>> good morning and welcome to daybreak australia. annabelle: we are counting down

to asia's major market opens. shery: the top stories, bond yields climb as major central banks warned they are not done with tightening. bank of england delivering a hayek and jay powell sticking with a hawkish message. haidi: india's prime minister meets with president biden and addresses congress, facing questions about human rights records. shery: and a sad end to the titan sub search. a catastrophic implosion and the crew is presumed dead. in the asian session, a little upside. data showed u.s. jobless claims were unchanged last week, the highest level since 2021 showing the labor market may be cooling.

and home sales barely raised in may. owners are putting -- it shows a lot about owners putting houses on the market. we have the boe and the norwegian counterpart sounding hawkish. the two year yield, 10 year yield -- two year yield at the highest level since march. we are seeing somepsde in wti prices but still below $70 per barrel. caution about the broader economy and hawkish fed comments despite the fact that u.s. inventory fell last week. haidi: let's get more on the top story. jay powell saying the u.s. might need more rate hikes before the year's end. returning inflation to 2% is

crucial to supporting long-term health of the u.s. economy. >> it makes sense to move at a careful pace. we don't want to do more than we have to but overwhelmingly we do think more rate hikes are coming. we want to make them at a pace that allows us to see incoming information. haidi: we will get more details with enda curran in washington. the boe dealing with inflation puts into focus how volatile the ender's game could be for central banks and you get the feeling from powell that they do not want to overestimate -- underestimate the stickiness of inflation. >> the inflation fight is not over. powell brought home the same message over two days, you cannot count us out for raising rates further just because they

skip a meeting in june [indiscernible] and he said there could be two more hikes on the table per their forecast. a similar story with the bank of england. there are some factors in the u.k. but the end result is that they also went with the rate hike. a similar warning for central banks around the world, inflation has not yet been contained. shery: treasurer -- treasury yields jumping global yields today. >> inflation is headed in the right direction and despite hawkish rhetoric from the fed, ultimately they will not have to raise rates so this viewpoint is out there but i think what central banks are trying to get across is if you look at core metrics, prices are not coming

back at the pace the market might expect they would be by now so they warn it would mean they have to keep tightening interest rates to rein it in. that opens discussion about what it would mean for the broader economy and if problems in the services sector will be solved. a debate going on. the end result is [indiscernible] that the warning is we will go higher in most advanced economies around the world. haidi: the boe will find itself higher this summer. not much choice when you see inflation at the rates that are four times as high but more than twice what we see in the u.s. at the moment. >> central bankers obviously make the argument that to do nothing would be worse. to allow prices to stay at very

high levels would have a bigger corrosive effect on wages and living standards. the u.k. pain would be acute given the percentage of floating rate mortgages. but the bank of england seems to be behind the curve so they had to go with a jumbo rate hike and indication is they have more work to do. we cannot yet count out central bank rate hiking story as being over. shery: enda curran joining us from washington with the latest. also in washington, it the indian prime minister addressed a joint session of u.s. congress after stealing some defense and commercial deals. jodi schneider joins me here in

new york. already addressing the u.s. congress. a big diplomatic deal. we also saw press conferences and prime minister modi taking questions. what are your key takeaways? >> it was a day of pageantry and also unusual. we have not had -- most indian the heads of state don't do joint press conferences. this is the first official state visit for prime minister modi and only the third state visit and state dinner of the biden presidency so this caps a day full of pageantry and official diplomacy and one thing they want to establish are the commercial deals to foster the commercial and military ties and it was a lot of discussion about that today but in the backdrop

is the issues of human rights issues and democratic members of congress who did not attend the joint session because of those concerns and then also the big question about india's stance on ukraine and russia, they have continued to aggressively buy russian oil and not necessarily back to western allies on the question of ukraine. haidi: a handful of progressive democrats boycotted that joint session of congress. and modi seems to be surprised that there was some questioning on the dedication of democracy and human rights. >> he said he was surprised that there was any question that they would not stand by democratic values and ideals and seemed a little put off by those questions.

we do not know how much attention those got in the room. we think the president was probably more focused on economic and commercial ties but also probably raising the question of ukraine and there is the issue of china, the elephant in the room, because prime minister modi has had discussions with china and the u.s. now coming out of some tense moments with china itself, it is interesting timing. basically a day of pageantry and a very warm response in congress and a long day at the white house so it really did go according to plan but those democrats did not show up out of concerns of human rights. shery: the tense moments by

china and the u.s., another one created by president biden himself with an off-the-cuff comment about xi jinping being a dictator. president biden: we had an incident that caused some confusion, you might say, secretary blinken had a great trip to china, i expect to be meeting with president xi sometime in the near future and i do not think it has had any real consequence. shery: that confusion, china called it irresponsible and absurd. tell us a little bit about how we expect this to affect china-u.s. relations that are already fragile. >> we do not yet know the implications. secretary blinken viewed this visit as good, the first trip to china in a while. he met with president xi and

both sign -- sides seems to think it was a good start but then president biden made the remark at a dinner event, saying he thought president xi was a dictator and china has criticized that. now the president is saying, i don't think it is such a big deal, we will be able to keep talking. i guess we will have to see what the implications are. shery: jodi schneider with the latest on all geopolitical issues. mainland china market still away on holidays but we have south korea, japan, and australia are opening up. how are we setting up? annabelle: kickoff with south korea. results from the global index providing their review and essentially they have to sign it to keep korea in the emerging markets index, 24 different

markets in that we had been waiting to see if they would upgrade it to be a watchlist in developing markets but ultimately the decision from msci was to keep the designation as an emerging market. findings earlier this month, msci indicated there were still a number of obstacles that korea faced to joining the watchlist or upgrade to developed market status as this was a decision that was widely expected, some say they do not expect a market reaction today given that it was a affected but ultimately in the future korea will become a direct -- developed market status. that is korea. the session, we will focus on bond yields given moves we were discussing in treasuries out of bond yields with more hawkish rhetoric coming from global central banks we could see the kiwi two-year climbing somewhat stops wise we are looking for a

weaker open and also watching different currency crosses in the session, particularly against the japanese yen given that the boj is staying at dovish and the pound against the yen we are well above the level we hit earlier this week for the first time in a number of years haidi. haidi: let's get more analysis from mark cranfield. at this point are we seeing market participants catching up or facing the reality of what we are hearing from global central banks top of mind is jay powell? >> yes. you look around the world yesterday, we had surprises from the u.k. and norway, both went by 50 basis point hikes, more than expected. so clearly there is more to come and the investors who may have been thinking we are coming towards the end of this phase are getting a wake-up call.

central banks are still very committed to fighting inflation. if you look through powell's comments, inflation is clearly still an important factor for the fed and if you look at what central bankers are saying, they have not given up on the idea of getting inflation back down to the 2% area, which is not the case in major countries, u.k. especially is a long way off their target, at 7%. so they are looking at 6% short-term interest rates there. in the u.s., it may be 5.5%. there seems to be some disagreement among the fed members so maybe we do not even get that far as well and it is quite a contrast with what is happening in the equity markets where retail investors seem to be coming back and buying in heavy amounts. that is how he can sustain some big names. a divergence where the treasury

key -- treasury curve is going versus s&p and nasdaq. in the end it will probably be a big hurdle for equity markets. when you have five point 5% short-term interest rates in the u.s., that is a big hurdle for equity people to overcome and eventually will cool down the market but short-term traders still seem to like a high stocks and tech sector so that is helping sustain but what seems irrational is the equity market. shery: we see sluggishness from other central banks have an impact on other economies that are not going in the same direction, like boj and we see the japanese yen at record lows against the swiss franc and the weakness, will we see pushback from policymakers there? >> i think traders expect that if pushback comes it will be

closer to the kind of levels we saw last year, so maybe when dollar-yen is around 150 mark cohen we are at 143 at the moment so still a way to go but i do not think traders expect aggressive push back until we reach similar levels to last year. last october i think the ministry of finance finally gave the decision they could intervene and engage the japanese and that is probably what we are looking for again. comments in the last few days from the ministry of finance officials and boj have been benign. no indication they are in comfortable yet with the weakness in the yen -- uncomfortable yet in the weakness in the yen. the pace of decline probably has not yet reached the level where they are really concerned about it. if it continues like last year we saw two months where the yen fell 4% back to back months. we have not seen it yet in this

cycle although we are at a slightly higher level. haidi: mark cranfield in singapore. highlights coming up from the bloomberg technology summit in san francisco as business leaders talk about their plans to further leverage ai. and we will get a stock outlook next. this is bloomberg. ♪

>> it only makes common sense to move at a careful pace. we do not want to do more than we have to be think overwhelmingly people in the committee think more rate hikes are coming. but we want to make them at a pace that allows us to see incoming information so we see -- do we make the decisions.

haidi: jerome powell speaking with the u.s. senate banking committee. our next guest says investors should not lose sight. sarah ponczek joins us with more . always good to have you with us. if you are a medium term long-term investors should you be looking through this time of profit and weakness? >> we have to be careful of separating the near term outlook and the elation from the long-term outlook. i'm talking five plus years. the reality is valuations are relatively high and upside of the near term might be limited when we think about the long-term case, we are seeing innovation and structural changes we have not seen in quite some time so for the first time in about 15 years it seems

like the are seeing a sustainable capex and at the same time growth capital is abundant and we continue to see investments made and digitization is accelerating so if you are a long-term investor, near term share there is reason to be cautious, you have to make sure you are not losing sight of the long-term picture and if you have a long time horizon and you are sitting on the sidelines it might not pay to do so because as we know, if you are on the sidelines there is never really a perfect time to get back into the market. haidi: if you are looking long-term, how do you accumulate when it comes to that long-term secular narratives like ai and big data and some things that have run up so much this year? how would you be building that portfolio? >> there are certainly areas of the market that have been swept in with eai hike this year --

with the ai hike this year. you might have to be a little selective but there are different etf's that play different themes. ai, robotics, cybersecurity, yes we have seen almost unbelievable gains this year, we have not necessarily seen it across the space. in fact, many of the gains have been concentrated in a handful of tech names and while some of the names are very large players, there are other names that are on the small or mid-cap side of the spectrum that are not evour large cap tech indexes so you have to look further away than just the s&p or nasdaq or top 10 names. you have to represent by the same names.

shery: have higher bond yields affected the trade? >> it did last year and when we look at the mega cap tech names that have surged this year, nasdaq up 30% in 2023 with less than seven months under our belt , a large part of that trade has been the expectations for bond yields come back down. but we do believe that even if bond yields remained where they are or if the fed raises one or two more times and then pauses, innovation is ng to be completely held back by 5% bond yields. so while yes it does have an effect on valuations, when we are thinking about long-term innovation, it matters more than we are bond yields are today. shery: sarah ponczek, always good at catching up with you. and we have more to come on

daybreak australia. this is bloomberg. ♪

haidi: the u.s. coast guard says the five members aboard the missing tighten have died from what appears to be a catastrophic implosion of the vessel. debris has been found a few hundred meters from the titanic. >> consultation from experts within the unified command come the debris is consistent with the catastrophic loss of the pressure chamber. upon this determination, we immediately notified the families. on behalf of the united states coast guard and the entire

unified command, i offer my deeper condolences to the families. haidi: let's get more details from angus lee. this is a sad ending to an extraordinary endeavor in the first place. >> confirmation of many people's worst fears. we know the coast guard using a remotely operated vehicle found debris on the ocean floor and the debris was consistent with a catastrophic implosion, when the whole of the vessel implodes under huge pressure of all of the water bearing on it. they found five pieces of the titan. some outside the pressure hull, some inside. from that they include -- they concluded that the structure had

imploded and there was no hope of any survivors. haidi: angus whitney there with the outcome that we know is definitive. plenty more to come. this is bloomberg. ♪

>> it is the working families who suffer the most from high inflation and it is for their benefit that we need to restore

to percent inflation on a sustained basis. >> if we don't get inflation back to target, it goes on for longer and the pain goes on for longer and none of us want that. shery: jerome powell and andrew bailey on the challenges of writing and elation. let's get more on the price path and we are global monetary policy will go. let's talk about price pressures. how is this time different from past episodes of patient we have seen? >> this time is different when we look at the core of inflation because this episode has a

sector of [indiscernible] in 2022 and 2023 we are living in a world of tight labor markets and more acute services inflation creating persistent inflation so given sectoral dimensions and long-lasting nature this is a different episode than in the past episodes. basically what we have been living through in the last three years is different and it will take time to get the inflation back to 2%. shery: how much of it is having to cool the labor market? chair powell says the most vulnerable in our societies are the ones who will suffer. >> indeed. this is why it is very important

to get inflation under control. the longer it stays, the longer the pain stays and it will be harder on the vulnerable parts of the population. it is very hard to tell how long this will go on. no one really knows the answer. this is why data is volatile and it is an uncertain environment. it's a difficult time for policymakers but still this is exactly why the hikes should continue, tight monetary policy stance continue until the job is done. haidi: what are the major reasons why we have not seen the monetary policy, the strong policy moves have not made much of a dent?

>> monetary policy is successful. we started at 9% and now we are down to 4% so inflation is coming down, it is just that taking time because of structural shifts in the economy. it does not mean structural features will create persistent inflation but the shift in the economy from services to goods and now the shift back from goods to services involves adjustments come up mostly acute and the labor market, which is why the supply and demand imbalance in the labor market is taking time to resolve. haidi: when you look at the high levels of inflation in the u.k.

and the struggle for the bank of england, does this highlight the risk for every global central bank at the moment that is trying to win the war of inflation? the risks of moving to late or pausing to early? >> exactly. the problem right now is inflation and that is a problem for all of the central bankers globally. u.k. is in a worse position than the u.s. because they started late. all the central banks are coming after the federal reserve so in that sense, this is the first problem. every other problem comes second after the inflation problem. shery: there have been arguments that we are entering a new tech era and that overall we should see disinflation take hold. we have seen ai launch and

different types of tech. when does that kick in? >> we are still not sure even the productivity impact of ai, let alone inflationary impact. so i would say it is going to be some time for us to see the full-fledged of facts of ai but i -- effects of ai but i can tell you we might be going into an era where we see higher global inflation because of the frequency of sector supply shocks. not just energy shocks but also shocks to labor supply and those type of things that go into the production process. i say that because it looks like we are trying to fragment the

world. that would create more supply shocks and that would keep upward pressure on supply shocks. haidi: always good to have you with us. let's bring in annabelle. j.p. morgan says u.s. stocks will struggle without a fed cut in the second half. annabelle: it is about the delayed impact we see when it comes to central bank tightening because it takes time to show up in the real economy so j.p. morgan has been talking about this and exactly we -- when we are going to see the full impact of the aggressive fed tightening campaign they say will be in the second half and yes we have the case building that we will see the fed needing to hike the longer and the key rate will end up being more elevated than some traders thought.

the impact that will have on stocks, j.p. morgan has been talking about this as well and essentially they are saying that equities will struggle, it will be a tumultuous time in the second half and that perhaps there is a risk of a new unknown. that view from marco is not new to us because he has been bearish in the past but what is important is he is sticking by and reiterating this call and it really does add to this divergence we are seeing on wall street. on the one hand you have the likes of goldman sachs, bank of america saying the s&p 500 is going to be ending the year higher given what we see in the ai lead boom. on the other hand you have j.p. morgan and morgan staley say -- staying bearish on the outlook that essentially just to reiterate j.p. morgan saying the risk reward for equities looks unattractive at this point and that perhaps investors still a

little complacent here. shery: a different story from what we see in japan, the exuberance in the equity markets and what is happening with boj remaining pretty dovish and what that is doing to the current date. annabelle: absolutely. it is one of the reasons we have seen japanese equities rises because the boj has stated so dovish but on the flipside of that is the current as that is coming through and just overnight we had moves come through from the boe as well as the peers in norway, switzerland, hiking, indicating there is more to come and that is putting a lot of pressure on these currency crosses in the morning session so we have the swiss franc against the japanese yen trading at a record level and we also see the pound again crossing past the 180 mark even though traders were disappointed perhaps the boe could have gone further and the rate hiking campaign but as for the outlook because we have the japanese yen now crossing the 143 level, what

does it mean for officials for the government in japan, could we see any intervention, if you change now cba has views coming out and they essentially are saying that the yen has further room to fall near term, will we see any direct intervention in the markets, a lot of investors saying essentially not at this stage, we are still going to get haidi to the 145 level. haidi: we are starting to get an idea of who could potentially replace the rba governor if his current term is not renewed when it expires in september. these are those being mentioned. stephen kennedy, jenny wilkinson, david gruen and michelle bullock. the decision will be made in july. shery: it has been a busy week

for central banks. sticking to expectations by keeping rates steady in indonesia for five straight months, keeping the benchmark at 5.75%. in the philippines, they held their key rate for the second consecutive meeting. 6.2 5%, the highest in 16 years. the governor says rate cuts in the near future are unlikely with inflation still above target but you will be able to hear from him directly. he is with us later on bloomberg television after 9:00 a.m. in hong kong and 9:00 p.m. in new york haidi. haidi: a lot of focus on the endgame for global central banks and towel in his second testimony speech driving home the need for further tightening.

janet yellen says diminishing risk for the u.s. to fall into recession on suggesting a slowdown in consumer spending might be the price to pay for finishing the campaign to contain an nation. this is from an interview with bloomberg news on thursday. when talking about the chances of recession, yelling the said that odds have gone down -- janet yellen said the odds have gone down. also talking about the debate over whether the inflation target of 2%, saying the debate is not appropriate for now but that recession remains a risk as tightening continues and we could need to see consumer pending consumer -- consumer spending slowed down as the price to pay to ease cpi and this latest assessment coming after the report that shows job gains have been essentially beating economist expectations with retail sales and other

indicators in the u.s. showing surprising resilience tips by just despite the tightening. this is bloomberg. ♪ we all work differently now. so cdw helped us deploy mac, supercharged by apple silicon.

♪♪ built-in security protects me from malware and forgotten passwords. i've got enough battery life to get me halfway around the globe. and lower overall costs leave more money in our budget. for more practical furniture? this was supposed to be hip. no. can you help me up? with mac, configured by cdw, a solution that works for everyone isn't just possible, it's powerful. sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh haidi: the bloomberg technology summit is underway in san

francisco with ai dominating discussions. let's go to ed ludlow. no prizes for guessing what is top of mind, but what discourse is taking place? >> the discourse is probably the right way to sum it up. everyone who has taken to the stage [indiscernible] inflection ai, we all agree we need some sort of global regulation but the difference they are talking about is where to regulate. the other question is china and the discussion has been how little we know about china's progress in artificial intelligence and that concerns people because geopolitically we know the situation between u.s. and china but we do not know where they are technologically

and then we can talk about regulation as well. shery: you have been talking to big names on ai, including qualcomm. what did they say? >> an interesting conversation with them. this year has been all about nvidia and servers and data centers and powering the cloud. but what about your cell phone? this is what was said about the future of ai on cell phones. >> when you think about the ai and semi conductors accelerating computers, a lot of competition and when we have seen what you can do with large models and you think about the history of computing, computing starts in the cloud and then gets scale. that is what happens with cpus. that is what happens with all

forms of computing in the smartphone is a great example of that. the largest computing platform ever developed is the smartphone. it's the largest development platform for humankind. it is with you all the time. if ai becomes pervasive, which we believe it will, especially when you look at how the large models are very natural, you can converse with them, that will happen at the edge. that is how you should think about qualcomm. if ai is going to get scaled, you will see it running on all qualcomm devices come in your car, your phone, your pc and other machines and i think it is a great opportunity for us. >> the future is to democratize

access to ai and qualcomm is going to make that happen, why are you not getting jensen level love [indiscernible] >> it's great for the semiconductor industry for anyone who has been on the forefront of computing, qualcomm probably used to be well-known as a communication company but what we do now is more conducted processing, not communication. as the models started to become very popular, they will be running at the edge and i expect that ai becomes an option on qualcomm. i will give you an example. there was stuff in the prior conversation where adams said something about in 1997 if you tried to guess the winners and the losers of internet, it would be a wild guess. but we see the generative ai

opportunity now is huge. we do not yet know all of the different applications that will come up. just within the past six months we've seen a revolution in a number of companies. >> so he is passionate about the idea of running these tools in smartphones and he demoed in airplane mode a mobile phone running a large language model in real time to generate image so if you are interested in ai, reach out to me. very wide-ranging conversations here at the bloomberg technology summit and so much focus on the needs or global regulation but only at the top end of the technology scale. the start ups, let's leave them to innovate and the conversations here continue. shery: ed ludlow with the

conversations that bloomberg subscribers can continue watching on live go. you can also find big big diary entries coming up today and later this week as well as some events you might have missed earlier. and here are some other tech stories. meta says they will end the availability of commercial news on facebook and instagram for all canadian users over a law requiring digital platforms to pay local publishers. the online news app is based on similar legislation in australia and the government says the bill will help divert advertising revenue to the canadian media sector which sought many outlets closed between 2008 and 2021. tiktok ceo is stepping down two years after taking the job. they will be replaced -- replaced by adam presser. the ceos says she is leaving her

role to focus on entrepreneurial passions but will remain with the company as a strategic advisor. and you can watch past conversations and watch us live on tv . dive into any security 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 on tv . this is bloomberg. ♪ ♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ )

-awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall. it can happen to the people who teach us and rescue us, the people on our team and in our family. it can happen to the people who serve us and the people who served. the people we work late with and stay out late with. it can even happen to the person in the mirror. opioid use disorder is a disease that can happen to any of us. it's possible recovery can happen to any of us, too. need it cool at night. you trying to ice me out of the bed? baby, only on game nights. you know you are retired right? am i? ya! the queen sleep number 360 c2 smart bed is now only $899. plus, 48-month financing on all smart beds.

shop now only at sleep number shery: ceo of deutsche bank says they expect trading results to improve in the second half as clients navigate a challenging economy. speaking with bloomberg, they told us the bank sees momentum in the business of fixed-income trading. >> we have a very strong copper bank and nice developing private bank and we can confirm our revenue for the year. we see the momentum and q2 2023 from a revenue point of view was higher than q2 2022 so overall i would say the bank is faring well, the strategy is paying off.

regarding the investment bank, we always said we had a record year, we had an extraordinarily strong year in 2022 and i still think in q1 and q2 we have done well but the overall market is a bit weaker then the record year of 2022 but i do believe with some uncertainties, first -- for example the debt ceiling going away in the u.s., with the still complex situation in front of us, i do believe in q3 and q4 there is momentum in the business on the fixed side but for us as a strategy of deutsche bank it is important that we further balance out the investment bank overall with a very strong fit business, what we really wanted to achieve is that also the [indiscernible] businesses further strengthened and so we have put more investment into that. >> so it will be an operating

environment for the fit business that is likely to be less good than last year, q2 may or may not be a blip, you still see uncertainty in the second half of your that could provide opportunity. so on balance, the numbers are likely to be slightly better? >> that is what i would say for the coming weeks and months. q2 was also particular quarter, given the situation we had in the u.s., we can also see now in june that there is momentum in the business so i am comfortable with the fit business and q2 was a peculiar quarter and i think the business in q3 and q4 will have a slight recovery. haidi: let's take a look as we

head into the friday's session. equity session, greater china still off from the dragon the holiday break but we are watching moves we continue to see when it comes to the yen, traders now verbal intervention watch as we see the extension of the weakness in the currency and so much of this has been down to the broader policy divergence, the yen really falling to record lows against currencies like the swiss franc. a little out it s to the aussie. this is bloomberg. ♪

as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network, with no line activation fees or term contracts... saving you up to 75% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities™.

♪ shery: coming to you live from new york, sydney and hong kong.