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market opens. traders are awaiting earnings season. u.s. inflation numbers and further rises to come. china is stepping up support for the ailing property market pressuring lenders to extend relief measures. turkey agrees to support sweden's nato membership at a crucial summit. >> we are one hour away from the opens of sydney, seoul and tokyo. futures are pointing higher across the board in the session. kiwi stocks are weaker in the session but the main focus is going to end up being the china support for the property sector as you just said, pressuring lenders to extend debt to this ailing segment of the market. a key component of china's growth story. we had for instance the latest credit tracker data from bloomberg rising from three. four is the highest level we've

seen. details on what is driving that ahead but it is a question on the health of the property sector and these calls. we been seeing further stimulus and more details of that ahead but in terms of what we are watching, s&p 500 futures are fairly flat. the focus in the session coming back onto earnings even though we are looking ahead now because they kick off with the lenders on friday. change on now. the focus is what we are hearing from fed officials and we did actually see the retreat in treasury yields on the front end of the curve and today in the session again that is the story. we are seeing it in the moves in the aussie and kiwi bond space as well to match that. kathleen: all right, let's move on to the federal reserve. several officials warning of rate hikes this year, to bring inflation to the central bank's goal. policymakers are expected to resume tightening when they meet on july 25 and 26. cleveland fed loretta mester

says she shares other officials views forecasting to more rate hikes. >> a fund rate will need to move up somewhat further from its current level and hold for a while as we accumulate more information on how the economy is evolving. >> as we get closer to what we think is sufficiently restrictive, that is part of positioning so that we can get to that target level in a careful way. >> one of the surprising things about the economy is how much momentum it continues to have. we are likely to need more rate hikes over the course of the year to bring inflation back into a path along a sustainable 2% path. kathleen: bloomberg's global economic correspondent enda joins us now. i would be surprised if they were not pumping for more rate hikes but one fed official is crossing his arms and saying i do not think so. enda: rafael bostic was the

audit one out adding that he thinks policy is restrictive. there is a case to stand back and see given the increase by five percentage points in just over a year. the big take away from the commentary you played is that the fed remains hawkish overall. they remain on track, cementing views that they will go ahead with the july rate hike. not so long ago people were debating not just a pause but that the next move would be a hold and a cut going forward. that will dwindle. once we push through this week we will have inflation data on wednesday and thursday. consumer and producer prices -- producer prices especially core prices will dictate where we are going not just in july about where the fed debate is going into september and whether more rate hikes will be coming on the back end of the year. haidi: we're watching china property developments closely and we're hearing from the china securities journal that china should step up liquidity support

according to the securities news, citing analysts as saying this to accelerate the policy rule out an aid to the policy sector. we are hearing more of an acceleration when it comes to momentum for the ailing property sector which has been stuck in the same rut for quite some time. will this make a difference to the broader picture given how dire especially the ppi numbers were yesterday. enda: the reaction has been subdued. those reactions on monday that you mentioned essentially making repayments easier for property developers in stress and of course making sure property developments finished projects that they have promised to homeowners, that is the essential gist of it. these are modest measures overall. the sale story has returned for the time, the property slump has gone on for two years or so. nobody is thinking these measures will turn that around. there seems to be a view coming

out of china from the government is not going down the road of major stimulus. they seem to be sticking with the idea of sustainable growth. no real hit to the economy, no massive stimulus despite the negative headwinds. inflation in the doldrums is reflecting some of that and that comes back to the property sector. there is no sign of a major effort by authorities to reinflate the sector. it is piecemeal, bit by bit, making sure that those who paid for properties get their properties but it is not a bailout of the major developers, at least not yet. taken together a cautious tone, measured tone i think on the commentary in terms of where china's economy is going and how the government plan to respond as well on that. kathleen: when you say not yet, you wonder if that is the point. they are taking steps in a direction after they see deflationary data, which was talked about for the last 24 hours around the world.

certainly investors are watching that. and as the growth forecast cut, at some point they know they need recovery. the youth unemployment rate is 20% in china. do you think at some point -- will they realize that they have to do something that is more definite and stronger? enda: very possible, kathleen. through all indications coming out of china and the consumers story is much stronger than expected and we know the manufacturing side of things, there's pressure. export story is weak and we have a warning of deflation but let's not forget that for all of these soft indicators recently china's government is on track to hit its growth target of five odd percent for this year and that is the political imperative. i don't think anyone is saying that is in question. they have some wiggle room. they are rolling out measures including short-term interest rates but that is not going to turn it around. the real question will be are they willing to borrow and

spend? we've got less room on the local government side. in recent weeks, we will have to see if the central government crosses the rubicon but broadly speaking messaging has been disciplined, kathleen. they seem to be ok with where things are for now. they do not want to sugar it. we are at the midpoint of the year and i would have to see if that changes later this year. haidi: watching china for us. let's bring in mary, global portfolio manager in sydney. always great to have you. you just got back recently from hong kong and you also went to shenzhen. when you were in china did the narrative that was on the outside matching up with how things felt on the ground? mary: the first point is it is better to be back on the ground because like many global portfolio managers i haven't been there since before covid. i think my conclusion from the trip is there is a difference between a short-term it

reopening in china and longer-term trajectory for growth. we -- growth is happening but it won't be v-shaped like other countries. it will be slower than that. the feedback that i heard from companies is there is a difference for consumers and businesses between lockdowns for three or four months or three years. so it is happening but a different trajectory. my concern coming back as they were saying earlier, china will have 5% gdp growth this year but they are requiring stimulus. if you look at other countries in the year of reopening without stimulus they were growing at two to three times their normal gdp growth rate. if china is struggling to get to five in its year of reopening, what does that tell us about the coast -- post-covid underlying growth rate. it could be closer to four which is a negative for china and the rest of the world if their long-run growth rate is closer to 4%. haidi: are there pockets of exception?

we know that elasticity or inelasticity of that market segment has been a big driver in terms of a global rally when you take a look at china or how they have been performing in europe. is that a strength for the consumer? mary: i have a strong preference globally, not just china, for high end consumers over low and consumers. in china lvmh is one of our largest positions. alpha generator over the last months. that segment of the consumers seem strong. they want to spend, travel. they are in a good position. i met with pizza hut and they're singers price sensitivity. haidi: it discounting a lot. mary: the china consumer needs to be careful because there is a difference between the ultra high end consumer and lower end consumer. kathleen: many investors have said no thank you, no china. i will look at the rest of asia. do you agree with that?

mary: no, china is the second largest economy in the world and even a 5% growth rate will be the largest in the world in the future. you cannot just discount the whole thing but from our perspective we do not have direct exposure in china so we do not own tencent, alibaba, baidu any of those names. we have indirect exposure through multinational companies -- national companies. starbucks is a good example. for these multinational companies china is a huge market. nike is another example and you cannot ignore it so for now we are comfortable in terms of reopening and that will have a positive impact on earnings of multinationals. we will continue to assess the situation. kathleen: u.s. earnings are coming up friday with big banks. what is your outlook? mary: so earnings, that's what we do is we looked at earnings and invests in stocks in an upgrade cycle so for about 18 months though global stocks were in irving -- earnings downgrade and then you saw a trough.

it will be interesting this quarter to see whether the trough was a fake or you are going to see continued upswing. we are looking closely at the magnificent seven or the seven mega cap stocks that have driven the rally in the second quarter because some of them have strong fundamentals and they -- earnings have tracked in stock prices so microsoft, google and meadow would be in that category. then other stocks have done well. tesla would be an example and potentially apple. they will be divergence in the upcoming earnings season between the magnificent seven. haidi: this looks at that. growth pressure continuing in the s&p. are there ways that you prefer exposure -- first of all, what do you make of the ai narrative in the medium-term as -- if you are holding these names for longer, is it worth getting exposure to?

are they names that are not quite up there with valuations that are more interesting? mary: we look specifically at earnings so from the ai perspective we are looking at stocks where you can see that in the revenues and earnings. were not buying an overall thematic and hoping it comes through at some point. so stocks were you can see earnings are nvidia, the easiest one, microsoft and google. there are other names where you will not see it in revenues until 2024 or 2025 and those names are at risk because they are at elevated levels. we are doing work on the medium-term as you asked for other industries outside of technology. the benefit of ai may be on the cost side and mckinsey has done an excellent report looking at that. that can be a huge earnings driver but that is not until 2025 so we are doing work on that now so we are prepared but you cannot see it in earnings. haidi: mary manning, global portfolio investor. still ahead of japan's plan to

discharge waste from a nuclear disaster site is drawing opposition from its neighbors. we will look at the risks with australian national university. first the nato summit on tuesday, the alliance is moving closer to expanding in the face of russia's war in ukraine. this is bloomberg. ♪ good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪ what if she likes playing golf? it's expensive. we're outlawing golf. wait. can i still play? since we work with emower, we don't have to worry

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♪ haidi: turkey has dropped its opposition to sweden's nato membership bid ahead of the summit on tuesday. turkish officials say the president has received assurances on key demands from stockholm including its approach to supporters and separatists in its territory. yen stoltenberg says he expects the only remaining hold out hunger re-sweden's bid. with expects to see progress from ukraine's membership bid. the lithuanian president told us more about how that could have been while ukraine fights a war against russia. >> we are ready to create institutional framework for all the corporations. if you bring it it will be done in the form of ukraine's nato council. and then, the procedure of entry

or integration into nato will be more simple without members action plans. and probably we can agree on that. we can agree on that too. at least this is a position of my country but i know that many countries too and maybe allies. we need to send a signal that ukraine will become the member of nato as the situation allows, meaning that if the war is over. >> is that sentence, do you think you can get to that? the grammar? >> we are in the process of discussions and i know even now the discussions will start and probably they will be dedicated to this subject. >> what is the message to the allies? it's not just the united states,

other allies say this is a country at war and there is a risk of escalation. russia will say we are not fighting ukraine, we are fighting nato. >> we all agree on that. the countries in the war and what will happen if -- let's imagine that we will just invite ukraine to become the member of nato right now, what will happen if article five should be activated by the way? but it means the activation of article five. deferred world war. -- the third world war. this is why this is a serious situation but what ukraine needs right now is full support in the military, economic, humanitarian means. we are providing the military support to them and i know that many countries coming, arriving

will bring additional portfolios of support to ukraine. but we should also understand that ukraine needs a signal about a potential membership tomorrow. and if it will be able to deal with that, to provide, to deliver this kind of support, political support to ukraine. it would create huge stimulus, fightings of ukraine. candidate status towards european union, have a conversation before with the president of ukraine. he said to me, look, may be for these guys which are fighting on the battlefield, this is not a critical issue because they might be dead tomorrow. kathleen: lithuania's president

speaking to bloomberg's maria. moving on to president biden at meeting with u.k. prime minister in london ahead of traveling to lithuania for the nato summit. the british government says that nations have started work on a critical minerals agreement. both sides agree to maintain support for ukraine and talked about geopolitics in the indo pacific region. get a roundup of the stories you need to get your day going in today's edition of daybreak. go to dayb . it's available on mobile and the bloomberg anywhere app and you can customize settings so you only get news on the industries and the assets that you care about. this is bloomberg. ♪

♪ >> these changes would increase

capital requirements over all but i want to emphasize that they would raise capital requirements for the largest, most complex banks. we intend to consider comments carefully and any changes will be incremented with appropriate fees and. kathleen: federal reserve vice chair michael bar on banking regulations. more on the core message in the speech, major u.s. banks are about to face one of the biggest regulatory overhauls since the financial crisis, including a controversial boost in capital requirements. su keenan joins us now. what is michael proposing? this is not a done deal and there's a lot a big stuff in there. su: it's a proposal that has wall street's attention. what he is propulsion is test proposing is credit, operational and trading risks. there be a standardized message to do this.

that translates into what he mentioned, tougher tests and what is getting everyone's attention, higher capital requirements. largest banks would be required to hold the most capital aside, two percentage points of capital or two dollars of capital for every 100 in risk-weighted assets. the changes we phase in over two years and stress tests would be better able to capture the dangers firms face. a mixed result in the bank's latest trading day and this is days ahead of these big banks kicking off their latest earnings season. the changes they now face which were aimed at the biggest banks, banks with more than 100 billion in assets currently, the restrictions only apply to those globally active banks with 700 billion or more. those changes are aimed at these banks and stem from a long

review to align u.s. rules with international standards. haidi: what are the next steps? su they are what is called: a comment period. and for a long time the bank industry titans have opposed capital requirements and this became a political lightning rod after the collapse of silicon valley bank and other regional lenders in the spring. at the time, they said an examination found the current system was sound but changes were needed. there was a drumbeat coming from lawmakers and others. they say the changes will take of facts, there proposing the regulators. that includes the office of comptroller and currency and an initial plan could be released this month, laying out the details of what was in the

speech. actual changes though, that is where the devil is in the details. that could take months if not years, depending on opposition and challenges from banks and others. stay tuned. haidi: bloomberg's su keenan. let's look at how we are setting up when it comes to trading in asia. this is a futures picture for sydney. upsides of 6/10 of 1%. headlines when it comes to support for the property sector, easing liquidity conditions when it comes to the property sector, set to benefit. the risk for china of australian risk assets. we are seeing equities seeing gains. solid session on wall street and china's property market will be a theme. kiwi stocks risk off, 3/10 of 1% lower as we count down to the decision. rates are likely to stay on hold

5.5% at the july meeting. 12 consecutive rate hikes already. the economy is seeing signs of recession and the impact is starting to play through. nikkei futures looking flat as we saw another burst of strength with the weakness that we saw in the dollar index. coming up next, ford's ev battery partner is losing money but it is hopeful that revenue will double thi 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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♪ >> focus on inflation and things driving ahead of the cpi report in the u.s. on wednesday. used car have been tumbling for months. the biggest drop since the start of the pandemic. haidi: yeah, it's interesting.

some signals of inflation. the outlook has improved for the third straight month. this is short-term inflation. this is the lowest level in more than two years in the bank of new york survey. one year ahead, inflation and cetaceans have declined to the lowest rating since april 2021 as well. kathleen: the treasury market has taken notice. in fact, one of the stories today was a bonds rally, some people figured they had been oversold. in fact, they have extended their retreat from the 2023 highs and this is a made it not only traders saying the selloff has been too much, given the fact that there are signs of disinflation. they are thinking cooling inflation will show up on wednesday, so let's bring in our strategist mark greenfield. put this in context, in

perspective for us. mark: well, it might not be entirely the end of the treasury selloff, but yields have risen sharply over the past month. we are near the years highs and we are going to a cpi report which traders must think there is a chance of a miss on the downside for cpi. it is no wonder that you are seeing adjustment, people buying bonds. this is the next big fear of missing out trade in the bond market. everyone will want to catch the rising treasuries when yields turn lower for longer. we've had a huge run-up in yields as the fed has been raising rates. they're coming to the end of the cycle. we can't pinpoint whether it's this month but we know the next big trend is down. there will be a gamut of traders who want to get onto it. some are itching to get into

trade, some will delay longer. everyone will be more nervous about missing out on the downside in yields. the up cycle is going to be limited but we are going to start a cycle for many months. haidi: is the yen sustainable? is it a short-lived blip? mark: it's going to be a lot more volatility in dollar yen the next few weeks but what makes it more interesting is the bank of japan meeting at the end of the month, it is a live meeting. we've seen data in the past week that clearly gives the bank of japan an option to do something with yield curve control if they already. it is not clear that they are. the governor ueda has been neutral, careful to avoid giving anything away. if you look at the inflation points in the report, if you look at the cash earnings

numbers, they are both suggesting that inflation is beginning to reach the 2% threshold on a sustainable basis that the bank of japan is looking for. that is the criteria that they have set. to say that they would make changes to yield curve control, it is beginning to happen. whether it happens at the july meeting or a later meeting, certainly traders are getting very excited about the possibility that the boj could do something this month. that is helping the yen to get stronger. kathleen: when you look at the bond market globally, what do you see in terms of -- we are closest to this top of the bond market selloff. where there is room to go in vice versa. mark: if you look across the g10 space we are in a similar situation where we have inverted curbs, yields not far from their peak but if they want a clue as to when the process is going to change, we might get one from

the reserve bank of new zealand. new zealand although it is a small economy and not a huge bond market, they were early in the rate hiking cycle and likely to be one of the first to cut rates. they may give a signal this week on when they see the time is right for them to lower interest rates. we have seen it before, new zealand can be a leader in rates cycles, so there will be interested in what the central bank has to say because that might give us a clue as to what we can expect in the g10 space. that makes them eating a lot more exciting for bond traders than usual. for a small country new zealand will get a lot of attention this week. haidi: mark cranfield there with us. let's get to annabelle for a look at what she is watching. annabelle: we had this at the

top of the hour but it is the monthly china credit tracker and its great data coming out because we just got china announcing support for the ailing property sector asking banks to renegotiate loans in the market, trying to prop up support because in the latest credit tracker we saw stress reaching level for in the onshore market, up from level 3 three in the reading prior. the level of stress is the highest that we have seen since february and it does speak to the magnitude of the problems even though in the offshore space we inch down to level three from a rating of level four in may. if you change on, what drove the increase to level four for the onshore market was moves that we saw in terms of some developers default thing on their debt obligations. this was the ocean group and country garden holdings and essentially that played a big role in the increase of stress that is being felt in chongqing in particular. that is the reason facing the

biggest defaults. hsbc among those saying in 2023, default rate for junk bonds could reach 30%. if you change on, this is what is prompting beijing to issue this call for stimulus in the market because monthly bond maturities for chinese firms that faced debt repayment, that is building. kathleen: thank you. latest from the corporate front, bloomberg has learned that uber cfo nelson chai is pointing to leave the company. chai has informed ceo derek of his intention to move on though a decision on timing has not been made. they are the most senior executive to leave the company since 2019. in a statement wilbur will not comment on executives career decision during pre-earnings. shares in icon have dropped to their highest after

restructuring loans. the car icon severs loans easing fears that they may liquidate holdings. the stock fell after hindenburg reports the company was overleveraged. their fortune rose more than a billion dollars on the latest surge. warren buffett's berkshire hathaway is taking control of liquefied natural gas project in maryland. it has bought a in energy stake for $3 billion, boosting partner ownership to 75%. brookfield holds the remaining 25%. the deal gives brookshire control of seven operational export facilities in the entire u.s.. ford motor's south korean battery partners says it is ramping up production capacity even as it loses money. haidi: let's get more from our global business reporter. he actually met with the company's chief financial officer for an exclusive interview, so let's get to them.

what was the conversation like and what did you learn about the company situation. >> sure. they got a massive loan from the u.s. government. it was $9.2 billion. it was pretty big loan. not easy to get that loan. there were pretty few companies that received the benefit such as tesla and general motors and ford in the past decade, so the reason is the u.s. government is happy with their plan to build at least three big battery plants in the united states and sk is relatively new in the global ev industry and they are pretty aggressive in terms of increasing output and they are planning to build at least 14 plants including six plants in the united states by 2025. kathleen: these are some big plans.

tell us about the loan and how they plan to boost production? >> sure. so with of the loan, it is given to the jv between ford and sk on. so they will create a lot of jobs and u.s. officials are really supporting their plan and so -- there plants will help u.s. government to reduce reliance on chinese components for their electric vehicle and also sk on is planning to make a profit next year. although it is not that easy to do so because, you know, we have a lot of inflation, rising labor costs. especially in the united states. to be honest it a lot of battery companies ceos actually complained to me recently that it is not easy to train and hire he battery -- hiring battery

workforce especially in the united states. haidi: when are they aiming to make a profit? >> oh, like i said, they are going to do the aiming to make a turnaround at least next year. that is the investors pushing this company because the company is actually preparing an ipo in the next four years. we have this new cfo at this company, he came from center charter korea and malaysia and he knows exactly what investors wants. haidi: that is bloomberg's kim. the plan to discharge of wastewater from the fukushima disaster site. more next with australian national university. this is bloomberg. ♪

kathleen: japan is set to release wastewater from the fukushima nuclear plant as early as next month after getting former approval from the government. it follows the iaea's finding that the relief strategy is in line with global standards of routine discharges from nuclear plants. japan's plan has raised concerns among chinese consumers about the safety of imported food. china's ban on seafood from fukushima has fishing groups fearing for their livelihoods. other products include sea salt

and even japanese cosmetics. haidi: let's bring in our next guest who says the water relief will have no effect on people and the environment. tony is an honorary profession or -- professor. tell us why the criticism is not necessarily well placed in your view. >> what they are going to do in japan is remove the dangers so that all that is left in the water is pretty harmless. nuclear power plants worldwide discharge water containing tritium in far greater quantities than plan for japan. this is a conservative discharge. haidi: there was speculation of the people behind the research, there were opponents but there are concerns and not necessarily

politically motivated. there was complete agreement that they had conducted the research in the way everyone wanted. >> this is one of the key things. have they been removed? two years ago japan asked the international atomic energy agency to independently look at all the plans and arrangements and assembly methods and everything, so they've done five missions, produced six reports and what they did on the last one was took samples of the water and it was analyzed but also by the iaea at their labs and then independently by labs in south korea, the u.s., all the samples and measurements agreed. they all agreed, there was no extra, only tritium.

so this was a good reassurance that it is safe. >> kathleen hays in new york. you know, china is saying that there are differences between their proposal and the way it is done, taking it out by its own nuclear plants and others around the world. is there truth to that, is this significant? >> no. because the independent analysis has shown china was involved with the task force that looked at this independently and remember china discharges far more water then is planned for fukushima. for instance the plant in new china, five times what is planned for the fukushima

discharge. kathleen: so just just be more specific. when you say treaty to water, one of the things that you said in one of the things you've written lately is there is more tritium up in the sky, you know, then there is in the water around fukushima? what exactly is this stuff? >> right. so tritium is just hydrogen with a couple extra neutrons in the nucleus. so it is very much like hydrogen combined with oxygen to form water, just like water. ordinary water and tritium water are chemically very much the same so they cannot be separated. tritium is formed naturally in the upper atmosphere and falls as rain. there is 10 times more rain that falls in japan every year than is planned to be discharged. you've got tritium in your body,

you know. it is everywhere. but it is a very -- it is the lowest radioactivity of all radioactive substances. so it is very low energy and does not cause us any problems. so this discharge is actually very, very conservative as the iaea say. haidi: do we know if it causes problems if it is internal? >> it is such a low energy and also because it's got a low half life but passes through the body quickly. it has little effect on you. haidi: my last question is are there better alternatives to disposal and will the fear -- is this a barrier when it comes to nuclear energy? >> there's an understandable concern when you say you're going to discharge radioactive water to the sea, it sounds like a bad idea.

not all radioactive materials are the same. bananas are radioactive, full of potassium. tritium has the least problems. you got 60 years of experience of discharge from nuclear power plants. without any harm to the environment. this is very conservative. haidi: thank you for elucidating us tony. honorary associate professor at amu. turn into bloomberg radio and hear more from the days big newsmakers and get more analysis from our team, broadcasting in hong kong. the app is where you can find that or bloombergradio.com. more ahead, this is bloomberg. ♪ no, that was always part of the plan. three kids?! this was never part of the plan! these kids order the lobster mac 'n cheese! what if she wants to play golf?

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♪ haidi: as we count down to trading in tokyo, some stories we are, nikkei asia reporting japanese prime minister is planning to meet ukraine's president on the sidelines of the nato summit. meanwhile his cabinet approval rating has fallen five percentage points to 38% according to our latest hole. disapproval grows to 41%. later on we will be getting japan's orders for the month of

june. we remember the massive 22% decline in may. kathleen: let's move to a big story. that is new project threads has reached 100 million users and less than one week. mark zuckerberg says the surge is organic demand with no major promotions. bloomberg's -- is joining us now. even mark zuckerberg is surprised at how well that went. >> i think there was a little surprised but extremely easy to on board. are you on boarded? kathleen: no. >> all you have to do is say onboard me. we get a badge number and that's how it works. 100 million is massive and we are getting estimates as to what we could see over the next couple of years. mark, very well-respected analyst, she says threads could reach 200 million daily users in the next year's end of the most important figure is a could generate $8 billion in revenue.

for meta as a whole, $8 billion is a drop in the bucket but data shows analysts expect meta-to generate 156 billion in annual revenue. as you can see compared to that it's was nothing but compared to twitter last year it's a lot more than what twitter had in sales revenue. twitter coming in in its last full year as a public company with five and a half billion dollars of sales and revenue. also a lot of advertisers are looking for a new place to go, they do not want to be on twitter these days. so perhaps meta-and its new reds will coal in advertisers -- pull in advertisers. capital markets sees the app bringing in at several billion dollars. he did not put a number on it but justin patterson says it will be immaterial as far as meta-but material as far as twitter.

haidi: you talk about the drop when it comes to revenue but you get the feeling this is a personal thing for elon musk, for mark zuckerberg. that cage fight and now this sort of expectation potentially of legal action being threatened. vonnie: the obvious thing to do if you are mark zuckerberg and adam, you have quality content, people paying for verification which elon musk tried to get people to do and everyone laughed at him. because it was being offered to users as if you wanted to do it, a lot of people signed up before they even moved. so people who did that are paying for verification. the whole thing is ironic if you think about it, but it is very much getting under the skin of elon musk and the person he named as ceo in the last couple of months. she is desperate to pick up the advertising that was lost during the time that elon musk was alienating a lot of users.

if you are an advertiser, are you going to divide or go with what you know already? users by the way have been positive at the beginning at least for threads, they are enjoying the experience saying it's a positive platform, it a lot of well-being and good feeling. not as polarizing. we have to see how long that lasts. it is possible that won't last as long. data compiled by bloomberg showed polarizing figures on twitter have migrated to threads. they made not be there yet. there is possibly for disinformation and problems that twitter had to migrate. not saying that that is going to happen. haidi: vonnie quinn there with the update. what a launch that we have seen. taking a look at when it comes to australian and new zealand bonds, the decision on wednesday, no expectation for a move after 12 rate hikes and

signs of recessionary conditions in the economy. they are expected to really hold in that sort of decision we are expecting today. we are seeing weakness when it comes to trading. the three year yield showing relief following the gain in treasuries overnight. treasury yields were extended from 2023 highs. some are starting to say it's a buying opportunity. market open is next, this is bloomberg. ♪

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>> this is "daybreak asia." hard to say what is going to rule. the bond market rallied in the u.s. even after fed officials talked about more rate hikes because investors are optimistic about inflation. the stocks did not do much.

haidi: certainly when it comes to this part of the world, the rbnz is not expected to do anything further. we were speaking to one of our mliv analysts today. could see that first sign of what the endgame looks like. kathleen, i think the biggest story potentially for asia could be how we see that reaction to chinese property stocks. these further signals pressure to extend lending to these beleaguered developers and would be a major theme as we get into the open. kathleen: absolutely. china very much and focus in asia today but the open upon us for japan, korea, and australia and the start of trading for cash treasuries in the session as well. on wall street, it was quite an interesting session in the sense that we had at least the fed officials arguing the case for further hikes. michael barr, mary daly, loretta mester, rafael bostic a little bit of an outlier, saying the fomc can be more patient. in the session, investors

looking ahead to what happens with inflation. we actually saw inflation expectations starting to drop lower and a lot of focus as well on used car prices as well because they tumbled the most since the start of the pandemic. today in the session, we have 10 year yield coming on fairly flat although we did see the moves laying it by the three year and five year yields in the session. the nikkei 225 is coming online to the upside, up .8%, largely down perhaps to those moves around china but we will get more details on that in just a moment. if you change in south korea, we have got the trade data dropping, the first 10 days of july and we saw exports here down nearly 15% on the year. we have of course been watching for any sort of moves around the chip sector in particular. exports to china as its largest trading partner. imports, meanwhile, that was a big contraction, down 27% on the year.

exports off 15% year on year. that is a bellwether. the south korean trade economy there. in terms of the market, direction and the session today, we have the -- in terms of the market direction in the session, up .9%, outpacing what we see for the kospi. tech stocks a particular focus given the results from tsmc and they posted an earnings beat. just another company in the tech space seeing a lot of demand from anything linked to ai. in australia at the start of the session, we are monitoring for any sort of signals we see or moves higher that we see in asset classes event china stepping up support for its property sector. at the start of the day, you can see that is the materials index, up point six cents. we see the entire session under weber broadly, materials, in terms of miners, one big sector that can benefit from china

pushing out support for its property sector. that is the start of trading and we are just a little bit higher in the session as is the wti. already a couple hours underway. kathleen: let's bring in our next guest to has remained constructive on china even after other investors and portfolio managers said maybe i don't want that quite as much as i once did. with us now is asia quantitative strategist at bernstein. we have to start there. it is so interesting to me that you have cooled off a little bit on other asian markets. but you still have been upbeat on china. so this news that the government is taking steps, maybe not the most aggressive steps to shore up the property market, do you feel that vindicates your position and what will that mean for china? rupal: thank you some for having me. in china, we did step back a little bit post the rebound we saw in january. this is more recent and largely

driven i would say based on some of the markets. the intermarket exposure that we are seeing. valuations have been cheaper earnings revisions seem to be bottoming out. even on a sentiment perspective, i would say that it is very similar to some of the levels we saw last year and some of the policy support that the market would start receiving is one of the key catalysts we are looking for. but apart from that, i think it has been quite extreme. extreme chasing of some of the names in china and that is sustainable and that is what we are hoping for. kathleen: in terms of your cooling on asia, we look -- we just saw the numbers, the trade numbers for korea. and for the first, you know,

july 1 two july 10, -- to july 10, exports down sharply. is that a sign of the lack of demand coming from china and is that one of the clouds hanging over markets like korea's? rupal: to some extent, yes. i think when we started the year, the chinese reopening was anticipated as one of the key catalysts for the region and we did see some of the sentiments across most markets. i would still say that korea has been a key beneficiary of some of the geopolitical, you know, aspect that we have seen as well as more recently. but parts of taiwan specifically i would say are a little stretched so to some extent, i would say that, yes. the slowdown that we see globally including the slowing recovery we are seeing in china

started in the southeast. more exposure. haidi: when you take a look at the property sector specifically, at what point do we start seeing perhaps some opportunity? are these levels of support that you are seeing from policymakers significant? rupal: we generally try and not -- foreign perspective. the way we approach the market is to get opportunities and we try and focus on sectors that are likely to benefit from policy support and in the context of where china is fully recovering -- right now. with that in mind, what we are focusing on are essentially stocks that are still on that side of the market. a lot of value names stand out. what we are now recommending is

adding some of that so i would say that some of them will appear in the real estate sector as well but apart from that, you know, more on the discretionary side. they need to stand out. haidi: is india too long in the tooth now? rupal: india is an interesting market. it will can -- potentially continue for some time. the way we are approaching the market is to look opportunities where there is more valuation and earnings support, becoming aggressively -- on india. trying to tag along with some of the names. it seems a reasonable strategy in the shorter term but also focus on stocks that are less -- markets are not as attractive as they were.

haidi: always great to chat with you. the asia quantitative strategist at bernstein. let's get you back for a look at some of the early movers you are watching. annabelle: that's right. we are just taking a look at chip stocks. these are the major names here in japan. big supplies into tsmc. materials down in korea but these are all getting across the board. ashley had tsmc reporting earnings after the bell yesterday in taipei and coming up with better-than-expected sales. this is really the latest name we are seeing in the tech space benefiting from the boom in ai applications. it's really demanding more of the industry, leading firms to ship banking -- chipmaking capacity according to our member calculations. a 10% decline on the prior year but the drop importantly not as bad as feared by analyst estimates so the average analyst estimate had been at 476.2

billion taiwanese dollars. so sales in the month of june coming in at 156.4 taiwanese dollars but tsmc is the primary manufacturer of invidious ai chip -- nvidia's ai chips. let's change on because is that focus in the session on what we are seeing in terms of china's support for the property sector asking for banks to renegotiate or extend or improve loan conditions to certain developers? any sort of support for this sector, given we are continuing to see credit conditions weekend in particular in the onshore credit market in china is going to be a big boon to supplies into china so these aussie miners in the session are already seeing gains at the start of the day's trading. kathleen: still ahead, china stepping up support for its ailing property market by extending relief for cash-strapped developers.

grow investment shares the china market strategy later in the hour. coming up next, the fed's drumbeat for further rate hikes gets louder. the inflation fight, next. this is bloomberg. ♪ 5-hour energy. think of it as 5-second coffee. for when you wake up too late to make it. or you don't have time to wait in line for it. or you're just too busy for a coffee break. 5-hour energy. the 5-second coffee.

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>> my idea was that the fund rate would be to move up

somewhat further from its current level and then hold there for a while as we accumulate more information on how the economy is evolving. >> as we get closer and closer to what we think is a sufficiently restrictive level, that is part of positioning ourselves so that we can try and get to that target level in a careful way. >> one of the surprising things about the economy is how much momentum it continues to have. we are likely to need a couple more rate hikes to really bring inflation back into a path -- a sustainable 2% path. >> officials speaking ahead of the u.s. giant june inflation print out on this wednesday. for more, let's bring in jill dices. we have gotten clues from other fed officials on how much tighter policy is getting this year. it seems like the drumbeat is pretty loud here. jill: it really is. i think that at this point, we are pretty much all baked in for

another rate hike later this month and really what the question has been for several weeks now is then what does the rest of the year look like? jay powell has made clear that there is another rate hikes at some point in 2023 baked in. what you are hearing from these officials is that inflation is still too sticky. we will hear what the print says later this week for inflation for june but ultimately what we have seen is there is a lot here that's really stubborn so ultimately, you are just hearing that drumbeat as you said louder and louder from fed officials saying, look, these rates are going to be higher for longer. we are just sort of solidifying i think a lot of what we have been hearing from the fed in recent weeks here. haidi: is lower for longer basically what the pboc is staring down when it comes to deflationary pressures? are these latest indications from the government to try and, you know, elevate confidence in

the property sector going to work? jill: china is in a very difficult, very tight situation here. ultimately, so what china has just done is they have extended some measures affecting the property market, measures that were in place at the end of last year. november, december. ultimately acknowledging that it is the real estate sector in china. it does need help here. when you looked at what was happening with that inflation print yesterday in china, no change year-over-year for june. i think that the sort of concerns about whether china is entering a period of deflation -- consumer deflation, or getting longer -- factory gate prices have been low for quite a while now. that is putting the pboc in a very difficult spot, especially as real interest rates rise. is it going to be that they are going to have to make even larger interest rate cuts in order to try and address this issue? i'm not sure how much room they

have to act there, especially if the fed is going to continue tightening policy. haidi: bloomberg's jill disis that. a bearish report by goldman sachs on chinese banks has drawn fresh criticism after an earlier blast from state media. for more, let's bring in catherine. what is this all about? >> last week, we saw goldman had downgraded a couple of chinese banks. you know, just concerns about their margins, especially about their exposure to government loans. and so, you know, this was -- it was fairly innocuous when it came out. over the last couple of days, it has really created somewhat of a media storm of sorts. we saw a very rearview of -- rebuke of state media. they had to clarify to the investors to say this was overdone and the report was too

bearish. it really sort of highlights this problem that is happening right now. chinese equities are not doing great. they are among some of the worst in the world. there's very little upside. and you know, there's a lot of concerted efforts to try and ensure this kind of negative talk and the sort of pessimism remains out of headlines to get people less concerned. whether that works or not, the market has not been doing so. kathleen: the deflationary figures out this week certainly do not help. you know, the recovery looking like it is not picking up steam so i am kind of curious, is this going to feed over to china trade today and will the steps announced to help shore up the property market -- we heard both sides. some people thinking it will maybe do a little bit more. will that offset any of this? catherine: it is probably a two

prong look at this. -- two pronged look at this. the measures are not necessarily new. they are not earth shattering. they are not anything that -- it is probably marginal from what has been announced before but you have to understand that in the last couple of months, the market has built up this expectation that this debt is going to come -- this bing bang is going to come and lift this market around. there is a little bit of hope built in that this will lead to something bigger. this in itself is probably not a and i think there's probably going to be a lot more pessimism that is coming through but if it does build into this big package that we have yet to be announced but people are still hoping for, that might actually change things. kathleen: maybe it will help him of the chinese government in that direction. let's head over to david ingles in hong kong.

he has been taking a closer look at some of the signals we are getting on chinese markets. what are you seeing? david: very nicely, of course, because you guys just mentioned what we are probably going to see at the open today which is probably a risk rally following on what happened in the u.s. and across the region today. it is important to take stock. we are up two or three days right now. where we are as far as the technicals are concerned. 14 week relative strength index and what you are looking at here, msci china, that is what a bull market looks like. it is elevated and it can remain overbought for some time and it typically does not fall below even the 40 handle of that. this is where we are. that is the rally we had at the start of the year from that reopening and this is where we are so we have not actually broken above not even the 50 hat mill or 60. we will need to be patient. that is the stock market.

the property market, the high-yield index, since we are talking about that as potentially the catalyst now for any sort of rally, that part of the financial market is actually not doing very good so we are looking at a high-yield index, back to 19% and that is at the lowest level of the year. we are down successive weeks and last week was the worst week for offshore dollar bonds going back to november of last year so again, this will take some time to filter through into these markets. haidi. haidi: david ingles in hong kong. great chart. you can get a roundup of the stories you need to know in today's edition of daybreak. bloomberg subscribers can go to dayb on their terminals, and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪

>> turkey has dropped its opposition to sweden's nato membership bid. it turkish official says president erdogan received assurances on key demands from stock, including its approach to supporters of kurdish separatists operating in its territory. the nato chief says he expects the only remaining holdout, hungary, will also prove sweden's bid. >> we wanted to create institutional framework for closer cooperation with ukraine. it will be done in four months. ukraine's nato council. and then the procedure of entering or integration into nato will be more simple. and probably we can agree on that, too. >> no map for ukraine? >> no map.

we can agree on that, too. it is the position of my country. i know many countries, too. then we need to send a signal that ukraine will become the member of nato as the situation allows, meaning that -- >> and that is exactly what they want. do you think you can get to that? it's about the grammar. >> still in process of discussions. i know that even now that discussions will start in one hour and probably, those discussions will be dedicated to the subject. >> what is the message to some of the allies? there's allies who say this is a country at war and there is a risk of escalation and of course we know that russia will say, there you go. we are not fighting ukraine. we are fighting nato. what is your message? >> we all agree on that at the

country is in the war and what will happen if -- let's imagine that we will just invite ukraine to become the member of nato. what will happen with article five, should be activated, by the way. means activation for article five. the third world war. this is the reason why we understand how serious is the situation. and what ukraine needs right now is full support or military, economic, humanitarian means. we are providing the military support. it will bring additional portfolios of support to ukraine. we should also understand that ukraine needs a signal about a

potential membership tomorrow. and if we will be able to deal with that and to provide to deliver this kind of support, political support to ukraine. it would create huge stimulus. fighting spirit of ukraine. i have the conversation before we took those decisions with the president of ukraine, volodymyr zelenskyy. he said to me, look, maybe for these guys, fighting on the battlefield, this is not a critical issue. they might be dead tomorrow. haidi: this when he is to maria tadeo. -- lithuania's president speaking to maria tadeo. biden's begin with rishi sunak.

-- biden speaking with rishi sunak. they began work on a critical minerals agreement. they spoke about geopolitics and the into pacific region. let's take a look when it comes to the future session in europe, just opening up. we are seeing that uplift being carried through by some of the early gainers we have seen in asia. futures up by a quarter of 1%. futures up a modest amount as well. we did see european stocks steadying at the start of the week and it did dropped the most since march last week. investors bracing for earnings season and of course going into u.s. inflation numbers as well. we can see a modest rise for the stoxx europe 600 index. reacting to the deflationary aspect of those chinese inflation numbers. we have been seeing some steady gains and lagging when it comes to utilities and real estate.

other wants to watch in the session today. much more to come here on "daybreak asia." this is bloomberg. ♪

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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. kathleen: -- haidi: consumer confidence crossing the bloomberg. july westpac consumer confidence rising to 81.3, a gain of 2.7% month on month. this is really still out when it comes to where the australian economy is headed from here as

we get into this kind of end part of the tightening cycle. the most recent skip from the rba showing the hiking cycle is potentially winding down but potentially a couple of more moves could be yet to come. this as some of the data that we have had has been pretty soft lately particularly when it comes to concerns over the state of the consumer and household sector but that westpac consumer confidence number showing a little bit of an uptick. let's get you over to tell for a look at how -- annabel for a look at how the markets are looking. annabelle: half an hour underway for japan, korea, and australia, but kicking off what we are seeing in the bond space in particular, it is being led by retreat in yields similar to what we saw in treasuries overnight but it's about how traders are fitting to recalibrate again the path for fed rate hikes. yes, we had said officials saying there is a need for further tightening in the months ahead but on the flipside, you also had things i consumer borrowing rising at the slowest

pace we have seen for a period. used car sale prices slipping as well. rent inflation expectations dropping below 6%. perhaps the sign of disinflation in the u.s. economy is starting to take hold so we saw treasuries slipping and that is what we are seeing in the session today led by the qe2 year yield. we have the rbnz decision on wednesday. in terms of what else we are watching, that retreat the dollar and we are continuing to monitor that but in the equities space, there's two stories at play here today. there's the gains we are seeing today. we have tech stocks higher and perhaps a beneficiary for that lower yield environment and strong tsmc earnings out after the bell so chipmakers and suppliers into tsmc gaining in the session. materials, also another focus for us, up .5%, given that support that came through, perhaps surprising to some investors but china's support

for the property sector. kathleen. kathleen: further pressure mounting on china's credit market with onshore defaults increasing -- defaults, increasing concerns about the ailing property sector. we will talk with kevin kingsburg. but concerns do not seem to have been alleviated too much by the latest announcement as there are some steps to shore up the property market. that is where the stresses and strains come from. what do you see now? kevin: to the highest levels since february of last month. we have the highest defaults for onshore bonds so we have been talking for two years about the levels of offshore debt that have been getting defaulted last month onshore. we had the highest level of 2023. there is some strains going onshore as well. financing vehicles as well. they have been getting some

support from the government as well. tanks have been issuing loans as long as 25 years. some of these weaker and poorer parts of the country. the spread back from the offshore debt back onshore having some issues as well. haidi: kathleen mentioned the properties to the government with the announcement. loans will be extended and we did see the further commentary from the securities journal today as well. is this going to make a meaningful difference? kevin: some people don't seem to think so. macquarie economist larry hughes said this step alone is far from enough to get the sector stabilized but he does think this is one of the first steps of additional lives at the government is going to make to boost the property sector further. contractor sales fell 28% year-over-year in june and kind of put the damper on this nation recovery -- nascent recovery we

have been seeing. more things that ultimately need to happen to gain confidence for homebuyers to be sure that properties that they buy are actually going to get built and constructed. kathleen: this is pretty important. is it possible that there some strategy here from the government? a lot of the common response in the past 24 hours has been that they are doing a little bit but not enough. do you see them as still -- well, we will do a little bit here were there. or could this be the start of something bigger? kevin: it does seem as though they are doing this trip, drip, -- drip, drip, drp so things don't fall off a cliff. the target they have for the chinese economy for 2023 that will get second-quarter gdp on monday, we will get a better sense as to where the economy is heading into the second half and some of the june data retail sales, fixed income investment

are probably going to have a week month. it really is going to be telling us to how the data looks next week and what this transpires over the summer as far as potential new policy steps. haidi: china credit editor kevin kingsbury there. let's bring in for some more analysis, william. great to have you with us. do you think china exposure at least for the rest of this year is really in the realm of treating it like an alternative investment? alpha as opposed to a beta call. in other words, you still need to have pretty elevated appetite for risk to be buying. william: yes. i think, you know, if you look at the market, year to date, china -- the u.s. market is up 15%. the divergence is huge and volatile. one of the key theses we have is we can think about the elko

part of the strategy. for example, some of the domestic bond trading strategies are up around high single digits. if you look at some specific sector, some of the chinese is up 20% and some of the -- made to single digits, mid teens. right now, china is more like an alpha strategy for global allocators. haidi: the china plus one thing is interesting, too. we talked a lot about companies that have indirect exposure to china from outside. you are looking at companies inside china that have exposure to growth stories outside of china. william: well, it's getting traction in the mutual fund industry and hedge fund industry. as of now, there was around 500 domestic chinese companies which have exposure in the asean companies, if you like, and they are building more production facilities and expanding market

shares in that region. it is still quite early in china but we are seeing stocks -- we believe the theme will continue. kathleen: let's dig into that more. there is so much skepticism, doubt. it seems like china is a huge country, huge economy. it's got potential. when you say you like high-end manufacturing and the domestic consumption play, especially at a time when the consumer has not been the strongest, what do you see there? william: the key question as a fund manager, i'm asking right now is how much of the bad news is priced in by the market? if you look at the data, you know, yesterday, and the market is actually up in hong kong so from an economic perspective, a lot are already pricing. at the same time, how much of the good news is being priced in by the market? i believe a lot of the big

stimulus expectations are being priced in by the market so that is why in terms of our approach, we are more focusing on the fundamental earnings, fundamental specific policy catalyst. back to the consumption theme, the third and fourth tier city stimulus is on the way and this is the way it should he and that is why some of the manufacturers -- interesting. yielding 2% year to date. high-end manufacturing is more like a subsector as a portfolio manager. when we talk to the peer group, people are looking for more areas. manufacturing sector and component specific themes and those would be less vulnerable. risk-on, risk-off involvement. kathleen: how much are you depending on domestic demand, domestic consumption, and how much can you depend on overseas

consumption and demand when you look at which, you know, which companies you are choosing to invest in? because it's possible the u.s. will be in a mild recession by the end of the year. it's possible the e.u. -- these are two huge markets for what china produces. william: exactly. we are overweighting the companies that focus more on the domestic consumption, you know. i would say two thirds of our portfolio is that area and one third of the exports are more sensitive to the global. there's so much uncertainty in terms of demand globally. inflation, rate hikes. the domestic china consumption story is simtech and there's more upside if there's more types of stimulus. one important data point is the volume. in the june 18 sales impact event when some of the white wine manufacturers -- when they cut prices, we see volume increase in those goods.

that means actually that the money is there as long as the manufacturer -- i think that demand is weak but it's not as weak as being priced in by the market. haidi: the tech story for china, it looks like it's winding up when it comes to alibaba. is this enough to two a in bets or confidence across that sector, particularly if we are leading the way to some ipo's? will that be a catalyst for more interest? william: it's picking up. i have been quite bearish for a while given the kind of china proxy play but i would say right now the big tech names listing in hong kong is becoming a call option on the china market. one is the valuation and second is there is some positive catalyst. when they spin off, listing some subsidiary. usually, you know, a conglomerate, they try and work as hard as possible to produce good earnings and numbers. i believe those are some

catalyst. certainly, i believe right now the global sentiments towards the china market is in the low end and usually, these type of big tech names is a proxy, coming back to asia or hong kong. i think these type of big tech companies carry this characteristic. we are getting more positive on this companies. kathleen: the chinese retail investor can be a powerful force when it comes to moving markets. do you have any sense -- do you have a read on where that investor sentiment is now? is it still very cautious, worried about a slow recovery? are there people who are waiting for a chance to put their money into stocks, into investments, and you know, watching it grow? william: there's two good data points to focus on for the retail sentiment. one is the market turnover which right now is .7 trillion renminbi, which is around 7%. on the low level.

the second is a martini glass by the retail investor, also on the very low level. i believe a lot of money is sitting on the sideline but don't forget chinese retail investor is quite spontaneous. if there is able market coming back, it could happen in a week or two. lastly, look at the mutual fund sentiment or mutual fund influence. they are also on the low side. you see the saving rate in the chinese bank, at historical peak level. kathleen: a lot of cash on the sidelines paid we will see. william, thank you so very much. group ceo at grow investment. plenty more to come on "daybreak asia." this is bloomberg. ♪

>> these changes would increase capital requirements overall but i want to emphasize that they would principally raise capital requirements for the largest, most complex banks. we intend to consider comments carefully and any changes would be implemented with appropriate feasance. kathleen: michael barr earlier today giving a speech about bank regulations that he sees as meeting to be passed now. we will get a lot more on the message in this speech.

it looks like potentially one of the biggest regulatory overhauls since the financial crisis. a controversial boost in capital requirements seems to be the one bothering some the most. michael barr, bid proposal. what exactly is he trying to get from lenders and why? su: he is saying he's not really smashing anything but rather, he's building resilience in the banking system. what he wants is rather than the banks using their own analysis and estimates on credit operational and trading risk, he wants a standardized approach. so yes, that would involve the biggest banks being required to hold more capital, and a certain percentage points of capital or -- an extra two percentage points of capital. and tougher stress tests. as he said, a phase in which would be about two years. all of this coming just as the major banks are set to enter a

new earnings parade that will be later in the week and again, the increased capital requirements, why they are probably going to be broadly up asked the board the toughest and biggest increases which will really be aimed at the largest and most complex banks. we are talking about banks with more than $100 billion in assets. these apply to firms that are globally active or have $700 billion or more. he has mentioned that they will be received and it is expected there will be some. haidi: what are the likely next steps? su: a common period is probably going to be lengthy. there are a number of regulators who have to sign off on this. the banking industry titans for a long time now have really pushed back against any higher capital requirements. this is an issue that became a political lightning rod after the collapse of silicon valley

bank and other regional lenders back in the spring but barr has said the examination of the banks at the time showed the system is sound but changes were needed. it is clear he also was under some pressure from lawmakers to do something so these changes will only take effect if they are formally proposed and an initial plan could be released in the next month. and then approved by all the regulators including the fed, the federal deposit insurance company, and the office of the comptroller and currency so observers say this could take months. it could possibly take years to see an actual overhaul but a major overhaul is indeed in the details that have been proposed so far. haidi: thanks. su keenan with the latest. you should to tune into bloomberg radio to hear more from the days big newsmakers and get in-depth analysis from our team. you can listen in via the app,

radio plus, or bloombergradio.com. this is bloomberg. ♪

>> as we see a winding down when it comes to the regulatory regime crackdown on e-commerce companies like alibaba, this looks like potentially the new

battleground for revelatory oversight in china. this is the new licensing for generative ai in china. there has been so much enthusiasm and in ways, it has been the new battleground for the u.s. and china rivalry in terms of just how much investment has been going in in china through the essential agencies and the private sector as well into mobilizing for the ai race against the u.s. we have seen the global wave of ai activity just beginning to take hold in china as well. we are now hearing his china is set to issue rules for generative ai. beijing looking to balance ai tech against an overriding desire to control the content. the administration of china which is of course the country's internet watchdog is looking to create a system that will basically -- companies will need to get a license before they can release generative ai systems according to two sources close to regulators speaking to the financial times. it is interesting, isn't it --

kathleen: it is interesting, isn't it? you are going to put together a lot of information, data, etc. how is it going to turn out? it is very specific in china that apparently, according to the draft rules from april, content should "embody corp. socialist value -- core socialist value, must not advocate the throat of the socialist system, or undermines national unity." companies like baidu and alibaba have been rolling out generative ai applications this year. they have been in touch with regulators to ensure they do not breach the rules but apparently, it's not just china. e.u. has proposed some of the toughest rules in the world on this kind of thing. a lot of companies are complaining and it's going to be fought here in the u.s. as well. it's not just an issue in china. we have specific things they want to avoid. it is only thing.

it's going to have a lot of power. i think this is going to be something that is discussed in many ways on many fronts around the world. haidi: you are complete you right. the regulatory challenges are not just in china giving it does seem along with cryptocurrency, what we have seen across crypto and blockchain, potentially, it's another situation where regulators are struggling to keep up with the advancement of that technology but speaking of the advancement of ai tech, we have seen that drive the advancement when it comes to the recovery in chip stocks. take a look at what we are seeing across the sector in asia penetrating to the upside to as much as 2.4% higher when it comes to that. sammy stocks are gaining --semis stocks are gaining again. we saw u.s. chip stocks climbing overnight as well. taiwan semi seeing ai orders with a broader slumping demand for chips. it is a major supplier for nvidia when it comes to these ai

accelerating chips. let's bring in jenny who joins us in hong kong. the question is really ongoing. is this going to be a sustainable picture for tsmc? >> i think before this year, i think there was a lot of skepticism versus other prolonged inventory problems in the semiconductor industry and then they are grappling with the end-user demand for electronic products globally. but this has all been overcome by the optimism of the ai demand especially for tsmc. we have seen rather than expected results yesterday and also the ai demand is really something people have been putting high hopes on. especially they are a manufacturer for nvidia and they

are seen as the leading company who can develop all the advanced chips. going forward, people are still -- second-half recovery especially with the end-user demand for electronics and also the inventory cycle starts normalizing in the semiconductor industry. i think, you know, basically, when we talk to investors, their views on the company have been very optimistic. kathleen: thank you. let's take a look out the markets are doing. green on the screen when markets open and you can see that building on against -- it had a nice pop. the kospi doing fairly well. 1.25%. let's remember that there was no help from the u.s. stock market today. it was pretty much unchanged and

unchanged in futures trading. in futures trading. new zealand stocks down a little so the asean rocket looking pretty good. we will see how this goes from here to the super trade coming up. this is it now from "daybreak asia." our markets coverage continues. we will look at the reaction to the china property market. are they going to encourage investors question marks stay tuned for the china open. this is bloomberg. ♪

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yvonne: 9:00 a.m. in beijing, and taipei, this is china open. david: let's get to your top stories. stocks across the region, on the up as