dani: good morning. this is "bloomberg daybreak: europe." i am dani burger in london and these are the stories that set your agenda. inflation concerns, recession risks, and central-bank policies push global bonds to their first bear market in a generation. jobs. u.s. unemployment claims drop. president biden -- crucial midterm elections. pres. biden: donald trump and the republicans represented extremism that threatens the very foundations of our republic. dani: crunch time. e.u. leaders worn europe -- warn europe. happy friday. you made it to the end of the week and are seeing risk assets attempting to bounce this morning but it is a gloomy outlook, worst week for global equities since june. that is when we saw stocks hit a bottom.

so far, we are seeing a pretty strong session. stoxx 50 futures up 150 percent. perhaps there is some follow-on through that, perhaps it's hopes of the energy crisis getting better as we see some of the gas prices come down but how much of a head fake is that? is it just delaying the problem when it comes to energy in the crisis in europe? s&p and nasdaq futures. we have seen some movement there. the biggest monthly outflow on record so that was especially painful when it comes to tech stocks. the appetite is not quite there. two year yields above 3.5%. global bonds in a bear market for the first time since at least 1990, the first time this generation has seen a bear market from an aggressive fed to a strong dollar and that is the impact on the european economies with the energy crisis as well.

bloomberg dollar hovering around a record that has been punishing the yen. the euro is stronger but we are still below parity at the moment. i mixed crude, a sizable rally after a drop on demand concerns. $88 a barrel. one thing eating into this is some concerns that the nuclear deal with iran will not go through. i teased the yen. juliette saly standing by in singapore with all the market action. juliette: so much currency pain here today. is it going to get even weaker if you have a strong u.s. jobs report? we have negative sentiment across a lot of asian currencies. we have seen the qe hit its lowest level since may 2020. we are seeing a little bit of offside in the -- upside in the offshore yuan.

an eighth day of stronger fix. we had this news that hong kong may ease quarantines. the regional index down by .4%. we are seeing asian stocks and it has been a painful week, the worst week in six weeks when you look at my gtv chart and we are seeing the asian index near the two-year low but there are some bullish calls out there that we could see a better rebound in asia than what you are seeing in other global markets. asia has outperformed for a second year. upside particularly in southeast asia and india, still a little cautious on the china story. dani: thanks very much. juliette saly in singapore. let's get to some of our other top stories and reporters from around the world. we are going to look at the bond bear market. michelle will give us the latest on the u.s. jobs report. russell morgan takes us through

what is happening with credit suisse. stephen engle with an update on the lockdown. now to bonds, where they have slumped in their first bear market in a generation. the index has fallen more than 20% below its 2021 peak, the biggest tumble since its 1990 inspection. paul dobson, our executive editor, joins us from singapore. to what degree is this a correction from what we have seen in years past or is it the start of a secular bond bear market? paul: that is a brilliant question and the only question if you are a fixed income investor. how far can we go from here? all my life, as long as i have been looking at financial markets, yields have been on that steady run lower and lower. central-bank rates have come lower and lower. inflation has been under control. like jack-in-the-box, we are bursting higher. we need to lift rates.

they have been in that lockdown. the question is, can we get back into the trend? all of those reasons that have been keeping rates low for so long. is this the start of a new era? suggesting maybe this is a time when you are going to see a sustained period of higher yields. the ecb tried to get inflation back under control. a more permanent fixture in the markets. we are going to see de-risking in bonds and in credits and a lot more fluctuations in price from here on. dani: along with the drivers impacting the bond market, we have seen them impacting the yen as well. that key cycle -- at what point do we look at the yen and say the boj is going to do more than verbal intervention? this will become damaging for

japan. paul: that is fascinating. no sign yet, really. the rhetoric we are getting from the finance ministry from the japanese government is good. nothing more aggressive than that, nothing like raising the ante for the fx traders. for japan and the rest of the world, no wonder the yen continues as well. look for a better yield basically. the policymakers, the government, all seem reasonably countable so long as it is not a short, sharp move into uncharted territory. we are not changing up on it anytime soon. everybody is listening to that message and prepared to believe it. dani: paul dobson, our executive editor for asian markets. one thing that might exacerbate all these trends is the hotly anticipated u.s. jobs report due

later today. it does have the potential took to the scales towards another jumbo size rate hike. that is after a wave of data appointed to a resilient consumer and high demand. michelle, what are we expecting out of the jobs report today? >> no one we have all been waiting for. what we know the fed wants to see is a moderate cooling down of that job growth. a lot of other indicators showing that tight labor market persisting right now. last month, there was a job game, 200 thousand higher from the highest survey estimate so this month, what we see is there is a higher variation among the estimates. maybe around 300,000 which would be right in that sweet spot that the fed is looking for for the job growth component. unemployment rate looking like it will hold at three point 5%. wage growth doesn't look like it

should change much but closely watched especially in this inflation picture. labor force participation, looking for a pickup by 62.2%. another important indicator that the fed will be watching and finally, just a warning. august is a bit of a screwy months. there's back-to-school seasonal adjustments. beware the big surprise here. on the highside come on the low side, expect the fed's -- fed speakers to push the message again. dani: beware the seasonality. wise words as always. bloomberg's michelle there. according to germany's newspaper, credit suites is weighing cutting 4000 jobs at the same time the lender is overhauling its business after a series of financial scandals. we are joined by a bloomberg asia investing editor russell

ward. what sort of overhaul are we looking at now at credit suisse? >> this is the -- two reports overnight. the potential for thousand job cuts. it would exclude business banking. the other report being from a news outlet referring to potential 3200 job cuts also domestically. how many jobs will be lost to that globally as well? it will affect global operations. thousands of jobs are on the line globally for investment banking and we know the ceo is going to be meeting with senior executives here in asia and the report next week to talk about the future of the business particularly in the region. we know that in china for example, the bank is considering

perhaps scaling back its expansion there. there are a lot of things on the table for credit suisse executives to discuss and it's being looked at very closely among investors. the stock with new record lows. dani: thank you very much for keeping us up-to-date. now to china where their decision to place the mega-city into lockdown has spurred people into panic buying goods as well as trying to rush out of the city center into bigger living spaces as the 21 million residents fear a repeat of the two month lockdown in worst in shanghai earlier this year. stephen engle in hong kong joins us now. beyond the impact, the local impact, what folks might be feeling, what is the wider implication of this lockdown? stephen: we could be talking about the slow down because this is the same area and city that

has been suffering through drought, and then the subsequent power shortages that has disrupted the manufacturing and there's been some shutdowns and ratcheting of power and this also affected of course the supply chain in this part of the world because of the many factories in this province. automakers mike volvo, toyota, and others, volkswagen, and also the tech supply chain is part of the foxconn family. it makes apple products and all have factories there. it is going to have an impact on a sewing economy. the chinese economy has not been able to gain momentum following the shanghai lockdown. shanghai is a bigger city but not that much. it is a top five most populated city in china. 21 million but it's not the commercial center like shanghai so we have to sit back, wait, and see how long this lockdown

goes. shanghai was supposed to be only about eight days and it ended up being two months and we are still feeling the pain from that. dani: thank you so much. stephen engle, our north asia correspondent in hong kong. let's get you set up for the rest of the day and look at some of the key things we will be watching out for. we will keep an eye on the euro area and then brazilian industrial production data. 1:30 p.m., we will have some data from the u.s. including factory orders and nonfarm payrolls. it is jobs friday. speakers will include european commissioners. coming up next, raphael bostic says the u.s. central banks campaign is still not complete. all eyes focusing on the hotly anticipated u.s. jobs report later today. this is bloomberg. ♪

>> i would be comfortable with some weakness in the labor markets. we start to see some job losses. to be honest, we are far from that today. incredibly strong job market. this is not like other situations we have had. >> we won't be able to get the strong conditions unless we get inflation down. >> we have to get our rates up to the level that will put down pressure on inflation. >> the employment costs are likely to increase as high inflation becomes more entrenched. >> it is important that we are clear on our communication about the destination we are headed.

dani: a number of fed officials commenting on the u.s. labor market when they were at jackson hole the other week. it is interesting for the labor market considering we are going to get nonfarm payrolls. there's a lot of weirdness with seasonality but part of the narrative that is arriving is do we need to see cracks in the labor market in order for the fed to say their job fighting inflation is done versus just this idea that we could employment all of that feeds into what we have been seeing in the bond market. we have a 20% decline from the peak of 2021. we finally entered a bear market in the global bond market. i'm looking at the bloomberg aggregate index here and this is the first time we have seen this much of a decline since this index was created. yes, we declined 20%. a lot of this is coming from the u.s. bond market front end of the curve. it is about 3.5%.

the market digests the reality that the fed will continue to hike but it's coming from the european bond market with an energy crisis unfolding. they continue to import inflation with higher energy costs so that is setting higher inflation expectations in the region, beating down bonds. it is toying with the idea of 50 or 75. if it is 75, doesn't mean they are going to increase the rapid nature at which they start to unwind qt? that has been a problem as well. all of this culminating in an ugly bear market but we will debate this question as to whether this is just a correction from the rally in bonds we have seen over the past few decades or if this is the start to a new secular bayer bond market. this is the picture for us. now, we are going to take this to our guest this morning because it is something that is impacting not just the bond market itself but portfolio

managers who have used bonds as a mainstay when it comes to things like risk parity. let's get to the managing director. this might be near impossible to answer at this moment. does this look like the start of a secular bond bear market or is it just a correction from the rally in years prior? >> it is certainly raising a lot of question marks. and about the role of cash. and what is the best relative asset class you today. it has an impact on the entire global bond market. and the entire global asset allocation market. it is very much driven by the sort of murky outlook that central bankers are facing right now in terms of doing the policy that is required and engineering the soft landing which they have been talking about in the last couple of months.

dani: if it is causing problems in terms of your typical strategies, what does that mean going forward if this persists? what sort of about-face regime shift are managers going to be faced with? anneka: ultimately, we have to acknowledge the simple act that we are exiting a market that was all about liquidity, constant liquidity being pumped in. i'm talking about qe but i'm also unfortunately talking about what happened. there are massive amounts of support that came in towards covid so in a norma's amount of liquidity, constant free money, that period is over and we are entering a period. mutual policy rates by central banks could be structurally higher for a certain period of time. during jackson hole, the language with a clear guide that

the pain that markets seem to go through, that is a total mind shift for investors and asset allocators. it relies on certain forces over the last decade which are simply not present and won't be for quite a while. dani: this gets to my surprise at the markets were so surprised by powell talking about that -- by kashkari saying he's comfortable with the markets. the fed wants to tighten financial conditions in part of the input is equity markets. is it too far to say or is it too cute to say that the fed put is now the fed call, that they are purposefully trying to make sure that some of these risk markets decelerate? anneka: it is quite fascinating. it's taken so long to leave markets off the fed put. i'm not sure but if they were, why would that be a negative reaction? to what extent -- the fed is working so hard to restore its

credibility because that has been knocked down by being behind the curb. the biggest risk is the following. the biggest risk is inflation today is a product of what financial conditions were over the last month to two years plus other more current factors. looking at house brought inflation figures are going to respond to the last 75 basis point hike is nonsensical for that reason. yes, powell is putting out the message that rates are going to continue to go up until spot inflation reaches closer to 2%. we have a long way to go for that your point, whether we want to call it the call or the put, it's not about what the stock market is doing. it's about getting back to that goal to restore credibility unless there is serious signals in the labor markets, etc. dani: if you are cautious about

equities, what will it take to you to go in and change your opinion, backtracking, pivoting. is there anything else that would make you more constructive on the equity market? anneka: we are so used to good news -- bad news is good news. now, it's almost the other way around. many pundits are anxiously looking forward to the upcoming jobs report because that means the fed could potentially get less hawkish and that would support markets. for equity markets to do better, we do need to see a pivot in fed policy and that will be -- because of what we mentioned earlier on with credibility. it will take more than a few cracks. real weakness in the economy which is tough for companies and then it becomes about ultradeep security selection. dani: only less than a minute

so, quickly, what are you expecting from today's job figures? how are you positioning around it? anneka: the jobs market is surprising us month after month after month. we are expecting cracks to come through but only the first. dani: great to have you on the program this morning. anneka treon, managing director. coming up, president biden ramps up his attacks on donald trump ahead of midterm elections. his primetime speech, next. this is bloomberg. ♪

dani: welcome back to "bloomberg markets: europe." i'm dani burger in london.

president biden has accused donald trump and so-called maga republicans of assaulting u.s. democracy. biden urged americans to reject any candidate backed by his predecessor in the november midterm. pres. biden: maga republicans have made their choice. they embrace anger. they thrive on chaos. they live not in the light of truth but in the shadow of lies. but together, together, we can choose a different path, a better path. dani: let's get to bruce einhorn on this. what were the main takeaways from what president biden said? bruce: he very specifically referred to donald trump and maga republicans which is striking because for a long time, president biden has tried to avoid talking about former president trump. this time, he talked about the

threat to democracy from that branch of the republican party. he made a point of distinguishing that from what he calls mainstream republicans. he referred to because of violence. he talked about the unwillingness to accept the results of free and fair elections. and he emphasized the threat to democracy that the u.s. now faces. all this comes at a time when the traditional start of the midterm election season, campaign season is upon us. labor day. we are likely going to be hearing more from the president. dani: thank you so much. bruc as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts.

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dani: good morning.

happy friday. this is uber daybreak europe -- bloomberg daybreak: europe. inflation concerns, recession risks, and central-bank policies push to the first bear market in a generation. u.s. unemployment claims drop ahead of a key payroll data set while president biden takes aim at the opposition ahead of crucial e.u. e.u. midterm elections. crunch time. leaders warn europe -- e.u. war in europe they may not have energy supplies this winter. pres. biden: donald trump and the maga republicans represent an extremism that threatens the very foundations of our republic. dani: president biden in an overnight speech commenting ahead of the midterm elections. let's get to some of our other top news with first word news. juliette saly in singapore. we are going to put a hold on

that. we will get back to jewels in just one moment. this top story continues to be one of pain when it comes to the impact of a stronger dollar and aggressive fed an energy crisis in europe. we have seen it slide through 140 per dollar. analysts and traders are betting there is more pain to come. let me show you what benjamin told her clients yesterday. it is becoming the only zero yielding currency with hawkish fed rhetoric. that apparently unwavering dovish comments from kuroda should leave the dollar-yen hostage. let's bring this to the head of fx. is this a case where the yen is hostage and not much will stem its declines? >> good morning. it is quite difficult when it comes to dollar-yen in the sense that analysts have consistently

called it wrong throughout the year because of its sharp volatility and repricing. there are some constructive -- here. it will not move its policy stands. what we do have is potentially a fed with peak hawkish myths. it will decelerate. we know that they want to keep financial conditions tight and the risk environment -- they don't want solutions. as the inflation starts to come down quite aggressively, they will talk about u.s. yields. fundamentally, the yield story is the main player here. it's not necessarily recession risks at the moment. it is not necessarily anything else. dani: i could come back to you and say peak inflation doesn't mean peak fed hawkish and us. what you are describing sounds

like a long-term outlook. what happens in the meantime over the next few months and throughout this year as the fed has made clear -- one data set will not cause them to pivot. >> the idea of what the pivot consists of has changed quite dramatically since the jackson hole symposium. even if the fed drops down, we are talking 3.5% to 4%. that is nowhere near that. they want duration in that policy. that is going to keep risk assets under pressure. in the near term, it keeps the dollar while propped up against risk currencies. in the short-term, yes, we do have -- dani: how much pain? where does ago? --where does it go?

simon: simon: the bank of japan said they were going to step in so you can make the case -- 145 now. really and truly, we don't have too much of an indication but there is this idea that -- it will come in and backstop the currency. dani: when you are looking at what is happening in the yen, this consistent yield differential that weighs on the currency, do you think that has got to be playing in the back of the mind of the boe and the ecb in their desire to ramp up rate hikes to stem some of their declines if they don't see a situation of devaluation like that of japan? simon: 100% and we are looking at things like euro-dollar trading around parity. there is a short-term equilibrium around this level because both sides of the markets -- they are happy to

play around these levels. governing council -- all of a sudden, it pushes back on market expectations. we could be talking at the structural level. headache with regards to inflation imports. it becomes a lot worse. those among the governing council know this and if they can sell the idea of ramping up the pace of rate hikes, all of a sudden, they can start bullying the governing role. dani: this is the thing in terms of importing the inflation, how expensive it is in the impact it had on current accounts. the call is for euro to go to 110 over the 12 month horizon. is that the dollar send the call you are making as to why the euro pushes higher? simon: a lot of this is on the

idea that the dollar has high valuations and we do ask them to start tailing off. not necessarily peak inflation but peak pain for markets. we are going to have to start seeing inflation pretty aggressively get down to those levels. fiscal policy should start to backstop it. we are seeing investment in energy markets in europe just to diversify. we should start to see here, especially the ecb's rate hike cycle as each yield differential is narrow. dani: when it comes to fiscal policy, i'm going to hit back at you. you can blame our market editor for this because her and i were having a lengthy conversation about it. what do you make of this idea

that fiscal spending as it relates to the euro and the european economies are just a band-aid? it just ramps up demand. people will spend on energy and it does not solve the problem which is importing this inflation and lack of supply. simon: and the fiscal policy has to be very fine tuned in that regard. just to make sure it is not necessarily sloping inflation. even though we are constructive on the euro over the 12 month horizon, it is considered long-term value purely based on this because even any investment in the energy sector in europe to diversify the sources of gas and electricity, it does not necessarily -- so fundamentally, that product -- that longer-term growth story is going to take a hit. when it comes back to fiscal policy, we need to see a very

targeted approach. take a look at the u.k. guilt curve, for example. the markets are going to throw a tantrum. dani: looking at what u.k. gilts have done and even sterling, and you look at this divergence, yields move higher. at what point do foreign buyers look at rates in the u.k., look at yield levels, and step back in and perhaps stop that divergence that has been unfolding? simon: i would like to think that the leadership -- it has given some clarity. all of a sudden, they start to see them turning more conservative, more realistic, fiscal spending packages that are necessarily wide sweeping.

that is what markets are pretty much looking for now, looking for some semblance of targeted fiscal policy that will not necessarily blow the budget deficit and is not necessarily going to start raising risk premium. dani: great stuff, great to have you on the program this morning. simon harvey, head of fx analysis. simon was talking about the u.k. story and the big risk around politics. let's get into it. britain will have a new plan minister on monday. they point to a victory for foreign secretary beating her rival, rishi sunak. a very full in tray. joining us now is lizzy burden. what is the issue, the economic challenges that they will face once they enter office? >> this is a worse economic

situation than theresa may inherited post-brexit, worse than david cameron has post financial crisis. you have to go back to the early 1970's. you have to find a decent historical comparison. it could go past 22% next year. you have got this largely driven by the energy shock which could be the new normal. energy bosses warning that more than half of households could be an energy property. they have got bargaining power because of the labor shortage is adding to the inflation but they cannot feel the benefits because the inflation is swallowing wage growth. the boe could hit 4.25% but it will be a nasty shock for anyone who is a borrower use a rock-bottom interest rate and then put it all together and the foundation told us yesterday that it could be the worst squeeze on living standards in a

century and the boe is seeing two years of zero or negative economic growth. dani: we were talking to simon harvey about hesitancy to buy u.k. assets around the political outcome centering around deficit spending. what would that look like? what is her economic outlook? lizzy: she has expressed her preference to tax cuts. these are handouts, as she calls them, although she said she will give some direct support. when it was rishi sunak, he blamed his premature fiscal consolidation for the rising recession risk in the u.k. she said her tax cuts could boost economic growth. sumac said all this -- sunak said all this borrowing could be a crisis for gilts and sterling. look at the pound. since johnson has resigned, it

performed worse than 132 of 150 top currencies. to fund all this, she says she would change the treasury's fiscal rules. she says the treasury and the boe are part of it. her name for the economic orthodoxy. she blames the boe for the inflation crisis and said -- all in all, it's a lot of policies that are not individually called but put them together and you can see markets already. dani: do we have any idea of what that would look like? lizzy: she co-authored a book with him in 2012, promoting deregulation and free markets. it would be the first time there is such alignment on that since david cameron and george osborne's partnership. it might be outside pressures. you can see jacob, the brexit

opportunities minister in the treasury and john redwood, head of the downing street policy unit. the big question really is what will rishi sunak do? will he join the cabinet or will they even have him back? dani: thank you so much. you have a busy weekend and started the week next week. lizzy burden giving us the latest on the u.k. leadership race. let's get to the first word news. she is here this time. juliette saly in singapore. juliette: i am here. a team of u.n. inspectors will remain there until saturday. it is the first time in the iaea's 65 year history that they have crossed an active battlefront in order to carry out an intervention. >> and glad you pointed out that the inspectors are there. we are glad to see that. we hope that they are giving

unfettered access and we look forward to their report about the operational sufficiency of that nuclear power plant because the danger could be so much bigger not just of the people of ukraine but even to the region. juliette: supermarket shelves were empty and anxious motorists sold the homes. 21 million residents were put into a strict lockdown. it is the fourth chinese mega-city to be locked down so far this year as beijing pursues its covid zero policy. officials have given no information on when the lockdown will lift. employers in the u.k. stepped up recruitment in preparation for a rush at christmas. 2.0 million new jobs were advertised, the highest figure for 2022 and the second highest on record. the labor shortages will continue to be a problem for business. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. dani: juliette, thanks so much. juliette saly in singapore. coming up, power problems. the e.u. sees limits to its interventions in the european power market. we will have that story, next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london. an emergency intervention in european power markets may lower prices but it will not protect from spillover effects of an historic energy crunch. while the intervention tools can help to mitigate the effect of the crisis, they will not bring energy levels back to precrisis levels or remove the significant

effects of the crisis on both inflation and the european economy as a whole. let's bring in our asia energy editor on this. does the e.u. see any short-term solutions when it comes to the energy crunch? >> this intervention will lower prices but the executive arm has issued this morning, the e.u.'s executive arm, saying do not expect a huge impact, do not expect prices are going to go down to precrisis levels. what they are doing is working on ways to limit demand as well as price caps on renewable, nuclear, coal, but not gas. we are seeing some impact on prices but the e.u., i want to stress that it's a partial solution at best i guess. dani: we have europe building up their storage of gas and of course we have germany fearing

that nord stream gets cut off. at the same time, prime minister boris johnson, of course, outgoing, is announcing the u.k. is investing in a nuclear plant. this into what he said. >> -- listen to what he said. >> that is why we are putting 700 billion pounds into the deal, just part of the 1.7 billion pounds of government funding available for developing a large-scale nuclear project in this parliament. in the course of the next few weeks, i am absolutely confident that it will get over the line. dani: a lot of these short-term measures which you were just talking about have been described as a band-aid affect pushing out the problem further on. how precarious is europe's energy market, especially in terms of trying to secure future energy supplies? >> it's obviously very precarious right now. we have had the nord stream pipeline down for maintenance

since wednesday and that should start coming back on saturday. the germans are concerned that the russians will again go into maintenance in mid-october so they have now got anything to worry about. it is a massive project but it will not be operational until 2035. nevertheless, this is the first sort of major u.k. investment in its power sector since the ukraine invasion and i guess it symbolizes that this stock is now really top of mind for policymakers. dani: i want to quickly get in because we are almost out of time. we have markets responding it seems to the ongoing iran nuclear talks. what is the latest? andrew: the latest is the u.s. has described iran's response to the e.u. proposal is not constructive so that has dampened speculation that we could get a deal soon which

would potentially unlock a lot of oil so that his countrymen into a bit of strength in oil prices today. dani: ok. andrew, thank you very much. that is andrew janes. coming up on the program, stocks and chipmakers tumble as the minister restricts export of high-tech semiconductors to china. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london. it is friday. let's get you geared up for it. 10:00 a.m. u.k. time, we will -- and that will be followed at 1:00 p.m. for brazilian production data. it is the all-important nonfarm payrolls from the u.s. and factories data from the region. later, it is a form and italy

that will continue on. speakers include ministers. the u.s. effort to restrict the export of high-tech ships to china has sparked a selloff with fears the semiconductor industry could be cut off from its biggest market. for more, we are joined by charlotte yang in hong kong. what is the latest? we have this pretty deep selloff yesterday. talk us through the drivers. charlotte: the heavyweights have been on a selling spree since the report about washington stepping up efforts to restrain artificial intelligence to china and this is really hurting sentiment. we have those warnings that these new -- could cost the company about $400 million just this quarter alone and if you think about this year, the semiconductor sector is struggling with weakening demand

from the lower end of electronics, consumers, and then we have the high inflation environment and a clear sign of the u.s. stepping up a technology boycott to u.s. companies. china is not helping. dani:dani: not all semiconductors are created equally. what is behind it? charlotte: the chinese semiconductor shares are telling a different story today. a lot of them are having a -- when the broader china market is actually down. especially with the ai chipmaker. it's already entering the overbought zone. we have seen this before whenever they reported about the u.s. stepping up, investors would buy into some of the homegrown producers so the logic is that given the pressures of

the u.s., the homegrown producers will be able to take away some of the market shares. even though the technology is not there yet. dani: that is charlotte yang in hong kong. as we close out the hour, it is a better picture for risk assets so far this morning. they are on track for the worst week since june. some of the gains in the yields with a -- taking a breather. we entered a global bond bear market for the first time in a decade so things look calm but we are looking at a yen above 140 and looking at oil searching as well with iran nuclear talks ongoing. this is bloomberg. ♪

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dani: morning and welcome