haidi: welcome to daybreak

australia. annabelle: we are counting down to asia's major market opens. shery: the top stories this hour. the bank of canada delivers a surprise rate hike that fuels bets on further fed tightening. tech stocks dropped for the first time in five sessions. annabelle: we speak exclusively with cathie wood later this hour. shery: u.s. futures coming online in the asian session, muted at the moment as we saw a mixed finish in new york. the drop in tech shares continued driving u.s. stocks lower. tech companies -- we are further away from the level now.

the nasdaq fallen for the first time in five sessions although interestingly we have the small-cap russell 2000 gaining for a second session. we have seen a couple of weeks of underperformance. we are watching treasury yields rising. the bank of canada rate hike decision. wti prices under pressure after rising in new york. data showing that u.s. refiners are increasing processing to the highest since 2019. here in new york, it has been an apocalyptic site. there's pretty much an orange fog all around coming into the office today, people wearing masks something you haven't seen since the height of the pandemic. we are seeing air quality new york, we are told the worst of any major city in the world

according to one measure. new yorkers were not necessarily used to this kind of bad air quality. air quality has been improving over the past i, but it was so bad today from the hundreds of wildfires in canada that we had some in-flight -- inbound flights to laguardia briefly halted. haidi: the recommendation that the vulnerable people wear masks. outdoor recess for schools being canceled. this is reminiscent of the bushfire season we had here in australia with parts of sydney most iconic beaches and images of new york city being blanketed in this orange fog. it is disturbing and i hope everyone is staying safe. again returning to mask wearing. speaking of canada, it is not a

usual day that we have them leading the headlines. we are watching a headline because of a move from the bank of canada. they boosted the rate no explicit guidance on the next move. this is potentially feeding back into that expectations if you take a look at these treasury moves. shery: we saw canadian rates lifting higher. now we are seeing renewed volatility around the pricing of fed policy expectations now traders fully pricing in a fight height -- a rate hike are the fed meeting. this ahead of next week's u.s. cpi numbers that will be released on the first day of the fed meeting. we are seeing a headline and core measures expected to decline but well above the 2%

target by the fed. all of this having implications for the broader markets. where traders are deciding to put their money, let's bring in our process at reporter. -- cross asset reporter. tech stocks are under pressure. guest: it's because of the bank of canada. it made a lot of investors jittery because if they hike, bank of canada for background is a leading policy bank. one of the first to hike and pause last year. with their signal hike or pause, they were like what does this mean? traders are questioning because they priced in a rate cut, hike, or pause so now they are trying to reassess the landscape.

haidi: this is causing tech to lose their luster -- lester. guest: we had small caps gaining. outperforming the s&p by the widest since january. investors were happy because these are usually the more volatile because they are linked to the local economy. the fact they are gaining might mean maybe the banking crisis is over. a lot of the stocks that comprise the 2000 index are banking related shares. maybe people have moved on or they are feeling more confident about the economy. haidi: let's look at china because we are hearing policymakers are looking at different ways to manage weakness. this is linked back to dollar deposits and banks. >> there's really a lot of

demand for dollars at the moment and that's one of the reasons we are seeing depreciation in the local currency, the chinese yuan that has been around 3%. now we are hearing from sources that banks in the country have cut their dollar deposit rates. instead of around 6%, we are hearing it's now down to 5.7% from some bloomberg sources. that means practically, ocbc is saying this is a creative solution that is going to reduce the impact of lowyuan interest rates. one is saying this could have unintended consequences because if you are a chinese company making dollars offshore then

they lower the dollar deposit rates on shore your disincentivize to repatriate overseas back into china. there could be something that plays into the balance of payments pressure we are still seeing in china. shery: given what we are seeing from policymakers, traders and china are betting on easing policy conditions? annabelle: that's right, they are getting more leverage. something that is officially disapproved of inside china. can bring up this terminal chart the overall overnight repo traits. you can see that huge spike, that is turnover that was nearly 8 trillion on tuesday. this could also indicate to us that banks are using cheap money

in the system to go out and buy bonds. as for why they are doing that, officials do discourage signs of leverage in the system but it's still a bit as you say that we could expect further easing measures for the pboc over the coming months. shery: let's get over to vonnie quinn. >> the new york mayor has told residents they should stay inside or wear masks outdoors as smoke from canadian wildfires blankets the city. the faa recorded flight delays in the area. justin trudeau says canada is living through the worst wildfire season and reported history. china is the biggest factor driving oil prices so says the iea. opec-plus agreed last weekend to extend production cuts to the

end of 2024 with saudi arabia taking in extra barrels off the market. >> there are uncertainties as usual when it comes to the oil markets and if i have to pick up the most important one, it is china. chinese economy. when i say more than 2 million barrels this year oil global oil demand, 60% of that growth is said to come from china. >> wennberg has learned that the proposed deal between liv golf and the pga is causing serious antitrust concerns. u.s. senate democrats are calling for investigation citing competition issues and allegations of human rights abuses in saudi arabia.

global news powered by more than 2700 journalists and analysts in over 120 countries. haidi: coming up next, arc funds up their stake in coinbase. this is bloomberg. ♪ summer. just purchase any 5-hour energy product, then enter for a chance to win an eco charger electric atv. just go to 5hecharge.com for details. 5-hour energy...charge it up!

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by more than 400,000 shares. cathie wood joins us now for an exclusive interview. last july you sold out of some of your holdings citing the regulatory uncertainty. given the crackdown that would present an existential threat at the moment, what forms the broad case to adding to that position for you? what we are saying is the judicial and legislative branches of our government are starting to weigh in on this topic. the regulator, the sec is more part of the executive branch appointed by the president.

as we are seeing cases go through court, in the judicial system, the sec i mean the judicial system is questioning the sec decisions. we think this is a good thing. we think this is going to be in the court and in legislation for perhaps years. what has happened in the meantime? we have binance under increasing regulatory scrutiny for more criminal activities. therefore, we think the competition to coinbase is disappearing and that's a good thing long-term for coinbase. >> are you still confident in the $1 million target for bitcoin?

guest: yes. the more uncertainty and volatility there is in the global economies, the more our confidence increases in bitcoin. one of the reasons is have just been through and inflationary scare. we think it was very much supply chain driven and bitcoin is a hedge against inflation. we also believe now that bigger risk is deflation not inflation. why would bitcoin do well in that circumstance? it would do well because it is an antidote to counterparty risk in the traditional financial system. on the bitcoin blockchain, everything is transparent. we can see all of the transactions, all of the

activity therefore we have a much better understanding of how little risk there is in the blockchain world. shery: you are saying you expect those on binance to prevail and that lead to more regulatory crackdown on coinbase if it has become a bigger player in this industry? guest: it was interesting to see the sec sue binance then coinbase. they were trying to put them in the same bucket come but they are not at all in the same bucket. we have two former officials of binance u.s. coming forward and now we understand that they have been working with regulators and the government generally to help the government understand how binance u.s. was not separate and distinct from binance

international and how much cz controlled binance u.s. and how much binance data was in china and how much commingling of funds there were. coinbase is not accused of any of this. it is unfortunate that the sec took action against coinbase the day after binance then chairman gensler was trying to implicate coinbase in the same way that he was implicating binance. no, they are very different. there are questions about security and about staking, those are the two questions that coinbase is facing. most of the other questions around binance have nothing to do with coinbase.

>> we are seeing more scrutiny whether it's from the regulatory side in the crypto industry or from the legislative side with congress and hearings in intellectual and artificial intelligence. wouldn't stifle innovation and is this a concern for you? guest: in the crypto space, i will broaden it and save it in the digital asset space, it is quite a concern. innovation is leaving the shores of the united states and going elsewhere. we have a hostile regulatory regime right now. however, as i just mentioned in the legislatures of congress and in the judicial system again this checks and balances, i think it's going to weigh in on the side of keeping innovation in the u.s.. i think they understand both the

judicial branch and the legislative branch that there may be more politics at work. more than real policymaking. haidi: the exuberance of ai has been the big market driver of this year. do you think this is the bull market driver, the idea for this decade or is it something else? it was big tech over the past decade and prior to that, we had going on china after lehman in the 90's. what is the big compelling idea for you? guest: we think innovation broadly. the five major innovation platforms around which we have centered our research. sequencing in health care. disease, robotics, energy storage, artificial intelligence and blockchain technology. these platforms are evolving and converging.

we think that artificial intelligence is the biggest catalyst to innovation. in other words, it is going to turbocharge all of the other innovation platforms. a good example is tesla. tesla is probably one of the biggest ai plays out there. autonomous driving is a massive ai project. we think it's went to scale. these autonomous taxi platforms going to scale from nothing revenue today to up to $30 trillion by 2030. i often say it can be somewhat confusing, but each one of those platforms is on an exponential

growth trajectory and now they are going to feed each other. we are starting to call that super exponential. yes, it is the companies that will harness ai to increase productivity and create new businesses. shery: how does tesla compare to other potential ev rivals coming from china? i know you have a preference for tesla, but the landscape in china is evolving so fast. can you share any insights and possibilities there? guest: we own byd in arkq and some of our japanese funds. we like what byd is doing. when the chinese put their mind

to something and they want something to happen, it happens. the issue in china for us is the common prosperity which is a noble goal, it is a goal that we have in the united states trying to near the divide between the wealthy and the poor. the way that china is approaching it is consistent more with commoditization so that these new technologies can reach into tier three tier four cities. it is usually associated with very low margins. as i said, we own byd and we love what they're doing. they will scale to the masses, but tesla which started at the high end and is coming down in terms of price points, we think is also going to be attractive to more and more population segments over time. shery: good to have you back,

cathie wood. if you missed any part of that conversation, tv is your function. you can watch past interviews and also watch us live. you can dive into any of the securities or bloomberg functions we talk about and become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out, tv . ♪

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credit suisse. it says results will be published august 31 instead of july 25 to give it more time to combine its financial statements with its former arrival. takeover deal is expectedhe saya shares for several more years. >> the ai has dominated the long portfolio for several months. if it's as big as it -- i think it is, nvidia is something we

are going to want to own for the next two or three years, not 10 months and maybe longer. shery: up next, investors might be betting big on ai but policymakers are looking at its risks. we are joined for an update on the u.s. senate ai hearings this week. this is bloomberg. ♪

>> the height -- hype is

absolutely remarkable. i've never seen anything quite like it. ai has been having an impact for decades. this stuff is not brand-new. >> if i am right on ai and the impact on it, it's already making the top coders up to eight times more productive than five months ago. if it's as big as i think it is, nvidia is something we will want to own two or three years, not 10 months. >> what's ai going to do this going to make it more effective? it's not totally explainable, but we are using it for the right purpose. changing the regulatory process around the use of ai is going to be important for every industry. >> it's more software, that's how i would see it. bringing more software we have

been bringing in for a long time. there's been all kinds of breakthroughs and problems. it is statistical and powerful and interesting. i do not see ai achieving the holy grail. i can't tell you and neither can the ai. >> some of the speakers at our invest conference. the u.s. senate hearing underway in washington. our next guest says while policymakers are focused on ai issues, this debate is quickly moving to the courts. let's discuss with the center for technology president ceo. we know the u.s. government has not necessarily been having a great track record on keeping up

a technologies. if this moves to the courts, how well-equipped are they to handle this and related issue? >> you are absolutely right, policymakers are paying attention. we are having senate and house hearings. the biden administration is acting through its agencies. and of the trends to watch is that the courts will be jumping in fairly quickly. we are already seeing lawsuits about ai over defamation results generated by chatgpt. we have already seen disputes things as big as getty images seeking an injunction last month because copyright infringement. you can also imagine product liabilities to come. we have had someone accusing accusing chatgpt of inducing her

husband's suicide. it is easy to imagine future lawsuits trying to hold these companies accountable. >> where are you seeing in the world the furthest advance when it comes to regulatory oversight on this new technology. >> the eu is out and been quickly. the act has been in drafting and the parliament is scheduled to vote as soon as june 15. by the end of this year, we fully expect there will be a large-scale cross industry regulation of ai coming out of brussels that will have effects around the world because so many countries want to do business in that block. >> do you think that the regulatory framework, the legal framework that there is the

capacity to deal with what is already being seen and feared and heralded as the wide-ranging impact of generative ai? that you talk about the financial sector, personal finance, health care and a myriad of other ways this could be ding -- name changing. >> there has already been a robust conversation taking place about other ways ai is being used right now to impact people's lives. to help decide who gets hired for a job, who was eligible for public benefits, who sees particular housing ads. there has been a long conversation around how people can be treated fairly with transparency and accountability when the tool either isn't fit for purpose or is discriminating and causing harm. the big question is how this maps into generative ai tools which to some degree do involve users engaging in more explicit

conduct. if i use a generative ai tool to create code or something that depicts someone in a harmful way, should the company be responsible or the person putting in the prompts the generate that result? there's a lot of work to be done figuring out where in the value chain accountability should sit. the other thing is whether there should be regulation before these tools are able to be used at all. we are seeing an increasing dialogue about the idea of preapproval licensing kind of like food and drug regulation. that is a really big leap to apply that to software. we are seeing policymakers talk about that today and i think the major take away is how seriously policymakers are taking these

issues and how important it is for the big companies generating these models to earn public trust that they are doing the testing, having the design frameworks and the public visibility and accountability for what they're doing to try to earn public trust. >> what does across societal approach to this look what? given that not just in the u.s., but a number of different economies and governments would have difficulties pushing through in a political sense a single piece of legislation alone something that is more comprehensive? >> the reason we need across society approach is that every sector of the economy is going to be using these tools in some manner. they're going to be sophisticated players, the ones developing these tools in the first place, then unsophisticated players. there the companies developing

tools to screen resumes, to automate video interviews of candidates than regular employers saying can i use that or will i be engaging in discrimination is something goes wrong? we need to quit people across all sectors of the economy to be educated consumers of these tools. can you use these tools without inadvertently defaming someone? without employees revealing private commercial secrets by the way they engage in it. pushing on the developers and the employees of these tools to use them and deploy them responsibly. regulation, guidance, education, and public discussions like the ones you are having now. >> what will it take to achieve the right benefits where you can get the benefits of new technology without stifling

innovation through too much regulation and oversight? >> that is more than a million-dollar question. i do see a convergence around key principles. we are saying this and what's coming out of the biden administration in the united states, the language in the european act and what we are saying out of other countries. they are focusing on reliability. are these tools fit for purpose? do people understand what their limitations are and know that they are fallible? the big focus on nondiscrimination. how do we make sure the results there putting out are not biased and deepening social inequality? a major focus around transparency and expandability. having people understand even if you don't reveal the source code, having people understand what weights are getting measured as the ai makes a recommendation or generates an output and how can people able

to look into that to interrogate it and understand in a better way how the system is working so that we can see where that system is going wrong and take action on it is doing so. >> great to have you with us for such an important conversation. no doubt when we will keep having over and over in the coming years. center for tech knowledge and democracy president. the bloomberg invest conference has kicked off bringing together influential names. let's take a look at key takeaways. lots of high-profile speakers including ray dalio. >> it's a huge event being hosted by bloomberg in new york taking place across three days. it just kicked off. ray dalio one of the high-profile speakers was very much focused on the health of the u.s. economy. in particular when you combine

what he calls sticky inflation, we have seen it elevated. then also the impact of high real interest rates. he said we could be at the beginning of a big late cycle debt crisis where we are producing too much debt and at same time have a shortage of buyers. here's what he said about the impact when you have elevated interest rates for a long time. >> interest rates are now at a level that they will stay up at they will not rise much. the consequences of that are going to be a rieger -- weaker economy owing forward. it doesn't have to be a big downturn because of the household sector, but it is a balance sheet type recession. shery: soros fund management is also seeing problems ahead for u.s. banks. annabelle: this was another speaker at the event.

the cio said to expect more bank failures. the problems and stabilize for now at least it appears, but she was telling us at the event that there are more problems under the surface. she also shared what she sees as a topic vestment pick. guest: the asset class this most interesting is typically boring. that's agency mortgage-backed securities. two thirds of the current holders, the central bank and banks have turned sellers. you have a dynamic where you have extraordinary interest rate volatility. the valuations in that space, we would say they have gotten disproportionately cheap. vonnie: the bank of canada

surprises with a 25 basis point rate hike. policymakers raised the rate to the highest in 22 years. the move ended the polls to rate hikes. the governor did not get guidance on the next move. new zealand's 10 month budget deficit is wider than projected. the figures show a deficit of $767 million u.s.. core expenses were $200 million less than forecast. a south korean prosecutor spearheading a case says he may spend most of his life behind bars. he could face trial and jail time in korea and the u.s. on distinct charges.

he is charged with fraud in the u.s. and breach the capital markets law in korea over the collapse of stablecoin. >> this is the largest financial fraud or financial securities fraud case that has ever happened in south korea. we are expecting the maxim sentence to be handed down. up until now, it was probably four years in prison but we are expecting more than that. >> he has denied charges of using forged travel documents. his representatives previously said the securities fraud charge is unfounded. his lawyer could not be reached for comment about the scenario laid out. global news powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. haidi: australian bond yields following what we suffer treasuries and the bank of

canada sure -- shocked decision overnight. the three year yield rising to the highest since 2012. the 10-year note also jumping 14 basis points after we saw treasury yields spiking on wednesday. trailing bigger increases after the boc policy rate rise of 25 basis points. we saw yields ending 11 basis points higher on the date. we have been seeing this impact of the crashing yield curve and austria casting doubt on what policymakers have been saying of hopes for no recession. some of the key bond makers -- measures are showing serious concerns we will see recessionary conditions in australia. the key yield curve gap between the 10 year and three year yield

for bond futures down 13 basis points this week. the gdp numbers did not help either. lots more to come here on daybreak australia. this is bloomberg. ♪ -diversification, futures, options. fiduciary. leverage. [whispering] -frothy markets. psst. virtual real estate is a lock. ♪ cold hard cash ♪ j.p. morgan wealth management knows the world is full of financial noise. i'm looking at your asset mix and plan. you are right on track. great, thanks. our easy-to-use app and local advisors are here to help you figure out what's right for your investments. j.p. morgan wealth management.

shery: take a look at new york

city and the orange skyline as we are seeing smoke from wildfires in canada blanketing north american cities. here new york, it has been bad. we are talking about air quality, currently the worst of any major city. we have even had inbound flights from laguardia having to be halted because there was not enough visibility. the mayor advising residents to start wearing masks. hundreds of places are active in canada and that is all drifting south. new york city one of the most effective right now. while i was coming in today, i could feel my nose was so spicy. it's really bad out there. >> this time yesterday we were getting alerts that we would be seeing the smoke from canada. hard to believe and look at what looked like in new york midday.

the sky was literally orange. depending on where you were in the city, people have different reactions but it was masking up once again. mayor adams had masks on and they were coping as best they could. new yorkers are famous for being able to cope. we've had 9/11, hurricanes, blackouts. that they reported flights were canceled. baseball postponed again. also kelly's game. schools canceled sporting events. it's all about what is happening in canada. canada is living through the worst wildfire season in recorded history.

allergy alerts stretched across canada and the u.s.. it has been an event many had not anticipated. new yorkers again grabbing the masses. they are heading out of our office building to head home. >> are things expected to improve soon or get worse? >> we are hearing that conditions from the midday, the orange smoke are expected to dissipate by the evening, the mayor of new york is warning people should prepare for the long haul. we are being told this could last for at least a few days. every part of the state is under health advisories. particularly older people,

people who suffer with asthma. they are advised this could be harmful for them. many commuters told me they were coming on the highway and surprised because it's a mild weather. just the beginning of summer here new york. they were surprised to see the windows closed. the smoke pending on your health condition could be considered dangerous. but again, most new yorkers are dealing with it. one colleague is from a part of spain where they are accustomed to wildfires. he said this kind of makes me feel like i'm at home. >> that's not good. >> it's bad, but not that bad. haidi: air quality and other environmental issues are back in

focus in the next hour. we are joined by a ceo about the most innovative solutions to global climate challenges. this is bloomberg. ♪ ♪ but by the third or fourth cup, your stomach might not feel so good. if that sounds like you replace your afternoon cup with 5-hour energy. it's perfect for when you're feeling coffeed-out. coffee in the morning... 5-hour energy after. your stomach will thank you. discover 5-hour energy. ♪♪

>> senate democrats are demanding an investigation into

a deal we have been watching citing competition concerns and alleged human rights abuses by saudi arabia. sources say they are also looking into this. our reporter joins us from san francisco. their big questions being asked. guest: definitely i think regulators in the u.s. and europe would be concerned over antitrust issues related to this deal which involves two large legacy players in europe and in the u.s.. the pga combining with liv golf. having these entities come together to form a giant monopoly is something that could potentially be a cause of concern. it looks like it's already raising red flags when it comes to regulators. we have been reporting there

have been concerns already and regulators will potentially be looking at this more closely. already, the doj is examining the pga policies. they started an investigation last year and that investigation is not going to go away because of this deal. shery: how likely is it the regulators will be available -- able to effectively block the deal? guest: a lot of the financial terms of this deal are being worked out. when the deal was announced, it was basically something on principle where both sides the pga and liv golf said it would come together and form this new for-profit entity but we don't know the financial details. advisors are still valuing assets of the three different leaks to see how the financial terms would be worked out, how they would split the pie in terms of existing contracts with sponsors. a lot of the stuff is still

unknown. once we know some of the details, we have a better idea as to what some of the concerns are or what aspects regulators could find troubling. shery: that's it for daybreak australia. daybreak asia is next. we are looking ahead to the market opens across asia, japan, south korea, and australia. we had a mixed picture on wall street with u.s. stocks finishing mixed although we did get a drop in tech shares. sidney futures pointing to the downside. this is bloomberg. ♪ ♪ old school wisdom, with a passion for what's possible. that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan

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