♪ welcome to daybreak: asia counting down to asia's major market open. paul: stocks are set to extend

gains after u.s. equities had their best day in almost one month. asian currencies remain in focus after big drops against the dollar. fed officials repeat commitments to fighting inflation. vice chair lael brainard says rates will have to rise to prescriptive levels. apple unveils the latest devices including the iphone 14 and an ultra apple watch. and skips raising prices. shery: apple gaining about 1% in the new york session for that lineup of audits. over all the same has been the text selloff that continues. apple is still down about 12% year to date. u.s. futures really muted after the opening. lacking clear direction after 95% of companies on the s&p 500 moving higher with the nasdaq 100 outperforming. after what happened with apple. pressure on oil prices across the market as well, perhaps more expectations of a less hawkish fed. the 10 year yield, treasury

yields across the board, stalling today for multiyear highs. oil prices in the new york session down below $85 per barrel. in the asian session below $82 per barrel. we have not seen these sort of levels since january or earlier this year. we have -- we might see more pressure on oil prices because we crossed a key level with the 50 day moving average below the 200 day moving average. we may not see such a hawkish fed. today it emphasized the need to bring prices again to rein in inflation. paul: we saw selling across asian equities wednesday. today, futures for the afx market higher by .4%. the nasdaq is one of the worst-performing in the region

yesterday. not a huge amount of change for the aussie 10 year. some gains in their following stronger risk on sentiment, up about .4%. let's look at the yen. the fund resumes. the yen came within touching distance of 145 against the greenback yesterday. it's on the rise again now despite possibly intervention coming down the pipe razz again continues to weaken. shery: rhetoric from the federal reserve. that bring in global economics and policy editor kathleen hays,andreea papuc and su keenan. we are ahead of the blackout before the policy meetings in two weeks. what will we hear? kathleen: they are on their way to another rate hike.

the only question is, how big? let's listen to what vice chair lael brainard said today. >> we are in this for as long as it takes to get inflation down. we have expeditiously raised policy rates to the peak of the previous cycle and the policy rate will need to rise further. shery: 75 basis point rate can't get much more expeditious than that. brainerd saying that the risk of such -- of tightening and i versus the risk of tightening too much but for now they have to get more restrictive. from the cleveland fed, yes, rates have to go higher. she says probably 4% next year. the anecdotal survey of the economy from the 12 districts put out a couple weeks before the meeting said, well, retail spending is strong. the labor market is tight. down the road, some slowing in

the economy is ahead. for now, the message is clear. the jumbo rate hike, 75 basis points, is still on the table. susan collins, the fed president of boston, is undecided on the size of a hike. she is watching the cpi data next week before she makes up her mind. michael barr, the new said advised chart of supervision since they are focused on defeating inflation. he is uncertain about the size of the hike, but there is no uncertainty about direction. paul: for sure, more hawkish rhetoric from the fed. andreea, u.s. equities are rising. what happened to not fighting the fed? andreea: that is right, paul. i think the best we can say is there was a reprieve after the declines we have seen in recent days. you also had a pullback in bond

yields that may have helped. you had a drop in oil. i guess to some extend that lessened concerns about inflation. one other thing that got earlier mentioned. the risk of cash sitting on the sidelines. investors are looking at opportunities to pick the bottom and deploy some cash. but in terms of bottom, it's probably way too early to say that. we will see bounces off of the decline, but the recession story is becoming more entrenched every day. as kathleen mentioned, rates are going up. yes, there is discussion about how much, but they are definitely going up. overpayment is therefore investors. it was no surprise after a few days of decline, we will see some investors coming in to try

to pick some bargains. it is still very uncertain going forward. shery: let's delve into the oil plunge. we could see even more downside pressure to come. su: you mentioned gas at the top of the show. that is a very bearish pattern. a 50 day moving average below the 200 day moving average. this tends to signal a halting of upward momentum and possibly a dramatic downturn. west texas intermediate is a major drop in the latest u.s. session. 6%, closed below 82. falling below 85. we have not seen that since the start of the year. debt has not really showed up since 2020. brent crude also saw a dramatic selloff in london, down at 88.

the energy turnaround, it's difficult to place any bets now. if you are trading energy. because of the lack of liquidity and the limited range seeing oil in a pullout, the risk reward is not there. if you lay out the pressures on energy, let's count them. growing fears from the china zero covid policy, lower demand, a surging dollar, bearish in general for commodities. the u.s. government cutting its annual oil production targets for the third month in ebro -- in a row adding to the wall of worry. we have seen oil prices getting the gains after russia invaded ukraine. then there is concern we could go lower from here. bloomberg, the u.s. energy crisis in california is being caused by extreme heat causing a

surge in electricity usage and a surge in electricity prices. california narrowly avoided rolling blackouts. residents there remain on alert. it is a real possibility. paul: how are we setting up for trading in asia today? andreea: we will probably see a little bit of a positive open. whether that stays throughout the day remains to be seen. one of the things to watch is billion. -- the yen, on track for its worst year on record. we have seen comments from japanese officials that they have fallen flat to the 145 level. that is a key thing to watch.

a positive open. but there are questions about where we end up. paul: back to the point on energy. what is the latest situation in the eu? su: eu officials will meet in brussels to discuss intervening in the energy crisis. will this provide liquidity? marginal requirements and capital have to be put up so they can even breathe. they want to keep prices from surging and put it cap on energy demand. they want to bring that down but when -- 10%. -- by 10%. they will try to clawback excess profits by power and oil companies and they are consider capping prices for russia for import gas, but that could raise the stakes of greater conflict with russia. v let's talk about the nord

stream pipeline, the crux of the conflict, a pipeline that is this huge gateway of russian gas to europe. it has been in a maintenance phase now. it is raising concern that putin may extend the outage to a complete shut off. you have the nato security general accusing vladimir putin of energy blackmail for the european country and concerned that this could lead to civil unrest this winter. gas prices in europe will remain elevated for a while, no matter what european nations do. they can only provide so much liquefied natural gas. you cannot do that overnight. europe could be faced with this issue and to mid or late in the decade until they are able to replace russian gas supply. look at the stranglehold russia has put on europe. it's really dramatically reduced

the exports to europe. that as a result has caused energy prices to surge. natural gas has surged tenfold in the last year. shery: we are very focused on monetary policy in the region. kathleen, for the ecb, 55 -- 50 or 75 basis points? kathleen: when you have energy prices increasing like that, it's got to be the big concern. that is what has changed since jackson hole for the european central bank. traders and many economists were signaling they were very open to a 75 basis point rate hike but now they have the threat of a session, governments having to dole out billions of dollars just to help their citizens pay energy bills. traders still see about a 68% chance of a 75 basis point hike. it had been as high as 80%. the central bank governor of mafia saying entrenched -- a lot

for you saying entrenched recession could impact rate hikes. talk about jumble -- jumbo rate hikes. data bank of canada, a 100 basis point rate hike in july. they just did their fourth 75 basis point rate hike in ebro. look at -- in a row. that left the door open to further hikes if needed. they signaled inflation starts coming down. if it continues coming down they go slow down too. with some latin america central banks, this could pave the way for the ecb to do this, 75 basis points. i think right now they are focused on their own economy, the energy crisis. paul: do not miss our coverage

of the ecb policy decision that will start later on thursday. for now, vonnie quinn with the first word headlines. vonnie: the chinese city of chengdu is extending a lockdown in much of its downtown areas to suspended the threat of covid. the capital of sichuan province is the biggest city to shut down since china's two month lockdown earlier this year. it reported 121 cases to stay from 90 cases monday. lockdown has been in place for a week. vladimir putin is blaming western nations for the shutdown of the nord stream natural gas pipeline. gas flows to europe could resume as soon as sanctions are lifted. this is the first time vladimir putin has commented on nord stream since the key gas conduit was closed indefinitely. >> nord stream 1 is still practically shut down and everyone is saying rougher --

russia is using energy as a weapon. that is nonsense. we are not delivering gas into the air. it's according to their request. what happened? there are two lines of gas delivery in ukraine. ukraine shut one line down automate up pretext. ukraine -- on a made up pretext. ukraine closed-end, not us. vonnie: ukraine's top army commander warned the war is likely to stretch into 2023 and pleaded for allies descended longer ranged weapons. vladimir putin is lashing out at what he says are shortsighted and dangerous sanctions from the west. i am vonnie clinton -- vonnie quinn, this is bloomberg. shery: ahead, a look into japanese markets with ps las nicholas smith. we are seeing correlation patterns breaking between the

yen and equities. next, we discussed the high -- impacts of high inflation on demographics and the workforce. this is bloomberg.

♪ paul: let's check markets trading now. up and running for little over an hour, what our 15 minutes. a little upside to the tune of .5%. we saw a little rebound for u.s. equities. nikkei futures kind of flat at the moment. here in australia we will probably raise some of the losses we saw wednesday. futures currently pointing up by

.4%. the s&p is kind of flat right now. if central -- as a central banks raise rates and fight inflation let's discuss shifting demographics. joining us from the sidelines of the jeffries asian forum is simon powell. simon, we spend a lot of time concentrating on big macro seems like a strong u.s. dollar, inflation, high energy prices. what are we missing? simon: recent inflation, take a long-term view. demographics, and aging population. that will keep inflation in check. if you look long-term term, china's population will shrink by 40% or 50% by the end of the century. we are seeing shrinking populations in developed markets. this is inherently deflationary.

long-term i think deflation is the story. the question for investors, is how long will inflation last? paul: let's look at china in a moment. i want to focus on shorter-term impacts of inflation we are seeing at the moment. particularly, for some younger demographics like generation z. what is your interpretation of their resilience? simon: we just did a big survey here at jefferies on gen z globally. if you key takeaways. number one, john -- gen z is at emerging frontier market story. when you look at gen z across the world, almost 80% is in asia, africa, and latin america. that is the story for investors. while investors are focused on

high income today, and china is a great example, almost 20% unemployment, there is a positive story around gen z investors. that is just how much money these people will inherit in the next 10 to 15 years. so, on one hand, i say demographics is inherently deflationary. this gen z is probably the largest cohort. 2 billion people on the planet in this space. this is people born between 1997 and 2012. we have 2 billion of them. they will inherit a lot of money and they will spend. shery: the question is, where will they spend it? the generational shift. my parents say the only way to accumulate wealth so far has been buying property. that is what we have seen in china, korea, in asian countries.

what is generation z interested in when it comes to spending patterns? shery: --simon: they are interested in spending in luxury. maybe, consumer luxury is the new defensive. luxury came out strongly from china and india. it's aspirational. also interestingly, pat's. our survey showed that generation z claims to be the loneliest generation and they want pets. that is an interesting perspective in terms of pet plays. i think the way investors should think about this, this generation, generation z seems to be fiscally extremely responsible. for more responsible than the millennials before them. so, high savings rates. very low rates of student loan debt.

but, they will spend the money they inherit on luxury, pets, and experiences. for my travel point of view, they will travel domestically, not internationally. shery: let's focus on china. we have been speaking about how bleak the demographic outlook is for this country. will we see what we saw in japan when it comes to graphic -- demographics? what will that mean for the economy in china? simon: if you forecast the population out until the end of the century, japan will probably shrink 50 plus percent and china will shrink between 45% and 50%. that is very similar rates of population shrinkage and population aging. what does this mean for the economy? i think it is inherently deflationary. we are living in an inflation scare now but if we look further

deflationary pressures from technology and demographics continue. i think ultimately this means that while interest rates may spike in the near-term they might trend lower long-term. shery: what does beijing want to see when it comes to authorities in china trying to shape societies next generation? what strategies could they roll out? simon: they are trying to turn around a birth rate falling quite fast, at a double-digit decline. that's driven by a falling marriage rate. the only way you can turn around the birth rate is to promote more marriage. the cost of getting married in china is very high. you probably need to own a flat, own a car, have a good job. i do not think the chinese government will be able to turn the declining birthrate. that does not mean they will not try.

they will throw significant tax cuts, cash at this. they will try to encourage people to get married. they will make it harder to get divorced. as we have seen from japan, they will really struggle. shery: simon powell, a fascinating conversation on the importance of demographics when it comes to big global themes. global head of somatic research at jefferies. there is more to come on daybreak asia. this is bloomberg.

paul: hey check of the latest business flash headlines. gamestop shares jumped after they announce of cryptocurrency exchange ftx. the videogame retailer is making strides in its strategy shift to non-fungible tokens after sales the second quarter missed analysts estimates.

the financial terms of the partnership are not known to us. china taking efforts against hong kong, and aggressive move with -- against an individual creator with a strong holding. sunac says this will not have any material impact on the debt restructuring that began after defaulting in may.

♪ funny: -- >> i'm vonnie quinn with first word headlines. the fed says tight economic prospects will weigh on the economy for the next year even with the economy showing signs

of deceleration. price levels remain high, with food, rent, utilities and hospitality services increasing substantially. the fed vice chair lael brainard says the central bank will have to raise rates in warns risks will become tighter in the future. the remarks, as other fed officials reiterated their commitment to fight inflation. policymakers are using their time before there probably -- their premeeting blackout this week that they won't blank. >> we are in this as long as it takes to get inflation down. we have expeditiously waved to the policy rate at the peak of the previous cycle in the policy rate will need to rise. >> the bank of canada with the business hike, policymakers raised the benchmark rate by 75 basis point to 3.25%, the

highest policy rate among major advanced economies. officials expect to continue raising rates. chinese president xi jinping will meet with russia's vladimir putin next week at a summit in uzbekistan. it will be the first meeting between this to -- between the two since georgia invaded ukraine. 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. i'm vonnie quinn. this is bloomberg. ♪ paul: thanks. let's look at fx markets, plenty of action of the past few days, dollar strength remember -- strength remaining a major theme. the yen is appreciating again, close to hitting 145 on wednesday and that is prompting a watchful eye from japanese regulators. we heard from finance minister suzuki who says we -- says they

will keep watching the markets with urgency and respond as needed. the finance minister cryptically added the necessary response is necessary sponsor. -- necessary response. the yen is on watch, the offshore yuan, feels like it is a matter of time for it breaches the psychological seven level. the dollar steam rolling currencies worldwide and triggering local pushback from officials in various countries. let's bring in mliv strategist simon flint of bloomberg. regulators in japan are watching moves of the yen, realistically though, what can they do? simon: we have almost reached the negative of what they can do, talking about necessary steps. it may be that they are prepared

to intervene if they get close to 150 in dollar-yen. they might be wary of a knowing the americans in doing this because clearly, the u.s. still wants tighter monetary conditions, still wants stronger currency given import price pressure. but i don't think that will stop them, given how much pressure the japanese economy is under. shery: in europe, the pound slumping to the weakest since 1985 on potential freezing of energy bills. what do you make of that move on the sterling? not to mention how we are setting up the euro when it comes to the potential ecb rate hike? simon: people are really worried about the pound. there is a very large deficit. new fiscal measures are going to be very expensive. so, it is creating concern about the u.k.'s deficit

sustainability. the deutsche bank has been writing about this. bloomberg is a little more optimistic, we think they will be able to fund their debt reasonably easily, provided bank of england remains independent on inflation, which we think they will. and that you rescue the pound. paul: simon, i want to bring the conversation back to china. when do you think we will see the psychological seven level breached? what further action do you expect from the pboc? simon: i think that is going to be breached, but only after the conference which begins october 16. i know i am in a minority, but i think the pbs will hold the line -- pboc will hold the line. we saw a record, strong fixed yesterday. dear question of what they can

do next, i see a continuation of those strong fixes. you could get a reduction on the reserve requirements in fx. what we have nothing much of that i would expect is shadow intervention, so you might see bloomberg reports suggesting that state banks have been selling dollars. we haven't seen much of that yet, but at -- but that would be the next, obvious step the chinese take. shery: simon flint with the latest on currencies. apple's unveiling a of devices with few surprises, except that it is not raising u.s. prices despite rampant inflation. let's bring in bloomberg's mark herrmann, who covers apple. is it fair to say most of those changes will happen on higher-and vice is? and without offset the fact that they didn't probably hike prices? mark: that is right, i am

calling it quiet inflation. they are not raising prices, they are just pushing new features to the more expensive models, which is going to raise asp's and raise revenues and offset those increases. i will give you examples. the apple watch series eight, minimal upgrade, apple watch altra, $400 more expensive for the entry-level. it has a ton of new features -- bigger screen, better gps, more rugged. the 14 pro iphone has a new display design come a faster processor. the iphone 14 regular has a modest camera phone. you have a picture of what they are doing here. paul: which competitors were these changes aimed at, particularly in terms of the watch? mark: the watch, apple has 40% of the global smartwatch market. that is the biggest piece of the pie they have the majority share. what i think most people don't

know is that garment has the biggest share of smartwatch is -- smartwatches priced about $500 u.s. the new smartwatch is $800. i think apple will try to take share away from garment about $500. shery: we hear about new lockdowns across china and we are hearing from suppliers like apple who say their suppliers have not yet been affected. have you seen any indications apple may change its strategy when it comes to how it deals with chinese supplies? mark: some publications put out articles about lockdowns impacting apple quite often. in most cases, apple is not truly impacted. if you look at the supply chain apple as we speak, the supply

they have four new apple watches, new iphones, is pretty good right now. i am sure apple would like it to be a little better, but i don't think you can really beat the availability that going to have or this launch. the iphone and the mac were in a rough place because of the lockdowns a couple months ago, but if you check the online store right now, you have near-immediate availability of the most popular ipad, the max. i don't think the latest lockdowns are much too threat -- much to fret about. paul: bloomberg reporter mark gurman, who covers all things apple. apple's latest product launch is putting suppliers in asia in focus, including tdk, samsung and lg. the u.s. and other nations are considering creating a system for sharing semiconductors. we are keeping an eye on

electron and sk hynix as well. shery: they ye -- they yen weakening and a global shift to rate hikes. what it means for japan's economy. this is bloomberg. ♪

♪

shery: counting down to the start of trading in tokyo and so. in korea, we are watching for announcement from officials on the yuan, an emergency meeting. we are keeping i on-chip shares after samsung warned the industry could be in for a rocky close of 2022. local witching day with futures contracts from indices and individual stocks expire. japan, second-quarter gdp and jump by current account balance are due within the next hour. we are going to be breaking those numbers live in a few minutes. bloomberg economics expects gdp growth will be revised upwards. keeping a close watch on the yen, on track for its worst year on record. the nikkei is reporting the u.s., japan and other asian nations are considering a mutual stockpile of semiconductors and vital supplies. specifics will be discussed at the indo pacific economic framework in los angeles

thursday. for more on japan, we are joined by nick myth, defense strategist at cls -- nick smith, defense strategist at clsa. japanese stocks are under pressure, something we haven't expected. we always thought a week yen is good for equities. what is going on now? nick: if you run japanese stocks against the yen, the relationship moves from a positive to a negative to a positive over time. not very stable but yes come over the last years since the global financial crisis, a weak yen has helped japanese stocks. i said at the start of the that if you hedge on that yen, you are going to have a very good year. that is the case. the market has really held up. that makes a lot of sense. we have got a belated reopening

from covid, we have got a lot of government stimulus, so the situation in japan is reasonably good. but the yen is collapsing. chances are that the yen will continue to slide but ultimately, the yen is moving as a straight function of the real-yield differential with the u.s., which is a function of the u.s. 10-year rates. at some stage, they yen will stop hiking and at that point, -- the fed will stop hiking and at that point, the yen will come down a bit. shery: does it depend whether fed goats? do we see intervention? the u.s. fed is reluctant for any intervention, but we already passed 140.

-- past 140. nick: absolutely extraordinary, usually, you would have the u.s. complaining about the weakness of the yen and saying that the japanese are manipulating it. there is none of that at the moment because of the strong dollar. we are not talking about the heavy yen so much as the strong dollar and that is doing a lot or reducing the problems in the country with inflation. so, the u.s. is not complaining about this at the moment. are we going to get some intervention from japan? that is not really a done thing. in terms of straight out influencing the market, japan hasn't done that for some time and it hasn't been effective when it did do it. what we could do, my feeling is that a change in the position of the bank of japan is not going to happen until we get a change of governor next year. it is difficult for the governor

of the bank of japan to say sorry about the 4.5 trillion dollars, but i changed my mind. chances are, when we get a new governor, a new governor will be more open to letting rates rise a little. paul: meantime, they yen keep s depreciating. we nearly cracked 145 yesterday. the chart on the bloomberg, we are talking about history, 146 is the next line in the sand. what are the chances we are going to crack that? nick: we are talking about emotions at the moment. there is no number that you can run that will say that. yes, that is a major pressure point and if it were to break through at that point, we are in blue skies. but chances are, it is already somewhat extended, and it will come back a bit.

paul: in a macro sense for japan, the yen is making energy imports from and to sleep expensive. how is this impacting your view on their economic? -- their economic growth? nick: every time we get into a strong yen or week yen, one side or the other will be saying this is the end of the world. the governor the bank of japan has repeatedly said a weak yen is good for japan. generally, a weak yen is a good thing. japan at the moment has relatively mild inflation. and it has been spending the last couple decades trying to generate any kind of inflation at all. the problem for japan is much less than you think. in terms of hydrocarbon costs, the first couple weeks of the year are gone and japan has already paid for its energy imports.

yes, japan is highly reliant on important hydrocarbons, but it is not a reliance that is particularly large. it is not the end of the world. there is not much inflation apart from this in japan and europe has said, my dear, the government is paying to keep down oil and gas prices at the moment. you just look at the week yen and say this is a positive. shery: spending numbers are down, real wages falling again, how much is that a consequence of everything we have talking about, although not as detrimental as we have seen in other advanced economies? and how much is it because of covid-19 and infections that are still around? nick: real wages are surely

negative everywhere. it is a real struggle to get wages up, because wages don't really move until a wage or offensive. what we have in japan at the moment is, consumption is still 5% below where it was averaging in 2019. it is belatedly coming out of covid. so, there is still pent-up demand and consumption recovery in japan, which suggests it would be safer to be with domestic stocks rather than exporters at the moment. shery: given the weakness of the japanese yen, we hear that intervention may not be in the cards, but the boj could week and play around with the yield curve control. is that something you are buying into, and what would that look like? nick: i do buy into it, i just don't buy into it until i change in governor. chances are we will get a new governor and he will very

quickly move towards opening up the 10 year, it is zero and the bottom line is 25 basis points. he might allow that to open up lessor -50 initially. unless we get a cuddly -- get a complete collapse of the yen come i don't think they are going to do it for the time being. it is all because the number-one pressure on the government, the number-one criticism, is inflation. you would have thought that support for the boj from government would weaken, but it hasn't. shery: we are expecting second-quarter federal gdp quarters out of japan any second now would we have seen that preliminary number at 2.2% growth for the second quarter. the final number is out and is much higher than what was estimated, 3.5% growth quarter on quarter. that is the annualized number. the expectation was only for a 2.9 percent revision. that was always a big revision

from 2.2%, but we are talking now about 3.5% that is the annualized number. the nominal number for growth on growth for quarter is 6%. the gdp growth for quark on quarter's 2.9%. we are seeing improvement when it comes to private consumptions. quarter on quarter rose 1.2% for the final number, business spending quarter to quarter 2%. we are seeing the stages lead to revisions upwards of the annualized quarter on quarter number by 3.5%. pretty much expected, but bigger than expected, the revision upwards. paul: yeah, handy beats on gdp numbers but a miss when it comes to current accounts. these numbers, 229 billion yen account balance for the path of july, the market expected ¥739 billion. a sizable miss on the current

account balance there. let's get reaction from nicholas. i think the gdp numbers are of most interest here. what is your take, it is quite encouraging? nick: it is an encouraging read. we already had the corporate profit numbers, a few weeks before that. generally, if you look at consensus numbers for the fiscal year to march next year, they are actually up from where they were in april this year. in other places, profit forecast sent been trimmed. but in japan, they are not uncertainly come of the week yen -- weak yen is helping, but stimulus from the government is also helping. paul: nicholas smith, japan strategist at clsa, reaction to the bigger than expected gdp

numbers out of japan. plenty more on "daybreak: asia," this is bloomberg. ♪

♪ shery: a quick check of business headlines -- apple unveiled a new lineup of devices without raising their u.s. prices, in one of the worst years for inflation in decades. this includes the iphone 14, fresh airpods, earbuds and the apple watch that includes the

first ever ultra model. apple's open new features and the lack of a big price hike will ward off competition for bibles. elon rusk scores a win in his buyout fight with twitter, the judge allowing him to add the claims of the whistleblower to his case. he wanted that for efficiency on twitter operations in his counterclaim on the acquisition. musk lost his bid though to push back on the trial date. d.l. reported a worse than expected quarterly loss of 3 -- ne-yo reported a worse than expected quarterly loss. despite $1.4 billion beating estimates, deliveries were smashed during the april lockdown, the ceo says they need to scale up production in the second half. paul: coming up, j.p. morgan

asset management says indonesia remains high in their strategies. we will explain why pleaded plus, speculation over the european central bank decision is the region battles with its hottest inflation in decades. and, our exclusive interview with the chairman and ceo and developer of the world's first needle free covid vaccine. the market opens in so, tokyo and sydney -- seoul, tokyo and sydney next.

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♪ shery: this is "daybreak: asia," counting down to major market opens as we wait for investors to react to the latest fad speak

-- fed speak about reining in inflation at a time when we have the ecb potential rate hike and malaysia could also be hiking rates. paul: plenty of central bank action tiki your eye out for today. looks like a risk on day for equities as well. we did see u.s. markets causing higher. and futures are pointing to gains today. let's see how we are doing at the open. shery: let me get to the market open. we are about to see japan come online. we just had gdp numbers for the second quarter, the final number of eyes upwards to more than economists the expected -- 3.5 percent growth for the second quarter. we are watching the japanese yen, 100 before is the level right now against the dollar. weakness continues. the level we are watching, 147.66 will be the low reached

in 1998. we continue to watch 10-year yields in japanese jgb's as well. we touched the upper tolerance limit for the boj. they announced another quant. we saw the 10-year yield easing, but still rebounding evan the treasury selloff. wti is under pressure. today, we haven't seen those levels since january. we continue to see concerns about a recession and a covid lockdown. korea, the korean yuan in a 13-year low against the dollar. strengthening at the moment, but 1375, fairly close to that 1400 level pit the kospi is rebounding, up 16%. we are watching for apple suppliers as well because we have that new lineup of products announced including the iphone 14. paul: let's look at australia.

difficult to get a read in the early going with a staggered opening right now, modestly positive. a few points higher. anticipating a better today on the asx, but watching the energy sector at the moment. probably one of the worst on the asx right now, particularly after declines in the oil price. the aussie dollar currently trading at 67 point 54 against the greenback. we will be watching that closely in terms of central bank action as well because we will hear from the governor delivering his annual speech and the topic, no surprises, inflation. our next guest says extreme dollar strength may be a headwind for asian equity markets. we have the portfolio manager at j.p. morgan asset management. dollar strength is weighing on asian equity markets at the

moment. how much more extreme do you see the pressure getting and where will it end? >> it is really hard to say. we have seen inflation soar this year in the u.s. as well and other places, so it is hard to say where the u.s. dollar will go. in terms of asian markets, the impact is diverse. if you look at japan the weekend, it does act the bottom line of corporate japan, so it is not all negative at the moment. paul: yeah, not all negative for some markets at all. i am thinking of the jakarta index, which is a whisker away from record highs. you view indonesia very favorably at the moment. why? aisa: indonesia is a beneficiary of higher commodity prices but

that is a historical theme. indonesian reforms of comfrey steadily. when you think about imports and exports, they used to be an exporter of raw material and an importer of materials. they have now developed downstream industries in commodities like nickel. that has been adding to their improvement. when you travel to jakarta, which i have not personally, i am told traffic congestion is a lot edited -- a lot better due to the mrp systems running. logistics of come a lot better. there are a lot of good things happening in indonesia and this is because of reforms the government has been doing. shery: you have marginally turned cautious on china. what are you expecting from the

party congress when it comes to covid zero? i suspect that is the reason not only you come but a lot of investors are cautious about the chinese economy. aisa: when it comes to policies, it is very difficult to read what will come out. so far, the case has been that they are still keen to pursue the covid zero strategy. contrary to what we thought, pboc has been easing, but the impacts of been more or less taken away by the lockdowns and zero covid policies. from that experience, we are slightly more cautious on china for the rest of the year. shery: if that is the case, how does that translate to other economies and markets that heavily depend on china? i'm thinking of south korea, taiwan, where exports from china

are important but they depend heavily on the tech sector as well. aisa: in terms of tech, we are more worried about the demand side than the supply side at the moment. smartphones and pcs, a lot of personal devices, sales of the devices have been quite inflated during the covid period worldwide. and we have yet to see how far down they will go in the next quarter. as far as demand, we are more cautious. on the supply side, the shanghai lockdowns and the china lockdowns are having an impact. we are seeing more supply chain issues at the moment. paul: do you look at buying quality names in china if you are planning to go along, is

this a good time? aisa: we think so. we have seen after earnings that companies with quality management have been able to come out of this in better shape if they have more control over costs. they have been taking market share, for example, and a lot of quality names have been pulled up, effectively. shery: aisa ogoshi, good to have you with this, asia equities portfolio manager at jpmorgan asset management. let's get to vonnie quinn. vonnie: the chinese said he obtained do is extending -- chinese said he of c -- the chinese city of chengdu has

reported an increase of cases since monday. u.s. national security advisor jake sullivan says he is concerned about a bill aimed at supporting taiwan. sullivan spoke to bloomberg ahead of a meeting with regulators want to alter u.s. policy toward the island. the bill would designate taiwan as a major, non-nato ally and provide $4.5 billion in security eight and supported in international organizations. vladimir putin is blended western nations for shutdown of the nord stream 1 asked pipeline. the russian president said slowed to europe could resume. it is the first time putin has commented on nord stream 1 since it was closed indefinitely. >> nord stream 1 is practically shut down and everybody is saying russia is using in g as a weapon. nonsense.

we are delivering gas according to requests. there are two lines of gas delivery in ukraine. ukraine shut one line down on a made up the text and is in control of it. ukraine closed it, not us. vonnie: the chinese president will meet with putin next week on the sidelines of a summit in uzbekistan. it will be the first in-person meeting between the two since russia invaded ukraine and will mark xi's return to the world stage since the pandemic. 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. i am vonnie quinn. this is bloomberg. ♪ paul: thanks. what are the big stories we have been reporting is apple's of products including the iphone 14. some incremental changes there. prices are not going up, perhaps the most interesting news. here is a look at how suppliers are trading.

lg is up 2.5%, samsung electronics off a little, but not a great deal of change for some of apple's key suppliers following that announcement from apple. shery: we have plenty ahead, we delve deeper into security markets with cba's carol kong. but coming up, the hawkish fed and a drawnout flight against in -- drawnout fight against inflation, next. inflation, next. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers

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>> inflation in our country is too high. we are not close to the federal reserve's target for inflation so i am focused in the fed is focused on making sure we do the steps necessary to bring inflation down to its target. shery: fed vice chair for supervision michael barr and inflation, as top fed officials pledge aggressive rate hikes ahead as inflation remains elevated and spending stays on track. global economics and policy editor kathleen hays is here. we have already two back-to-back

75 basis point hikes. as the door open for another? kathleen: i was a three is the charm. but we know for sure vice chair lael brainard is also speaking today along with half a dozen total fed officials as she is clear she is ready to keep writing inflation, ready to push rates higher, and they are not coming down until they have reached that goal. listen. >> we are in this as long as it takes to get inflation down. so far, we have expeditiously raised the policy rate from the peak of the peas is that the peak of the previous cycle in the policy rate will need to rise further. kathleen: in other words, the risk of recession is too much, and in terms of letting inflation state to high, she says rates have to get more restrictive, no doubt. the chair of the cleveland fed says she sees if i coming down until the fed gets the key rate

to at least 4% and keeps it there for a while and also said more rate are needed. we just heard michael barr saying he wants this to keep going until the fed has actually defeated inflation. susan collins from the boston fed, saying she is not sure of the size of the rate hike got, nor was michael barr earlier, but 50 or 75 is on her radar screen. the fed beige book is put out ahead of each meeting and shows crosscurrents. down the road, some districts were worried about the economy slowing. but right now, strong consumer, tight labor market come inflation to high, that is the message from the fed. jay powell is speaking at the cato institute conference tomorrow. we expect he will repeat what he said in jackson hole, that the fed has to keep moving until it gets inflation down. no talk of a soft landing, but he took a lot of questions and we will get some sense of

whether he is on board with 75 basis points or not. paul: still plenty of discussion about whether it is 50 or 75, so how about the size of the european central bank's right hike? kathleen: after we got news of russia stopping the flows of natural gas to europe, it seems to me this question got a lot tougher for the ecb. it traders -- traders are looking at a 68% chance that there will be a 75 basis point type. after that jackson hole speeches by members of the ecb, there was a move to 80% odds. but this is now casting a recession shadow even darker over europe. the central bank governor of latvia saying a prolonged recession could slow rate hikes,

but he says they are still looking if they need to push the right above neutral. the ecb hasn't hiked by 75 basis points since 1999. quick look at malaysia, asian central banks facing not just the job of bringing down inflation, mail asia's inflation rate continues to rise, their economy is so strong. the rate is at its lowest level since 1998 in the midst of the asian financial crisis. we are expecting it to rise 25 basis points to 250. only our bloomberg economic team is predicting a 50 basis points hike. it is hard to put anything off the table. shery: that would not be surprising giving outside -- given outsized hikes are the new norm, kathleen hays, thank you. that aggressive central-bank

action, really leading to pressure on european stocks in the regular session. we had a anticipation, anxiety over what the ecp do. look at futures trading. we have seen that pressure although utilities were still higher because we are seeing government officials now starting to act across europe. look at the next picture right there, nfci -- msci in europe under pressure but u.s. stocks futures pointing higher. you can see the ecb policy decision and the subsequent news conference live on bloomberg at 8:15 p.m. more if you are watching in hong kong, 8:15 am. second-quarter gdp growing 3.5% on an annual basis in japan, bring in our editor paul jackson. we knew the numbers would be revised tire, we didn't know

they would be revised tire this much. what drove those gains in economic growth in japan in the second quarter? paul: if you look into the figures, you can see that business spending improved 2%, a much stronger figure. we had an early take on that last week when we got figures from the finance ministry showing that companies had been spending more. that is a good sign, a sign that there is confidence in the economy at the second-quarter stage. you know, these figures are encouraging. they indicate more resilience in japan's recovery than we expected in the second quarter. but looking toward the third quarter, that is a lot of clouds on the horizon with these rate hikes, the continued conflict in ukraine, the energy crisis looming in europe.

can this momentum we have seen in the second-quarter continue in the third quarter? i think there are doubts. i think we will see slowing in three q -- 3q. paul: the third quarter also reflects action in the yen at the moment, pushing back toward 144. where are we heading on this? we are hearing from some in the japanese government about intervention, how likely are we to see that? paul: a lot of the yen movement, to reiterate, it is mainly dollar strength. we have seen a lot of currencies take a hit. the difference in japan? japan interest rates, therefore the hit to the yen in japan is bigger than elsewhere. it is down 20% this year. i remember is like 1.15 in march and if you try to hit 1.45 last night, you didn't get through.

the question is, how much can it go? i think it will weaken further. we have key data points coming. i would say next week, u.s. cpi figures should be a key on whether to accelerator check the movement. you know, the intervention, we have gotten verbal warnings from the government but are still a ways from getting close to japan flagging any possible decision. we are not there yet and as we saw overnight the treasury comments, the u.s. is still making clear that we are not ok with intervention. that is where we stand. paul: economy editor for japan and korea paul jackson. coming up, apple's biggest product launch saw a range of new products and no price bump

for the basic iphone. the gamble in the face of rising competition. this is bloomberg. ♪

♪ >> today, we are here to talk about three products that have become essential in our lives -- iphones, airpods and apple watch. they are always with you, useful wherever and whenever you need them, and are designed to work seamlessly together. paul: apple's tim cook at the unveiling of a new lineup of devices including the iphone, airpods and a watch geared toward outdoor sports.

there were few surprises, except a strategy of keeping some prices stable despite hot inflation. we get details from technology editor tom giles. keeping the prices down, what is the logic? tom: they want to see consumers getting out there despite the inflation that is resulting in higher prices of just about everything else bit they want to send the message you can still get a good, high-end apple product at the same price you could in recent years. what is interesting is, they are basically putting more high-end features into the more expensive devices, hoping you will upgrade. maybe if you were looking to get a new phone, you would be more willing to gravitate to one of the higher-end devices if you have been on the lower end in recent years. it is just one way apple can keep its margins up and get people buying those higher-end

devices. shery: telus of -- tell us about incremental changes, i understand there is a new sos feature? tom: that is right, this is a way for you to be able to use satellite to make emergency calls, higher-end cameras so higher-end photos, more movie details, the high-end chip for mobile devices. they have added something called dynamic island, this little section on your screen, a screen with a screen you can get information like stock prices and the weather even when the rest of your screen is turned off. it is like what tim cook said in opening remarks, it is a way of keeping the device valuable to you, even when you are trying to get away from it, maybe when you

are trying to use your watch or airpods, which brings up a couple other the devices they unveiled. one is the high-end watch called the ultra coming in at about $800. it is aimed at sports enthusiasts. shery: tech executive giles -- tech executive tom giles. elon musk scored a win in his by out fight with twitter, judge allowing him to add the claims of a whistleblower to his case. elon musk's legal team wants to add allegations of deficiency and twitter operations in his counterclaim. musk though lost his bid to push back to october 17 trial date. gamestop shares jumped after it announced a partnership with a cryptocurrency exchange. the announcement suggests the

videogame retailer is changing even though in the last quarter it missed estimates. the financial terms of the partnership were not disclosed. as we await the ecb rate decision, we talked with carol kong about why she expects a 50 basis point rate hike. this is bloomberg. ♪ 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. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. ™ >> the recession, we hope it

doesn't happen but obviously, we forecast it. it is overwhelmingly caused by russia and the impact on energy prices.

we are seeing extreme volatility in energy markets. i welcome the fact that there will be policy announcement this week's. shery: o yum governor andrew bailey hinting at a possible change to sell gilt next month, and energy rescue scheme as traders weigh the possibility of the boe slowing hikes. this comes ahead of the ecb decision. our next guest sees the euro remaining heavy while energy issues are at play. our guest is carol kong, international economy and currency strategist at cba. what would that mean for the euro? carol: the cycle of the next ecb interest rate hike is a key question and i think the debate for the upcoming ecb meeting

reflects tensions between the near term worsening inflation outlook and the weakening economy in the euro zone. following the jackson hole symposium, we heard from several ecb governors, saying they favor is 75 basis point rate hike because after the higher near-term inflation in the news over the weekend saying that the russian gas giant will cut off gas supplies to the euro zone, that supports the case for a bigger rate hike. i think they ought to favor a smaller, 50 basis point hike because of the remaining recession in the euro zone -- because of the risk of recession and the euro zone. i think the medium term inflation pressure will be

contained around the ecb target of about 2%. shery: money markets were pricing in a 75 basis point type, not as much as last week, 80% and 65%, but if they do not come up with 75 until with 50 basis points, what would that mean for the euro, which has been pressured against the dollar? carol: it would mean further dollar pressure of the euro-dollar. europe is struggling amid energy and gas supply issues and i think a smaller paper rate hike from the ecb would exact more downward -- exert more downward pressure on the euro. paul: how great is the risk we don't see this rate hike, no matter what size come a fully filtered down to money markets? carol: that just shows there is

a lot of uncertainty related to inflation and the growth outlook in the euro zone i don't the ecb committee itself has reached consensus yet on the next rate hike. that will set off market speculation about the monetary policy down the track. paul: can you give us a sense of the magnitude of the task for the ecb? yes, inflation is an issue but the same time, a severe energy crisis is think the continent. carol: certainly, energy issues on the biggest challenge facing the eurozone economy. a lot of european economies are scrambling to fill gas storage facilities ahead of winter. they are ahead of schedule, but the question is whether they can sustain gas inventory to meet

upcoming demand. a lot will hinge on whether consumption for gas will increase, depending on the severity of our winter. so, the gas supply issue will continue to be a downside risk for eurozone growth and a big challenge for ecb monetary policy deliberations. shery: the policy -- the possibility we might see a freezing of energy bills and the u.k. has sent the pound to its lowest since 1985. how do you expect that will play out in the inflation picture in the u.k. and expectations of raining and prices -- of raining in --- reining in prices? carol: the pound gained a little bit on the announcement of further energy relief by the

incoming uk prime minister, liz ross. you are right that the u.k. is proposing to impose an energy price cap at current levels. if that is true, we could potentially see the u.k. inflation peaked already. but depending on the nature of the fiscal stimulus package, we could potentially see a bigger challenge facing the ere -- the bre, particularly if we face tax cuts. paul: thanks for joining us. let's look at what is driving the currency rout in asia. u.s. treasury yields rising much faster than their asian peers while interest-rate differential that pressure to asian current seas. but take a look at this mixed chart, volatility in a key asian

energy basket have not picked up like we saw in may. levels are important and the pace of weakening is also important and you think about whether asian central banks might be able to tolerate further weakness a little longer as long as the slide comes under control. shery: let's turn to energy. green on the screen in asia trading after oil usurers fell near an eight month low. it was a brutal selloff. bloomberg's su keenan is here, so brutal we had the death cross appearing. su: the 50-day moving average below the 200-day moving average and you get a dramatic reversal and selloff, which is what the charts have been showing. we are city -- seeing a bit of a bounce up in the past couple minutes in asian trading. but earlier, we saw an extension of the 6% drop in new york trading where crude closed below $82 and brent crude had a brutal

come down, more than 5% in london trading, where it was below $88. all of this coming on a number of factors. in addition to the technical after, you have bearish rushers from fear of china's zero covid policy and bloomberg -- policy and lower demand. the u.s. cut its annual oil production targets again for the third month in a row. look at the come down on the big picture for oil. it is down some $50, west texas intermediate, from the peak in march after russia invaded ukraine. so, a number of issues weighing on prices short-term. meanwhile, drop into the bloomberg because california is starting to have its own energy crisis. nowhere near the level in europe, but still significant. we are looking at eight huge run-up in electricity prices, huge run-up in usage of electricity, as the

unprecedented heatwave there has caused electricity grids to almost melt down. residents remain on warning about rolling blackouts and for two days in a row, they have managed to avoid that. paul: in europe, the energy crisis is getting worse. what is the latest on the eu? su: eu officials are planning to meet in brussels friday to talk about implementing a strategy they have to halt surging prices and get liquidity. traders have been hampered by the collateral requirement. they want to put a cap on energy demand and bring it down 10% on they want clawbacks to bring back money from excess profits by oil and power companies. and they are considering capping rises paid to russia for important gas. that could cause a conflict with russia because the nord stream 1

pipeline is at the crux of the conflict. at a conference, president putin of russia into it -- putin of russia hinted, if you lift the sanctions, i could turn the gas pipeline on tomorrow. russia is being accused of energy blackmail which he says good lead to unrest this winter. and energy prices across the board in europe, whether coal or natural gas, electricity, all these things are surging. that is why the eu and measures out of the u.k. are designed to address that, but analysts say gas prices in europe will be elevated possibly into the mid- decade because it is not an easy problem to solve. paul: bloomberg's blue keene --

bloomberg's su keenan. let's get to vonnie quinn for headlines. vonnie: high prices on a tight labor market will weigh on the u.s. economy next year. that they report published two weeks before each meeting by the fomc says prices remain high with food and rent increasing substantially. fed vice chair lael brainard says the central bank has to raise rates to restrictive levels. his remarks, as other fed officials also reiterate their commitment to fighting inflation. policymakers are using their time before their premeeting blackout later in the week to assure that they want to curb inflation. >> we are in this as long as it takes to get inflation down. we have expeditiously raised the policy rate to the peak of the previous cycle and it will need to rise further. vonnie: a hike and a bit to drag

inflation down, policymakers in japan raised -- policymakers in canada raised interest rates and canada now is the highest rate of any westernized economy. pakistan's former imran khan says he regrets remarks at a rally about a female judge. he seeking dismissal of a contempt of court proceeding and calls the remarks unintentional. khan has held massive public gatherings blaming his political rivals in the military for his ouster. 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. i am vonnie quinn. this is bloomberg. ♪ shery: coming up, the u.s. expects to host the first gathering of the indo pacific economic framework in los angeles to counter china's rising influence in the

asia-pacific. details next. this is bloomberg. ♪

♪ paul: the united states is set to host the first gathering of asian nations on an economic agreement envisioned by the white house to counter china's rising influence.

chief north asian correspondent stephen engle joins us. stephen: this is the indo pacific economic framework, a nontraditional trade agreement the other countries in the asia-pacific. they are meeting in los angeles later thursday, and the inaugural meeting. it is a couple days. i think all of the signatories want specifics because like i said, it is not a traditional fta, free trade agreement. it is not like tpp, which trump pulled out of in 2017. it is not really aimed at cutting tariffs, which is the traditional aim of a free-trade agreement. it is focused on ways to build trade with these 14 nations to improve supply chains, to build clean energy initiatives, de-

carbonization is the main goal and the infrastructure to do that. it also deals with taxes and anticorruption and is the most significant u.s. economic engagement in asia pacific since trump withdrew from the tpp. but the big assault levied on this is that it is short on specifics. if these 14 nations get together and start finding areas of agreement on cooperation and build the framework, that would be a step forward. shery: this as a geopolitical tilt, right? like-minded countries coming together economically, cooperating on trade? i guess it is no coincidence that we are getting news that president putin and xi jinping are meeting. stephen: you could draw the parallel. the ibef, the 14 countries,

constitute about 60% of global gdp. you have japan and australia and other g20 nations that will be part of this nontraditional free-trade agreement, if you will. at the same time, we are hearing that xi jinping will travel to cause extend and it was becca stand next week, first time he has stepped off the mainland, he came to hong kong in july, but the first international trip for him since the beginning of the pandemic. he will be meeting, according to the task news service, with vladimir putin -- according to the tass news service, will be meeting with vladimir putin on the sidelines of a meeting next week. we have already heard that xi jinping and vladimir putin will be at the g20 meeting in bali in november and aipac in bangkok following. it is further evidence of the

de-globalization and perhaps bifurcation of the blocks. shery: chief north asia correspondent stephen engle with the latest on the ipef. the biden administration is announcing it has not changed its position over taiwan's status despite chinese claims. sticky death speaking to the david rubenstein show, jake sullivan said he is concerned about some elements of a congressional bill aimed at supporting the island. >> it remains a distinct threat that there could be a military contingency around i want -- around taiwan. china stated as its official policy that it is not taking invasion of taiwan at the table and that remains a potential option for reunification. their position has been changing in terms of their disturbance of the status quote over the taiwan

strait, actions with their military to undermine stability. the american position has remained steadfast -- one china policy, taiwan relations act, three joint communiques we agreed with china in the 1970's and 1980's that laid out that from our perspective, there should be no unilateral changes to the status quote across the taiwan strait. we will continue to push back against any effort to stay -- any effort to change the status quote through force. david: there is legislation moving through congress to toughen up support taiwan, has the administration adopted a position on the legislation? jake: today, i will talk to some members about the legislation. i prefer to lay it out to them before tv. but there are elements of that legislation with respect to how we can strengthen our security assistance for taiwan that are quite effective and robust, that

will improve taiwan's security. other elements give us concern. paul: national security advisor jake sullivan, speaking on the david rubenstein show, "peer-to-peer conversations," and two in to the david rubenstein shall on sit-down -- tune in to the david rubenstein show. let's check business flash headlines. apple unveiled a new lineup of devices without raising its u.s. prices, in one of the worst years for inflation in decades. the iphone 14, fresh airpods and airpods and and apple watch upgrade that includes the first ultra models. apple is hoping the lack of a big price hike and new features will ward off competition. ne-yo with a worse than expected quarterly loss as covid lockdowns hit the ev maker.

ne-yo deliberate bounced back after getting smashed during the april lockdown. the ceo says they are aiming to scale up production in the second tappet coming up, hi -- in the second half. coming up, this is bloomberg.

♪ shery: we are heading to the market opens in china and hong kong. mainland developers under fresh pressure, two of them receiving petitions. we bring in our asian stocks managing editor. explain why this is important for these developers and what happens next. >> sunac and gyron are the latest to receive court petitions, and evergrande in june got one as well pick that is an indicator that offshore creditors in particular are resorting to courts to try to get their money. they have been waiting for a long time for restructuring deals to happen with those defaulted developers.

evergrande is a good example, it has been delaying its restructuring plan a few times. another big default, kaiser, never presented anything. those creditors are getting anxious. is there anything they can do? court action would be their top choice now. paul: chengdu is extending its lucked out to contain covid. how is this quote to be reflected at the market open? -- how is this going to be reflected at the market open? >> given the performance for the past week at the csi one hundred, traders are getting jaded dog lockdown news. if you look this week at the csi 300, the index was up 0.8%, and outperformer versus the msc in the asia-pacific index with a 1.2% drop. for traders, as long as

factories are operating, whether a closed-loop system or not, this is reassuring to traders because the economic impact will be limited if operations are continuing. paul: our bloomberg asia stocks managing editor. let's look at stock we are going to watch ahead of the market open in hong kong and china. apple's hong kong suppliers, reports of a wider quarterly loss because of the shanghai lockdown. with chengdu extending its lucked out, we are keeping an eye on other carmakers that have been hard-hit by restrictions. plus, property companies set to report earnings today as well. shery: and we are watching the currency space for the euro-yen, rising past its june peak and

reaching its highest since 2015. not surprising given we have the rate differential soaring and we have a potential ecb rate hike up 75 basis points while the boj holds steady on its extra loose monetary policy. coming up, amy patrick tells us more of the global trade cycle. plus, expectation of resilient investment in manufacturing in china. that is it for "daybreak: asia." the bloomberg china open is next. this is bloomberg. ♪

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♪ david: this is, uh, my kitchen table and also my filing system. over much of the past three decades, i've been an investor. the highest calling of mankind, i've often thought, was private equity. [laughter] and then i started interviewing. i watched your interviews, so i