haidi: good morning, we are

counting down to asia's major market open. shery: the top stories this hour, a 75 basis point rate hike as new inflation surprises come in coming forecasts. haidi: a down session on u.s. stocks on the back of an cpi trend. shery: the nasdaq losing more than 5%. as i said, the yield sensitive stocks took a hit with a technology stocks leading the decline with services stock as well. the s&p 500 was down, the worst day since june of 2020. we have wti prices and oil in the asian depression -- session,

that the biden administration may be restocking crude reserves . it was not that much harder than expected. especially when it comes to bonds, they plunged. we are following the sensitive two year yield. that is not by as much 20 -- that is dumping by as much as 22 basis points. taking it to the highest levels since 2007. haidi: it is all about the inflation reaction as we get into the trading in asian markets. we are seeing a downside when it comes to

are relative to value, a decline of over 2%. we have another cash trading in a little bit. the dollar seeing a little bit of a slowdown, the risk of sentiment really denting a number of the risk currencies and commodities including the qe dollar -- kiwi dollar. that is extending across the g10 space. kiwi stocks by down over 1% -- are down by over 1%. it is all about inflation topping forecasts, expectations for a drop in u.s. price pressures and this is for amending these bets on a big fed hike. not only for higher or longer but, look at the breakdown, we have been worried about the fed speakers have been saying it may be longer to resolve. food and medical care are some of the largest

perpetrators. a climb of 8.3%, a little bit of a deceleration largely, that is because we have seen the pullback in gasoline prices. shery: what happens next? will consumers be spending more taking the cpi even higher? it is worrying people and we are counting on treasury yields jumping. perhaps even 100 basis point rate hikes? you can see how that wipes out technology, the two year yield shot up and you have this falling. this is a decline of 4% or more for the nasdaq 100. even those technology giants would consider a defensive closing were not there today. reacting to this hot inflation data, let us bring in ed ludlow. and emily rafael as well.

give us the picture today on the part selloff on closing stocks and bonds. >> before we had the inflation reading, equity investors were optimistic, they had built on a long position. the idea is we will not see a fed pivot but at least inflation has cooled. maybe rate hikes will not be as aggressive. it was hotter than expected, we started to see yields shoot up and stocks sold off and the talk of potentially a 100 basis point rate hike which would be the largest hike since 1984 started. traders were -- all of these sources i spoke to said they still expect a 75. that is fully priced in, 100 is on the table. haidi: because of those expectations, inflation is cooling and we are telling

investors to more into the biggest technology udf? -- etf? >> one of the questions around valuations is where do we go from here and valuations? the market changed so quickly, we were anticipating it would cool off and then reality hit home, you are right, nvidia traded 30 times future earnings, in the mecca cop, dazzled off as well. there are questions on whether the market really felt last night when we got our minds brought it, the inflation is to cool off. what was going to happen? 100 basis points with almost unthinkable. the chatter around 100 basis points was impacting technology. the mega caps have disordered the picture because they sold off as well. haidi: twitter bucking the

trend, a gain in the stock in particular? >> those who are tracking the deal with elon musk points to a lack of a smoking gun. the whistleblower would talk about the president's -- presence of bonds on the platform. it is a focus on the security vulnerabilities. the chaotic nature of management and so, we move on to this trial as much as we started today, nothing has changed. the judge has the same issue to consider. the allowed whistleblower filing in that anyway, the stock is interesting. the spread that is a gap between the current share price and soft indicator of how the market seems to go. the stock went up in a savage market today, we take that as a

soft indicator along with our repertoire specialist, the deal is happening and it is still high. haidi: not just before weight saw the big fed steepening, we saw yield surging? >> we saw that policy sensitive two year yield do with the highest level since 2007 as we saw the yield curve starting to come further inverted. it has been inverted for a while and throughout the day as traders were continuing to anticipate a 100 point rate hike and in the afternoon we did have an 30 year auction that produced stronger demand than expected. we expect yields on the 30 year bonds, we finished today in new york in negative territory so the yield curve is inverting. the narrative is the same.

they talk on wall street is good this tip the u.s. economy into a recession -- could this tip the u.s. economy into a recession? shery: the inflation fight looks tougher than ever. kathleen hays has the latest on the cpi numbers. the headline numbers were not as good as expected. it was the composition that took many by surprise. >> bloomberg economics said that gas price drop was the only good news in this report. that kept the headline cpi from getting worse but this did not follow as much as it was supposed to. what the fed has feared is that they do not get inflation under control as fast and they cannot, that is what is going to lead it to be more and more of a problem.

look at the tour on cpi and core cpi, -- chart on cpi and core cpi, the core cpi was up zero point -- 0.6 percent in the month of august. the headline cpi was up 0.1. year-over-year you have the headline cpi of 8.3% year-over-year while the core cpi is up to 6.3%. it was supposed to be 6.1 but not much higher. we go back to the point about wages. wages are moving higher and that is a concern about the core cpi looking not so hot. we are moving up but inflation is moving more. people go to their boss and ask for a raise.

apparently because of the labor shortages people are getting them. you see this in the core part of the cpi. going beyond rentals, going beyond the implied rentals into mortgages which are growing and expected to keep growing. you have transportation, health care, it is spreading out. that is why people are pounding the table about the fed being behind the curve. they would do a 100 basis point hike. alice greenspan did it back then because they did 150 basis point rate height of october, he had to schedule a meeting because of an election. he waited and then he did a 100 basis point hike. there was a bloodbath in the u.s. treasury market the following year. that is hanging over the question of how fast they are going to go.

they pretty clearly signaled that they were open and ready to use 75. jay powell seems reluctant to make a move that is not priced into the market. what he do a 100 basis point rate hike without signaling it more subtly, i do not know? he cannot give speeches right now. haidi: let us get you over to vonnie quinn. >> the european union is moving towards an energy company and when the alien on revenue from power generators there is a levy on fossil fuel companies and amendatory consumption cost. filters are rationing and trying to contain the current crisis. vladimir putin oil hash out a meeting with china and

india's leaders. 15 municipal legislators are calling on him to resign. military aid for kyiv after a shift of momentum after ukraine recaptured a land in the past week. xi jinping and russia's vladimir putin will hold their first impressive meeting since the invasion of ukraine. it has almost been 1000 days since he has been abroad. they will meet on the border of you pakistan. -- use pakistan. chinese authorities are said to tell state owned firms to examine their exposures. the local commissioner receiving statements made requests. the moves reflect concern about the conglomerate who shares and

dollars loss have doubled in recent months. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg haidi:. close look at our -- a close look at our clothing line news. carol schleif of the bmo family office llc joins us in a moment. this is bloomberg. ♪

>> the corporate for today was not fantastic. >> inflation is going down. >> not at a rate the fed is comfortable with. >> the number is going up with the november expectations rising as well. >> 75 is on the table. >> there is not going to be a pivot anytime soon. >> markets continuing to predict that the senate begins to cut in the next of next year, that needs to come off of the table. >> it and put the fed into

overdrive. -- it puts the fed into overdrive. haidi: guests weighing in on cpi data implications for fed policy. let us bring in our next guest, it is deputy cio of bmo family office llc. there is a cut in the second half of the year, and only that, looking at potentially another 100 basis points. has that been single enough for the market in term of expectations adjusting? >> we do not think the fed needs to go to 100 but the market is backing away from the stated comfort with 75 is premature on the side. we think that they are going to bring inflation down. we do not think there is a need

to go to 100 basis points and we did not think we would be in a place to cut that security. these inflationary pressures are endemic especially when you start talking about wages and rent. it is hard to get that out of the system. haidi: how do you trade the situation at the moment? we saw a big hit when it comes to some of the pockets of the market including technology. what about opportunities? >> i am not sure that you are trading actively as much as they wisely invested. i think we have never -- we think there is little to push markets violently up or down. today it felt pretty violent. you are looking at it from an intermediate standpoint, trading in a pretty wide range and markets had tried desperately to spend able case and fight the fed and that is a dangerous place to be.

from an investment standpoint, we think you can focus intermediate and longer-term and the positives happening and underneath it all we do have a great deal of fiscal stimulus on his way into the market to take the place of the monetary stimulus. there are things to look at, in the short run, people focused, it is tougher than the focus a quarter or two out. we wanted more information, there is more beta coming this week in terms of what consumers are doing this week. we will be able to parse through what company managers are saying about how inflation is impacting them and there may be some signs in some of that that the inflationary pressures are going at the margin for some companies. that would be a positive undertone for markets. haidi: we are expecting a slowdown in the month of august. given that gas prices have fallen so much, could this add

to consumer spending even more so that they have -- because they have a little bit more cash on the side? >> i think that is pushing consumer spending, i think pent-up demand. the summer trips are over, the college visits or overcome the kids are back in school and parents are back at work. we see more come into the labor force. i think some of the cautionary work, people will not necessarily spent exuberantly and they may be waiting for some deals because of the heart of all of these retailers who have inventory stacking up. maybe they stretch out the christmas selling season? consumers should be a lot more circumspect than they are given credit for. haidi: if you have the same investment in the stock market, how does the u.s. compared to the rest of the world? >> the u.s. is where we want to continue to place our focus.

europe is facing a lot of issues that asia is facing as it relates to our hostilities and potential disruptions to the supply chain. the energy crunch and they slowing, the u.s. is facing a potential for capital investment happening here. infrastructure structure -- infrastructure spending happening here, green technologies and health care and other places like that. if you look beyond the next month or two or economic statistics, looking at how intermediate turns into 2023, you can see some interesting things to shape up from a spending standpoint in the united states. shery: given the deceleration given the dollar strength, those companies have been exposed overseas. they are behaving differently to the tort on the bloomberg, given

that we are seeing new strength, you need to make the classification a little bit more sharp? those who have overseas exposures versus those who do not in the u.s. market? >> the exporters. you may see some european companies and others that it is tougher to do business there. they decided they wanted to put plants and manufacturing capacity closer to consumers and they started investing in the u.s. too and that can be interesting. it could be a rebuilding of the manufacturing infrastructure. it would be lost from the 70's and 80's. shery: thank you, the deputy investment officer from bmo family office llc. go to dayb , customize your

settings so you can the information you care about. this is bloomberg. ♪

shery: here is a quick check of the latest business flash headlines. jp morgan may fall by half in the third quarter. clients are sitting among the sidelines around the around inflation, fed hikes, and a possible recession. the bank needs to be very careful about headcount reduction. citigroup has warned of the trading revenue will likely drop in the third quarter in line with the part slowdown hitting wall street. the cfo says that sales are likely to drop. investment banking revenue is likely to fall 50% as a client

sales hit the sidelines. twitter shareholders have approved the $44 billion buyout, paving the way for a trial next month to decide its fate. elon musk is trying to scrub the offer he made in april saying what he said about bought accounts. -- bot accounts. regulators are following a response to a whistleblower testimony. he says at the company had outdated software and had personal user data and a nuclear security policy would he emphasize what he is always ineffective enforcement from the ftc. taking a look at the to head for australia and new zealand, we have the balance for the second quarter, the first quarter, just

over 6 billion kiwi dollars. the volvo group to supply responsibly resource to low carbon products and the financial view reporting that the equity raise was 3.1 billion aussie dollars. it should have a chicago skyway deal. inflationary pressures around 5% more expected than a year ago. we discussed the inflation with the ceo of american apparel & footware association. 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.

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australia.

tencent has won approval for a new game since chinese regulators froze licensing. it is among 73 titles cleared by the publication administration. they small arrival also made a new list of approved games. china had a crackdown when regulators halted licensing. saudi arabia says it is adjusting one million barrels a day last month. this came at a reported number since april 2020. the increase follows the disagreement to speed up the return of covid supplies to key consumers and tema soaring fuel costs. -- tema soaring fuel costs. queen elizabeth has arrived at westminster hall where her body will lie in state until her funeral. thousands of people lined the street as the her estimate is way past -- as the hearst

made its way past. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. haidi: we are watching higher prices in the u.s.. consumer prices are less expected in august and old measures coming in above forecast. apparel prices were not immune, jumping 5.1% on the year. as we wait on numbers this year, let us bring in the ceo of american apparel & footware association. good to have you with us. where do we see the biggest gains? >> we saw gains across the board. apparel prices were up 8.6%, footwear is up 6.8%. you have to remember as price increases for apparel and footwear, they are deflationary. we see his work price increases

-- historic price increases. it is not something we can tolerate much further and that is why we are asking the administration to step in and provide some inflation relief. shery: this was because of supply chain disruption, what is happening on the ground? there israel, ports or trucking services as well -- there is rail, ports, or trucking services as well? >> some of our major rail and transit hubs, we are looking at a potential rail strike this weekend. americans are fed up with high inflation and stories from washington that they cannot take action. this is a time for all of the stakeholders and employers and employees, all of the policymakers to really come together and find solutions.

not invite new problems which were experienced this weekend if we are to see a real strike. haidi: what issues do you see with the supplies going into the holidays season? >> we see supply chain costs that we are still during the burden of that date back to the top administration, in the next few days we see the tariffs collected by the biden administration be more than the amount than the trump administration. the supply chain costs stay with us, the tariffs, we see the high inflationary pressures. we have budget conscious consumers that will be talking about looking for good deals and that is starting to show up in lower demand. the solution is that consumer demand is strong and this is a consumer driven economy. we are looking at some

difficulties later on in the year. haidi: we have seen that pullback, what of the early pullbacks we have seen in inflation on account of lower energy prices and lower gasoline prices. do you buy into the narrative that with cheaper energy costs that will flow onto appetite for discrepant mary -- discretionary spending? >> these are items you have to have, your back to school gear, clothes and shoes if you are doing experiences. experiential consuming these days. you need to have the right clothes and shoes to wear and have them for school and as the weather turns colder. these are basic items. consumers have to spend money for these basic necessities if their fuel costs are going down, there is a little bit more power to purchase clothes and shoes.

unfortunately, clothes and shoes prices go up and that means them as well. shery: president biden hosts a celebration for the inflation reduction act. you mentioned some tariffs relieved that could help businesses. what conversations are you having with the government and what are you expecting next? >> we have been talking to the president directly and this is something that the president does before he even ties the shoelaces. the tariffs are no longer strategic, we do not think that they ever were and they are highly aggressive. they fall on lower income americans. if you are looking for something that is quick and effective and tight target relief, you have to look no further than tariff relief. the administration is looking at this as a function of trade leverage with china. we are not going to get leveraged with beijing by making

it more expensive for americans to get dressed every day. shery: the ceo of american apparel & footware association. we are talking about the pressure that governments are facing because of the inflationary pressures and the government in latin america are talking about high levels of inequality. social unrest really spreading from the likes of panama to peru to ecuador and we continue to see prices surging and one third of the entire region of costa rica meet the definition of poverty. you have food and fuel rises. haidi: it is a vicious cycle in this part of the world because we have seen at least seven of these countries central banks have rate hikes of 250 basis point or more but that failed to make much of a dent when it comes to the price pressures. we have seen these governments

being forced to deploy tax cuts and deploy social programs, it is already where economists are saying that there are more price purchase to the outside but even worst, -- even worse when it is driving up food prices which is so key. that is one as people we see this global narrative of inflation hitting very differently and hardest in some parts of the world and some pockets of certain economies. we get more on the meeting between xi jinping and vladimir putin amid the ukraine war and china's economic slowdown. this is bloomberg. ♪

shery: u.s. futures slide higher in asian trading. even though the u.s. tech giants were seen as defensive holdings like amazon and apple falling more than 5%, the guest one day loss is september. very yield sensitive stocks we have seen a two year yield jumped to the highest level since 2007 as traders are pricing in not only 75 basis point hike but up to 100 basis point hike being priced in as

well. haidi: take a look at chinese adrs, they took a deep tumble earlier off of the cpi data. nasdaq 100 closing in the red, we are seeing the likes of alibaba, billibilli after the report that u.s. is considering a sentient package against china to deter it from invading taiwan. when we hear from this report that the sanctions could take effect beyond measures already taken in the west and the eu and is under pressure to do the same. speaking of china, xi jinping is embarking on his first trip abroad in the 1000 days. he is meeting in uzbekistan.

a lot is at stake when he leaves the country. what do we expect? >> it is a big geopolitical leap. you mention the taiwan report, that adds some headwinds for chinese listed stocks in the united, a lot of different things will be happening this week. it could test those adrs and whether it is the beginning in hong kong and anything that comes up, any news that comes out of this summit tomorrow is expected to be between xi jinping and putin will have an impact on market. back in february, the ukraine war began, chinese stocks saw a selloff because of the so-called no limit partnership that he and putin have weeks earlier solidified. china could then be facing other

sanctions from the united states because of the potential indirect collection -- connection in ukraine. anything that comes out of the summit between xi jinping and putin in uzbekistan could have a similar impact. for putin, he needs china's support. perhaps the war is not going as planned and as for xi jinping, he is again steadfastly sticking with this plan of decentralizing western institutions and creating a narrative from the chinese perspective. he is also going to be going very soon to the g20 in bali. those institutions he will not be able to necessarily set the agenda. with vladimir putin, they will be able to set the agenda tomorrow in uzbekistan and control the narrative. it is very sensitive time for xi jinping as it is rare, if ever

it has happen for a chinese president to head abroad so close to a party congress. perhaps he feels he has already solidified his domestic support and he sees some urgency needed in this meeting with putin. haidi: he is going to uzbekistan first, that is where he launched the belt and wrote initiative -- road initiative. the chinese listings in the u.s.? >> this reached chinese and u.s. officials last month to potentially avoid the delisting of 200 chinese listed companies in the united states. this is a confrontation that has been brewing for decades but comes to the four regionally with with legislation that is required for beijing to turn over their audit books to stay

listed in the united states. as it requires all under -- other countries. it is just china and hong kong who have held back to date. we are hearing from sources that the public accounting -- public company accounting body that essentially has inspectors to look at the chinese audits will come to hong kong and reportedly as early as this week to begin the process and it is an extremely complicated process. chinese officials have insisted that they are a part of the inspection process. how will these documents be transferred out of mainland china on thumb drives, electronics, are they stacks of papers? there will be a lot of different obstacles to be overcome and the officials will have to determine whether what the chinese companies and what china has

provided u.s. inspectors is sufficient enough -- sufficient enough for them to check off the box and say that china is complying. it could be a very contentious or a problem-solving solution to this decade long standoff. shery: stephen engle joining us from hong kong. be sure to tune in to bloomberg radio to hear more from the newsmakers. broadcasting live from our studio in hong kong, visit through the app, or bloombergradio.com. plenty more ahead, stay with us. ♪

haidi: investors are pulling cash out of exchange traded products outside of the upgrade that is expected as early as when this day. the ceo of consensus assistance and the cofounder of the foundation says the merge will have enormous impact. >> we think it will be nothing and probably nothing is a playful phrase in our ecosystem that indicates sarcastically that we think it will be enormously impactful but it will also be very likely nothing in the sense that there is no

disruption. it is going to be experienced by users. there is virtually no disruption being experienced by software developers. it will be as smooth as if you are on your laptop and it operated overnight. in terms of impact, in the history of our ecosystem, there have been two major events so far. the attempt to bitcoin and the development of ethereum. this locks in as number three. >> your painting eight picture of smooth -- you are painting a picture of smooth sailing. there is no real world proven it yet. what is your concern that there is potential to go wrong? >> tiny, little concerns.

there has been so much testing that the merge is overwhelming, we are likely seeing it be very smooth but we have not tested it in the context of the whole ecosystem which has become an economy in its own right. little projects that may be read from the blockchain. of those little projects have not been upgraded to what they need to update to form their own smooth transition but the services that depend on the blockchain have already done the work. >> we have talked about those concerns, exchanges have, the reason is that they are pausing withdrawals is including being layered, how they interact with ethereum after the merge. are there changes that need to be made for any products tied to ethereum that they need to change it react to this merge? >> we have been telegraphing

this for many years and telegraphing it very explicitly for many months. as i said, all major infrastructure have done the work and so there is nothing to be concerned about. >> you mentioned the system around it too, what is your expectation about how the economics change? is there a sense of how much people are going to stake with the initial months of the merge and what that will mean for if you are doing work? >> this is an enormous amount of ethereum stake in the chain and the execution chained together and into a single system. there's is already a huge amount of aether state and we expect the overhanging uncertainty,

once it is complete, many more actors including institutions and financial institutions will take that as a cosigned that the coast is clear and they can trade a yielding asset as something that they want to participate in as correlated or uncorrelated asset. an infrastructure they already consider a potential -- already consider a substantially imported in the future and gain expertise. we have spoken to many institutions that are ready to dine in. shery: that is joseph speaking exclusively with kailey leinz and sonali basak. here is a check on the latest is this flash headlines. the trial against a man who they say it was a serial lighter --

liar. the niccolo one model is not even functional when it was unveiled in 2016. it was -- the defense is saying that the prosecution was distorting the facts. he face a five years if convicted. volkswagen has agreed to buy stock, volkswagen has said it is over the evaluation of 70 billion euros. it is looking to finalize a price range and take investor orders early next week. starbucks jumped after boosting the outlook for sales and profit on rapid expansion and the expected recovery in china. it sees earnings rising 15% to 20% in each of the next three fiscal years. sales are a key metric and they

are seeing rising 9%. haidi: twitter shareholders have approved the $44 billion buyout paving the way for a pile next month. bloomberg's sarah joins us now. we see training to the base of its own story, a selloff we saw across technology stocks overnight. >> it is really an indication that shareholders, even though they are going through the deal, they do not expect it to take place. the trade is well below the 54-20 deal price and we are looking ahead to the trial where we are going to try to say elon musk agreed to purchase the company and wants to make sure that he goes up with it while a lot of our sources are telling us that the laws are in twitter's favor.

elon musk has a lot of power and will do what he thinks he wants to do with his money and he may not be able to -- he may not end up getting out of this deal. although they shareholders have approved it, it is far from over. haidi: what impact does the testimony have on how this could unfold for twitter and elon musk? >> we do not think that the peter testimony has a large bearing on whether this deal will happen or not, it is convenient timing for elon musk that this is occurring now. we do see quite a curve based on the testimony today is from rethinking around regulation of technology companies in washington and senator graham and others said they wanted to come up with a new regulatory framework for technology.

for security and content moderation and the issues that twitter faces on the stands. peter talked about outdated security protocols and ways that they are using data that would be concerning to him. i should note that twitter says this is an employee who was fired from the company and we should take what he says with a grain of salt and others say he is a respected member of the security community. we will see how the division is fair. haidi: much more to come. this is bloomberg.

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