>> good morning and welcome to

"bloomberg daybreak: australia." >> we are counting down to asia's open. >> -- tumbling to multiyear lows. giorgia meloni looks untracked to lead delete to bring the government since the second world war. >> and looking to russia to diversify the fuel source. >> maybe we can look to russia to provide us with some fuel. >> u.s. futures under continued pressure after we saw the worst two weeks since june for the u.s. market. we are looking at the s&p 500 looking for the fourth consecutive session on friday. have pressure coming from the fed rate hike and it is cutting

the year end target for the s&p 500 to 3600. we also had a mixed picture when we saw the treasury space. the 10 year yield retreating slightly at the 3.7 percent level, but also continuing to climb for the 12 consecutive sessions given the expectations of a hawkish fed. he also have the nasdaq 100 bleeding almost 0.5%. in new york, we saw at climb below the $80 a barrel level. strength of the dollar unrelenting, continuous on the chart on bloomberg showing how we have seen the dollar index climb up half of the levels since 2002 and this was expectations over a more hawkish fed. we are locking -- looking for a fed speech as well. on the other side of the dollar trade, they will add margins on

the pound as well given the force of the government's fiscal measures and how that could provide pressure on prime minister liz truss. we have seen the pound continue to fly by as much as 9%, a fresh 37 year low against the dollar. >> ideas amongst those saying that the markets could be underpricing the counts. you have to look at where it was on thursday and that is where it was at 14%. that is also refracted in euro accounts trending this morning, but the euro is paring some of the earlier gains. we had the exit poll as well showing that giorgia meloni's alliances are on track to lead the most right-wing government since world war ii in the country. otherwise, we are keeping and i across the markets with the dollar higher and it is

reflected in the aussie as well. and we look at stocks because we are having a lower futures trading and that is what it looks like for australia and to pan. we are watching for possible intervention from authorities this morning with brent crude and the wti. overall, this is still a king dollar story. >> and with all of these uncertainties, it is unsurprising we are seeing cash is king again. this is according to new data from boj saying that the president -- this has not been as bad since the 2008 crisis. thinking over the numbers, through to the middle of last week, we saw outflows of $7.8 billion. we need to compare that to cash inflows of over 30 billion.

$400 billion even less in gold, so it is the preference and it is really going towards cash. also on that note, not just cash but the commodities and volatility continuing to outperform bonds and stocks with that indicator returning to a maximum level of bearishness. this is the data we have seen for a while, king dollar, and some beneficial trades at the moment. and we are gaining more volatility. >> we talk about fed officials coming out with their outlooks for rate hikes this week as well. we also mentioned that we have those from the u.s. from the likes of spending too pce and housing as well. right decisions also in asia, talking about thailand expecting to hike rates. we are also looking for a china pmi number coming out.

everything will give us more indication on the state of the global economy. let's discuss this with all of our next -- this all with our next guest. ben emons, managing director and head of global macro strategy at medley global advisors. this rally has a consequence of going so far out when it comes to the risk sentiments as haisi just mentioned. ben: it is somewhat traditional to have a clash because the more people are pushing themselves to the sideline with this bearish outlook, the worse are the numbers. in this case, that inflation number is turned and you see a major rebound in the markets now. this is a bear market and china confirmed once more that as we

go below for mid june, we are seeing this inflationary bear market. that shows overtime that in these bear markets, we have the rounds. to this sentiment, this is the worst since 2008 and this is a set up for a rebound in the region. >> and we have seen in the early asian session how the u.k. assets continue to be decimated, especially the pound after that fresh 37 year low against the dollar. also what the implications are for the buyer markets, especially for any sort of boe action to be called into question. ben: it is a decision on the bank of england last week announced it had -- in terms of innovation and the government came out with a major package, something like 25 billion pounds, so the market is prepared for the pain in the guild market.

that is the stress that we are seeing here coming out of the debt region and we still see u.s. markets and asian markets. u.k. policy is going to try to push that back and we will get that division with the majority in more of the house, but on the other hand, the bank of england must be going at some point and the weakening pound is harrowing because this is a potential crisis. we see that this becomes an emerging-market situation, so people are on edge watching the bank of england. the markets will really be watching the pvc. >> we talk about this idea of the u.k.. take a listen to what larry summers had to say. >> i think the u.k. is behaving

a bit like an emerging-market, turning itself into a submerging market. it would not surprise me if the pound eventually gets below a dollar. if the current policy pad is being tamed. haidi: he also talks about this kind of wishful thinking on the supply side. he also talked about the other side, complicating that is the huge burden we continue to see in the greenback. how problematic is this to the rest of the world? we see the pressure on dollar borrowers. ben: it is very problematic because if this is an emerging-market situation, having the current account debts, that will worsen the results of the policies. we see the pounds accelerated in

weakness and it tracks down the currencies to something that propels the dollar on the back of the federal reserve policies that will continue to raise rates. once we get inflated -- i head of inflation, we see the move in yield. where we see the pressure point right now is more than we have seen since the financial crisis. the strength of the dollar is now accelerated by the weakness in the pound and it drags the pound below parity. >> is there an argument that hedge could be found in china? ben: china has a lower volatility currency, but beware because even though that indicates, the currency itself is weakening and it does not look like the pboc wants to draw a line in the sand.

you want to be more diversified globally against this uncertain environment. we do put some of the allocation to the asian markets that have indicated a rebound upon reopening against the shortened bills and health care, so it is the low volatility sectors. as we saw friday, the policy is asymmetric and it is not a good choice to deal with inflation. you want to be wary of the end -- yuan. >> ben emons, managing director of global macro strategy at medley global advisors. coming up, we take a look at global risks. george friedman, chairman and

founder of geopolitical features, just ahead. giorgia meloni is set to lead the most right-wing government since the end of world war ii in italy. more on that next. this is bloomberg. ♪

>> you are watching "bloomberg daybreak: australia." i am vonnie quinn with the first word headlines. there are tears that -- after the conscription plans in russia spark a mass exodus. kazakhstan and georgia will be weakened. some students will be exempt. small protests also broke out across the country. hong kong business groups are calling on the city to relax

covid restrictions. they say this will not be enough to attract tourists under calling on the government to provide of roadmap -- a roadmap on reopening. there covid restrictions pushed many businesses and residents to leave. chinese communist party has gathered a number of delegates for its next month. where than 2200 officials were announced for the national party congress. president xi jinping is expected to have a third return to office. bond markets will remain closed on monday in the philippines as super typhoon noru is set to hit luzon. have each intense rains are

expected early morning and the typhoon will sustain massive winds of 195 kilometers per hour. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: giorgia meloni looks at this week to become the first female and far right president for the republic. what are the results showing us at the moment? >> the italian political system is a very complicated and complex, but if you look at the projection, this is the start of a long night. if you look at the projections, giorgia meloni would be the big winner of the night. that puts the italian right on track to form the next government. giorgia meloni is controversial.

she has not sugarcoated that this is a conservative revolution for italy, but others would say that this would take the country back 30 to 40 years. politically, it is a big change. again, i want to stress these projections of a long night to come. this is a complicated political system, but i have to give you a quick takeaway. it is the end of the mario draghi era and the start of the giorgia meloni era with everything to come with her. >> when it comes to the bond markets and the spread between italian and german bonds, there does not seem to be much of a reaction. what is the significance of this? maria: you have to look at the political story but also the markets story. the btb market has not been doing as well heading into an election. there has been no talks about the electorate. this was a big thing four years

ago, whether this country saw a future for itself in the european union. there has been no talks around that and you still have the european central bank active in this market. going forward, however, there are a number of things to watch out for. first is the balance of power within this coalition, whether meloni is able to cement her power. the other thing is the finance minister. they will have to manage the energy crisis that italy sees and just like any other european country, those bills are going to be a big issue for the italian economy of the potential downturn that will come with it. for the time being, this is a story that combines the actions of the european central bank but also the fact that this election will play a hard role. it is no rule at all. >> maria tadeo with the latest

results from italy. take a look at the currency markets now because we have a strong u.s. dollar at the moment. talking about european assets, they are spacing uncertainty not only because of what is happening in italy, but the u.k. government's fiscal plan. that tilted the british pound down more. we are talking about more declines in the asian session after they had fresh seven year lows against the u.s. dollar. the european markets actually fell into a bear market on friday. we are seeing the japanese yen right now with not a lot of movement. staying with the aussie, but we are still early in the asian session. talk about the philippines because they are talking to russia right now about buying fuel, a key commodity. i spoke to the president,

ferdinand marcos, jr., in new york. they have rising concerns over the war in ukraine. >> it impacts us in the same way that it impacts all the other countries. this is in fuel. it is such a basic commodity that everything follows fuel. the point that even our agricultural commodities like fertilizers, the input, transport costs have gone up. we have been asking our friends in the shipping industry and they say there are no longer any charters for fuel shipments coming out of russia. that, again, is -- what we >> -- what we are hoping to do is to go back and diversify. you cannot get complacent and depend on a single source. now, we will look to what we

describe as nontraditional suppliers of fuel. we have certainly depended on dubai oil prices, but now maybe we need to approach russia and see if they can produce enough and provide us with some fuel. >> are you having those conversations with russia? >> we are. we are having conversations with as many potential suppliers. >> when could we see talks come forward? >> pretty soon. we are coming close to some agreement. it will not be only in one place. again, the diversification of supply lines in terms of fuel. shery: do the prices against russia given the war in ukraine worry you? >> yes, we could see the effects.

in our grounds, the political side of it has been tricky. the national interest comes first, so we have to find those new sources of fuel. but that applies not only to fuel, two things like feed and fertilizers. all of these other inputs that are critical. shery: with that also include a potential joint exploration of oil with china for longer-term solutions today? >> yes. shery: those conversations were halted, right? >> they were halted for the same reason that we could not come to an agreement on what to quantify. that's derives from the fact that there is a disagreement on

the maritime areas of the sea that we consider to be philippine. and within the philippine baseline, therefore we have that local disagreement. the chinese have a different view and they claim it as their territory and their local area. it became a constitutional question. it would have violated our constitution if we were to agree to the chinese assertion that their local laws should apply. shery: are there any points to compromise? >> i believe there are pretty we have to continue. we have set on this basis, we cannot continue, but we continue to explore in the other ways we can do it. shery: the philippine president

ferdinand marcos junior there. the markets there are closed today because of thai fund noru whirling through the island of news on -- typhoon noru whirling through the island of luzon. you can get all of the news that you care about on your bloomberg terminal. this is bloomberg. ♪

>> taking a look at the day ahead for australia and new zealand, australia is looking to the possibility of rates for another bound of heavy rainfall this week. the emergency services issue a warning for worsening fronts for the region. there are concerns that data is

being sold online after a cyber attack on optus. and with the wall street journal has reported that the u.s. is discussing accelerating the production of nuclear submarines to bolster australia's facilities. shery: early in the session, we were looking at the futures rates. this after we had two weeks of weakness for the aussie dollar and we continue to watch aussie bonds as well as we follow the treasury that fall -- fell off the 10 year yields. we are also watching nikkei futures unchanged at the moment. they are coming back from a long week and the following has been at the japanese yen, still folding -- holding at the same level after japan had to intervene in the fx markets,

pricing at 90.98. we get the final cpi numbers out of japan, so watch out for that later today. u.s. futures remain unchanged. coming up next, hong kong's business groups are on to the city to remove its remaining restrictions on travel after the government announced an end to the hotel quarantines. we have more on that story next. this is bloomberg. ♪

vonnie: you are watching "bloomberg daybreak: australia." the philippines are holding talks to buy fuel and other key commodities from russia.

the president tells us the southeast asian country is closed amid fears of the super typhoon to hit the country. >> now, maybe we need to approach russia. maybe they can produce enough and provide us with some fuel. the political side of it has been tricky, but nonetheless, the natural -- national interest comes first. we have to find those resources of fuel. north korea has fired a short-range missile. the missile launched on sunday reached above 600 kilometers. it comes as the aircraft --

the pound is continuing to weaken as early asian trade, dropping to a fresh 37 year low against the dollar and keeping on the pressure for prime minister liz truss. kwasi kwarteng's financial plan sparks of ferocious and damaging assessment from investors that son's u.k. assets tumbling -- send u.k. assets tumbling. >> the u.k. is behaving like an emerging-market moving into a submerging market. it would not surprise me if the pound gets below a dollar if the current policy path is maintained. vonnie: global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: hong kong's long-awaited

removal of hotel quarantines for arrivals is being met with calls to the city to scrap remaining restrictions on travelers. stephen engle joins us. there are calls to disrupt it all because that is the only thing that will encourage tourists and businesses to come back to hong kong. stephen: this is a very positive step, but we have seen some of the most strict covid curbs in the world and it has lasted about 2.5 years. that is after the big protests that happened even here at the hong kong airport where i am here as an arrival waiting for passengers to come in on day one of this new openness. again, there are still a lot of restrictions. i am wearing a mask and if you

arrive, you still have to wear this mask. i was told by airport staff almost immediately that you have got to wear a mask, so that is one downside. in the u.s. and elsewhere, people have become accustomed to not wearing masks. but hong kong's in public, you have to wear the masks. you also have to -- yes, it is positive that hong kong is opening up, but you are going to have to take 12 covid tests when you arrive from arrival to the seventh day, which is actually the eighth day because day one is day zero. you have to take four pcr tests as well as eight rapid antigen test. it is another stumbling block for hong kong if it opens up. it is cut in the middle between the world opening up and also acknowledging covid zero policies of mainland china. it is a slow process and will

likely be a step-by-step. the chief executive of hong kong last week when he announced this opening up said that there will not be a rollback. hong kong is gun shy right now as far as policy. with the carrie lam administration, we saw back and forth between policy. shery: we saw the cap sized tumble because of the reopening. stephen: this is the issue. with the restrictions that have been lifted and that are still in place, some people say it does not go far enough. a lawmaker i interviewed last week says that the national people's congress, he owns a thousand retail brands, and he says that employment to have these halfway restrictions

because nobody's going to come, and that is why we are here right now, to see if there will be an influx of tourists. with this yellow code that you have that restricts you from entering restaurants, it will restrict you from going to bars for the first three days and we know many people come to hong kong for the weekend for about three or four days, so again, if the government does not go fully with reopening, it could be a lost opportunity. you might see more people leaving hong kong just because of pent-up demand for travel. one passenger comes in and they get swarmed. shery: it is exciting when you have been locked away for so long, but again, the pcr tests are a mountain to pass. stephen engle on the ground at

the hong kong international airport. the are reopening, one positive for investors going into another trading week in asia. however, futures are moving from a slower start. >> basically, standard chartered is looking from that aggressive rate hiking cycle from last week and looking at the fed, we are looking at rates above 4%. there is a conclusion that the rate hiking cycle may not be done until well into 2023. the conclusion of that is on the dollar strength, consistent weakness. standard chartered says it is interesting we have not seen a major capitulation in markets yet. we have seen risky assets declining all year, but investors reducing their risk exposure. standard chartered said it is surprising it has not made a correlated risk of event that is

surging with the traditional market bottoms. on the charts, you can see what they are saying and what they are saying could be the boj furthering and yield control program. it is the loan holdout now is in monetary campaign, but standard chartered says it is getting harder to stay bearish on risky assets, especially with the consensus that is already leading extremely bearish. you need a catalyst region finding -- redefining the market bottom. shery: we are seeing a market that is trying to go too far down too fast. annabelle: this echoes what we heard there, but basically when negative sentiment is indicated, it can actually be a gold indicator there. they are looking at the bull bear spread in the last service.

that is slightly below the current cycle low, but with the new low, there have only been two occasions in the past decades when it was below this level. they were both the ultimate bottoms of banking crises, so that brings a stretch today, but it does appear according to jeffries that the market is still trying to grapple with the current inflation crisis. they said on a psychological basis, that is the most recent playbook. with everyone being so quick to jump into this position, they say this is being a bit overdone. >> coming up next, we discuss the global risks of geopolitical futures. he thinks that the military

crisis could lead to the end of the russian federation as we know it. this is bloomberg. ♪ and it's easier than ever to■ get your projects done right. inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews. just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done.

>> we are ready to stand in support of ukraine sovereignty and territorial integrity. if that means more sanctions, we will think about it.

haidi: the spanish minister of foreign affairs amid growing fears that russia will annex the territories to the east of ukraine. let's bring in george friedman, the founder and chairman of geopolitical futures. we have gone through seven months of this war, not where many would anticipate being at this time. what comes next? is there more to come given the exodus of russians after the announcement of deployment. george: he has come to an understanding that he can get to the number of trips -- troops, but you need to get them trained, have enough bases. it would take him 3, 4, 5 months

to start bringing the forces there. in the meantime, he continues standing against the ukrainians. the problem he is facing is how well those forces can stand. i am sure he is not sure of it, but most of the people aren't. haidi: at the same time, you are facing more nuclear threats. we know that the likes of liz truss and the u.s. are trying to push back on allies to not be deterred from the invasion and pushing against the kremlin with these threats. george: strategically, these are the weapons that we are worried of. they have huge catastrophe and fallout. -- does not give up much

radiation. putin is careful to not specify what he is talking about. the u.s. today said that if that happens at any level, the u.s. is going to turn russia into glass. putin is not specifying what kind of nuclear weapons he is talking about, and it is a great deal of talk. he is trying to compensate, and he is frightening people. shery: two -- to haidi's point, how effective are the sanctions given the current status of oil? >> we go to russia, maybe saying they can produce enough and provide us with some kind of field.

the political side of it has been tricky, but nonetheless, the national interest comes first. we have to find those new sources of fuel. shery: and we spoke to the saudi prime minister as well and he wanted to buy russian oil and wheat. if we are not disrupting flows of capital to the kremlin, how effective could these sanctions be? george: the question is how much is flowing to the kremlin and how much of it is cut off? for the past six months, there have been major pressures on the russians. that created real political problems, economic problems, so on. just buying from dubai is not going to shift that very quickly. there is some incentive from the

u.s. where the u.s. is backing up the ukrainian view. they are supporting those forces, and the russians are facing them. as they recover, the u.s. will increase military assistance. shery: we have seen the relationship between china and russia flourished. given the rivalry between china and the u.s., how much stronger that this partnership between china and russia get? george: there is very little help that china can give to russia. they will not rush hundreds of troops there. they are certainly not going to take the navy out of the east china sea and move it around the black sea.

talking about a partnership is interesting. you can shake hands and be partners, but it is not clear what kind of material support china will provide russia. obviously, china wants the united states to use this as an opportunity for the chinese to get them out of the way. i do not think the u.s. will tell you much that there are two separate conflicts in different places and they do not supported either. haidi: three different assessments of risks. in washington, what is the bigger political wind in terms of how it deals with russia and beijing? george: politically, a gallup poll recently showed that 67 percent of americans support

war. we have political persistence inside the united states. if you are going to drop out of the war and want to get oil, at this point, we do not get much out of the europeans. so the problem on the russian states is that they do not think the -- the russians are afraid that the americans will be on the eastern border of ukraine. the americans are afraid that the russians invade the western border and start to pull more over again. each has a national interest. the united states has better artillery. shery: george friedman, great to have you with us. the founder and chairman of geopolitical futures on his view of russia and explaining that the war continues to weigh on european markets. we saw european markets falling

to bear market on friday. we continue to see the pressure on the british pound, u.k. assets took another beating when it came to the recent u.k. government's fiscal plan. at the moment, not a lot of change in currencies like that japanese yen and the aussie dollar, but we are watching the japanese yen as it touched 145 last week and we have the first intervention by authorities since 1998. haidi: let's look at how that is playing out when it comes to trading in oz is fairly -- australia and new zealand. saw the treasuries soaring as we saw the carnage across the u.k. bonds and currency assets driving up the pace of volatility. the selloff in treasuries gathering pace towards the end of last week after we saw the fed indicating that the rate could be around 4.5%.

we are seeing that selloff continue when it comes to australian and the new zealand session. be sure to tune into bloomberg to hear more from the newsmakers and the daybreak team there. much more ahead. this is bloomberg. ♪

shery: we take a look at how oil prices are trading at the moment. some green on the screen as wti futures a belies following the longest week of losses this year amid concerns of global growth. bloomberg's su keenan joins us with more on this. su: it was the lowest close since mid-january, below 79 as we come back above that. this put downward pressure last week. we had west texas down a big way with brent crude also down and gasoline futures taking a big tumble. all of those things on recovery since the first hour of asia trading, but the bigger trend has been the fourth straight week lower for west texas intermediate and it is now set for its worst quarterly loss in

two years. this as central bank's or hiking rates around the world and there is concern about recession. some analysts are saying that crude prices are pricing in a steeper session at this point. hard landing for the u.s. economy and a coiffed of the global economy are working its way into the system. you can see that drop off in brent from last friday. that is why you are seeing the selloff. prices are also being pushed lower by the stronger dollar, the concerned that opec+ might cut production outputs once again. and ahead is the eu impose him, that ban on russian oil for the red -- rest of the year. if we drop into the bloomberg, despite the fact that for 90 plus days we saw pump prices come down, we are now seeing a big surge that has a lot to do

with refinery issues on the west coast. a major disconnect between what futures are doing and the retail level. more pain for the consumer at least in the u.s. when it comes to putting gas in cars this week. haidi: there is a big industry gathering taking place and many analysts are seeing oil take a hit. su: it will be a big topic at the asian petroleum conference, the first time it has been held since the pandemic. we mentioned big banks and refiners getting together and the direction is perhaps the key issue. some of the biggest banks are forecasting a rebound in prices because of the low inventory and sustained demand despite the recession.

these banks continued to see the markets are tight and the conditions are bullish. jp morgan is a forecasting brent at $101 a barrel by the final quarter. goldman says even higher, $125 by the final quarter. many analysts see volatility ahead and the big question that people are concerned about is the low trading volume and the very height continued volatility that has become normal now to see oil prices swing $10 in one week. we have a disconnect between final metals and the price. haidi: a quick check of the global business flash headlines. combining two hong kong business risks over concerns. there are watching the designs with another merger that could

value the company's transport this year out of year. the bank may sell a minority stake in minster. the founder of x humble lost market shares after they plunged this year. they had an average price of $13 per share on friday. trading shares have slumped 73% this year. singapore is set to launch its first lithium and cobalt contract to get battery companies and investors interested in their futures. >> we have gone since dinner.

>> you are watching "bloomberg daybreak: asia."