over the past day. we have seen this continued noble energy shortage, boosting commodity prices globally and in comparison we are seeing a downside of the broader markets here in australia. in asia in particular we have seen tight energy supply russian volumes, we expect to see that risen during the period as well. we have a wide range of estimates for the first half because this is the first time with the merger with the petroleum assets. they are looking like pretty good numbers. kathleen: the agricultural bank

of china is seeing a boycott on unfinished property projects. does overdue loans are linked to more than 1100 projects. security has been subpoenaed by lawyers by the social media 54 and elon musk after a whistleblower complaint to twitter about privacy issues and defenses against hackers. it is time for the u.s. open. it has started. serena williams is going to be there and even though at 841 she is on the verge of retirement, the top ticket is running out of the door, even $10,000 to get the special box where they give you your popcorn and your beer, whatever you want as you sit there. serena is still a great athlete, a person who has done so much. she is a mother, a happy wife

and a business woman and she is still on the court. haidi: what is quite interesting about this is this extraordinary demand, monetary spending has remained resilient in the u.s., despite rising interest rates and tightening among lower income consumers. we talk about the inequality of how inflation hits. i guess it is another way of looking at it. you think about serena williams and how she is writing herself for after tennis and she has sites -- readying herself for after tennis. bloomberg asia is next. ♪