shery: welcome to daybreak asia.

we are counting down to the major market open. paul: the top stories this hour. stocks mate right on optimism of a strong u.s. close. that could give the embattled yen a modest tailwind. traders are still betting the fed will deliver another jumbo rate increase. china locked on a university -- an university in beijing over a covid case. shery: we are seeing the upside in extending gains we saw on friday in the s&p 500. we are saying the best week since late july. we may have seen a bit of bargain-hunting given the s&p 500 is bringing below 17, the below 10 year average. we had perhaps using in yields, leading to the boost on the technology sector. the two year yield was up.

we may get another jumbo rate hike by the federal reserve. oil prices, we saw a lot of volatility last week. we had a rally, given the broad risk on sentiment last week. we finished flat around $87 a barrel. we see pressure in the asian session. covid lockdowns in china and the demand concerns. paul: let us take a look

their trade in australia, under an hour away. if futures are better by more than 1%. the gains we saw on the asx on the end of last week. 3.551. new zealand has been trading for an hour now, modest gains. take a look at the yen. we watched the fortunes of the yen over the next coming days. we have had a steady stream of rhetoric coming from a number of policymakers in japan about the u.s. dollar also weakening the yen, pulling back a tad. shery: are stories and bring in our senior asia reporter, and su keenan and garfield reynolds. this week we are very much watching the inflation numbers in the u.s.. the cpi data, what impact will they have on the fed? >> we have been debating 50-75. things are pushing more towards 75. they signaled they would support such a move, we have heard more hawkish rhetoric from jerome powell.

we heard from esther george, a longtime hawk, cautioning against moving too quickly. we do keep hearing the references where they are not really talking about winning the inflation viper warning about what happens when you let up too quickly. fed officials pushing, saying we will see this through to the end. 22a75 basis point hike. we are entering a blackout period. we will get a break from the fed officials talking. have a cpi up report -- we have a cpi report in washington. not a huge step down, it is a meaningful step down none the less. 8% is still skyhigh, pushing on track for 75 next week. paul: assuming we are hearing eu energy ministers calling for

measures to monitor gas. >> yesterday, they cannot wait on this because they are looking to the executive arm of the eu to come up with specific measures. i struggle to come up with exact details and execution on the measures. there is an urgency for the eu, 20 seven different member nations, there is a lot of use to take into account. they stopped calling for a reduction in energy demand, the most crucial step,. . that is forward, german demand has increased tenfold. a price cap on imported russian gas, the german lawmaker is

favoring that. others disagreed on how it would be done and providing liquidity, to the struggling energy firms they are being hit with major margin calls. ecb's christine lagarde reminded everyone it is the role of government not the ecb to find energy trades. it is to provide liquidity to banks. everyone seems to agree that the energy traders need a financial aid. the fight starts next week when the commission president sets out concrete measures for legislation. one week after moscow shut down its main pipeline in europe and moscow has been tinkering the amount of gas available to the european nations over several months now. it is getting increasingly desperate for the european union to solve the energy crisis that

could become both economic, social, and financial. many of the nations are trying to get ready for winter with various reserves. resorting to add to their storage. they are not there yet. gas supply would not be restored to the north spring pipeline which is another maintenance fade after a sanction after the invasion of ukraine was lifted. increased fears that there may be some total cut off of russian gas? shery: we are seeing the price pressures across europe. we are hearing from the ecb president on the potential approach to fighting inflation. what can we expect? >> this is a message that we

heard in early july, the fiscal monetary policymakers must work together. they do not want the fiscal policy to what the monetary policy is doing. if it is not targeted, it only aggravate the -- aggravate the inflation problem. if needs to be a government role, not the central bank's role and focused on the small segment that i need that help. -- that needs that help. shery: given the monetary policy action, we have seen a very challenging place for global bond investors. >> because of the policy action and this report reads in part as action, neither is good for bonds. add in credit by uncertainty,

mostly projected inflation would be transitory. it has not proven to be that. it has been a wild ride. i propose on friday we had the strong risk on rally across assets except in bonds. in bonds, we had the motivation for new clients. the two year yield to the u.s. jumped because comments from george as mentioned. the 10-year yield did not know where to go. we had the curve flattening and 10-year yield staying stable. that leads to the continuing demand for bonds whether they are yielding more than 3% from investors as a potential haven. that is a turnaround because at the beginning of the year, bonds

were far from a haven. there were not offering any income over the longer term. it was more dangerous than holding onto a lot of risky assets. it will be interesting to see what goes on with tuesday's cpi. two fed officials take that on board? will they raise rates by 75 basis points in september and target a higher terminal right then a lot of people have been expecting? shery: we have been hearing from the deputy chief cabinet secretary in japan about the yen, adding his voice to the growing don't be -- drumbeat around that. what is the longer-term picture for japan's currency? >> it is still difficult.

as long as we are going to have this dog policy divergence between the u.s. and japan, that will make it harder for the yen to value bonds here. the high energy prices in japan is overwhelmingly an importer of their energy resources. oil and gas. we are watching with at least as much interest as others how this situation in ukraine develops in the counteroffensive. what impact that has on russia's attitude around energy as a potential for supply shocks to either get worse or better. the yen needs a faster fed. sustainably weaker energy prices before it can be sure that it has hit the bottom. paul: let us get to bonnie --

vonnie quinn. >> ukraine's forces have continued their rapid advance. unconfirmed reports suggest troops have taken a key town not far from the russia-ukraine border. if green defense minister shows russian forces outside of the region without commenting further. a school in beijing has been sealed off due to a suspected case of covid among students. also 40 new cases all from quarantine. authorities have apologize for shortages of food and medicine in areas that have been subject to covid lockdowns. more cities may lock down ahead of the party congress in october. brazil's presidential candidate

could appoint his running mate right he could lead financial agriculture. he has committed to a moderate political and economic agenda. polls show the majority of thais are dissatisfied with the acting premier. expected early next year, he has emerged as a contender. he became the acting prime minister in late august after the former holder of the position was suspended. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: japanese officials are watching the yen with a one calling it slide excessive and one-sided. she and oliver thanks short-term

bond returns will improve -- shane oliver thanks short-term bond returns will improve. this is bloomberg. ♪

>> the third one the dollar to be firm because a stronger dollar it restrains economic activity and reduces inflation. it reduces the costs of

imports into the united states. this is one aspect of how you tighten financial conditions. >> the restraints revealed by the pandemic are likely to be with us for some time. contributing to inflation and likely requiring the sustained policy response. i will argue that constraints continue to bind policy. >> based on what i know as of today, i support a significant increase in our next meeting. to get the policy rate to a setting that is clearly restricting demand. paul: some recent comments on the fed's fight to tame rising price pressures. we are watching the u.s. inflation data. fed official's views on whether

to press ahead and supersize a rate increase. china will be getting activity data for august and we see recovery stalled with heat waves , power shortages, and cold flareups lead to getting momentum from output to consumption. india's inflation data could see a spike and japan's trade could narrow. shery: those inflationary concerns and central-bank action white we are seeing is it a significant time for global bond markets. double-digit losses are the norm for income investors. you see how government debt has been the worst hit. performing worse than a corporate bonds. energy related bonds have suffered the smallest declines, not surprising given the price of oil. volatility is soaring. not seen two years ago. our next guest says short yield

bond returns should improve a bit further. the head of investment strategy and chief economist at amp. have bond yields peaked at this point? where are we headed? >> it is quite possible. they could slide a little bit higher. in the period ahead, we have a bit more evidence of u.s. inflation has peaked, it will be too high. that means they cannot hike at the next meeting. as the year goes by, we see a combination of improving supply and declining delivery times and cost pressures and so on combined with slowing demand will allow bond yields to stabilize and get back down again. if we go another leg down in share market, it may not be the valuation pressure, but

recession. again, i think those concerns about precision are dominant, the state bonds rally. it is quite possible we have gone from an era of six month window where bonds were pulling diversified in a portfolio to where they are going forward. shery: is that when we are seeing so much uncertainty in the equity space? not to mention european equities as well? is there a concern about recession being the big hit for these equity markets? >> markets are surprisingly resilient. there are technical reasons for that. we also had sentiment levels in the negative levels and that is positive. by the same token, it does not go in a straight line and despite the resilience the risk is on the downside.

a big driver of the risk is recession risk. a recession in europe is 80%, u.s. is probably 50-50. i think i will become the dominant consensus. going forward. paul: we do have a lot of data coming out of china. china is staying strongly committed to it policy of zero covid. what is your outlook for china? particularly the growth story in this environment? >> i think the target was -- they are not going to achieve that obviously. there are big factors behind that. it is not helping, act as a property slump. that will show some stabilization in things like. natural production and retail sales. it will be stand realizing --

stabilizing. a number of cities going back into lock down again as we go into september. the outlook cannot look -- [indiscernible] the congress and coming out there in november. we may get some direction in china on the covid front. we have the risk on the downside and the government have the covid numbers down and they have an effect on the economy. paul: if you anticipated my next question. i wonder if this changes, this presents an opportunity for summer forms or reset a policy? >> i think it does. if xi jinping confirms in his term and his role, i think he

can relax on some of those other things. there may be some relaxation in the covid policy. ma combined with the introduction of the mrna vaccine into china. i think that is probably one think we will see some sort of turning point. the rest of the world is going down the path of living with covid. china is unlikely to do that before the political events later in the year. shery: an economy is dependent on what is happening in australia -- china is australia itself. we saw the sector taking a hit with the fit rate hikes. what are you seeing in australia and do you see any opportunities in the property sector going forward? >> there will be opportunities. in australia, they have contributed massively. [indiscernible]

the ultra low interest rates we had a year or two ago and that is reversing. interest rates are pulling the rug out from under the property market. the central banks here and other central banks are signaling more rate hikes. the ongoing track in the property market, property partners in australia are pulling 4%. you are going to see a way to go. that will provide opportunities for investors, it may be a bit too early two hunting for that. they are not prepared to dig deep into the property markets that have stayed hard. on average i think it is a bit too early. paul: the head of investment strategy at amp.

get a round up of the story that -- of the stories you need to know. go to dayb , it is available on mobile and on the bloomberg anywhere app. customize so that you only get news on the asset that you care about. this is bloomberg. ♪

paul: quick check on the headlines. catl says the lord's plant in china is operating a factory bubble. the population of 4.6 million are to stay home in what officials described as a severe covid situation. there are the main battery supplier for tesla in china. walt disney spinning off's espn,

the ceo says he looks forward to seeing espn have synergy as part of disney. the ceo says espn is critical to his vision of the company which includes sports betting. a plan to take up the boards of director of two indian cement makers following the firm's $10.5 billion takeover of the company's. the ceos will join the boards. a rapid cool down in an e

>> there have not been any real shortages in oil. >> countries like germany could

completely run out of gas in early 2023. >> the charges could come in the future. there is nervousness. >> scarcity will come from the liability of reserves, that will blow up funding cause and that is one of the biggest risk. >> energy security as elevated its position. if we are going to go for a transition we have to do it more sustainably. >> [indiscernible] but doing it because high prices tend to do that. shery: are tbs responding to a question on what the most significant shortage will be in the next 12 months. the reason this is important is what happens to those supply concerns and shortages will affect what happens to inflationary pressures that central banks are dealing with now. the key question which commodity will drive inpatient the most, natural gas coming in at number one with 74% of respondents of

our survey telling us it will come from gas, 15% from oil, corn and none is another answer from our survey respondents. very important as europe struggles with natural gas supplies. top asian lng buyers such as south korea ending up in a price war that could push prices higher. paul: oil in place on 15% does beg the question about what opec+'s next move might be. saudi described the oil market is schizophrenic. it has been psychologically confusing as well. marta supply increases following supply caps off. 14% increase in output. 37% felt there would be a decrease in output and half of our respondents felt it would be

cap stable. i do not know if that clarifies the picture much at all. a very confused outlook for the oil market. let's get the vonnie quinn. vonnie: president biden says the u.s. will not hesitate to use its military power against terrorist threats. he was speaking at a ceremony marking 21 years since 9/11. he cited the airstrike that killed the al qaeda leader, successor to osama bin laden. biden also said the u.s. owes an incredible debt to the troops who served in afghanistan over 20 years. u.s. freight railroads will reduce services starting monday after two of the country's largest rail unions failed to agree on a new country. journal of commerce said railroads began notifying customers ahead of a popular strike. three unions representing more than 90,000 rail workers are holding out for better working conditions. sweden's right-wing opposition

is nearly overtaken the prime minister in an early vote count. the bloc is likely to gain 125 mandates in parliament. versus 174 for the alliance led by social democrats. the party was previously shunned as political extremists by exception. china has launched -- china plans to launch three unmanned missions to the moon over the next 10 years. it discovered in isotope that may be a future energy source. both china and the u.s. are eyeing the moon as resources with space mining possibly being a place of tension. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: a rapid cool down real

estate is threatening to worse and the global economic downturn and emerging as a key variable for central bankers who want to tamp down inflation. let's bring in bloomberg's personal finance editor. how big of a problem is this? we have rising borrowing costs with central banks hiking rates in order to bring down inflation. is this a real problem? >> well, it is. a cooling housing market will make the global financial downturn worse. last year, homeowners felt wealthy, and that underpinned consumer spending and confidence. now the opposite is true. it is a fine line. central banks want to cool inflation, they aren't raising rates. if they do it too much it risks dipping consumer confidence and

some countries into a recession. paul: two terms have the potential impact, how exposed are borrowers to these higher rates, increasing rates? >> it really depends on the different countries. in the u.s., very few borrowers are exposed because most people take out mortgages that last up to 30 years. in other countries a lot of borrowers take up variable rate mortgages or a short-term like one or two years. a report look at australia, the u.k., canada, and spain and found that in 2020 people took out variable rates. in new zealand 55% of people were under variable-rate mortgages or a fixed rate that had to be renewed in the next year. there is going to be a lot of pain and belt-tightening for borrowers.

shery: that is scary if you have continuing rising rates. does that mean we could see a wave of defaults in those economies that have more people exposed to variable rates? >> the good news is that looks unlikely. people have been saving a lot of money. balance sheets are strong. the labor markets are robust in those countries, and the lending criteria it has been improved since the financial crisis, and most borrowers have been -- against tirades so it looks unlikely we will see a big wave of defaults. paul: ainsley thompson there. coming up a tokyo governor shares their views on gender equality, the yen and japan's reopening. this is bloomberg. ♪

shery: we are watching tourism and airlines years following the nikkei austria's report that the government is planning to lift its cap own arrivals and remove remaining barriers to foreign travel by october. japan's financial glitter stepping up sales of risky bond products to retail investors and also sending examiners to bank branches if necessary. we get a read on machine tool

orders in august, increased 3.5% in august year on year. a senior japanese weak yen measures to ease the impact. let's get more from paul jackson. we did see a lot of intervention so far whether it is japanese finance minister officials or a doj governor -- boj governor. the is again under pressure. could we see other intervention given that the effects do not seem to be that long-lasting? >> yeah, that is the key question. i would say first of all team japan is on the message. the global warning last week, the three-way meeting between the finance minister, cso, and

boj probably came a day later than it needed to be. but since then, the languages much stronger, it is a clear warning that tokyo is taking this seriously, and that was capped with the meeting between prime minister kishida and a central bank governor on friday. they spoke of the effects moves -- fx moves being undesirable, a two to three year move against the dollar have been sudden. these meetings feel speculation about is kishida wanting to do something? the governor tried to dampen that speculation by saying he had no particular request from the prime minister. there is a boj meeting next

thursday. i think it is a continuation of messaging from tokyo that he is taking this seriously. they yen -- the yen has been that help from the dollar coming off steam at the end of last week as well. it is lower than the levels against the dollar, 1.62. that is preferable for tokyo compared to last week. the languages nearer to intervention, but i do not think a direct step will happen yet. i think there needs to be more ramping up of language, and the question is with the u.s. green light or possibly approve? at the moment you have to say that sounds very unlikely. paul: of course there are advantages to a weak currency

and in terms of loosening porta restrictions, what are the possibilities here? >> i think this is an interesting point, because at the moment there are a lot of negative optics on the yen. japan is looking for something positive to throw onto this. of course exports do well, but the domestic companies and domestic oriented industries, is a pain. if you have the tourists coming back in, there were 32 million of them in 2019, you have got someone who can drive the domestic economy. in that sense, hitting on with that even if we do not get all of those tourists coming back, it could help to change the optics by showing there are

positives on having a weaker yen . it is not all bad. paul: bloomberg's editor paul jackson, and tokyo's governor is one of those who sees the depreciation of the yen as a chance to boosterism. she told us exclusively their efforts to increase participation of women is being reflected in government ranks. >> i have worked to provide opportunities for women to play active roles, and this is reflected by the tokyo government with women making up 20.2% of managerial roles. additionally 31.2% of representatives in the tokyo assembly are women, which is the

highest amongst 47 today. for further progress, participation, decision-making, we have introduced advisor meetings ensuring at least 40% representation of either gender, and i have decided at counsel or any meetings, consistent representation by either men or women exceeds 40%, if it is less than that the meeting is not considered a meeting. recognized as an official meeting.

we are reaching the target. >> we are dealing with a weak yen, we hit 144 yesterday. tell us about tokyo's financial house. what is the report card like? >> i think this is the time to import our export. as i told you, tomorrow the door will be open. tourism is a big industry in tokyo as well as in all of japan, so this is the time to greet more foreign tourists by using this advantage of depreciation of the yen. >> if you could take your best guess of when the borders will

fully reopen? >> soon. >> november? >> the national border is under the management of the central government. as governor of tokyo i would say it would be tomorrow. >> tokyo has a lot of goals, different types of goals, another is to reach net zero by 2050 and becoming the center of green finance. we are still behind places like in europe. what are your thoughts on the problems of greenwashing, and what do we need to do in order to increase japan's presence in the esg green world but in a meaningful way? >> the company should of keeping a good environment and sustainable supply chain with

good views of finance is very important. right after i was elected as governor of tokyo, i decided to start issuing agreed-upon's -- g reen bonds. it was so welcomed by the market and we sell the green bonds consistently. >> [laughter] >> we are more than ranking in government. [laughter] the system was we could not exceed the government ratings but we are double or triple the rating. and that is very important. as i told you the 2000 u.s. dollar asset is sweeping.

why don't we move our assets to work on making a sustainable society? green bonds by the tokyo government and the esg bond with the issuance license. this makes the environment more sustainable, the city of tokyo more sustainable. and also a day before i enjoyed a fresh river breeze by a very traditional boat. it is a good trial.

we have many sorts of energy, wind and also we are preparing for a new ordinance of tokyo to make a publication very soon. and why don't we use our roof in tokyo. shery: tookie's governor speaking with bloomberg. you can watch those live interviews as well, the interactive tv function tv is where you should go to get the latest on the securities and uber functions or become part of the conversation by sending us instant messages

during our show. check it out tv . this is bloomberg. ♪

shery: a check with the latest business flash headlines, a french power distributor oversold large quantities of electricity due to trading errors earlier last week, a mistake that could cost the company over $60 million. the company's union says it made onto the errors on transactions tuesday and wednesday with the cause coming from rebalancing operations. tesla is pulling out a new beta version of its autopilot system which it calls full self driving. elon musk said it is overly cautious. last month he announced tesla will start charging $15,000 for the driver assistance system. paul: you might have seen u.s. stocks rallying toward the end

of the week but stock funds have seen a lot of outflows. u.s. stock outflows, $10.9 billion. bank of america sees the likelihood of an economic downturn increasing in the united states despite the fed aiming for a soft landing. europe as well, 3.4 billion pulled from european stock funds from the week of september 7. fillon talking about and energy lehman moment. shery: there was pessimism in emerging markets, but this may be turning around given that the last two weeks we have seen bailout pledges by the imf, namely for pakistan, sri lanka, egypt, and chile. not to mention that china is becoming more open to offer debt relief. it said it would forgive the

liabilities of 17 african nations. for half of that there is sentiment it could be turning around. the strength of the dollar will not help emerging markets. take a look at how currencies in eastern europe are trading. the strength of the dollar is falling for a fourth consecutive session, and that helped eastern european currencies on top of the weakness of the dollar we have seen. we have seen ukraine's forces continue the rapid advance into the kharkiv region, perhaps one of the biggest victories. eastern european currencies, we are seeing a bit of a turnaround now. paul: under five minutes away from the market open in japan and australia. no trade in south korea today. here are stocks we are watching. stocks linked to the country's

reopening could move, japan reportedly planning to end its barriers to foreign tourism. a copper mine has dodged strike action for now as union leaders agreed to participate in talks to resolve safety concerns. wheat producers, and australian admirable company -- agricultural company as well search -- surge. coming up next we will talk strategy with our guest. you are seeing a risk rally

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shery: you have mainland china and hong kong, waiting on holidays. when the eco-data. we have activity data and the u.s. cpi numbers. paul: we will have cpi numbers out of china and we had a pretty good rally for u.s. equities. australian equities are going pretty well as the week closed out as well. we are a few seconds away from the open. we had --shery: we had u.s. futures open higher. that helps us through the asian markets. we see the nikkei gaining, slightly higher. the japanese yen reversing.

this is what we were watching very closely in japan given that we have seen the 24 year low against the u.s. dollar and a rally in the previous session. authorities in japan warning against a rapid weakening of the gun against the u.s. dollar --yen against the u.s. dollar. the top limit of tolerance. we are seeing crude opening in the asian session under pressure around $92 a barrel. we had a little bit more risk on sentiment when it came to the energy market. that is not being held up in the asian session on this monday. paul: trading getting underway here in australia as well, things do start slowly with a staggered open but it looks pretty positive in the early going.

as a material sector performing particularly well right now, better by 1.5%. they were expecting a positive day here in australia on the back of the strong u.s. equity market. take a look at the tenure for the aussie -- 10 year for the aussie. some dollar weakness, supporting some of the other g10 currencies at the moment. our next guest says corporate margins have become depressed. i could bring the next leg lower in equities -- that could bring in the next leg lower in equities. thank you for joining us. you are watching corporate margins, how concerned are you that they may be on the cusp of an earnings for session? >> into the second half of the

year, particularly, we have had in the q2 earnings, they talk about inflation. they have a mentioned recession and these are the risks that are getting more into the picture as we get into the next quarter. what we are expecting now is that a first -- most of the companies are getting difficult to pass on higher costs that they are incurring because of recession fears. we have seen announcements of sales cuts from several spaces and several industries. we do see that getting more potential into the third and fourth quarters and that will bring the next leg down in equities. paul: we have the ongoing pricing narrative and every developed market's central bank in the moment.

how do we trade around these positions? particularly the upcoming federal reserve decision? >> i think there is growing confidence, most of the speakers have given a unanimous voice. they are fighting inflation and some have called for a 75 basis point rate hike. i think that is already baked in the market expectations right now. i downside surprise in u.s. cpi is likely more of a concern and that could see the dollar weakening further. we could -- that could be a risk to watch. also, the other global central banks are catching up in fighting rates. the ecb had a 35 basis point rate hike and they are considering quantitative

tightening. there is some room for other central banks to capture. i think the fed will remain ahead of many of the central banks on a basis and that keeps the dollars supported until the end of the year. shery: is that why we are seeing the pessimism in the market? taking a look at the parish and bullish sentiment, we see the readings showing that the bears have run the show now. what could lead a turnaround in the sentiment? >> that is one indicator. we also have been talking to clients about it. they were extremely bearish. that is one of the reasons we saw a recovery last week. i do not think that was enough to support that really. the sentiment had gotten too

bearish. as we started the discussion talking about possible earnings recession, the tightening will continue. i think there is a lot more room to get bearish out there. shery: commodities prices, we see the supply shortages, right now wti and others are under pressure. how would you trade that when it comes to energy related stocks as well? >> as a commodity prices have been battling the focus of whether to shift to the demand side or the supply-side. i think demand-side is most active in nature, the zero covid policy to stick by. the recession and concerns we have been seeing because of rapid cycling as well. there has to be an end to zero

covid policy. the recession fears as well, particularly in the u.s., economic data has done really well. overall, there is a sense that u.s. economic systems can bear this tightening pretty well. that puts the pressure on the supply-side. a massive underinvestment in the commodity space for many years now. that does not mean that the supply will not fall short for many years. there are not enough investors in that sector. that will drive commodity prices higher and the elegy sector, that could be a positive back there. paul: some of these commodities are important to the australian economy.

china was a key part of the commodities story in australia. do you see the demand which are in china or the investing picture in china changing? >> that is important politically. i do think that the zero covid policy is something to be extremely strict as we get into the sequence because they had to show success with that policy given the scale that event has. i think it is not clear how that will shape out. what is clear is that chinese policies have to focus on growth . they started out by sending a 5.5 percent growth target for 2022. they do not want to fall. they have these targeted support measures that are coming through and that is helping a lot of the infrastructure companies and

that flows down to the material sector industry as well. i think apple does ship will -- i think it will ramp up. paul: thank you so much for joining us. let us get to a check on the first word headlines. >> ukraine forces have continued their advance, exploiting a collapse in russian offensive. they have taken a key town not far from the russia-ukraine border. russia published a map showing most of the labeled areas as the kharkiv region. the communication university of china was put under lockdown with six cases of covid confirmed there. they have a apologize for shortages of food and medicine in areas subject to covid lockdowns. they are enforcing covid

markdown for the party congress. a majority of thais already certified with the acting premier -- are satisfied with the acting premier. the acting prime minister was the -- was put in office after the former prime minister was suspended. -- the roads have been notifying customers about the service cuts ahead of a possible slide. the two unions representing more than 90,000 real workers are holding out for better working conditions. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: we are watching the trading happening in japan, those reopening stocks gaining ground by more than 2.4%

minimum. given that we have heard from local media, saying that japan is planning to scrap a $50,000 -- 50,000 people per day cap and consider moving other barriers for an balanced tourism and we do have a week japanese yen. that may make it more attractive for those tourists going into the country. paul: on the note of flying, still to come, an exclusive with the founder and chairman of vistajet's, the largest operators of business aircraft. the fed will deliver another supersize rate hike. a preview the cpi in a moment. ♪

>> this is a constraint revealed by the pandemic that will be with us for some time. contributing to inflation and likely requiring sustained policy. i will also argue that constraints continue to bind policy. >> our support continued

increases in the policy rate and based on what i know as of today, i support a significant increase at our next meeting. to get the policy rate to a standing that is clearly restricting demand. >> the ecb can and will act decisively to see that the high prices we see today did not become entrenched as inflation expectations are not at risk of the anchoring. it will move away from this expansionary monetary policy. shery: comments on the rising price pressures and the fed looking for another increase in interest rates this month as officials try to crimp demand at bring inflation back down to 2%. the latest out of the u.s. cpi numbers, will they make any impact on the fed's calculations

at this point? >> not at this point. it is too close to the meeting. the decline of the rate of inflation is too little and there has been almost no pushback from an array of fed speakers including the top ones. the idea of 35 basis points is coming next week and they are in the blackout period. if there is going to be something to steer people away from 75, it will have to come pretty quickly. paul: 75 appears to be nailed on, will this be the last one? >> if it is funny, we saw this in the bank of australia early this month. they said that rates are not on a preset course. they say nothing is off of the table. this striking uniformity

regardless of the economic data of the degree to which interest rates are increased. every policy meeting. at some point, there has to be some variation as we start to head into less restrictive territory. we are still hovering around neutral. you cannot keep having these 50-50 cases in the case of the rba. it is interesting, i would recommend people go back and read the speech from last week. the only top and there are many fed speakers, and all are equal. among the top leadership she is injecting a little bit of a note that let us not forget risks can be too way here. she did indicate that they are mindful of the growth outlook softening globally. keep an eye on her thinking.

shery: talk about the softening of the growth outlook. the expectation so far is that the u.s. economy is strong enough to upset any of the tightening we may see in rates. it can withstand the tightening and for other economies like you mentioned australia, what are we seeing in terms of a global recovery? are we still saying that after the pandemic? -- seeing that after the pandemic? >> a global recovery, do we have one? the imf global growth forecast has been consistently downgraded. we spent a lot of time last week talking about the trade data from china. showing imports fairly on the right side of positive. a significant decline in chinese export growth. reflecting the global slowdown. the u.s. is strong, we are

talking about the labor market. there is not a lot else that is strong. eurozone growth forecasts cut pretty significantly last week. 75 basis point move is to cut out information. as a pmi data here in asia, the workshop of the world is now looking very good. -- not looking very good. paul: bill dudley told us that the central bank will not be making the same mistake it did in 2019 as it reduces asset purchases and shrinks its balance sheet. >> we have the experience of last time to go by. they were surprised by the demand of banks for reserves and they unexpectedly drove the reserves too low relative to bank demand. that is why you had the spike in repo rates. they have learned from experience.

they put in place a standing report facility which is available slightly above market rates. people are spiking up, banks turned to the fed standing repo statement. there would be a big spike or a little spike. the fed will be tapering the right of how it shrinks the balance sheet as we get into the process. we are up to $60 billion in treasuries each month. once the reserves get significantly lower, the fed will slow the rate of asset runoff. they are not going to stop. if. before they think we are at the critical point. they're going to learn from past experiences and i do not think they will make the same mistake this time. >> how we done this before? has the new york fed in lower

manhattan, in an experiment that says this is going to work? or are you flying blind? >> you did the experiment last time following the financial crisis. we had the experience where they shrink it a little too much. they learned from the episode and will not do the things that they did last time. they never slowed at rate of asset runoff, they never stopped the asset runoff prior to the reserve becoming scarce. they do not have a mandate. they do not have a built or suspenders last time -- they did not have a belt or suspenders last time. >> is the built and suspender -- belt and suspenders too strong for the dollar? >> a strong dollar is one of the consequences of the fed tightening monetary policy

aggressively. the fed was at the dollar to be firm because a stronger dollar restraints economic activity and reduces inflation. it reduces the cost of imports into the united states. this is part and parcel, one aspect of how you tighten financial conditions. shery: bill dudley speaking to bloomberg earlier. european union energy ministers are calling for urgent measures to get liquidity to traders hit by massive margin calls. this is bloomberg. ♪

shery: take a look at how european futures are trading at

the moment. but upside -- broad upsides. the best week since late july, european stocks also hosting the first weekly gain in a month. they're looking forward to after , the past six months of $83 billion to put it in context, president lagarde urging a common european approach to fight inflationary pressures. the eu ministers calling for urgent measures to shore up the supply late last week, su keenan joins us with the latest. >> everybody seems to agree that they need to act immediately but the exact manner in which they at they do so is the issue. -- in which they do so is the issue. they're looking to the executive arm to come up with the precise manner of action going forward.

there appears to be a bit of a struggle on certain issues. despite all of the minister's backing overarching plans for a price cap on all gas imports and a levy on power producers, you are looking at the issue. a huge peak in prices, everything turns in 2022, gas prices went up tenfold. they stopped short of calling for immediate reduction in energy demand. that is a crucial step to ease the crisis. the pipeline is being maintained and the fear is that it will be up lately cut off in terms of the as going to europe. -- it will be completely cut off in terms of the gas going to europe. if they have to do something, they have to do something now. they put a price cap on imported russian gas. it only makes sense, it will be

a bit of a difference and it can take time. we have all of these different countries having different manners to store gas, trying to get them through. they are not there yet. as a big announcement will come in the coming weeks. as when the price starts, the eu commission president set out concrete measures for legislation. that is when the measure start to take shape. paul: the ecb says it can offer liquidity to energy firms? >> what you have is these massive, merging calls and it is causing energy traders and firms to struggle as we see the big shoot up in the prices. christine lagarde has rolled out -- ruled out a to these firms. that is the drop of the government.

short-term financing a is struggling, energy traders is not the ecb's role. they provide liquidity to banks, not traders. the call on these governments to provide more liquidity. there is a concern because of the pipe what -- pipeline that has energy crisis is getting worse by the day. paul: 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.

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early 2023. >> charges could come in the future. >> or is the scarcity is from is the liability of the reserves and that will blow out costs. that is one of the biggest risks. >> going through a transition and we have to do it more sustainably. >> it is fair to say that it is going back on consumption. they are doing it because i prices tend to do that -- high prices tend to do that. shery: the most significant shortage will be, the next 12 months, most of the natural gas is a driving inflation as the war in ukraine and tensions with russia continue. ukraine's forces continue the advance in the kharkiv region. the collapse of russian defenses and raising the question of how far they can go.

we bring in a guest. the invasion of ukraine by russia, it has lasted more than six months. how significant is this advanced by ukrainian forces? >> it is extremely significant. it is difficult to convey how fast this has happened. this took russia -- this took russia months to gain. basically the different units of russia to compensate the fact that they have not had mass mobilization. have not spoken to each other or coordinated, a fairly embarrassing strategic feet. not the end, but an embarrassing one for the kremlin. paul: what has the reaction been from the kremlin and what might we expect russia to do next? >> we have seen not much of an

acknowledgment. putin has carried on and opened a fair and congratulated moscow. pretending nothing is happening. we are seeing signs are strained in the russian military and even on russian television. i the game going on -- a lot of blame game going on. he could go to mass motorization. he could also retreat could technically -- retreat effectively and come back. shery: we are expecting president putin to meet xi jinping very soon. what is the position of china as this invasion continues? >> we have seen him a for the first time outside since the

invasion and the two will be meeting for the first time since the invasion in the week. xi jinping will find themselves under an upper of -- under a lot of pressure. they are meeting on the sidelines of a broader summit, it is not because xi jinping is going to moscow, moscow should keep expectations low. paul: let us get to a chart of the first word headlines. >> the biden administration reported that chinese chips are used for spy intelligence. they would codify restrictions on communicators to companies like nvidia.

sources say brazil's presidential front monitor -- front runner is a key running mate if elected. the candidate could lead several important ministries. the candidate has committed to a moderate clinical and economic agenda. sweden has overtaken the president. it includes the democrats, it is likely to gain 195 mandates. the alliance is led by the social democrats. this is a party those previously shunned as extremist by the political establishment. china plans to launch three unmanned missions to the moon in the next 10 years. they have discovered a new donor mineral that contains the helium-3 and maybe a future

energy source. space mining is a piece of contention. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. paul: rapid cool down in real estate is threatening to worsen the economic downturn. a key variable for central bankers want to tamp down inflation. bloomberg's correspondent, what is the impact of a rising interest rate on housing? >> one of the big stories from the pandemic was a huge increase in the house prices around the world and that was because it was so to to borrow money. we are starting to see the reversal and it is global and happening in most developed economies. central banks are increasing their own interest rate and the is blowing through to the cost of borrowing. some economies like australia

and new zealand and canada for example, sweden, others, house prices like the u.k. and in the u.s., goldman sachs saying that priced growths are going next year. an unwinding of the some of those pandemic gains, not talking about a house price crash that we saw back in 2008. this is a crucial one for central banks. looking to raise interest rates and manage a soft landing. that will be critical to all of that. shery: is this what policymakers wanted to see from overheated property markets that were adding to the inflationary picture? now that we have tightening up a central banks, how much of this is actually a problem and how much of this is as intended by policymakers? >> this is what they want, they want to see slower growth and demand. that means prices come off, so

be it. at the moment, we are seeing a pickup in the deceleration and so markets like canada and new zealand quite pronounced. take south korea, policymakers are worried about the number of people and the exposure they have to rising interest rates. it is a policymaker want, they have that when people in for big gains, all of this is true. the trajectory is more or less on track with policymakers. very uncertain and fragile global economy and policymakers are aware this takes a long time for the rate hikes to play out. shery: the property sector in china is a whole different monster? >> the central bank is not putting up houses for mortgages, the world economy is now in a synchronized global property

downturn, china's is so pronounced it is 28% of total economic output. they are in a slump. the bottom to china's real estate. real estate prices are adding to consumer and in perks, adding two households, and all of the rest. that is not happening in china or the u.s. or anywhere else in the world. because prices are coming off of the bottom. shery: coming up next, as japan is set to move closer two scrapping covid rules for international travelers, an outlook for the business in the aviation market. this is bloomberg. ♪

paul: tokyo's governor says the efforts to increase women's participation is being reflected in government ranks. we spoke to them about the push for quality in japan. >> i have worked to provide opportunities for women to play active roles. this is to the government with women making up 20.2% of manager

roles. to further progress women's participation in the decision-making process we have introduced a quota system. ensuring that 40% of either gender. we are almost reaching the target. what we need to do in order to increase japan's presence in the esg green world in a very meaningful way? >> as a of keeping good environment and a sustainable society, with views of shyness is important. also the esg bond would be issued quite soon.

this makes the environment and sustainable or city of tokyo be more sustainable. we are preparing for an ordinance in tokyo to make obligations to the house makers to put a solar panel on the roof. shery: speaking with bloomberg's reporters. she wants to see the reopening of borders in japan very soon. we have heard new reports of an easing on restrictions from foreign arrivals. our next guest runs vistajet, the largest operator of business jets with more than 85 airplanes. the founder and chairman, thomas joins us from one of his planes.

it was great to have you with us. talk about the growth of margins you are seeing in japan and why is that when restrictions are still in place for foreign arrivals? >> japan is a very important market. we are at the hundred 50 aircraft, not 85. -- 300 aircraft, not 85. japan is at the center with china being more close than japan but we see things opening up. shery: what is the difference between tourism flights and the business flights you have seen so far? have they been dented as much during the pandemic? how has that been felt across your business? >> the business flying is what has boomed in the pandemic because of the commercial

infrastructure. executives needed to fly to remote locations, the counterparties meet their subsidiaries or business partners. that is what stepped in and connected the world while the airlines actually had to produce -- reduce their capabilities. paul: business class is coming back but is still very high, do you find your customers are saying business class tickets are so expensive i may as well take a private jet? >> if you take this plane, it fits 15 people, if you put that kind of number of people into the aircraft to get very close to the numbers in terms of total cost of the trip. as extra flexibility and the safety to be shielded from all of the touch points of covid

that the private jet industry has commissioned and found that there is proximally 20 points versus 700 in commercial aviation. a safer way to travel. paul: things are changing back to the way that they were, airlines are ramping up capacity . as a of covid is proceeding. do you see these as threats to your business? >> it was always about being the alternative for business aircraft ownership. 23,000 corporate jets in the world and we are replacing those corporate jets. the average utilization is only 250 hours and year -- a year. our price point is lower per hour than owning an aircraft. it is our major market replacing full and fractional aircraft ownership and that is where we take the market share. that has us through the airplane

and spanning across the globe today, covering every continent. paul: private jet travel is convenient for business travelers and glamorous as well. also terribly environmentally irresponsible. what are you doing to mitigate your carbon emissions? >> business aviation represents 2% of the total aviation pollution. we have committed to be carbon neutral by 2025. impressive goal, 25 years ahead of the industry. sustainable fuel, new aircraft, the first green aircraft. we have a whole series of actions we have put in place at the company, our members, 89% of our members have financial contributions through our education process that they actually decrease the hourly rate they are paying to contribute to being carbon

neutral by 2025. paul: vistajet's founder and chairman, thank you for joining us. that is have a check on the -- let us have a check on the headlines. printing errors last week, a mistake that could cause a company more than $50 billion. they make quality -- quantity errors and this came from volume adjustment operations. tesla is rolling out a new beta version of its autopilot system which it calls all self-driving -- full self driving. the version is overly cautious around pedestrians. db start turning $15,000 for the system, the second price rise this year. -- tesla will start charging $15,000 for the system, the

second price rise this year. officials describe a severe covid situation. catl was the biggest battery supplier for tesla in china. two indian cement makers report they got new board members. two long-standing board members stepped out after the acquisitions are completed. shery: chinese authorities are apologizing for food and medicine shortages. areas have been under covid locked out in the past month. this is bloomberg. ♪

paul: chinese authorities are apologizing for food and medicine shortages in areas of covid lockdown. let us bring in our north asia correspondent in hong kong to see what they are doing about this. >> a month until the party congress in beijing begins on october 16 and local authorities all across china are under pressure to make sure that these outbreaks have been popping up

in various parts do not get out of hand that they also do not want to cause social instability. that is why there is a balancing act in the far west, this is in an area that is highly controversial because of the crackdown on the minorities there. also because of the work camps that are there. using an outbreak in the north, the border with kazakhstan. a city of 500,000 people, it has been a lockdown. shanghai gets the lockdown -- headlines, but this area has been in lockdown for a month now since august 11 and they have seen claims of food and medicine shortages. that has missed rolling across the chinese social media and the

local authorities did apologize for some shortcomings and are bowing to fix those shortcomings and make sure that people's lives are not inconvenienced by this month-long lockdown. losing a flareup in beijing which is a sensitive ahead of -- there is a flareup in beijing which is sensitive ahead of the meeting. in eastern beijing to have had a campus put into lockdown. they will keep on doing covid zero until they have things under control. shery: the impact on firms have been closely followed, catl could be affected. what do we see in terms of supply chain pain? >> the biggest factory is in southern provinces, and a lot of auto parts manufacturers are in the area and they have been in

lockdown out of the supply chain has been affected not only by covid zero but by the severe drought that is causing power outages. this factory that does apply tesla and other big automakers has been put into a closed loop system as in the areas around them have been put into lockdown. another city near the area where the factory is in has been in lockdown, residents have 1.4 million of them, they have been ordered to stay at home. foxconn, vw, a big auto parts supplier, they all have a closed loop system in and around the city of 21 million. paul: our chief of asia correspondent there. let us see how trading is around the area at the moment. a public holiday in south korea,

in hong kong -- westerly it we are up by 1.7%. the sector is up by 1.8%. stocks in japan pushing higher, the nikkei is better by 1.25%. we do have a positive close to the week. a flat start, up better by a third of 1%. shery: we are watching u.s. futures trading at the moment, we continue to see some gains. remember, all 11 major industries were in the great on the s&p 500. perhaps some bargain hunting in u.s. markets as well given that the s&p 500 is trading around below 17. that was below the 10 year average which is about 17.25. we have the vix falling around 20. treasury, a mixed picture in

asian trading. 3.3%. we are watching a two year yield at the highest level since 2017 and expectations of an outside hike. we have markets closed across asia and korea, away on holiday. ahead, why central tightening will lead to a synchronized downturn in the major economies and navigating further volatility in a european natural gas market. global markets, china open is next. this is bloomberg. ♪

>> good monday morning from hong

kong.