coming up on >> welcome to daybreak asia counting down to asia's major market opens. >> a mixed open for asia ahead

as investors reconsider the risk of recession and rate hikes again. studying after friday's big jolt against the dollar. chinese tech in focus. billion-dollar fines for ant group and alibaba potentially marking the end of the two year crackdown. janet yellen decline cause -- declares u.s./china ties on surer footing after a beijing visit. >> let's look at how u.s. futures are trading. we start the trading week in asia. you can see there is a little green on your screen. thinking of stocks, you have the s&p 500 up marginally. the nasdaq up marginally. they were down marginally friday. the u.s. jobs report was mixed. jobs came in on the payrolls lighter than expected. wages year-over-year actually rose. the unemployment rate fell showing enough tightness in the labor market for the fed to continue hiking rates another 25

basis point hike at the july meeting in a couple weeks now is already priced in. likewise, for treasuries, same analysis. more rate hikes probably means yields have maybe not peaked. the 10 year yield friday got up to about 4.04%. the three year got to its highest level, back to its highest level since mid-march. the dollar weekend. that was surprising with what bonds were doing. in terms of what is expected now. cpi will be the big report this week. coming out wednesday. expected to show improvement on the headline. energy prices have fallen. on the core, not as much improvement. it will be interesting to see how markets react. today it is all about friday's reports getting the stocks down and the yields up and we will see how it translates in the asian trade. >> yes. the asian trading session is looking muted and subdued. to the downside we had not much of a lead from wall street. a couple key decisions when it

comes to military policy this week as well including the rbnz. they will likely hold. they feel like they have done enough and the economy did show a technical recession in the last reading. we are also watching the bank of korea as well for the decision. sidney futures looks to an upside of about .2% when we started to get into the start of cash trading in the next hour. personnel news crossing bloomberg now. bill evans, a chief economist after more than three decades at the bank is one of the market moving top economists in the country when it comes to people outside the rba that have the ability to shift market expectations. he is stepping down. lucy ellis, the chief economist at the rba itself, will be taking his place. that's interesting to me because it narrows down the scope for who will be next to be the rba governor if we do not see reappointment.

lucy ellis was one of the names being suggested as a successor. >> she is taking another great job. u.s. treasury secretary janet yellen is apparently doing a great job herself wrapping up talks with chinese leaders in beijing saying she believes relations between the two countries are now on surer footing. let's bring in our chief north asian correspondent stephen engle in hong kong. what stood out to you? stephen: really, her emphasis to all the leaders in beijing she met with. that de-risking does not mean decoupling. of course this is just semantics. it is something beijing has taken to the heart and at the world economic forum a couple weeks ago where i listened to the premier speak he called the day risking proposition a false narrative. they feel that de-risking means decoupling. a lot of the narrative out of the state media in beijing has

been blasting this messaging from the united states. janet yellen tried to assuage those concerns at beijing. that was almost to the top issue she needed to hammer home in her talks with government officials in beijing. let's listen to what janet had to say yesterday at the close of her trip. sec. yellen: it was important for me to address this issue and ensure my chinese counterparts these are by no means the same thing. this is something i am trying to communicate and i believe very strongly myself. certainly, i think the message was received. >> clearly the u.s. is diversifying supply chains. it's de-risking in certain areas and that is where she wanted to clarify to beijing. these are targeted curbs. the export curves. and potentially what is coming down within days or weeks, that

biden executive order essentially banning u.s. investment in key technology areas like artificial intelligence, advance to chips and quantum computing. she needed and tried to tell beijing these are targeted curbs, not a broader attempt to limit china's rise and access to core and key technologies. but again, you can see the talks here. here she is next to u.s. ambassador nicholas burns. she met with her counterparts like the new economics are. they xi jinping loyalist going way back. she met with li qiang, the premier. she met with you gong. she met with leo cohen of the finance ministry. she met everyone about except for xi jinping. we will have to see whether the message resonated in beijing or not. >> our chief north asian correspondent stephen engle there with us.

the yuan remains in focused with chinese cpi and ppi for june week monday. that is when we are expecting to get those. the outlook for our chief rates correspondent for age and life contributor garfield reynolds. the expectations, when it comes to inflation is that it will continue to show weakness. that will be a sure thing when it comes to further downward pressure on the yuan. garfield: yeah. you can see how much downward pressure there is on the yuan by the way the gap between the vix, what the pboc says, ok, this is where the yuan can trade, either side of this. but the onshore and offshore yuan that have been considerably weaker stated like that. last time they did that was back last year when you want ended tumbling as the yuan ended

tumbling back. the pressure will continue. it is not as if cpi is coming out of nowhere. data for china has been pretty relentlessly poor. they have been deploying a bull will during range of stimulatory tools to try to turn things around. so far, there is little sign of such and until there is it is hard to see the yuan sustainably turning around especially as long as we have a situation where the u.s. in particular and relevant to markets in general, central banks there are mostly pursuing more aggressive monetary policies. all that feeds into a reason for the yuan, in some ways the chinese authorities needed to be weak, but they don't want it to get too weak. where do you get a sustained turnaround? you likely don't. no matter how hard the pboc

tries to spur one. >> so, bond markets. the post u.s. jobs reaction was to see yields rising bit on the 10 year in the u.s. although the two-year had the yield fall a bit. jobs were mixed. strong payrolls. wages rose, unemployment fell. tightness over weighing that concern about the hope for a softer labor market. where is the bond market now. after the jobs report and before the cpi report wednesday? if you think of that nexus there where you have a lower two year yield and a higher 10 year yield, that is both more positive about the longer-term growth outlook for the u.s. and a bit less positive about the likelihood of further rate hikes from the fed. past the july 1 priced in, the question is, do they go again this year?

if they do, do they end up coming back down? so you have a slight reduction in the odds of a policy ever -- ever. because these are the sorts of figures that would give the federal reserve the potential to pause again after july and make sure they have not gone too far. the general consensus among economists and bond investors has been that the fed has been risking going too far for a long time. all the same, the economy has shown surprising resilience, especially the jobs market. so, the fed keeps going. this is a baby step towards a world where what the fed does is closer to what bond investors have been expecting it to do for at least six months. slow down and stop rate hikes and be ready to cut rates because the economy is in a dangerous situation. the fed is looking at economic figures saying there is no

danger here. we can keep going and we will keep going until we are sure that either inflation has been sustainably tamed or the economy is indeed breaking. >> we will see. a lot of fed officials are still betting on a soft landing and bond markets may agree. bloomberg's contributor garfield reynolds. sticking with market reactions, we will watch alibaba closely at the open in hong kong. it's fintech arm and group is planning a major share buyback after regulators closed out of more than two year investigation into the company. annabelle, ant group has a way to go to shore up investor confidence, at least, that is what it looks like. abigail: -- annabelle: right. we have the fine coming through late friday in china. essentially ant group facing a near $1 billion fine wrapping up what was nearly a three year investigation on more than two years at the company.

the idea of a buyback is not just about investors. it's about protecting staff at the company. we understand after the big crackdown and regulatory read through from beijing. they said chinese tech giants need to be focusing on employees and investing in the chinese economy first as priority. this is a chance for ant group to try to retain some top talent here as it really starts to refocus on its bottom line, perhaps even look ahead to an ipo. the chart shows the alibaba market cap well down below the level it reached in 2020. ant group itself or the company that was supposed to be worth nearly $315 billion. it is worth around $80 billion today. that's a huge gap. the question is how you start to close that. ant group we understand will be looking to buy back nearly 8% of outstanding stock. 70% lower than the valuation it

reached before it scrapped the listing in 2020. alibaba is looking to sell shares into ant group. alibaba owning about one third of ant group. >> what does it mean for the past to the ipo? will enough to sue's investors -- soothe investors? >> that is one of the key questions. will this buyback be able to shore up confidence for ant group to consider returning to listing again. the readthrough is yes essentially this is one step closer to a listing for ant group but will not necessarily speed up the process. in fact alibaba faces a tough road ahead. this is something our bloomberg intelligence team has been looking through in particular. the readthrough is a question of earnings. the near $80 billion, well, they are looking at 2022 earnings that came in at 31 billion you want unless 50% the amount they

had in 2020 of 60 billion you want. ant group needs more time to rebuild its profit base after the technology crackdown. the near $80 billion price tag is the amount of the share buyback about 18 times earnings. compared to the average for chinese online lenders it is around five times. there is already a big gap at this point. bloomberg intelligence says the share buyback for investors will not really speed up the process for an ipo. >> annabelle there in hong kong. coming up in daybreak: asia yamaha motors tells us why they are looking to go full throttle on hydrogen fuel. an exclusive interview with their ceo later this hour. first, moody's analytics joins us for their take on china's underwhelming economic rebound as the trading week gets underway. this is bloomberg.

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♪ >> the economy is solid. >> wage growth is stronger than the fed feels comfortable with. >> wage growth gaining momentum as the opposite of what the fed wanted. >> we will be much higher for longer than people think. >> the fed has to keep moving on the backside of this. >> the fed will hike. >> this will not get in the way of the fed hiking in july. >> we could see another rate increase shortly thereafter. >> it is still strong and the

fed has more to do. >> bloomberg tv guests reacting to the u.s. june's job report and what it means for the fed. most expect a rate hike in a couple weeks. inflation remains the key focus. uscp i continued to soffit in june. a key measure of underlying price pressure due wednesday likely to support rate hikes this month. before that consumer and producer inflation data from china. two right decisions in focus and asia. economists expect the rbnz on tuesday with new zealand in recession and the bank of korea is also likely to hold rates thursday with inflation slowing, but still well above target. in between a right decision from the bank of canada. china's june trade data out thursday is likely to show exports falling at a faster pace due to weaker external demand and a higher year earlier base. imports are also expected to slide based on sluggish domestic demand. other economic data to note

includes japanese industrial production. we will watch this week's nato summit us president biden travels to europe to firm up ties with key allies. >> a busy week, kathleen. let's bring in katrina ellis, senior economist at moody's analytics. let's start with central-bank action. we pretty much know the rbnz said they feel like they has done enough. the economy is in technical recession. what is the risk as we get into the endgame for central banks? >> good question. one of the main risk says we have got headlines starting to come down. but, core inflation proves incredibly sticky. that will be the driving force as to whether these monetary policy tightening schedules are actually over or if they continue to linger for longer than we expected. >> when it comes to china it's entirely different. i want to bring up this chart looking at cpi and ppi.

we expect softening to continue. does the yuan have any chance of a solid footing with that inflation picking up? wife it is interesting. what we are seeing from the pboc , monetary policy, the differentials between that and the rest of the -- developed world will keep downward pressure on currency. we will continue to support the languishing recovery in domestic demand. if they will continue to provide supportive that will keep downward pressure on the currency. >> when you expect china to actually do something on stimulus? the latest from bloomberg talking about allowing local governments to do the latest financing to shore up indebted businesses and other ventures in their breeze jens -- their regions. still nothing big or dramatic. what do you expect?

>> i think that will continue the targeted trend of providing fiscal and monetary stimulus to areas that needed. we have seen some tax cuts coming on board. we have seen local governments getting relief on the fiscal side of things where they are needing it. that trend will continue. gone are the days of the blanket exuberant stimulus that will reinvigorate the economy. at this point, it is more about trying to stabilize domestic demand. against this, you know, concerning backdrop of global recession risk remaining elevated and the export picture. >> you mentioned how sticky core inflation is. it's not just asia. it's across of the world. the bank of korea, after it got a weaker than expected number for cpi last week he came out with a message that we are

keeping rates higher for longer, etc.. does the federal reserve getting ready to hike rates exacerbate the need for the rbnz, be ok, to message after their meetings things may be slowing down inflation and growth respectively in these countries but they will keep the rate hike? >> i think that's critical. at this point, we need to be really cognizant of the fact that we cannot be talking about rate cuts too soon because we may see inflation expectations rise and sticky core inflation that will not return to the rates we need it to. that is why it is important we maintain the tightening bias. at least, keeping elevated rates on hold to make sure that not only headline inflation but core inflation gets back to the range we wanted to. labor markets are still very tight. wage growth is elevated.

we still have some ways to go to bring inflation back to where we need it to be. when it comes to australia, what do you rate as the chances of a soft landing here? >> i think it is quite high that we will avoid recession. we are seeing the labor market is still quite tired. we see an incredible firewall between household consumption slowing and it's going down a darker path. if we continue to see people in jobs it will support ongoing household consumption, but on a weaker trajectory, i would say. >> great to have you with us katrina ellis senior economist at moody's analytics. get bound up on today's edition of daybreak. terminal subscribers can get it at dayb . customize your settings for the news on the industries and assets that matter to you. this is bloomberg.

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>> a quick check on stories around the world. president biden spoke with his turkish counterpart president erdogan as the u.s. pushes for a deal to allow sweden into nato. the organization summit begins tuesday in lithuania. turkey says sweden is not doing enough to clampdown on the kurdish separatist groups it views as terrorists. democratic lawmakers voiced concern about biden's decision to send cluster munitions to ukraine. more than 100 countries have banned their use in part of the danger to civilians from unexploded bombs. bidens team claims the choice was difficult but necessary because ukraine's stock of ammunition is dwindling as it mounts a counteroffensive

against russia. a leading candidate to become thailand's next prime minister appealed to lawmakers to back his bid for the top job days before a parliamentary vote. he leads an eight party coalition that commands a clear majority in the house of representatives but still needs the support of more than 25% of senators, many of whom were appointed by the royalist military establishment. dutch prime minister mark rutte faces a no-confidence vote monday after pulling the plug on his coalition and infighting over migration policy. he says he wants to stay on as caretaker prime minister until the election in november at the earliest. sources tell bloomberg some of his former coalition partners are considering voting to oust him after 13 years in office. ahead, catch our exclusive conversation with the taiwan stock exchange ceo sherman lin as we figure out whether taiwan's politics could deter

investor enthusiasm. next, the outcome of janet yellen's beijing mission discussed with the american chamber of commerce president and china michael hart. this is bloomberg.

>> i also believe the united states should have healthy economic competition is not a winner take all but with a fair

set of rules within both countries of the time. >> that was janet yellen on the u.s. china relations. let's bring in our next guest that met with them last week. janet yellen says these extensive talks with top members of the eco-team in china put relations between china and the u.s. on a sure footing. what do you see? >> that is right. she made quiet if you visit. she met with private enterprise, a number of people in the government and one of the things she said was secretary blinken was just here. a lot was made of yelling to visit. we have a very important trade relationship and it should be normal, it should be a huge

press story. as i say, she made the rounds to this community government, etc.. >> you are seated next to janet yellen at talks on friday. i am wondering, you said you have been trying to, regardless of what is happening in politics between the u.s. and china to find a common cause with your chinese counterpart by employing manufacturing producing, buying selling, paying taxes in a way that reflects our values. what do you hope to have happen now with china? >> a couple of things is that u.s. engagement with china has failed. a number of people have said that has been a failure. i would disagree. particularly with businesses operating in china in the last four years, anytime there is

criticism of the united states and the chinese press, there are millions of chinese dues that started in the united states would return and a that was my experience. i had a good experience in the united states and there are millions of business people who work for u.s. companies recite as companies treat me well. they give me a chance to move up in my career. they train me. there are hundreds of millions of chinese who everyday reach for u.s. products. i think engagement has been positive. number two, politics for the past couple of years has been pretty cold between china and the united states but the business community has continued to operate. the businesses have continued to work. it has been difficult when u.s. china relations have been bad. >> this is a list of the things -- receipt restrictions on both

sides, backwards and forward. what is most important to the businesses operating in china? do they feel the u.s. should back off? china should back off? what do they want to see happen? quick secretary yellen said it well when she said the vast majority of things trade back and forth. they had the largest trade ever between the two countries. the vast majority of things we trade back and forth are not controversial. u.s. egg exports to china, that is the u.s. is number one market. that is very important for everybody from farmers in the midwest to the traders that make those trades happen. plus those that move the greens, etc.. there are a few areas where we are concerned with national security, jiggling around chips. ships are relatively small part

of our business. that is where most of the tension is. i think that is something secretary yellen addressed. the chinese are very worried that the united states may put in additional controls on exports to china and that might hurt their future economic growth. >> these new reestablished guard rounds. the executive order. is there any sense this could be managed through? we know they will characterize this competitive relationship going forward. >> that chip is is particularly tricky. a few months ago or this year. shameful -- jake sullivan listed a number of areas where the u.s. was concerned on chips, ai, quantum, life scientists. the chinese are very worried the u.s. will roll on a number of new restrictions.

there have been numbers that the new executives were coming. that is what the chinese were watching. one of the things secretary yellen announced was the chinese nested above restrictions on metals exported from china to the world. when she was very curious to see if the chinese realize this might be something that could make people want to diversify their supply chain away from china. she said with the business community she was very clear. i understand your challenges and your opportunities. because she understands and we know that china continues and will continue to be an important trading partner for the united states. >> when it comes to the broader economic environment, not to mention some of the difficulties of doing business where the object ability of doing business and investing in china, what are you hearing from you members in the trend toward their levels of confidence this year?

>> it is an important point. the reason people have invested here for years is because china was very predictable. it was very clear if you made an investment, what kind of incentives you could get, where you could invest and what that would look like. it was just uninterrupted, every thing from manufacturing to the supply chain. china works very much compared to his neighbors in southeast asia. exports stopped, certain items were difficult to get and all of the sudden, companies realized they might have one single point of failure and their supply chain or manufacturing. this is where companies start to reconsider how they are working with china. china does not what the united states to decouple. most of our companies don't see decoupling as practical. decoupling for the two countries would be disastrous but what company's do want to do is to find how they can balance well-adjusted supply chain

networks use tips. this year we have seen a number of ceos coming back to visit. from three is during covid, no one came to visit. we've had more ceos coming into town. hopefully we will have more senior government officials coming in soon. ? have you with us. reacting to janet yellen's visit over the weekend. let's get into the bell for a look at how it is setting up when it comes to the start of trading this week. cries a lot for investors to be wrapping their heads around this morning. i think one of the key themes will be what you were just discussing their. how that latest signal of easing tensions between beijing and washington could be something to help spur investor sentiment. you can see a pop up more than 2% inspected at the open. we did see the hang seng nearing their market territory again or once again here.

it has been a stock market stuck not only between deteriorating economic patient in china but also by the expectations around the fed. this could help spur investor sentiment. it does appear at least that the multi-crackdown from beijing regulators on the tech sector generally could be coming to an end. the question is what could be the next catalyst in either direction for mainland stocks? we have anyone -- we have a new one coming. we have money locked up in stock market funds. this is put away in mutual funds. that is looking to expire soon and investors saying the pressure is going to be tilted to the downside. something as we will be watching

point closely over the coming weeks for the csi 300. we are negative year to date. cries all right. stock managers looking to risk chinese equities. let's get more with joanna. there is greater demand for separating out other shares from china. what is driving that? requested have been so many other narratives coming up with places like india, taiwan, south korea and there is a sense that china is such a behemoth and it has its own narrative, it has the regulatory concerns, geopolitical but also its own unique investment thesis. you have these other countries where there is another investment thesis and if you have these unique products for them, we are seeing more and more last year and this year being created as people want to take advantage of the specific

narrative for other emerging market countries that mike accredited up i china otherwise. >> what kind of numbers are we talking about here? >> we are talking about -- one of the etf's from msc i was at about 165 $1 million at the end of 2020 and now at $4.4 billion. we are seeing these big numbers going into these countries as you see a little bit more hesitancy. cries what are investor thinking about chinese stocks these days? >> is a mixed bag. -- it is a mixed bag. you have them pulling out of china a little bit in june and then you have some people say valuations are really cheap or at the bottom. this is a great investment opportunity. it is very mixed right now as to what people actually think about china.

>> all right. cries coming up, the latest on yamaha motor's efforts to reach carbon neutrality, or exclusive interview with the ceo is up next. this is bloomberg. ♪ ♪ 76% of 23andme health customers surveyed reported taking healthier actions. because they know health isn't just a future state. health happens now.

start your dna-powered health journey today with personalized insights from 23andme. >> it is time for japan ahead on

jay baker asia -- daybreak: asia. we will be taking a look at the yen as you can see. the dollar yen a little bit higher so the yen just a little bit weaker. no big moves here in terms of the nikkei looking for some downward pressure here. we are waiting for the japan current account news in just a few minutes from now. we can see the 10 year jgb is looking like it is about -- a little bit weaker here. >> they are turning their focus to hydrogen to expand -- expand internal combustion engines. he tells bloomberg is possibly why he thinks it is a clean and viable option for reaching carbon neutrality.

>> we have to keep the many possibilities and opportunities open to achieve carbon neutrality. i don't want to be limited. this is a strong priority. but i don't think of this that way. from the beginning, technology carbon neutrality. i don't want to limit it, the possibilities. because i want to hear about the supply chain, how easy is different from your hydrogen fuel engines. can you explain when you are building the hydrogen fuel engine, how that is different than re-creating something new

and creating an electric vehicle? >> maybe the injection part. maybe this is something we can keep. it needs a motor, battery and we are not opposed to change. >> usa are saying by going into the hydrogen fuel engines, you can keep the same suppliers. >> that is also a reason why we are sticking with this.

we don't want to deny the possibility for the future. >> who are your biggest competitors in the space independent overseas? >> it we go to today's commercial engine, -- maybe for the future, maybe something can become like tesla. >> potentially a brand-new engine into the industry. cries there are many in the evening market and chinese market. >> as a business leader, what do you think is the one thing japan needs the most right now?

quick the population labor is a serious problem. that is the japanese economy. the total industry is the same issue. >> we need to boost the birth rate but candy -- do you think foreign workers good fill that need? >> yes. that is very serious for the future. we need to give the manufacturing and japan. >> there he was speaking exclusively to our interviewer.

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the current account balance for the month of may. standing out at ¥1.8 trillion. that is more narrow than the estimate at 1.9 trillion and it is also down a bit from the april number which was ¥1.9 trillion. we are winning for the adjusted numbers that might show a slightly different picture, a trade balance on a balance payment basis is something we are also looking for. this looks at all of the transactions that a country does with the rest of the world. that includes trading goods, services, income transfers, all of these kinds of things and one of the things we want to -- one of the questions it helps answer

is when we get a chance look at exports and imports and dig about the yen having weakened recently, how that beads through. we have one more number here. the trade balance looks at about one point ¥2 trillion and that is actually larger than now from the 113 trillion yen we have got before. a big number. and one that takes a little bit of looking at to get the sense. twice the japanese prime minister is among asian leaders seeking to enhance ties of nato during the alliance summit and let the line summit in lithuania this week. let's bring in isabel reynolds in tokyo. the four leaders will be attending for the second year in a row. what are we expecting in terms of cooperation? >> i think what we would have to do is look back at last year.

they reached out to these four leaders and brought them men to attend the summit in madrid last year. this year we are expecting to build on that to make things a little bit more concrete. i wonder if one of the ways they will do that is to introduce these individually tailored partnership programs which will show away for a sense of cooperation on things like -- we are not sure exactly the details yet but things like standardization of weapons and ammunition so they could in theory could supply each other in times of need and things like interoperability so things like chips can talk to one another more easily in times of emergency. what we want see, i saw a report is that the idea of innate office in japan will not be decided at this summit and the report says that is because of objections from resident macron

-- president macron. >> there are many that are dubious about these efforts. we can only assume this has something to do with how closely these nations are tied to china or the position with russia from india. >> yes. there are many countries in southeast asia that want to take a more neutral stance. they don't want to fall into the u.s. can't or the chinese camp for that matter, exactly into the russian camp. russia has a great deal of influence in southeast asia. there are issues on both sides. there was the issue of overstretch. if you're committed itself to asia, they are already having trouble arming ukraine. where they have enough capacity to do anything really substantive in asia in times of emergency? i think that applies on both sides. >> that is is -- bloomberg

isabel reynolds. these are the stocks we will be watching when trade opens in korea and japan. japan's factory automation stocks may move after the industrial robot maker reported an 80% jump in operating income. using some concerns over the business environment in china. they reported on the weekend that the toshiba takeover bid may be delayed until august or later. watch energy literate -- energy related stocks after they turned more bullish on crude. plus, electronics retailer is, the companies reporting earnings today. still ahead, the rio tinto chairman joins us live from mongolia on daybreak asia to discuss their strategy in the region and the other for metals demand. that is just after 10:00 a.m. in sydney, 8:00, and hong kong. coming up in the next hour, we

talk market strategy with gamma asset management plus dominic barton joins us from mongolia with an update on their strategy. pwc will share their view on emerging trends in china's consumer market. the market opens in sydney, so until you are next. this is bloomberg. is it no

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>> this is daybreak asia. we are counting down to asia's major market opens. a jobs report on friday, heavy on wage gains.

in a few stars a little bit of the downside. we will see how this will play out in the asia trade. the first chance to respond. >> they are setting up for a busy week when it comes to the picture here. a couple of central bank decisions from the rbnz. let's get over to the bells to look at how this first market open of the week is looking. >> absolutely. they kick off the week here. starting with those jobs numbers, given the news we saw, treasuries as well as and the week. more than 200,000 payrolls added engine. that was a mess on estimates but in earnings they increased a little bit more than had been forecast. the unemployment rate edged down in the u.s. as well. a bit of a mixed jobs picture coming through. investors clear we are going to see a hike later this month and

that is what we are seeing in terms of the market reaction but the big question will be what happens later on in the year. essentially, investors were split when it gets to what is ahead in terms of the fed productions. the one we will be watching over the coming days, it is off the lows last week. we could force it to move back to her 145 level. this is what comes through on the inflation picture as well. it is one of the key things watching over the coming days. the expectation is we will continue to see it softening. perhaps not enough to force the fed from hiking later again this month. the nikkei 225 just coming online here a little bits of the downside but actually flat as we are trading underway. let's change on because in korea as well, there is a specific sector we are focusing in on today and that is the long-term prospects of artificial intelligence. watching tech stocks very closely.

had morgan stanley coming through with an upgrade to tech stocks in particular. upgrading chip stocks in china, japan and south korea and something else -- that is something us investors will be watching. the korean won as well. we are just fractionally below that key 1300 level. something korea is very sensitive is very -- any developments around china. investors should be really focused on what came out over the weekend. janet yellen's visit to beijing striking what would be considered quaint a positive tone after the visit. something else that would be helping china sentiment in the session, regulators have ended their multiyear crackdown on the tech sector. we have a huge fine coming through for as on brought a $1 billion.

investors saying that could be a positive when you put it in the context of the company's earnings. that is actually something that is pretty manageable for the company. it just does not allay any investor concern over the tech crackdown that appears to have ended. we will be watching tech stocks quaint closely in the session and also looking ahead to the opens in mainland china about 1.5 hours from now. while in focus. we are a bit more steady as we get the session underway. we do have back to back weekly gains for brent crude. we are seeing speculators increasing their bullish bets. >> thank you for that. the spring and our next guest who has reduced equities and cap credit exposure left deteriorates and high credit spreads. with us now is a global macro portfolio manager. you've got more cautious. you note that you have reduced

exposure to equities, cap credit exposure low because of higher real rates. the jobs report mixed news but the conclusion is there will be at least one more rate hike. that is what the fed has been saying repeatedly. how does that affect any shift you've made? does it make that shift seem like he makes even more sense now? >> every time we get a jobs report which is actually not too bad, that is an additional month or time we don't have worries about an imminent session. i think that is what surprised investors who had been expecting limited recession. that is what we have these yields rising. the higher yields. the fact that the fed will go to another rate hike. it is most important that it is trying to get the market away from pricing i wait -- presently a rate cut. i think that is somewhat a

weight on risky assets. real yields, the ones we have determined from tips are what we can work on. >> you see emerging market local currency debt as policymakers, especially in latin america are pivoting toward rate cuts. we've heard from the bank of korea that even after a better than expected inflation report last week that they intend to keep their rates high. that does not seem to be opening the door for them. if the fed will keep hiking rates, is that a trade you're going to put off? are you putting that trade in place because you know the fed will stop hiking rates and the others will be pivoting to the cuts? >> i think it is more of the second. we have seen the fed reaching toward the end of the rate hiking cycle. other central banks in emerging-market compass, brazil, july, they really impressed -- increased rates earlier.

we have very high rates right now and inflation rates are starting to decline like everywhere else in the world. they have room to cut rates. that makes it interesting when one looks at the emerging-market local bonds to start increasing locations to that part of the market on those expectations. >> does that make you want more exposure to opportunities that benefit from >> absolutely. that was a significant headwind on any positions for positive china. now we are seeing much more contact between the u.s. and china. it is stabilizing the situation. it is not that they are huge improvements in bilateral relations but at least it is stable. i think that is a positive one.

this is also another positive on china. >> what sort of opportunities would you be looking at when it comes to domestically within china or companies that have indirect exposure? >> i think domestically, it remains interesting. i am also expecting some further stimulus. so far it has been quaint disappointing. issuance by more local bonds, government bonds to stimulate a bit more. that is something that could be positive for the market, the domestic side. for the hong kong listed shares, if the tech sector is given a bit more room to grow and prosper as it has in the past, those valuations are very cheap as well and remain cheap even after last week's move. i think there is more upside on

the tech sector in china as well. just as there has been a big move in the tech sector globally. >> always great to chat. so the head, alibaba's fintech is planning a share buyback. that is later this hour but coming up next, rio tinto wants its copper mind to beat the largest by the end of the decade. this is bloomberg. ♪

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>> let's take a look at china's we recovery weighing on metals in particular. epic curves and some extreme heat warnings dimming the broader outlook. traders are just waiting for more signals from the fed as well as a little uncertainty over the broader growth outlook. speaking of copper, they began production at the underground portion in mongolia. it is expected to be the world's fourth largest copper mine by 2030.

they could expand into copper. joining is live is the chairman, dominic martin who is in mongolia for the mongolian economic forum. great to have you with us. we are looking to expand. there have been a few hurdles. there has been recent flooding as well as ongoing concerns about the impact of weather amongst other things. tell us about what you are seeing and how production levels are looking right now. >> thank you. it is great to be with both of you today. the mongolian economic forum has going -- has been going on for today. we are here with a number of their investors to be able to come and look at the mine.

it is a body the size of manhattan which is about 1300 meters below the ground. it is a fairly complicated ever to be able to mind that or. we have been doing above ground mining requires some time but we just began to do the underground part of it in march of this year. that is a significant milestone. we are there to look at progress and see how it is moving. >> give us your outlook when it comes to the china recovery. there was a lot of optimism coming out of covid zero. that demand has not resurfaced. but has resurfaced is a resurgence of the property crisis. are there structural concerns when it comes to the medium-term price for the legs of iron ore or copper?

if you look at china right now, i actually feel very positive about where it will be going. i think it has been bumpy but i think we need to remember it could come out of covid after us. i had been there a couple of times this year. in very much looks like -- it is now. this is a massive number. that is obviously shifting. this relates to another change underway in china. that is to shift to a new economic equilibrium.

we are talking about high-quality growth. i think they want to see more focus on the consumer services, that type of thing. those are not easy to make happen. if you look at fundamentals, it is to the medium and long term. if you look at this continued urbanization, china is much less urbanized than the united states or certainly japan. i think that will continue. the consumer is a key factor. consumption is -- they are saving a lot. the resonance -- there is uncertainty. i think there are enough of the fundamentals to feel good about the prospects as they move forward. i think you will see a more

relaxed view about what the growth is. you have the exact numbers on the exact date you will do it. >> in the short-term, without a strong recovery out of china, is the earnings -- two companies like yours need to look at other aspects of value creation? >> yes. i think as we look at our portfolio, i think iron ore

still is white critical and sustainability. there is just 300 tons of steel in the windmill. with the energy transition going on in china, there is literally hundreds of billions of dollars being spent on that. that will be the need for these resources. as you alluded to, we are wanting to push more on the, from. we have set an aspiration of doubling what we have by 2030. this is a very important part of it. i think m&a is definitely an option. i think it is the mind building and mind building -- mine development we need to get to. since we have been around as humans, we have mind or if and

mine 700 million tons of copper. that is over the last hundred thousand years. if you think about us meeting the net zero targets we have for 2050 and having reasonable growth in global gdp, three to 3.5%, we will need to find another 709,000 copper. that is just a massive gap. buying other companies will not sort that huge mismatch. we see it in other areas. question we are anticipating a question. i want to ask if we are still looking for lithium assets. i don't know if there are any particular targets you could share with us. >> we don't have a target but clearly, lithium battier -- lithium battery materials is important for us. we want to help provide the materials for the energy transition. that is right square down the

target. we will continue to look for that for opportunities there. there is a lot going on on the technology front in material science. that is what we are also looking at. we are looking at lithium recycling. we want to figure out how to recycle all those batteries which will come to the end of your life. how are we able to draw lithium out of that? there is a whole range of initiatives underway which others are involved in on that front. to try to use up our lithium profile. >> what about the lithium line where the service was canceled? >> we continue to be in discussions.

you have others who are also interested in trying to help develop that. we just need to be careful given where we are and to try the best we can to make people understand there is a real opportunity and we would do this sustainably and so forth but we are very much at the best of what the government would like to do. >> how much is at the behest of geopolitical? niche minimal but critical ones.

do you think it will be harder to do business and harder to propel that growth going forward? >> definitely concerns me when we have restrictions on supply chains on the other hand. the united states is brief -- pushing very hard to ensure that if they have critical minerals they are referring to comedy encourage that. mining executives are welcome in central government. i think everyone fundamentally sees this demand supply gap. they don't want to be beholden

to one particular is -- particular supplier. it is spurring more exploration and more development. the challenge is if we put barriers on particular parts of it, it can really mess up the supply chains. all these things are intricately linked. >> really appreciate your time. the chairman of rio tinto joining us. 20 more to come on daybreak asia. this is bloomberg. is it not -- this is bloomberg. ♪

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find your purpose. visit gcu.edu oh booking.com, ♪ i'm going to somewhere, anywhere. ♪ ♪ a beach house, a treehouse, ♪ ♪ honestly i don't care ♪ find the perfect vacation rental for you booking.com, booking. yeah. >> u.s. treasury secretary janet yellen has talked to china's leaders in beijing, saying relations with the two countries are on a surer footing.

chrysler was knocking to be any victory here on the issue separating china and the united states. they need to put a floor on the spiraling downward of rhetoric.

he is a educated, he is also an english speaker. they brought out leo from the shadows. the big issue obviously was some of the rhetoric united states and its allies have used regarding china and supply chains. that is de-risking. china has dismissed that terminology as being nothing more than decoupling. >> it was extremely important for me to address this issue. and it sure my chinese counterparts that these are by no means the same thing. this is something i am trying to communicate and believe very strongly myself.

>> this could be fraught with issues. this is to limit u.s. investment in key technology like a i and advanced computers and advanced ships as well as quantum computing. these export controls and restrictions are very targeted. they wanted to explain that national security would be targeted measures. this is something they did say on saturday. essentially that generalizing national security was not conducive to economic exchanges. that being said, china has used the issue of national --

national security for the last 10 years or so as a key issue for various curves of its own. janet yellen was probably the right person to -- for those to spiral downward. >> stephen engle there with us. they share the latest emerging trends when it comes to the chinese consumer market. we get details on the report. i had china's inflation numbers throughout this week. this is bloomberg. ♪

hat material. i do think both will continue to grow and continue to be very relevant. the big thing that is changing is the risk-taking is what is going to move. this -- this is the next phase of what we are into now. that would be the material change. >> even if inflation is still above the fed target and real growth is slowing, tough to see how earnings in the aggregate continue to expand. >> they are now seeing the consumer slow down their spending, those sectors seem

more vulnerable to us. >> we think the full impact of the tightening cycle is going to have a real impact. >> it will be another earnings season. i think we will hear a more cautious message and the companies. they will start to see the effect on the consumer. that has to impact earnings on the others. >> responded to our latest survey. earnings have been by positive for these markets. this time around, it is expected to be a little bit different as a reminder earnings season is about to get underway later this week. we have the big banks on wall

street starting to report earnings from friday. that key question we put toward investors -- the biggest risk is a further tightening in financial conditions. we had the latest jobs data coming out from payrolls. slightly missing on economist estimates. they have a key u.s. inflation report. that is due on wednesday. by feeding into that, when you have further tightening of financial conventions, the second was the risk of an economic slowdown.

the impact from ai on tech earnings could be overblown. they have really been benefiting from investor enthusiasm. let's change on. this would push the s&p 500. so far, we are looking at range bound trading. activity is above the 20 day moving average for the trading volume. investors are active.

both those will be so interesting. china has some of the world's slowest inflation. >> you will get these. bloomberg intelligence expects consumer prices to post only a marginal rise. food recovered slightly. most economists are expecting another 0.2% rise for the month of june. we will be looking into the details of that inflation report given that we have seen the consumer driven recovery in the

economy. take a look at emerging trends in the chinese consumer market. i want to bring in the china m&a advisory partner at pwc which prepared this report. great to have you with us. in this uncertainty where confidence for the broader economy feels quiet fragile, are we seeing some repositioning in the post-covid zero europe? >> thank you for having me. yes, in the past several months, there are shifts in the chinese consumer market. >> they really seek strong

experience of off-line consumer experiences. this is a foreign intonation grows. these numbers are growing and the first half of 2023 as well. another shift is says the pandemic, a member of the population which started to use online income is, it really pushes the online income is to grow to the lower tier cities with repurchase platforms and then people get more used to this digital environment. >> the economy is still struggling. we know that house all yells --

well and spending is tied to property investment. are you seeing the impact of that? >> yes. it is actually kind of a stable. the consumption of the necessary goods still rebounded. there is does luxury and leisure concern sector. they are feeling a little bit slow in recovery. people are looking for more pet related categories. the rebound shows more stress. >> you seem pretty optimistic about how the consumer is opening up again, how the

opportunities are there. you also know it could be very difficult for companies to create a brand, build a brand. what is the number one thing the company needs to go to enter into the retail industry now in china? >> although the china market is still very big and i white optimistic that is recovering, there is still a lot of challenges for foreign brands to enter china in this market. let's take a closer look on the challenges. i think the first one is a very intense computation. in the china market we have both the international brands at the local brands competing here. to stand up in this crowded marketplace, the overseas branch have to adapt their product and service offerings to the chinese consumers. this includes the culture

difference, linguistic differences and others to be considered to earn their heart. another challenge is the regulatory landscape. the need to navigate through this regulation landscape in the product sector and to follow the local compliance and all of this, they need to be very careful to protect your own brand. also, your intellectual property. >> i want to ask you if you could give us an example. who is a shining star when it comes to someone who has come into china even recently? and taken the steps that need to be taken? what is the lesson to learn from someone who has succeeded in the things you just mentioned.

>> i think i would name a brand. we start to see there is one that works for foreign brands who like to operate in china. in china, we mentioned there are a lot of challenges. a very different landscape of consumer market. it is very different for the regulation landscape and also the digital ecosystem is different here. also, the geography, this is a huge country. they give up to build the infrastructure in chinese markets. it is big and very heavy investment. also, this requires a very strong understanding of the

local market. we are seeing some oversea brands that have already had very strong investment and infrastructure in the chinese market and the foreign brands, the overseas branch can just focus on building brand awareness and also their product, their design. this kind of joint effort will be a good model of a fading chinese market. >> with a great to have you with us. sticking with consumers, we are watching the opera performance in a tokyo session of the busy parent company reporting upward income that be the average analyst estimate. we are seeing that big jump off the session highs. we know this company has been trying to enlarge throughout

asia and operating profit goes through the end of the fiscal year 2024. they have also been diversify domestically into retail outlets. really cheaply made products. products that cost less than four dollars. they're looking to expand across target price points with japanese consumers. coming up next, regulators -- and i'm we get some analysis next. this is bloomberg.

>> we will be watching shares closely at the hong kong open after alibaba's fintech arm announced a ship -- a major share buyback. that is after regulators closed down to your investigation into the company. the buyback offer won't speed up his future plans to revive an ipo. francis chan joins us now for more. you not optimistic on this spin things up.

>> i just want to highlight -- they changed hands. any firm with a change in ownership may take three years for them to list the domestic chinese market. at this current stage, the company may try to complicate this latest business with the investment community before they further relaunch the ipo. that is our fall. that is why i think in the near term, that share buyback will try to re-consolidate their share and they are trying to make their management part of

the future. there would be our current view. >> it has been a costly conflict of almost three years. this last fine, 7.1 you -- billing you on, what does that mean for the group's future? >> hopefully as the market is expecting to see the closure of this group, i have already seen strong signals at the beginning of the year with the change of ownership, the management and the bit -- in the beginning of this year into the consumer finance unit, the current stage, they need to regroup the business under the current set of regulations which has been set, they were complicated to

all that majored in those platforms. >> we have seen a fifth consecutive -- this is just a broader microeconomic environment in china. >> it is a combination of different factors. >> i think the one major

disappointment -- they come from the first quarter. we will wait and see. some catalyst might work toward the end group as a signal to the whole sector, i hope this may make a difference. >> bloomberg intelligence analyst francis chan there. let's get more on whether or not this was way investor views on china in particular when it comes to big tech. take a look at the market open. as we were just talking, the story is really in the numbers.

we have seen a lot of that money be directed toward the booming japanese equity market. does this improve sentiment in a meaningful way? >> if you definitely improve sentiment at the margin. we saw that in the training. you need to see this in the context for what is happening in china. is it just about the regulatory overhang? that happened a few years ago. there are macro risks. you would have seen the stock was above 50% or 60%. markets will take their own time asking for a lot more steps, a lot more stimulus to access the

macro economic slowdown. they are feeding on the quiddity losses. china stock indexes are set for the third consecutive year of losses. in that context, how reporting shows there can be redemptions. there are investors that want to invest in other markets. there are a lot more things at play. it might just be a trading up move. >> what about some of the policies they pursued over the past few years but when it came to the property markets? pouncing on the developers and helping to fuel the big meltdown we have seen there? have the steps done more damage, more long-lasting damage to investor sentiment within china

and then globally than the government realizes? >> absolutely. trillions of dollars got lost globally because of the draconian policies we saw during the covid era. what china pursued, when it has done to private enterprises. all those losses are still sitting in the market. market has not recovered from that. the bounceback is not as strong. the long-term damages there. there needs to be a lot more steps starting with something like a big bank stimulus that the market is not pricing. it is very confident china cannot deliver that even with the financing of china where it is right now.

>> much more to come on daybreak asia. this is bloomberg. ♪ your god and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

>> investors are stinking on

taiwan where the benchmark index outperform to those of mainland china and hong kong in the first half. traders also keeping watch on high-stakes presidential election happening for both the u.s. and china. let's bring in our markets coanchor. he joins us for the taiwan stock exchange. course the outlook is great. we are here in the taiwan stock exchange. this market has been on a tear. since the lows of last year, it has rallied 30% when it comes to the taiex.

it is a big day here. >> he certainly picked the right person to begin with. what are you most interested in knowing? we have seen you anchoring out of taiwan in the past. what you think is most important today? >> at think there is just so much buzz about taiwan. this is a market that is heavily dominant when it comes to the taxpayers.

is there a risk of relying on just one sector? they have started to boost competitiveness. they want to be more like the nasdaq they say. they want to appeal more to international investors. >> we can hardly wait. yvonne man joining us from taiwan. she will intervene with the head of the stock exchange there. keep it right here, this is bloomberg.

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yvonne: 9:00 a.m. in beijing and hong kong.