haidi: welcome to daybreak australia. shery: the top stories this hour. u.s. stocks slide with the s&p 500 hovering just above a key threshold. treasury yields klein. -- climb. china's president xi jinping says he and vladimir putin canned -- can inject stability into a chaotic world. the s&p 500 managed to stay just above 3900. it's the lowest level in two months. growth stocks really being pressured. we are also seeing treasury yields climbing but still the two year yield the 2007 hi.

the twos intends are deeply inverted. we continue to watch oil prices in the asian session down below $85. we heard from the department of energy about the u.s. emergency crude reserves, but that wouldn't be added until after fiscal 2023 so we are the supply demand picture. where watching fedex plunging. we had the jobless claims numbers falling for five straight weeks. when it came to the retail sales numbers, a surprise to the upside. the previous month july numbers it was revised downward. we also had empire manufacturing numbers. investors have a lot of -- a lot

to digest today. >> that is exactly the narrative we are getting going into the final friday session for asia. asian futures trading broadly are showing a picture of retreat. we saw a risk currency flee away from the assets. terms of what we are watching today, we will be watching out for details. the dollar yen is holding steady . shery: today the big story going into the morning session was the

potential rail strike. we had u.s. natural gas selling off after the strike was averted then they reached a tentative deal between railroads and unions. this we were watching closely because we have seen the supply chain disruptions and how they affected the commodity space. we have had this labor disruption that added to supply chain constraints. this has been affected from everything to production cuts to crop losses to the war in ukraine. haidi: speaking of the war in ukraine, we have this interesting high-profile visit between vladimir putin and xi jinping. vladimir putin saying he understands china's concerns over the war in ukraine. he said we understand your questions and concerns, our two

countries could inject stability into a world of chaos. vladimir putin saying he is talking about the balanced position of the chinese friends offering to explain in detail our position in ukraine. we continue to watch that key relationship. this is key for investors as we get into this final session in asia. as you went through the latest batch of data, let's bring in our contributor. how are we going to set up the ending of this week particularly going into next week? >> a lot of ways, the key data point for me was the jobless claims.

those fell, that underscores labor market strength and that is a key part of what the fed has been looking at. they're very concerned that elevated inflation plus tight labor market equals wage price spiral. it is not too much of a shock in the wake of that and in the wake of any other, there were some concerning signs about the u.s. economy but not to concerning. people try to tell the fed, someone was saying the other date don't hike by 75 basis points because you're going to drive the economy into recession. the response has been look at the jobs market. where is the recession when the jobs market is this strong? in that case, you have to say 75 basis points is definitely going to happen, maybe 100. that helps to explain what went

on in treasuries where yields rose across the board but a lot more at the front end. we got those yield curve inversions due to what's going on with perceptions of what the fed is going to do. you also have concerning data points for the longer-term outlook for equities in the economy in general. the way mortgage rates keep soaring, the highest since 2008, that underscores the potential for weaker demand even as we have the fed looking like it's going to make it clear it's not slowing down. shery: talking about how the countries of the front end of our recession that the u.s. has an addiction to debt and needs rehab. this coming at a time when it has been such a hectic week.

happy asia friday. even the yuan. >> it's a little bit to relate -- too hard to get relieved about it being friday given how much is coming down the pike. for 16 straight days, the stronger side to the yuan than expected. this might not be enough to make it substantially -- to keep it from going substantially above seven. there is so hope that retail sales will stabilize after a disappointing set of data that came out for the previous month. there have also been lots of signs that china continues to struggle.

we have a fascinating potential for what goes on with the yen. that was an outlier overnight. it was stable after they drew the line in the sand. will the yen continue to offer stability while everything else is selling off against the u.s. dollar? shery: geopolitically, we have been watching xi jinping and vladimir putin meeting for the first time since russia's invasion of recurring. the leaders are bowing to support each other. for the latest, let's bring in stephen engle in hong kong. this was a challenging tricky delicate dance for xi jinping. he called vladimir putin an old friend. what stood out to you? stephen: old friend. that's a term that chinese leaders and generals used. does it mean a lot? he called joe biden that when

they had a videoconference. old friend. you have to read between the leads and see exactly what is happening. a statement was put out after the meeting saying that xi jinping told vladimir putin they are ready to work with russia to support each other. they have to decide or determine or decipher what kind of support that will mean. clearly on the energy front, there will be support. diplomatically, there will be support. they are side-by-side in the face of what they both call provocations from the united states and its allies especially over sensitive issues like taiwan. vladimir putin mentioned taiwan many times. will that support include

military support? if chinese military hardware starts showing up on the ukraine battlefield, that could invite u.s. or western sanctions against china. that is the delicate dancing act that xi jinping is going to be doing in this two-day meeting in his pakistan with vladimir putin. he acknowledged that china probably has a lot of questions and needs some answers on the motivation and reasoning for the invasion in ukraine. if you go back to february, you see that no limits partnership that they reached between moscow and beijing ahead of the olympics, ahead of the war in ukraine. was xi jinping taken by surprise or did he know what was happening? >> that's fascinating.

let's get you to vonnie quinn in new york. vonnie: the uss announced a fresh wave of sanctions against russia. the state department has sanctioned 31 defense technology and electronics entities. the treasury department has imposed restrictions on 22 individuals. the u.s. has averted a rail strike after companies and unions reached a tentative deal. the agreement came after 20 hours of talks including president biden. now the deal goes to union members for a ratification vote. rail workers say they are trying to resume operations. >> today is a win for america.

together we reached this agreement that will keep the rail system working and avoid disruptions in our economy. vonnie: in a bid to prop up its currency and curb inflation. this comes a day. economist expected the inflation to accelerate to 95% by the end of the year. a new report from the world bank says the global economy may face a recession in 2023 due to tightening an adequate to temper inflation. investors expect central banks to increase. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries.

i'm vonnie quinn. this is bloomberg. shery: the macro economic weakness is weighing on fedex plunging and post market trading after withdrawing its forecast saying preliminary results fell short. ed, this is a very important story showing us the him clues about the global economy. ed: fedex has a global purview. there are things that jump out from a preliminary result. it's global what they are seeing and this company has embarked on cost reduction measures. they are saying that despite those measures, the global slowdown in volume in other words customers sending packages is outpacing that. at the same time, why? worsening macro conditions. the data on tuesday, they are monitoring fuel prices. they are saying we can't keep up with the changing picture, it's

happening too fast. >> are we talking about deep longer-term structural trends or things that are likely to improve? ed: all we can take is that fedex said they expect this to continue. there was a breath of movers. amazon falling after hours. the story for amazon was that the would be stronger the second half of this year because they themselves went through a cost reduction program lowering fulfillment costs with support they hope of a strong consumer that the consumer would stay up. we had a mixed data picture this morning in the united states. where the retail data suggest that spending is softening yet there is strength of the jobs market. i have also been thinking about the fed and rates. you have to remember why does the fed raise rates? one indirect mechanism is to temper demand.

looking across fedex and amazon, the consequence of higher rates could be households reduce spending. they don't invest or they don't buy a broader range of products. it's not just amazon and fedex falling, other carriers are carrying on with focus very much on ongoing disruptions with supply chain used in fulfillment costs. >> still ahead, we will get the outlook for energy. after the u.s. yields avert a yield strike. coming up our guest tells us what they're not expecting a 100 basis point hike from the fed. this is bloomberg. ♪

>> as we count down to the fomc, our next guest says there is more upside potential than further downside. it's great to have you with us. what makes you feel cautiously optimistic given that the market is still wondering if we get 100 basis waits next week and when we see the peak to inflation? >> thank you for having me.

i think the market is very focused on what the fed is doing. i am cautiously optimistic. markets are pricing and 75 basis once with discussions about whether 100 might be likely. if you look at where markets are pricing terminal rate, that's at about 4.3% now. that to me is very much closer to the end of the cycle rather than in the middle of it. in other words, we can see rate hike cycle and closer now than we did before. that is reasonable to think that we might see a pause. >> let me ask you question about

the short-term. what is the best trade right now as we head into that decision? >> don't trade that tactically. in the near term, i expect risk assets to be extremely choppy. you saw that in the market following not just the cpi report the last two days also we have seen moves in s&p going green to red intraday several times. it's hard for me to predict what it will do in the next week. for the next six months or so, these levels are quite reasonable in which you want to start adding a base and building your portfolio. >> we are now seeing the selloff

in the u.s. only for a few months, but the selloff in developing markets started a long time ago which makes them a little bit cheaper by this point. the same time, the chart on the bloomberg is showing how the dollar strength hit them even harder. this would be asian stocks we are seeing at the moment. how do you offset that? is this a risk you're willing to take? >> that's an excellent question. if you look at how stocks have been doing, there have been shocks here not just the dollar strength driven by trends in u.s. economy and the fed hike cycle but also from what is happening in many of the asian economies in terms of their own policy and weakness in growth there.

plus the added pressure of what is happening on the eu front in terms of the commodities. there has been a triple force of negativity around the stock market. once again, if you look at the chinese stock get and basically in asia in general, these are levels where you begin to start adding to portfolios. you start building a base in anticipation of recovery. that may not happen next week. >> what about next month? what is the risk reward look like for chinese equities? >> i think a lot still depends on what the covid policies are. right now, there have been a ton of policies that we have seen

come out of china. there are more than 19 or 20 of small measures. we have the property market in china and a systemic risk picture that is beginning to develop. ultimately, we won't see improvement unless it is a demand response. that is not coming forth because of the covid lockdown. in the next month or so, i don't expect policies to change. we may not see a huge rebound in the next month or so. we will get some direction after the policy meetings in october, but next year is when we will again to see improvement on that because the supply side is ready. we need to see consumer confidence improve.

for demand to increase. that means covid policies to change. >> great to have you with us. you can get a roundup of all of these articles that you need to know to get your day going in today's edition of daybreak. terminal servers -- terminal term if you wake up thinking subscrib about the marketeir and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity.

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>> let's take a look at bank of new zealand.

manufacturing numbers raising to before .9. we have been seeing this patchy recovery when it comes to the kiwi economy. that number was such a strong beat earlier in the week and that performed under the weakness that we have seen in the kiwi dollar. we are hearing that the rbnz governor will be speaking at a climate conference later on next week. >> the u.s. economy is sending mixed signals ahead of the fed meeting next week. let's get more from kathleen hays. jobless claims, empire manufacturing, retail sales, -- >> i'm going to take two of the

main questions for the federal reserve. they started raising rates aggressively and they're going to do more. the big concerns are will because a recession because they want to cut demand and what does that mean for the labor market because they want to push unemployment up not too much. let's start with retail sales. august retail sales were up 0.3%. there was a modest increase. july retail sales this happens a lot, it was revised. that was pretty much flat. gasoline sales if you take them out of retail sales, then they are up 0.8%. that's in nominal terms.

that is one thing that pulled the sales down. on the other hand, furniture sales fell. one of the bright notes was auto sales. they were peppy because prices went up. people site demand is holding up , but it's not as strong as it was and it's not getting stronger. let's look at the labor market. jobless claims look for the good. they felt well below the pre-pandemic average. they are hiring workers. those of the coin. the atlanta fed gdp tracker looks like third quarter could

be negative. these are two pretty important reports as they look to next week and say should we talk about 100 basis points? >> just as important, china's recovery has dark clouds hanging over it. >> have a perfect storm. a heat wave, electricity shortages, covid-19 lockdowns. and a property slump. what we're looking for is china's data down. the retail sales on the year-over-year basis are supposed arise from 2.7 to over 3%. fixed asset investment is supposed to be week. around 5.5%. property investment is supposed to fall 7%.

then you have industrial production expected to rise. i think for china, these numbers are going to be we know the recovery has stalled. we're waiting for the pboc to perhaps do more stimulus. we will have to wait until after the party congress coming up in october. for now, i would say this is going to probably confirm what we think we already know what we have already seen. this economy has left a lot of momentum. these data unless they surprise are not going to send too many positive signals in the other direction. >> kathleen hays, it's the first word news. vonnie: vladimir putin says he understands china's concerns about his invasion of ukraine.

he also slammed what he called provocations on the u.s. and its allies in the taiwan strait. he called xi jinping an old friend. germany is said to be an advanced talks to take over gas importers to avoid a collapse of the energy markets. sources stay -- sources say the state ownership is the main solution under discussion. we are told germany is considering buying stake for a nominal price. the sec chair says inspectors are expected to fly to hong kong this week to review automakers listed in new york. their possible removal --

roger federer is retiring. he made the announcement on twitter. he has not competed since wimbledon july 2021 and has had a series of knee operations. he says he will play more tennis in the future but the tournament in london will be his last. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. >> joe biden announced that a tentative deal has been reached to avoid a potential rail strike. >> today is a win for america.

together you reached an agreement that will keep are critical rail system working and avoid disruptions of our economy. >> the president says the impact with ts.conomy markets -- let me this does extend the time when unions cannot strike, but it still a tentative deal. it what do you make of it? is it a breakthrough? >> certainly, it is a start in the right direction. you wouldn't want to see those unions going out on strike. let's put it into context. in 2021, we saw 187 billion dollars worth of goods move through the rail network. on the trucking side, that is up to about $828 billion. there is quite a disparity. it really would come down to looking at critical industries

inside the u.s. that would suffer the most if we saw the rail strike go ahead. with a tentative deal in place, there are still safety measures that will be ahead. we do think we will see this strike dissipate and workers will get some sort of pay increase and life will return to normal. >> we saw u.s. natural gas selling off the news. what commodities were you watching and what will you be on the lookout for until the ratification of this deal? >> inside the u.s., you have to be very careful on the coal market. it is one of the significant payloads that railways carry. one would be careful there in terms of how you would get coal from the mines to source. chemicals is the other. we think that there is significant movement of chemicals through the rail network as well.

you have to be watching very closely there for any price disparities. finally, although not a commodity, car parts they are the other big industry that would be significantly impacted by a close down of the rail network. generally speaking, it would have to be an extended strike over any weeks before we would start to see some impact on the global commodity prices globally. >> you talk about the carry through affect that might take time. do you see winners and losers outside of the u.s. in the scenario? >> one of the biggest losers would be europe. if you look at what is happening with coal, europe started to import from the u.s. we think upwards of 2 million tons of coal this year. china is the other big importer

of u.s. coal. something like early million plus will go into that country in 2022. one would expect that the coal will get to the ports by rail. if that is tied up for any time, we know it is happening in europe with the gas and cut down , that would really cause some price spikes in europe for coal prices. >> will be take a look more broadly at the rate of demand instruction with the global recession, the risk of prolonged slowdown in china, where do you see pricing for key metals like iron ore? >> one would have to say that if you have a look at the current price of iron ore, it has been tenaciously sticking to $100 u.s. per ton.

yes there are issues on the demand side coming out of china, but we are seeing the chinese authority stimulating their economy in various ways. if we can see a transfer away from the property sector which is currently in a bad spot to further infrastructure building inside china and they have significant infrastructure still to be built, that would stabilize the iron ore prices. we think at the moment the markets are pricing that fully in because we are well aware of what is happening in the chinese property market and we are well aware we are seeing stimulus reaction taken by the chinese authorities. iron ore remains stubbornly stuck at $100 u.s. per ton. there is some tension in the pricing but will have to be careful because there is risk to the downside. it depends on how further down we see the value.

how far we see the property market fall and how much strength the chinese authorities have to keep pushing through the infrastructure building plans. >> always great to chat with you. coming up on daybreak, taking a look at those markets. this is bloomberg. ♪

>> the best investment advice is the fact that we are in the business of taking risk. >> the best thing is to be a high conviction investor. when you dabble and just put a bunch of money here in things you don't know or understand, it tends to work out badly. >> the important thing is to concentrate on particular areas that you know better than other people in that area and that's what gives you an advantage to succeed. >> early in my career i had a conversation with somebody about barriers to entry. i never really thought of it, but i understood the fact that a monopoly is better than oligopoly and competition. >> you don't need to have a good

idea every day. there are times to be patient and times depressed. >> you should never and best in something that can't be simplistically explained to you. >> people have an understanding that they can buy into stocks just because they can pick up a phone and do it and they can't. >> how to invest with david rubenstein. chris does most important highway ethereum just got repaved. the network has officially completed the biggest and most ambitious software upgrade to date. a significant rally ahead of the merge because of the hype around it, how does it go? >> it went fairly smoothly. we did see it fall 9% soon after . you can see the volatility this chart was talking about leading up to this.

years in the making if you count although the delays along with anticipation. it appears to have gone well. it transitioned the blockchain from a proof of work to proof of stake which makes the system 99% more energy efficient. it makes the blockchain smoother, faster, more attractive to investors. the cofounder sent out a tweet at 3:00 a.m. your time saying we finalized happy merge. if you drop into the three-day chart, you can see the drop upon completion. that was a risk off event but that was maybe part of it. already down more than 50% this year and it rallied more than fivefold last year. in large part, this was due to the optimism about the merge which many believe are going to take ethereum to a higher level maybe even make it a more

competitive rival against going which is the biggest cryptocurrency traded at this moment. >> what are the hurdles and challenges to that? >> many could say there could still be a lot of bugs. there could be scammers. it's important to make sure the software stays online as well as a lot of the users. what's not mentioned in the chart is the sec. we do know that thursday in the u.s. the head of the sec while careful not to mention either by name did mention for state. he is concerned that this feature could possibly make the token be considered security by the sec and therefore subject to regulation. meanwhile, ether has come under pressure. if you look at the chart, you can see has had quite a decline in crypto winter then has built back up going into this merge in

the last 12 hour time, all the other tokens our. bitcoin has been lower, a lot of the other tokens. it microstrategy is on the board which is now in the red. interestingly microstrategy is a bellwether for crypto was up briefly because they announced selling stock to buy more bitcoin. in terms of other challenges ahead in 2022, for crypto in general, you have the macro environment, recession, pressure on a lot of the other assets. the risk off and the tie that we are seeing to the stock market. a lot of these pressures will continue to make a rally like we sought going into the merge difficult to replicate any time soon. >> google lost most of its court

battle in europe. it's attempt to tackle record fines over the ecosystem. the antitrust chief says the ruling against the tech giant is a big win. >> this is a win. a huge majority of the case is completely upheld which means that the court has confirmed our view that, we also feel the encouragement to continue enforcing when it comes to big tech. we have a number of investigations ongoing. three apple cases, one facebook and google case coming up. >> the progress with regards to the google case, do you think that helps you with the other antitrust cases? >> we get guidance from the court on our approaches. one of the major things for us

is first approved dominance. if you have that kind of market power, then our rules will kick in. if you are just a small guy, you can do so many different things. if you have the market power, it becomes much more strict. bikes to be clear, we know that google is going to continue to fight this as long as it can. even if you end up with a victory in the traditional sense, does prolonging of this fight get those other companies a little bit more encouragement to fight back in their cases? >> i don't see it this way. also because we have regulation coming into complement what we do with the case-by-case enforcement. the digital markets act was signed yesterday. it will enter into force mid-october. of course there is time to adjust to new rules but by early

2024, those who are designated as gatekeepers, they will have to comply quite a number of provisions but also things they must do for instance share data with some of their customers. >> already the threats of fines have changed behavior to a certain degree. the u.s. is welcomed as positive some of the changes google has made. you look at some of the reporting on the google story from u.s. print, saying they call you big tech's tormentor. i'm interested it you are finding that the u.s. is becoming a tormentor when you hear talking with your counterparts from a competitive perspective did the united states back you on some of the moves you made on these big companies? >> the first time i came to the u.s. as commissioner for competition, they said what's

she talking about, crazy woman. that is changed completely. the public opinion, the legislature in their approach, competition enforcement now cases are being brought, the state is very active. it's part of a global development. >> the european commission executive vice president there. plenty ahead on daybreak. this is bloomberg. ♪

>> labor day is sort of a new start for the corporate workforce in the u.s.. we have a little bit more insight of what it means to the return to office push. but 80% of remote workers think there employers fire them if they said no and rejected the push to come back to the office. big companies like apple and peloton have been leading the charge. nearly 60% of employers are saying they would be happy with employees resigning rather than returning to the office. >> there are employers who want to sweeten the deal to bring people back more willingly with more money, more flexible

options. we're going to get more on the workplace and this readjustment to post-pandemic work life with zip recruiter chief economist who will be joining us in the next hour to talk about the workforce quality aspect and the phenomenon of quiet quitting. who is doing it and implications for career progression. that is just about it for daybreak australia. daybreak asia is next. this week is looking like muted retreat for asian markets. this is bloomberg. ♪

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