♪ haidi: good morning and welcome to "daybreak: australia." i am haidi stroud-watts in sydney. annabelle: i am annabelle droulers in hong kong. we are counting down to asia's major market opens. shery: good evening from bloomberg's world headquarters in new york, i am shery ahn.

the top stories this hour. u.s. stocks edged higher in preholiday trade, shaking of a slowdown in factory activity. tesla surging on its record sales results. haidi: haidi: it is decision day for the rba. bloomberg intelligence says array tom price crowd crush on demand -- a rate right could crashed home demand in the second half. ocbc targets a revenue boost. we will hear from the ceo at this hour. take a shery: look at how u.s. futures are coming online. a mildly positive session in new york. we had the s&p 500 edging slightly higher. but it was a holiday shortened week and a holiday shortened trading session as well, ahead of the fourth of july celebrations.

tesla led to a car stocks gaining ground and battery suppliers gaining ground. also watching treasury yields push higher. the 10-year yield around 3.85. when it came to treasuries, it was a yield curve inversion in the 2's and 10's reaching multiyear extremes. that is what we are watching in the treasury space. also watching oil prices. the asian session slightly pushing higher. that did not happen in the new york session. we had a lot of pressure. saudi arabia pledging to extend voluntary output cuts, and at the same time, the volatility. not to mention concerns about global demand, it really let oil prices down. but haidi, it was all about the yield curve inversion. slightly eased in today's session after we got the u.s. manufacturing activity numbers. we were pretty surprised that this gauge fell to a three year

low. we are talking the eighth consecutive month of contractions since the month of june -- in the month of june. slipping to the lowest level in 30 years. demand for merchandise remains pretty weak. talking about new orders also continuing to ease for a 10th consecutive month. you can really see the struggling manufacturing sector, which seems to have in the narrative in asia as well. you are seeing manufacturing, being challenged back services being resilient. haidi: and we saw treasuries pushing higher, the curve steepening even higher after the institute for supply management data. the yield curve inversion is approaching a multiyear extreme. the gap has shrank in terms of the rally sparked by the weaker institute for supply management factory gauge numbers. but the 10-year yield is going higher, this is the most inverted level we have seen in

decades as traders continue to price in further fed tightening. shery: it is that relatively we are watching closely, especially with the jobs report later this week. let's turn to annabelle for a check of how we are setting up in the asian markets. annabelle: just echoing what you were discussing. the debate amongst investors is whether the gains we have seen in the first half can extend into the second half, a lot of analysts in the market saying that will not be the case. there will be some profit taking and we can expect downside for u.s. markets in the months ahead. what is interesting, if you look at history as a guide, when you have seen double-digit gains in the first half, and we are seeing this in other points in 2019, 2021, you take it back and you can see it has led to further advances into the second half of the year. we will see if we will sustain the momentum we have had in the first half of the year.

in the session today there is a couple of things we are watching, first, some data from new zealand. this is a private survey of business confidence. we saw it edging up slightly in the second quarter. put it in perspective, because in the first quarter, it was around 66% of businesses in the first quarter saw the economic outlook deteriorating. in the second, it is around 63% of businesses. just under 60% on a adjusted basis. broadly, futures are looking rangebound. it is a wait and see moment ahead of the rba. shery: yeah and the big question there is to hike or not to hike, as it is for many other central banks around the world. balancing the risks of recession versus inflation. our global economics and policy editor kathleen hays is here. it's a tough call. economists again, very evenly split.

kathleen: they sure are. deja vu all over again for the inflation and the rba, because the question is do you risk doing too little and let inflation become more entrenched, or do you take the risk of doing a little too much, perhaps tilt the balance between the economy that is still growing, and a housing market that is still in balance. 14 of 27 economists say they will hold. -- say they are going to hike. 14 saying they will hold. the problem, if you asked half of each of those groups, probably a lot will say, i think they are going to hold, but they could hike. that is what we saw last month as well. if you look at what we're seeing in terms of expectation, in terms of how much the reserve bank of australia has done, rate hikes since may of 2022. that is why people are saying, isn't that enough? can today let this work its way through the economy? right now markets are pricing in

two more hikes for the rest of this year. the question is should they do the one here in july, or do they wait and the one in august or september? these are the big questions. we spoke yesterday to someone from macquarie wealth management, division director. he is in the middle. although he does say a rate hike could come today from the rba. >> we think there is a possibility of a rate rise tomorrow. if not tomorrow, we have penciled in a rise for august and again in september. our peak rate in austria is 4.6%. we think they will keep rates on hold for about six months, just making sure inflation is tamed. kathleen: surprise 25 point rate hike last night got them up. where does it next? let's look at inflation. the simplest view, it is still very high.

this is first quarter cpi number. off the peak, but still, 2% to 3% is where the rba has to get this number, it is far from there. we heard from the deputy governor from the rba saying recently that, it has to get to at least 4.5% to get the cpi down. it is at a record 3.6% now. wages are still rising. these are all the reasons why the bets are so divided and many people say they still need to do it, and they will. a few hours from now we will know, but again,, it's a cliffhanger. this time it is a little more clear that people are not sure. markets and economists are divided. haidi: i know that one of our guests this hour puts the procession at risk at 50% at the moment. what is the broader view -- and

this is very much tied to housing and loan rates as well. kathleen: in an economy were so many people have adjustable-rate mortgages, where central bank starts raising rates, you will see mortgage rates go up. and right now, people in australia, economists are talking about a cliff where some 900,000 people are going to face their fifth straight -- fixed rate mortgages turn into adjustable-rate mortgages. one analysis found that for the people coming off the fixed rate terms, their rates could up 263% higher if they face the full brunt of the 400 basis points of rba hikes we have seen so far -- could go up to 62 percent higher. the bottom line is showing you that the housing market is still very strong. does this give the rba room to

go ahead or pause? we will see later today. but i think that is the number one thing. because if the mortgage rates go up and households are hit, what will happen to resale sales? there are early warning signs that that will be hit. that is a concern probably for the rba as well. haidi: kathleen hays. you can get the latest from bloomberg on this and that rate decision at tliv . get commentary and analysis from bloomberg's expert editors. there has been a further escalation in the technology crash between china, the u.s. and europe. beijing is set to put export restrictions on two metals that are crucial to the telecommunications and electrical vehicle industries. for more, let's bring in our chief north asia correspondent stephen engle in our beijing studio. these are very niche ingredients, but the highly

significant. stephen: absolutely. part of the supply and difficulties of securing and making the supply chains more resilient for the chipmakers. this is a complication. not saying outright that this is a retaliation. i will give you the facts and you decide yourself with a you think this is tit-for-tat. because if the u.s. and some european partners will be restricting advanced semiconductors and chipmaking equipment to china, and china has the raw materials that are critical to the chipmaking, well, china will restrict that. the metals are gallium and germanium, which by the way, china dominates production, not necessarily because they are rare earths, but because they have been able to keep the costs and prices fairly low. not rare, but they can be difficult to extract. these are byproducts of other processes in processing coal and bauxite and the like. china has plentiful supplies of that.

these goal -- they are critical components, critical metals that go into compound semiconductors. compound semiconductors are different from silicon -- silicon comes from one single element, compound semiconductors are made from at least two elements. so compound semiconductors as well as electric vehicles, telecommunications equipment and displays. we don't talk about gallium and germanium much, but it is key. we will have to see when we go from here whether these export controls that china's commerce ministry announced will start being put into place from august first. anybody in china who is selling it abroad will have to apply for an export license. good luck there. this looks like a political retaliation -- looks like. [laughter] shery: you said it. we don't talk about these metals, gallium and germanium. tell me who else produces these

metals, what happens to prices if you don't have supply from china, and what happens to the products that they go into? stephen: well, prices go up. i would imagine. it will depend in the short-term what kind of stockpiles those buyers would have in the rest. but you mentioned as well those other suppliers, that will be key as well. where will the market be able to get other supplies if the prices of china-originated germanium and gallium start going up as they are expected to do. the timeframe is key. let's bring up valium. we have that spot prices here. these are from the china metals exchange. it went up overnight from 5% of the last time i checked -- gallium. prices have been depressed. china has cap the prices of these key components very low because they want to continue to dominate the market. so as we shift to other

suppliers -- and other suppliers of gallium include japan and south korea. but also russia and ukraine. switch the page and we can look at germanium -- there it is -- other suppliers are the u.s. and canada which helps the u.s. obviously, but also belgium and russia again. don't expect to much germanium and gallium coming out of russia. but there are alternatives, it is just a matter of how much it will take to get the supplies from other sources. shery: our chief north asia correspondent stephen engle there, joining us from beijing. oil prices are rebounding nicely in the asian session. wti closed under pressure in the new york session. saudi arabia is prolonging its unilateral output cut through august, warning it may extend the curves even further to pop

-- prop up prices. it's a light russia also announcing fresh herbs, cutting 500,000 barrels a day in august. opec kept oil prices study in june as oppressed on with an accord aimed at shoring up the market. june production was up by a modest 80,000 barrels a day, but supply should fall this month. opec-plus will meet in vienna, this week and the saudi arabia representative will be addressing the cartel. haidi: and we will get more analysis ahead of the rba decision. amp australia tells us why they expect a hike, but they see policy looking too contractionary. before that, we will talk market strategy with k2 asset management, explaining why they are cautiously risk-on as investors continue to defy the fed's hawkishness. this is bloomberg. ♪

>> my view is, you end up with growth disappointing a bit and inflation disappointing on the high side a bit, ending up with probably bad for bards and a little bit bad for equity and generally week growth -- and generally weak growth. shery: our guest on market sentiment. our neck guest remains cautiously risk-on while seeing a shallow technical recession ahead. george boubouras is managing director and head of research and investment advisory at k2 asset management. it was good to have you with us. we actually got a pretty weak manufacturing number, not to mention the yield curve is the most inverted in years. so why are you still cautiously

optimistic, especially a slight overweight in the u.s. markets is your call right now? george: yes, good morning. thanks for having me on. exactly, the journey here today is that expectations are nowhere where they were last year. the resilience and aggregate economic numbers and the resilience in the margins of large corporate, and the resilience in the downgrades. they are there, but nowhere near as bad. we are trying to buy 2024 and 2025 earnings, with the premise that the recession will be a shallow, technical recession. again, there is resilience in the labor market and the core inflation numbers putting some concern. but generally, we are quite content that this set of data is consistent that earnings will grow at a long pace in 2024, and

to overlay all of that, developed markets it, is very clear that consumer and business sentiment is low and fatigued. however, the conditions are nowhere near as bad as the sentiment indicators. a combination of those factors suggests there is more predictability and that earnings will grow in 2024, but less than people thought, partly because the down growth in 2023 is not as bad as people thought. shery: banks will report next week. what are your expectations on that front, and how will that square off with the fact that markets seem to be chasing those rate cuts from the fed? george: very quickly on the hawkish tone, people don't believe it. the rate cuts will always be there and priced in. i just think people need to be cognizant that the federal reserve and central banks in the west want to keep it elevated for a little bit longer to

really nip inflation in the bud. having said that, -- on corporate america, they have been very successful in protecting their margins and aggregate. passing on price raises where they can. it's about the margin of compression. they have challenges in the second half of this year versus the first half, they have been resilient enough. and very quickly, the rally is broadening out for corporate america. we are looking for signs of continuation of that. again, 2023 is depressed earnings versus 2024. it's just not going to be as bad as we thought. therefore, we are buying those 2024 earnings. we like the predictability of that, is nothing to reinforce.

any guidance would be appreciated. but we don't think in aggregate, it is as bad as people have made it out to be until just a couple of months ago. haidi: he also like japan. it does seem broadly going forward, that the goldilocks narrative will continue to support japanese equities. where do you see over to hades? george: the japan run-up, he would probably take a little bit off the table. we like southeast asia as a player gets china. so you would probably take a bit off japan at the margin. the underweights are europe, and the u.k. but japan is always going to be a little bit of a volatility event, japan is the beneficiary of the, and the u.s., for that matter. definitely asia, ex-china is the

place to be on the risk-on, and u.s. equities as well. haidi: how is emerging markets ex-china impacted by china? do you see that diverging? george: since march, 2021, the chinese created softening risk. the fact that the production fixed cost investment has been going on for vietnam, thailand, indonesia, the margins are -- and austria is a buffer. but they will be the beneficiaries structurally going forward. that is the sort of lay we have been having. then you go into the fixed income side, will not play

emerging markets fixed income, we will be doing unsecured credit in the developing world versus high-yield. they are structurally better off than where they have been pretty much for a good decade or so. china has its own problems. they need to get domestic demand going, for obvious reasons, and deal with the property issues that they have had to address. which are quite severe. the slowdown in china needs to be addressed with more stimulus and i suspect beijing will have to come up with some fiscal monetary policy or solutions to address what is going on there. but they have lost the finite capital. there will be there for the long-term. short-term plays into china make a little bit of sense. it is just difficult to make the case for long-term.

haidi: george, always great to chat with you, george boubouras, managing director and head of research and investment advisory at k2 asset management. you can catch up with more stories and what you need to know to get your day going on today's edition of "daybreak." just dayb you can customize the settings as well for the news on the industries and assets that you care about. this is bloomberg. ♪ ( ♪♪ ) hey, stop, stop, stop.

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haidi: a quick check on some other headlines around the world. france has seen relative calm on the sixth night of protests, over the fatal police shooting of a teenage boy. police made fewer than 150 arrests on monday, down sharply from over 700 the day before. authorities have kept 40,000 police and special forces deployed to quell the riots. the french president will meet

mayors of about 220 towns affected by the unrest. . china has issued emergency flood alerts in seven provinces hit by heavy rain. . severe downpours reported in certain areas as well as, in the east. floods in 2021 killed more than 300 people in hunan province. coming up next,, we will talk to amp about why they think th so... i know you and george were struggling with the possibility of having to move. how's that going? we found a way to make bathing safer with a kohler walk-in bath. a kohler walk-in bath provides a secure, spa-like bathing experience in the comfort of your own home. a kohler walk-in bath has one of the lowest step-ins of any walk-in bath for easy entry and exit. it features textured surfaces, convenient handrails for more stability, and a wide door for easier mobility. kohler® walk-in baths include two hydrotherapies— whirlpool jets and our patented bubblemassage™ to help soothe sore muscles in your feet,

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when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. haidi: taking a look at how we are trading when it comes to currencies, the aussie dollar extending gains. although pulling back a bit at just under $.67. it was our third day of gains as economists and money markets are

very divided. it makes edge decision for the rba bank today, whether they will pause to assess the impact of the previous passthrough. also watching the yen and the yuan. when it comes to the yen, it is holding close to that level that authorities have seen to intervene last year, around the 145 level. we heard that the u.s. treasury secretary janet yellen, is in talks with the japanese government on the implications, the pros and cons of fx intervention to deal with the yen depreciation. also watching the yuan. a little bit of instability on the onshore yuan, around the seven month-low. the pboc vowing to prevent large swings in the exchange rate. the aussie will be not just affected by the rba decision coming up but also what we see

out of china. speaking of the rba, our next guest sees if 50% risk of a recession in austria. diana mousina, great to have you with us. you see the fed hiking even as we socialists are rising. you say that policy has become too contractionary. diana: thank you for having me on. it will be really close today. i think the reserve bank themselves will not even know until they finish their board meeting. the communication from the reserve bank has been in quite varied over the last humans. if you read the minutes, you would probably say they will hold today. but then he would say there is a big likelihood of a hike. the reserve bank is still hawkish on rates. if the reserve bank thinks they

need to hike again, which it appears they think rates need to go higher, then why wouldn't you go into today's meeting, why extend it into august or september if they are concerned about inflation and the potential for a recession? even if they don't go today, i think they will cite the lower-than-expected headline cpi that came out last week. interest rates are likely to go higher in the next month because the reserve bank seems resolute to get the cash rate in australia closer in line to its global peers. haidi: we had a chat a few days ago about potential inflationary and growth impact of the taylor swift concert -- that is not until february, though, but until then do we see further pain ahead for consumers and the retail sector? diana: we think the risk of recession in australia is extremely high. the reserve bank is taking

policy to an extremely contractionary level for australia. i am not of the opinion that interest rates should be in line with global peers, because we have a very different mortgage structure in australia. consumers are much more sensitive to interest rate rises. the next few months, as we see more of those household roll-of fs of fixed rate mortgages, which we know the bulk of that will happen in the coming months, i think we will see more negative impacts on the retail data. if you look at the surveys that households with mortgages are saying about the future, they are quite concerned about meeting their monthly payments. because if we get another rate hike today, that will take the change in mortgage payments up by 16,000 or $17,000 in a year. quite a lot. shery: is that what the rba needs to see? you expect that in a few months, but as this chart shows, the housing market still remains

resilient. diana: the housing market has been extremely difficult to read, but the reserve bank shouldn't just be hiking rates because house prices are going up. i mean, there is a lot of different factors leading to this outcome, the surge in net migration. we are seeing a record number of people coming back into australia at a time when housing supply is constrained. we should not read rising house prices as a sign that monetary policy is not working. there are specific factors going on in the housing market. borrower capacity has taken a 30% hit since the rba started hiking last year. there is a lot of pain yet to come onto households, don't forget, monetary policy works with steeper legs, about 18 month lags. it will take until the end of last year to see the full impact of rate hikes this year.

shery: we are expecting the inflation quarterly report later in the month as well. and it is not like it is a taboo to pause and resume hikes, for the rba anymore. diana: now, it is not. after the pause in april. but in april, there were more signs that a pause was warranted. but the minimum wage decision did throw a big spur in the works because it led to a broader wage gains in australia. it's unclear how far those will go. we see broad wage pressures across different sectors, then that is a risk for inflation. if we see that trend from our global peers, we can actually see producer price deflation in the u.s. and the eurozone. inflation has come down significantly in the u.s.. i think the same situational happen in austria by the end of

the year. haidi: is there any upside in terms of exposure to china if there is meaningful stimulus? if there are policy efforts to support? diana: the major benefit would be to commodity prices and to trade, and were actually seeing the budget numbers are showing close to a record surplus in the year to date. we saw that in the budget numbers last week. that is generally a positive. but only if it gets through to households. if the government just keeps it in its coffers, that doesn't translate to the everyday consumer. so it depends what government does with that extra income, but at a time when we are trying to battle higher inflation, and think it will be difficult for the government to continue passing cost-of-living relief onto households.

haidi: always great to chat with you diana mousina, deputy chief economist at amp australia. let's turn to the pboc for more analysis. belle isere for morning calls. s come up with a strategy in terms of policy makers needing to reboot growth. it's a little bit like what the boj potentially had to play with. annabelle: let's write. that is really what a lot of investors and economists are waiting for, something that can try and lift china out of its malaise. over bloomberg's economics team says this could be what they are calling a three-pronged policy response. it's about further rate cuts that they say the pboc needs to enact. they are also calling for a broader fiscal policy response. add to that policy reforms, because much of the focus from beijing has been on assisting its state owned enterprises. but our bloomberg's economics team says the benefits need to start to flow into the private

sector instead. bloomberg economics says they are sticking with a lofty call on the projection for china's growth over the course of 2023, at 5.8%. that is quite way above china's projection of 5%. not what we're seeing from the likes of hsbc, for instance, at 6.3%. still, they say they say that could, de-risk. the second quarter data, they say has been better because of the base effects coming in, given this was the point last year when. shanghai started to lift its curbs. . . but they say that unless we do see something like that three-pronged policy response, china's economic growth could surprise to the downside, coming in at 5.1%, that is their base case. shery: we have seen the exuberance over a potential massive stimulus coming from beijing really helping sentiment, something that hasn't really materialized.

so what does china's economic weakness mean for global stocks? annabelle: if you look at the gains in global stocks since around the same time, march or so, a lot of that has been underpinned by the expectation that we would start to see larger stimulus from china that has not really materialized. and investors have been disappointed. it has been something to lift the global stocks index, another part of that playing into the growth story in the u.s. those economic indicators holding up better than what had been expected. some investors are essentially saying that, going into the second half, the outlook is not so rosy. jp morgan is one of those who are still sticking with a painful bet against the moves higher for international equities. they are actually starting to short the stocks instead and loading up in government debt. shery: and there is one lender actually banking on chinese growth.

ocbc set an ambitious revenue target as it shifts its focus two flows between china and southeast asia. our interview with ceo helen wong is next. this is bloomberg. ♪

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shery: bank of america and citi have started discussions with the fed after the central bank's animal stress tests projected results that -- animal stress tests projected results that different from the forecasts. how exactly did the two sides divert? >> there are questions from two of the largest lenders, bank of america and citi. each of them differ in how they are saying their projections are in opposition to the fed's. the bank of america said it is talking to the fed to understand differences in its comprehensive income over the 9-quarter stress test period. citi is seeking to understand differences in its net interest income. the fed's projection was a bit rosier. for citi's forecast, it was opposite, more of a negative figure.

haidi: what are the broader implications? >> the latest results released last week show that the biggest 23 u.s. firms could withstand a severe global recession and turmoil in the real estate markets and other markets. so although that broadly is a positive sign for the industry, the tests remain a flashpoint, with some advocates arguing that these exams need to be tougher, and industry groups are fighting against some of those changes. overall it is the changes in question and it would be a key factor in determining how much banks can return to investors in future payouts. that is why the investors are watching these announcements, to see what is potentially going to be the likelihood for bank of america, for example, in announcing their dividend payments which they have not done. citi has. but there are still? in terms of how these tests are going to change and how the

banks are in these discussions, going to get answers that might cause them to alter how they are dealing with investors going forward, and how they could potentially alter their own payouts. haidi: our bloomberg finance reporter katherine doherty. ocbc says it wants to boost revenue from business flows between greater china and southeast asia by 2.2 million u.s. dollars of trade increases. we asked the ceo without the bank has made an earlier target to generate $740 million of pretax profit from the greater bay area, including hong kong and macau. >> the progress is fine and we are generating the revenue, but of course, the pandemic was not too helpful, particularly when you talk about people in china moving out to hong kong and macau. at this point in time, we think we made very good progress. but we are defaulting this

exercise of putting the greater bay together as a whole as a part of our greater china strategy and linking that more with asean. >> do you have an idea when you will achieve the target that you wish? 22% of revenues are coming from this. >> soon. >> soon? >> soon. no clearer than that. [laughter] if you have 22% revenues from here, how do you grow them? >> of course, you grow them by continually linking it with other parts of the group and by having more customers. a lot of greater china customers are either doing their strategy in southeast asia, or looking at opportunities in asean. we talked quite a bit about the electric vehicle industry that looks into indonesia as the very important material supplier. they also go into build their own plants so as to capture and

secure the resources as well. so this is just part of it. >> but is it purely organic? would you plan other acquisitions question mark may be another bank, you have a stake in that of another 20%. would you increase thatake? >> there is no plan at the moment. we're are very happy with our investments. . we are working with them. they continue to grow well and could to do to bring more profits to the group. but if you talk about inorganic, it's always a key consideration. we will look at when opportunity arises. there is no shortage of opportunities, but wherever we look at must complement what we have and also must be able to add on incremental revenue. >> bolton acquisitions, that sort of thing is what you're looking at, perhaps, and you are not seeing anything at? >> nothing very serious yet. >> tell us the reopening story in china has played out for you.

we have seen money via singapore, that has helped to contribute to record profits. tell us a bit about that and how those flows are now behaving. >> i think flows is not just from greater china. if you look at the world today, there is a certain flight to quality. we as a aa rated bank in singapore, we do attract quite a bit of new money. for example we have a strong hub in dubai. we are attracting money from other parts of the world as well. also from asean countries. greater china is important because it has been growing very fast, and we do intend to continue that growth momentum. as we see continuous wealth migrating across asia -- not staying in singapore, it could be in hong kong, or it could go to look at other types of investments like private capital as alternatives. >> we have seen the false dawn

of a reopening in china. you had all of these revenues come from that part of the world. how are they now after what we saw as a false dawn? we have seen that in the equity markets and in the economic data as well. >> it is very diversified. we continue to acquire em for both our private banking and our resale network. but if the equity market is not working to everybody's liking, if investment sentiment is still low because of uncertainty, that benefit is to us because we diversify. we could have higher insurance income. higher net interest margins leading to higher net- interest income. the key is -- we say that linking up is important to acquire more customers. in bad or better times, you still have more customers you can focus on to grow your revenue. >> those ultrarich individuals,

you are a private bank, in essence. how has that been doing? >> we have been acting on customers. we want to add on -- >> there is a big splurge in the number of family offices, it also helps. >> it does help. there is a good source of new net moneys coming in. shery: ocbc group ceo helen wong, speaking to bloomberg's rishaad salamat. a quick check of some of the other headlines around the world -- israel has launched its most intense military operation in the occupied west bank in nearly two decades. . it has carried out a series of drone strikes and sent hundreds of troops on an open ended mission into what it calls a militant stronghold in a refugee camp. at least nine palestinians were killed and dozens wounded. hong kong police are offering around $127,000 as rewards for information leading to the arrest of eight pro-democracy

activists. the first bounty is to be offered in relation to the beijing drafted national security law. the wanted people are all currently living in a self-imposed exile in countries including the u.s., u.k., canada, and australia. thailand is preparing contingency plans to deal with a potential drought that could squeeze global supplies of sugar and rice. rainfall will be 10% below average this monsoon season, and the el niño weather pattern could lower it even further over the next two years. it has prompted thai officials to ask farmers to restrict rice planting to a single crop, to conserve water. we have more to come on "daybreak." this is bloomberg. ♪

haidi: bloomberg intelligence says tech etf's could total 300 billion dollars globally by the end of 2023, due to a surge in nvidia shares which underlines investors' growing interest in aa. it's been utter exuberance when you look at how much nvidia has

rallied year-to-date. what does that speak of in terms of the longer-term potential for ai and for etfs? rebecca: if we set the landscape for you, when do you think the first it ietf was launched? take a guess. shery: we have been focusing so much fun and video was it so much earlier than what we're thinking at this point? rebecca: so the first it ietf was actually launched in 2006 by wisdom tree. long before the ai boom. everyone thinks of nvidia and because of that, they have been jumping on the ai bandwagon, but it ietf had been around for quite some time. the largest etf, take a guess. [laughter] shery: go ahead, tell us. rebecca: blackrock, usually for etf issuance, if you guessed

blackrock or state street, you are pretty safe. blackrock has the largest it ietf, a robotics etf. it was launched in 2016. they have roughly 3.5 billion in assets. it has been a growth from 2006 when the first etf launched, to now. we are seeing a huge interest. the market for ai, rai analyst mandeep singh suggests they could reach over a trillion dollars. goldman sachs give it a more aggressive target of $7 trillion in the next decade. we are seeing huge interest, tons of influence. in the tech sector we are predicting that more than $300 billion in assets will be reached by year and. so for ai-specific etfs, in the past week, we have seen more than $3 billion in assets go into the space. shery: our bloomberg intelligence etf analyst rebecca sin there with the latest.

thank you so much. take a look at how crypto is trading. bitcoin above the $31,000 level. there is a lot of optimism, given the renewed interest in ets that could invest directly into the digital currency. we are seeing it near year highs. that's it for "daybreak: australia." "daybreak: asia" is next. this is bloomberg. ♪

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