haidi: 30 good morning.

we're counting down the asia major market moments. shery: good evening. the top stories this hour. u.s. stocks sank and treasury yields hit multiyear highs. haidi: we are speaking to the former atlanta fed president in just a few minutes. shery: world leaders gathering at the united nations condemn russian plans. u.s. futures are positive at the moment. we saw the s&p 500 fall a two month low, traders are very anxious. the 10 year yield surpassed the 3.6% level.

this was exasperated after we saw the two decade low. we had the fall with the dollar, a little bit of a rebound. this is the head of the fomc meeting, inflation concerns. what happens tomorrow is a different issue. the last four meetings we saw the s&p 500 gaining more than 1%, the key question is will that be sustained? we have seen the fed send stocks higher. haidi: there is a broad lack of

conviction in either direction. we will have to wait and see. let's look at asian markets. aussie futures are looking lackluster. expecting probably an early decline of 1%, seeing a bit more pressure when it comes to the aussie dollar, just holding under the $67 level. we are getting lines from the rba as a result of the qe review, the ongoing lack of paying the government a dividend. they are not ruling out using bond buying as a program in the future. they say it's a more flexible program. shery: we have seen the

volatility given what the rba said, that's all about getting back to the normal settings. we are talking about a full percentage point hike, the most aggressive tightening in three decades, kicking off a global round of tightening, we have the boj, we are watching the 10 year very closely ahead of the fomc. haidi: geopolitics continue to dominate. looking at the latest developments when it comes to russia, we had the u.n. general assembly taking place as well as we continue to barrel towards the party congress in china, we are seeing many comes to russia,

officials in all regions setting up these votes. this will be another key issue. shery: geopolitical tensions are really pressuring the markets. i mentioned early how we have seen stocks rally, but we heard from dr. doom signaling perhaps a 40% fall in stocks. what are you watching? guest: [indiscernible] i'm watching [indiscernible] a lot of demand-driven commodity prices will fall. we will start to see a fall in canada, the u.s.. probably not as swiftly -- it's

happening, it's going to happen. the u.s. consumer is pretty much tapped out. that can't last forever. we're going to see a little anxiety. the market has been so negative. haidi: for more insight, let's bring in kathleen hays to give us some of those insights. reporter: big division this

decision from the fed. we are bringing in dennis. dennis, great to have you back. tomorrow, the question is how big is the high? inflation has stayed very high. at the july meeting, jay powell open the door when he said he would hesitate to making a larger move if the committee were to conclude that was appropriate. >> i believe they will stay the course. i don't think they want another departure, it might signal a real panic setting in about being placed in the situation. they want to be delivered. i believe they will do 75.

i can't fully rule out 100. i can rule out 50. there is no justification forge -- four dialing back at this point. i think the highest possibility is 75. >> what about the outlook for the economy? >> that will be very interesting. we will look at the economic projections, to see if they are more hawkish. in june, they had a year and policy ratesetting of 375 to 400 basis points. let's call that 4%. it will be interesting to see whether a number of the people on the committee feel they need to go well beyond 4% by year end. that would be an interesting

development. in all likelihood, we will get some indication from the year end 2023 policy-setting but it does not tell you exactly what the path is. >> is it possible we will see some thoughts? the highest in june i believe were definitely slightly above 4%. >> it's possible. the committee is 19 people. some people are very hawkish. i don't think there are any does to speak of. they would not surprise me if you saw 5%. when i look at is what appears to be the consensus, central

tendency of the thoughts and how tight or spread that central park of the committee is. whether it's getting tighter and the consensus is stronger and a variety of opinions. we pay attention to the median, but sometimes that does not tell you the spread. shery: looking at cpi compositions, when you consider the so-called totality of the data, what are you focusing on right now? guest: i am focusing on core indications, core cpi. that reflects the attention of the committee on the so-called

underlying and patient. that is what they are interested in. i am focused on month over month readings because that tells you at the moment, we tend to focus too much on the 12 month number that has history that is not relevant right now. it does not necessarily tell you what is the inflation challenge at the moment. haidi: when you take a look at the fedex story, i suppose -- guest: the previous speaker talk

about the consumer in order to sustain spending, i think it's very likely that broadly speaking americans are running through their savings and running through the point they have to cut back a little bit. i think that is what the fed hopes for. it that is likely now in the coming months. reporter: do you expect him to talk about the higher unemployment, that they see rates going up and staying up? staying high for the course of 2023? guest: the high for longer

message was very strong. it is something they have to get across. it's unlikely you're going to see a pivot from one meeting to another. an unusual set of circumstances. i would expect once they get to a point where they need to either pause or stop, that rate will be sustained for probably several meetings. that is my expected path of policy. well through 2023, we may not see much in the way of change. shery: always good to have you with us. the former atlanta fed president

joining us with kathleen hays. next, the ceo of the biggest consumer bank sounds a warning on red-hot inflation. we will have the latest. this is bloomberg. ♪

shery: the ceos of the biggest u.s. consumer banks are heading

to washington to warn lawmakers that americans are struggling amidst inflation. committees will grow them about how they are helping. this get more from sonali basak. how do the concerns swear up? sonali: two different sets of concerns. one thing is the economic environment might get more challenging. the challenges are no less daunting even though the worst of covid is behind us, jamie dimon said it's a tale of two cities and highlighted inflation is a big issue. if you look at lawmakers, what happens to the consumer ability to borrow as it gets more expensive to do so. haidi: are there specific issues that have been addressed by the ceos in terms of the

regularities? sonali: you have seen them address some of this and prepared testimonies. addressing the issues of fees and overdraft fees that have been contentious. that is one thing there has been direct response to as well as commitments to minority communities in terms of banking services. one of the things under review is legislation, you're going to hear the banks speak to the ability of these firms to grow, what it means and whether it is serving the best interest of those communities, by and large some of these banks have reduced the footprint. shery: these conversations come just ahead of the midterm elections. sonali: will all of the same lawmakers be there for the next round?

one other thing that is much on the agenda and you see it in terms of the legislation is climate issues, eft issues. both sides of the aisle do not agree in many ways. oil and gas financing are certain to be issues. haidi: sonali basak with the wrap of what we have heard. let's get over to see canaan. su: the hsbc top boss says the massive correction in the china real estate market may last two years. he told the conference the correction has been faster and more decisive than expected. last month, hsbc took further charges against $12 billion in exposure to the sector. developers report the worst first half earnings in over a decade.

the swedish bank has delivered a rate hike the fine productions of most economists as the bank moves to grasp tightening. they raced initial gains after the hike. the former head of currency policy at japan's finance ministry says officials can intervene any time. he said last week's rate check by the central bank makes ability to take action even without a green light from the u.s.. he told bloomberg the ministry of finance must show the public it will not allow speculation on the yen. >> if [indiscernible] it's time to show that the

government is not speculating. su: russia is moving quickly to stage votes on annexing regions of ukraine it controls. ukraine and its allies have denounced the referendum and few are likely to recognize the result. the secretary-general says the kremlin's move will only worsen the conflict. >> such a referendum has no legitimacy and does not change the nature of the conflict. this remains a war of aggression by russia against an independent sovereign nation in europe and this will further worsen the situation. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700

journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. shery: still ahead, why the u.n. inability to act leading up to the russia-ukraine war will be impossible to ignore at the general assembly. details ahead. this is bloomberg. ♪

>> the united nations charter and ideals are in jeopardy. we have a duty to act and yet we are gridlocked. shery: u.n. secretary general. the war in ukraine dominating as world leaders gather for the u.n. general assembly. the institution established almost 80 years ago to preserve

peace faces its biggest test in decades. every leader had something to say about this invasion that has been going on for seven months. it was a pivotal day-to-day -- day to day. reporter: it was interesting that this happened as the world leaders were gathering and diplomats were gathered in new york. they were all denouncing something about the war in ukraine with russia, saying it would have so-called votes, sham votes to shore up and annexed territory it occupies in ukraine. they are saying this is our territory. the president of france said it

was imperialism. that happened at this gathering and there have been plans to's test to discuss what has happened. haidi: beyond discussing about what is happening, what has been happening, is there any meaningful action given that there were already concerns sanctions are at the risk of weakening? reporter: that is what we will be hearing a lot from including president biden will be speaking at the un tomorrow. if the u.n. body they came about to try and make peace around the world, if they can do this in ukraine, why do we have been u.n.? this is a pivotal moment for the

organization and the u.s. president will be asking questions as well. it came up today, macron defended that he continued to talk to vladimir. he said it's important to keep doors open to try and broker an agreement. haidi: president biden is speaking tomorrow. jodi: we expect several themes. one will be to denounce what is happening and tell world leaders you need to stand by, even if it gets tough, even if it's a cold winter. secondly, he will be imploring the u.n. to try and at that historic relationship where they

try and be world policeman and he will be saying this cannot happen this time. haidi: coming up next, we discussed market strategy and find out why they are not ruling out 100 basis points for the fed tomorrow. this is bloomberg. ♪

>> you are watching "daybreak australia," with the economist who predicted the 2008 financial

crisis. they see a longer session ahead in the u.s. and globally. let's bring in annabelle droulers. talk me through the gloomy details. annabelle: this is quite a downbeat forecast. he's also saying that this recession will come around the end of 2022 and it could last all of 2023. even a vanilla recession, the s&p 500 could fall by 30%. he's looking at the risk of a hard landing. in that case, he says the s&p 500 could drop by 40%. the reason he says that is because achieving that 2% inflation target without seeing a hard landing is basically what he says is also mission impossible. he is extending a 75 basis point hike. 50 basis points in november and

december that would lead to the fed funds rate being around 4% to 4.25% by the end of the year. take a look at that terminal chart. he is looking at global debt levels in particular and that is what he says will be dragging down stocks. debt services in turn increasing. basically, there's a lot of zombie institutions out there, households, corporate, banks, shadow banks, and they are all going to die. in the words of warren buffett, they are going to see who is swimming naked. shery: starting to eye bonds again. annabelle: the treasury yields we have been watching our around decade highs. they are attempting the big money managers. all on the conviction that this asset class will be delivering the hedging in the next downturn. short-term yields are trading around 4% for the first time since 2007. you have fixed income with

better looking rewards in equities for the first time in more than a decade. blackrock is among those saying fixed income will be back with two here. -- with a bang here. look at the terminal chart. in the 60-40 four folio, we are starting to see that strategy on course for a third quarterly gain as the stocks start to recruit some of your losses from june lows. >> annabelle droulers with morning calls. our next guest is not completely discounting the 100 basis point hike at the fomc tomorrow. let's bring in marvin loh -- marvin loh. we understand 75 basis points is a consensus at this point but it has become hard to discount anything at this point. marvin: absolutely. never say never. generally, the case for 75 is quite strong given the fed not

wanting to bring the markets down. 70 five is still base case. i think we need to think through a 50 versus 100 basis point also. 50 seems off the table. really think through what each one of these scenarios means. shery: what would that mean for the markets? every fed day, we have seen a rally and then the fading subsequently because people start to dig into what the fed has said and then they realized it's more hawkish than they expected. marvin: i think the fed learned from that and that is one of the takeaways. certainly, we had a risk rally that the fed did not like. financial conditions were loosened. they are going to try to avoid that. whether that is 75, getting to 4.25, like annabelle talked about at the end of this year, signaling more as we go into

next year, or if they decide to go more supersized this month, we should be prepared for a fed that is going to try to avoid sounding dovish at all. it got itself into a bit of trouble after the june meeting when the market interpreted things not particularly they wanted -- particularly the way they wanted it interpreted. haidi: 4.5 is where berg intelligence see the fed being at, further 200 basis point down the road. what is the impact when it comes to the consumer and these consumer related stocks that we have been seeing really suffer ever since we had the shocker of the news by fedex? marvin: we started at zero earlier this year and we are talking about 4.5 by march of next year. potentially 4.25 by the end of this year. this is short. consumers who are struggling, lower income consumers,

particularly with inflation, are going to struggle more. it's going to make their way into credit products, which predominantly, particularly on the credit side of things, is used by low income consumers and potentially younger consumers. at the same time, the fed has no choice but to push on because that middle-class to upper middle-class has wealth ultimately that is still supporting strong demand which is really, you know, formulating this inflation challenge that they have. i think consumers, as we go along, are moving to higher incomes. they are going to fill that pinch but it is the jobs market i think that define how much of a pinch and how quickly the broader economy feels that pinch. certainly, consumer stocks are on their back foot at this point and everything the fed is saying is that it needs to slow that demand and that robust spending that is coming out of that sector. haidi: chinese equities and assets more broadly have been on

the back foot. marvin, have we baked in all of the bad news as we get over the hump of the party congress in october? can things look up from here? is it a bargain-hunting opportunity? marvin: i am not ready to bargain-hunt in china yet. ultimately, i do think that this terrible pandemic that we have all struggled with and tried to understand has taken a variety of terms. within china, we have not really seen where those turns can take you. certainly, the housing market has been well discussed, but really, as china reopens to a potentially global slowing, i think that that is really a potential risk that no one has a sense of because we are still struggling with the conflict of whether we will have a recession within the developed market at this point and whether or not good news is going to require us to push ourselves at a time when china might be ready to open up and the demand's big it might not be -- demand spigot might

not be there. shery: marvin loh at state street. we appreciate your time. first word news with su keenan. su: we start with united. antonio guterres has given a singing assessment of affairs at the opening of the general assembly p or he criticized the inability of world leaders to take urgent action on a range of issues from climate change, inequality, to the war in ukraine. he says the world is in peril and paralyzed. >> the ideals it represents are in jeopardy. yet we are locked in colossal global dysfunction. su: jp morgan's jamie dimon is taking aim at higher capital requirements ahead of congressional hearings this week, calling it bad for america. he is set to appear in

washington alongside teeth from bank of america, wells fargo, and citigroup. in his prepared remarks, he touts the role jp morgan plays in the global economy, warning of harm from arbitrary increases in capital requirements. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. shery: malaysia's largest public services pension fund says it is embracing market volatility as an opportunity to buy. a ceo told us exclusively about the fund's plan to diversify its international investment base. >> indeed, it is a perfect storm that we are facing now. the interconnectivity that we have is -- in terms of supply chain. inflation is not everywhere. everyone is facing the same

issue. our intention, we have a vision 2025 that we have the intention to expand and diversify our investments, international footprint from 20% currently to 30% to 2025. so right now, we are already in over 40 countries in terms of our investments. we want to go from $8 million to $15 billion in comparison to our $14 million -- currently and that is almost double in terms of value. so because of that, we must embrace connectivity. the current weakness we are facing is an opportunity for us to enter into a new investment at a much lower level, at a much more objective valuation. >> where are you seeing these opportunities? what is looking cheap right now in terms of sectors and markets? >> if we look at comparisons

from the perspective of volatility, we are looking at stronger volatility from the public market space right now. it is always our intention to move into the private market space. the private market accounts for 10%. a better market for us is the private equity side, it covers the property real estate side as well as infrastructure. we intend to double that exposure to 20% by 2025. haslinda: is china looking attractive to you? this is the market that is in deep bear territory. might tech be the one to pick up right now? nik amlizan: when we look at china, we look at it from our total international portfolio perspective.

not just specifically for us to look at one country specifically but towards the portfolio. it is looking very attractive. haslinda: you talk about the new norm. might the new norm include digital assets? you are seeing the rise and fall of digital assets. going forward, my you think of cryptocurrencies as an asset to invest in? nik amlizan: for us right now, digital assets is not one of our approved asset classes. it is still very new. for now, we don't view any currency as an asset class appeared i will put it this way -- it is essentially a currency. more transactional perspective. fallback into fundamentals. for us, rather than investment, it is more -- haslinda: how are you being

hampered by the strong dollar as you look to put money to work in other markets? nik amlizan: stronger dollar is good for our international investments that are currently in u.s. dollars, but of course, i mean, we have to -- we have done, for example, about 50% of our exposure in tech because a strong u.s. dollar would also -- perhaps some of the cost, not just revenue, would be rising. >> ceo of the malaysian pension fund kwap, speaking with haslinda amin. rio tinto says it will spend $7.5 billion to cut its emissions by half by 2030. catch our interview with the ceo, next. this is bloomberg. ♪

shery: taking a look at the day ahead for australia and new zealand, the rba released a review of its two-week program showing some benefit. the full cost will only be known in 2023 when the last purchase bond occurs. more than 36 companies hiring for various roles in the tourism and hospitality sectors.

we will get the westpac leading index for august. it fell 15% in july on a weaker economic outlook. this is the picture across australia and new zealand as we get that drumbeat towards the fed. we continue to see flashes of the warning of recessionary conditions when it comes to the yield curve for treasuries. another down day after a brief recent rebound when it comes to australian and qe bonds. the aussie dollar feeling the brunt of that risk-off trade. the haven for the greenback continuing to play out under 67 u.s. cents for trading in the aussie. shery: rio tinto is joining the first movers coalition of global initiative of more than 50 companies to create new markets for zero carbon technologies. the ceo told us more about the challenges in addressing climate change and long-term investments to reduce emissions. >> first of all, rio tinto, we

have to recognize, has a big carbon footprint. when i laid out the four key objectives for the company, one of them, last year, was about having impeccable credentials. when we did our strategy work, we suddenly realized that addressing climate change and the consequent energy transition is part and parcel of everything for us and represents a massive opportunity because there will be more demand for our products. it also puts a burden on us in terms of we need to decarbonize. it is a massive challenge we have taken on. we have set ourselves targets to reduce our own emissions by 50% by 2030 and that requires we already set seven point $5 billion of investments. look, i'm very pleased to be here in new york this week, talking to american business, government, civil society,

because we don't have all the answers paid we need to learn from each other. i'm absolutely -- we don't have all the answers. we need to learn from each other. we want to get there as quickly and efficient as possible and there is so much to learn. >> can you do that on your own, rio tinto on its own, and remain competitive against companies that don't have the same deal as you do? jakob: we are competitors in the mining industry and there are areas where we can cooperate because we are competitors, but there are a number of areas where we can cooperate. i am talking to competitors about where we can cooperate. for example, we have a joint venture with -- where we are building a whole new way of doing smelting where instead of admitting -- in the process, we will be emitting o2. it is possible to work together and we need to see much more collaboration because it is

impossible, no matter how big you are as a company and how capable, to have all the answers. >> how do you get investors on board with that? a lot of investors say i am invested in mining, oil, or gas. i'm going to let you be the company you are. are there investors who say, no, i want you to change and become more environmentally friendly. how do you tell investors your story of a new rio tinto? jakob: the story on one hand is laid out and on the other hand, keeps on maturing. we had a capital markets day last year where we -- show them what we were going to do. i think the direction was very well received but spending $7.5 billion, investors would like to say, what kind of returns are you getting? that is fairly unknown. will there be a price on carbon? will there be a number of assumptions you have to make? overall, i'm convinced it's the right thing for the company. for a company like rio tinto, we

are not a company you should measure on quarters or years. it is a company for decades. taylor: are those ambassadors willing to be patient with you? jakob: i hope so. there will be some people who will leave and some people who are enthusiastic entering the register. right now is the time for us to think long-term. >> rio tinto ceo jakob stausholm speaking with taylor riggs and romaine bostick. let's look at prices soaring once again. minerals attracting its highest ever winning bid for a shipment. paul allen joins us now with more. what is the steep upside right now? we see so much enthusiasm for the future metals. paul: that minerals deal was quite extraordinary. this was for a shipment of the raw material of lithium. 5000 tons shipment.

just last month, they saw the shipment for $7,000 a ton, so that is a 10% jump. if you get to the more refined product, lithium carbonate, that is even more expensive. 71.5 thousand dollars per ton, triple five months ago. at price going beyond those insane levels that elon musk was talking about a year ago. demand for electric vehicles obviously a factor here but there's so many supply issues as well. sichuan province had electricity outages. that afflicted their supply chain and delivery issues. and new capacity for lithium is very slow to bring on so new mineral resources australia is another lithium miner. they see these problems continuing until 2030. that is on the radar of chinese authorities. lithium miners, producers, users asked to step up recycling. and asking that the price is not

too much more than the production cost. shery: paul allen joining us from sydney. we do have breaking news at the moment. we are hearing that wall street banks are set to lose about $600 million on citrix debt. they are trying to offload front and sing -- financing commitments on tuesday and this has been the combination of months of work when it comes to trying to mitigate the damage from underwriting pledges. we are now hearing that a group of underwriters led by bank of america, credit suisse, and goldman sachs, ultimately have found enough to sell the total debt package. thanks still hold about 6.5 billion dollars of that $15 billion financing and that they are set to lose about $600 million on that debt. be sure to tune into bloomberg

radio to hear more from the days big newsmakers come i get -- newsmakers and get in-depth analysis from the daybreak team. plenty more ahead. stay with us. ♪

>> a quick check of the latest

business flash headlines. the u.s. federal communications commission added chinese telecom firms to its national security rights list. the move was made under a 20 not to protect u.s. communications networks. the regulator earlier revoked their operations, citing national security concerns. tencent is considering selling down stakes for the likes of meituan. a spokesperson said the tech giant has no need to raise funds nor timelines for such divestment. tencent has been expected to reduce global investors over time due to political pressure. china's aviation regulator said it held talks with boeing officials. the 737 max could be closer to returning to service in the country. officials say boeing resolved the issues that were resolved after boeing resolved the issues that were really -- raised in the meeting. they will issue a review to clear the way for the jet to be

introduced in china. no timeline was provided. shery: this is what u.s. futures look like at the moment after we saw the s&p 500 fall to that two month low, really mutate in the early asian session. this ahead of the fomc decision, not to mention the boj. coming up in the next hour, find out why bearings chief global strategist says it makes sense to be cautious in the near term. plus -- still thinks rates are heading higher but not in a straight line. terminal users can tune into live to catch a speech by the rba deputy governor. this is bloomberg. ♪

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