>> you are watching daybreak asia coming to you live. >> we are counting down to the major market opens.

>> futures are flying in a positive start. the inflation report giving points to the fed's next steps. the u.k. has reviewed microsoft's activision take over after judge green let the deal in a defeat for the ftc. >> south korea's unemployment rate rising a little bit, 1/10 in june, 22.6%. -- to 2.6%.

it is not going to turn at bank of korea from holding its key policy rate. the latest inflation numbers down more than expected. the bok came out with a message to everybody that they did not think they would be shying away from keeping the rates where they are. asian markets, this will be a factor. haidi: speaking of central banks, we are counting down the rbnz decision that is due later. we are expecting the governor to keep rates steady. that will be the first time they have held the key rate since the start of the tightening campaign. what is continuing to monitor,

we are seeing the kiwi dollar drifted lower against the greenback. kiwi stocks a little bit of downward pressure. that is one of the few markets in the red right now. other futures indicating we will see higher starts elsewhere. kiwi bond yield a little bit more led by the front end of the curve. we saw the two year yield dropping yesterday as well. quite a bit of action in that space over the last couple days or so. we will see the rbnz holding its key rate after 12 straight hikes. that is one thing we will be watching in the session today. there is more for investors to be considering. we are in the middle of the summer months here. we will be watching the headline reading of the u.s. inflation number. there is more expectations around what could happen with china because we had the property moves yesterday.

china could ramp up fiscal stimulus to boost the economy and that could include a special sovereign bond issuance. we know policymakers in china very focused on the deteriorating fundamentals in the economy. also just the weakness and trepidation we are seeing from investors as well. haidi: we continue to speculate overall what the stimulus measures will be. we are also watching geopolitical developments at the nato summit where the alliance has advanced plans for the enlargement of the firm and up ukraine's future membership. russia's war in ukraine puts a block on ukraine's immediate membership and a minister told us a chance for peace still look bleak. >> talking at the table, at a

certain point we will sit down and talk. we believe that talks with russia can begin only after they withdraw from the territory of ukraine. haidi: let's get more from jodi schneider. what is the key messaging from nato to ukraine at this point? >> the message was we want to have you join us at some point and we will try to remove some roadblocks, but while the war is going on, we cannot do that. the wording was they would be happy to invite ukraine to join nato when the allies agree and conditions are met. one of the main conditions is that there not be a war because security agreements they have to make would be hard for western countries to accept at this

point given that there is a war with russia. they would know they would be on the hook for that war. but what they are doing in essence is telling ukraine that there will be a fast track, that they will be able to avoid some hurdles to join nato. in the meantime, the nato countries support ukraine and will do what they can to support ukraine even though they are not in the alliance. kathleen: we have vladimir putin opposing this. the war in ukraine is still going on. so how does that fit into this play to get the membership bid for ukraine into nato? >> it is basically the nato countries saying we want you, but we cannot take you right now.

so what they are doing is, it is a promise. they will have a fast track to membership. they will not have to complete this membership application, which can take years in some cases. and on the other hand, you have our support in the meantime in terms of armaments come in terms of spending, in terms of the support on the international stage. and president biden has made that very clear and is expected to make that clear tomorrow in remarks he will make at the nato summit. haidi: what are we hearing from president zelenskyy about all of this? >> he is of course not thrilled. the comments he made, he made a speech in which he basically

said that when the war in ukraine and's -- ends, it will be much better for nato and the world and joining nato will allow it to do that. he criticized the organization somewhat in saying he did not think they should have to wait. he wants a concrete timetable for joining nato, which the countries are not going to give him while the war is still going on. it is a bit of a catch-22 situation. they cannot given the timeline until the war ends. he says the war will end if ukraine is a member of nato. at this point, it is a bit of a standoff. but the nato countries have continued to make clear the support and the head of nato made that clear today in his remarks regarding ukraine. annabelle: jodi schneider, putting it all together for us.

the latest from nato today. kathleen: another big story here. microsoft certainly move the stock of activision. haidi: it is a big story. the chances of microsoft land and its $69 billion bid for activision has soared. let's bring in ardent legal news reporter for more. can they close the deal before the closure deadline of july 18? the markets are now pricing in an 80% chance it will go through. >> this is a good sign from microsoft, the fact that a federal court has greenlighted

it for now. there are a couple of hurdles. the ftc could appeal this decision. it would ask an appeals court to temporarily drop the deal. that is one hurdle. also, the microsoft activision deal has been vetoed bama by u.k. regulator's. they make sure any concerns will be addressed before the july 18 deadline. kathleen: so u.k. regulator's are still opposing the deal. what happens there and how well microsoft work around that? >> today it seemed like the u.k. regulator's were softening their stance because before the ruling came down, they put out an announcement that they would

stay litigation while they work out some sort of agreement with microsoft. let's discuss to see how we can remedy the situation. the appeals process has to play out. whether microsoft will be able to iron out everything before july 18 remains to be seen. microsoft has not had any issues in the european union. remains to be seen if they will work with u.k. regulator's to figure it out. haidi: what does this mean for the ftc and its ability to challenge big tech deals? >> this was a big test given that this decision is coming on the heels of another decision when it came to the ftc challenge to the meta

acquisition. ftc lost that fight as well. it ended an administrative challenge against that deal. we will have to see with this deal whether the ftc -- every time there is a loss for an agency, it tarnishes their reputation a little bit. it seems the ftc on its part is not backing down. haidi: that was our bloomberg news reporter. looking ahead, new zealand central bank expected to leave

its interest rates unchanged. let's bring in our bloomberg economist. knowing the stickiness of some of these elements, will they need to cut the gun before the end of the cycle? hike again before the end of the cycle? >> there is a lot baked into the cake, however one will we see two started coming through? we have seen inflation peak. drop in troubling elements. we have had the food prices and run prices starting to ease off, but there was stickiness on things like airfares and we know if anybody is trying to get a flight, it is still challenging.

the stickiness they still bear on the services side. but we have seen the economy enter the recession earlier so we have a contraction that has already begun. the rbnz was not expecting it just yet. it is likely to last for most of the year and that is they point to talk about, they have already done a lot in the -- and now they have a difficult challenge if markets begin to believe the rbnz exchange rate. kathleen: a technical recession in the u.s. is a bit different because there was a committee that determines when it is a recession. in the case of new zealand, it is a rounding error. underneath it all, how big is the slow down?

is it enough to bring down inflation? is it enough to make the rbnz think it has to move before is seen as a meaningful decline in inflation? >> that is right. i think we are going to see, with the gdp, declines. when we look at what is going on with new zealand, we have had the surge in migration. even though it was a rounding error, you are seeing a big curtailment of consumer spending. the rbnz, we have the data about the average interest rates being paid by households to may. even though interest rates have

risen, they increase in what consumers are paying has only gone up by 210 basis points. there is a lot more tightening that is coming through that is really going to grind those already struggling consumers. two quarters in a row so far, but we do not see the recession ended in a new zealand until the end of this year. kathleen: still ahead, temasek posted its worst return in seven years. our interview with its cio, later this hour.

this is bloomberg. ♪

kathleen: the latest inflation readings out of the u.s. are in focus around the world. the federal reserve is finally

getting the upper hand on prices. the core cpi taken out food and energy to be subdued. at 5% the core would be more than doubled the fed's target. super court of particular note because the fed wants to see continuing declines. bond markets person in a quarter-point hike for the fed later this month. wondering if the cpi print cocom on the weaker side and change the conversation at fed meetings. particularly the one in september. haidi: our next guest says they may be time for investors to reconsider their bond ratings. with us now is andy kapyrin from regent atlantic capital. is that how you are positioning? >> it is. i think investors over the course of 15 years have coached

themselves out of having large locations particularly with government bonds because they have been so low for so long. what is different today is after a very fast cycle, government bonds around the world are offering some of their highest yields. and this year's turbulence is giving investors a bite at the apple, with yields still pretty high. haidi: when you take at look -- a look at market assumptions, hasn't been adequately price? has it been uneven depending on which sectors you are looking at? >> on the one hand, if you look at estimates from wall street, wall street on the whole has set a low bar for corporations. they are looking for companies to have another quarter of profit declines, potentially

seven or 8%. that is a reasonably low bar. at the same time, investors have set their sights higher with the market already returning double digits in the united states. companies don't just need to clear low bar, they have to go over it. kathleen: you just said you thought people should look at their bond holdings, maybe even hold more. the two-year note still so close to 5%. what kind of bounce? treasuries? corporate? what would you recommend? >> intermediate duration, especially in government bonds. an inverted yield curve is almost a mental challenge for the average investor. what i think is leading them

astray is they are confusing volatility and risk. shorter-term bonds are less volatile, but your real risk is both bearing volatility has rates rise, but also missing an opportunity as rates fall. the trade-off has gotten better, particularly in government bonds that have matured. kathleen: i want to ask about stocks. most people do not want to hold just bonds. what kinds of stocks? artificial intelligence? health care? >> i think in a lot of ways, a lot of the investment community is waiting for the next shoe to drop when it comes to the economy. the kinds of stocks expect to do best in a recession are more

defensive names. they have land in this rally -- la in this rallygged -- lagged in this rally. the thing i would avoid are relatively high valuation companies, companies more sensitive to the state of the economy. kathleen: they have been doing well lately. andy kapyrin, thank you so much. you can get around up of the stories you need to know to get your day going. go to dayb . it is also available in mobile in the bloomberg anywhere app. you can customize your settings so you only get news on the

industries and assets you truly care about. this is bloomberg. ♪

haidi: we are getting breaking news when it comes to the ftc microsoft activision deal. we are hearing from a person familiar that ftc is leaning toward appealing the judge's ruling to block that division blizzard acquisition by microsoft. according to the source, they are not authorized to discuss those confidential deliberations. the judge ruled in favor of microsoft, so there was a big

reaction the stock price, deal odds almost doubling after the judge's giving them the green light. but we are now hearing the ftc could file an appeal listing is wednesday. the judges order pause in the deal that expires at midnight. shares rising 10% on tuesday when it comes to activision. bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright. xfinity rewards creates experiences big and small,

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>> this would change ukraine's membership path for a two-step process to one step. we also made clear that we will issue an invitation for ukraine to join nato when allies agree

and conditions are met. >> u.s. secretary-general on ukraine's pathway to membership. ukraine's president has slammed the alliance's language on its hopes to become a member. bloomberg's and marie has more from lithuania where the nato summit continues. >> nato leaders are promising to invite ukraine when members agree and conditions are met. but when those conditions are met they say this will be a swift ascension process really trying to break down some bureaucracy that comes with a country becoming a member of the alliance. but it was not good enough for volodymyr zelenskyy. what he has said and took to twitter, he is scolding the alliance saying they want a clear-cut timeframe. i spoke with the country's foreign minister and he said that the conditions are already being met, the issue is the lack of political will. >> these decisions make our path to nato shorter and they could have done it faster if there was

a clear indication when the indication to ukraine would be extended. we proceeded from the assumption that all conditions are already in place for the invitation to be extended here. while the membership itself will take place when conditions allow. we will keep working with allies on moving this process forward. >> the language regarding the membership has been up for debate for geeks -- weeks with european member saying there should be a concrete roadmap for ukraine others like the u.s. say the focus should be on immediate assistance to the country and when it comes to that the foreign minister said what needs to happen is the continuation and sustainable deliveries, not necessarily new weapons. >> here on the margins of the nato summit, a coalition on western fighting jets was officially launched which was a

good sign and we need to speed up deliveries and preparations of infrastructure for pilots. we need to ensure sustainable delivery of artillery ammunition because this is something that is needed in big quantities on a permanent basis. we are working to receive more services, we welcome the announcement by france that they will be providing us with missiles. everything is on track. i think the question now is not in unlocking new weapons because we did unlock them, the question is in ensuring sustainability of deliveries and fast tracking delivery. >> ukraine's path forward into the alliance as well as the support, nato members are giving the country will be on full display today when zelenskyy joins the summit and sits down with president biden. bloomberg news, lithuania.

>> let's get you a quick check of some top global stories, tylan's caretaker prime minister says he is retiring from politics. elections in may were not in favor of the pro-democracy favors led by him to the current front runner to bpm. he seized power in 2014 through a military coup and became head of a civilian government in 2019 following an election. thailand says it detected 20 nine chinese warplanes on tuesday in a self-declared air defense zone. the island defense ministry says fighter jets and other aircraft were taking part in training exercises with warships off its southwest coast. i it says a deployed aircraft and ships in response. president xi jinping told china's military to strengthen drills in the taiwan strait. -- has also called for the greater opening up of the chinese economy to focus on foreign corporation, state media saying a meeting of that focus

should be on international investment trade and financial innovation. it china's attempt to encourage foreign investment have ramped up in recent weeks as the country's post-covid recovery continues to struggle. >> so growing activity in china accelerating in june following the pboc rate cut and boosting credit demand. it in our fx and rate its tax rates reporter michael wilson, will markets buy into beijing's preferred narrative here? putting some stimulus into it, they should perk up or is this just seasonal flows? >> great question. i think the market being as cynical as it is will probably work through it, it is more of a distraction. in reality it is good news and we will take any good news we can get right now but the china backdrop -- we won't know whether this is organic growth

or whether it is just banks lending money to each other to get to their target. as they usually do at quarter end. we might get a better idea of that, we have gdp next monday, so it is going to take another calendar of data before this sort of thing feeds and and we don't have the ability to drill down right now and see just where that credit demand came from. whether it was interbank or fresh demand for new construction. it is hard to tell but my personal preferences i think it might be more a case of banks lending to each other, but that is cynical me. >> when you have been covering chinese financial markets for a while it is pretty fair to be cynical.

is that also what is driving the dollar to heal against the yen on the flipside, these expectations of stimulus are driving some positivity in that trade. cap -- >> we see evidence of chinese banks selling dollars for one -- you on in the market yesterday. they have been reasonably active but that is just a bit of a band-aid. maybe it is the central bank trying to catch the market on the hop because the broader dollar and the bloomberg dollar index down for the fourth day. against that backdrop, positioning ahead of cpi data -- as a participant in the market the pboc's making the most out of strong fixings. stimulus news and all of that sort of thing just to try and dial it back and make something

out of this dollar softness. you get the feeling they have thrown everything added except the kitchen sink and the kitchen sink would be that big bazooka stimulus package which i think the market is growing tired of. when it does arrive if and when, it would have to be something to really get their attention. which might push the dollar yuan down 7.5, it may be a little lower but that would be part of a broader dollar dial back. >> we have seen the dollar gradually weakening and that is one of the reasons -- up to the highest in about a month. a lot of hopes that this inflation print, the cpi in the next 24 hours is going to justify this. how are traders positioning? have they priced this and already or could this make another move up in the yen? >> i think what we have seen heading into the cpi print, there is so much writing on it.

i think what we have seen as a combination of overcooked fed pricing and undercooked boj pricing. markets don't realize just how large that boj meeting is coming up and there is a big distance between cpi print and the boj decision. people are probably trading on the side of caution and i can't blame them. if it is going to be a hot print that is going to come in from these levels after we have corrected like we have, you can see the dollar put on a couple runs may be back up to that 143 area. but if we happen to come in soft, or the market is still a little top-heavy, there could be a further shakeout. -- a head and shoulders formation on the chart coming up very quickly and we are already nearing the right hand shoulder of that support so if we go through that 140 level on a week

print that could probably elicit further correction lower than about the 138. >> bloomberg's fx reporter michael wilson, let us stick with the outlook when it comes to u.s. inflation. annabelle is here for a check on markets. as we get closer to that print how are traders positioning? >> as michael was saying, something that is being very closely tracked in the markets and it is really also how traders are starting to position for moves in the s&p 500. as we know we have seen u.s. stocks fluctuate wildly after these inflation prints. jp morgan has come out with a monthly cpi game plan and they look at the different scenarios and assign probabilities and also estimate the reaction we will see in the benchmark on the u.s.. what they are expecting, for the headline it is expected to come in at 3.1% on the year and that is broadly what they saying.

we are going to see that and and 80% chance will come in at expectations or even that we will miss to the downside that inflation will be lower than what had been forecast at 3.1%. that 80% probability, if that does eventuate, reactions they are expecting as we will see moves her to the upside of as much as 3% in this scenario where it is at 2.7% or lower. there are two tail risk scenarios they are debating. essentially it is that inflation comes in hotter than expected but that is a 21% probability, you will see that when you take an aggregate when we are above 3.3% or higher. in that instance stocks can flip. in terms of the market reaction cpi is perhaps starting to take on a little bit less of a significance in terms of the moves on the vix because we are trading a lot closer on the one-day vix but at that 16 level. that is significantly lower than

what we have seen when you go back to may 2022. other cpi prince throughout the fed tightening campaign so that essentially tells us the anxiety amongst investors has become a lot more muted given we are nearing the end of the fed's tightening campaign. that is something that is seen as a positive for stocks overall. >> i think after we get the numbers you are going to have to go call jpm and see how close they were to reality. let's move on to u.s. crude and other big story -- holding its gains as asian trade gets underway after breaking up of its 100 day moving average in the new york session. su keenan joining us now to talk about how much -- what is coming out of russia and how that is driving this. >> one of the big stories that has kept oil prices depress this year has been the resilience of these russian oil exports and now we have fresh data that the

latest oil flows have dropped below their february daily average. this is a key development because russia is stronger than anticipated crude exports thus far has been a big factor. another depressive factor, prices are down about 7% year to date. china's lackluster recovery and fresh news on that front which adds to bullish sentiment. in china will be taking more steps as the signals coming out of beijing to revive its economy with additional stimulus and that has had -- rising above the $74 a barrel. you can see it is barely down a penny in asian trading. $74 is above the 100 moving day average. that is a key resistance level and has been the past month. very bullish signal. the saudi voluntary cuts are also quietly taking effect. commodities were up, oil stocks also up in traders will be watching u.s. consumer prices,

the index on wednesday for clues on interest rates in order to keep these bowls on the run. >> u.s. government reversing that 2023 outlook, it now sees a tighter global market. >> very big turnaround with the u.s. government and what they're saying with the iea. the energy information administration out with its july report, they are not saying they got it wrong but they are shifting their view that they now expect the world to consume a bit more oil than it produces. opec's reduced output is going to trim the supply by about 101 point one million barrels a day and that is short of demand, the july report says later on chinese stimulus plans accelerate the recovery and they are seeing a supply deficit with global oil inventories moving from builds in the first half of the year to deficits through

2023 into 24. that puts upward pressure on price so that is a bullish shift. the government now coming more in line with what opec-plus has been saying is a tighter global market, that is their aim. that is why we have seen these recent reduced output increases and more recently the surprise output cuts by saudi arabia done on a voluntary basis. this was to help push the price of oil higher. >> bloomberg's su keenan, we have much more to come on daybreak asia, this is bloomberg. ♪

>> -- domestic warns of an uncertain road ahead after posting its worst total shareholder return in seven years. the firm also had a rare net loss, cio spoke to bloomberg about their performance. >> the net loss number i think is a bit of a misleading number because it refers to a new accounting standard that marks to market sub 20% so it is an accounting profit number. we don't measure ourselves by it

i think -- we have always said the right measure for us is our portfolio value and i think that is what we focus on. >> you have maintained your holdings in china at 22% of your holdings in total. what have you been buying? >> the areas we are looking at in china are twofold. one they are driven by domestic consumption so china for china. secondly there are areas which china has unique advantages on. for example, electric vehicles, batteries, solar, wind, the supply chain. in than other areas like biotech and life sciences in china, huge domestic market where there are opportunities in good companies. in the near term a lot of these companies are starved for capital and some of them are struggling but there are also going to be long-term investment in that space and we are focused on them. >> is china still a risky market

in particular what hedge funds have been doing. they are unwinding the positions, 70% of their holdings not believing in the china story. 5% or not, how are you assessing risk in china? >> from a capital perspective it is very difficult for say u.s. capitol to flow in any significant way into china. the real catalyst for china for the market to recover is domestic money. there is a huge pool of domestic savings a lot used to go to real estate which is now less attractive. if you get the confidence back in that starts coming into the stock market that will be the real catalyst. we have seen that in india. when domestic money started coming into the equity market that has made the markets so much more resilient. i think we need to wait to see that happen in china, that will be the real catalyst. we need to see consumer confidence come back first. >> the biggest risk for markets right now? >> geopolitics is probably one of the biggest uncertainties we have. i don't know where things go from that, that is something that could create some major risk.

beyond that, it is the sort of stuff you will have stuff around rates and it may be a slowed economy but those are cyclical. the biggest risk from a structural perspective is geopolitics. >> u.s. china decoupling? >> it is going on. i think it is going in one direction only we don't think that will reverse. we have to factor that in in our investment decisions, you have to look at companies with access to large domestic markets. companies not cross -- caught in the crosshair of u.s. china tensions. that is just the sentiment right now i don't see that changing. >> that was the cio of two mastec speaking with bloomberg. we do have some breaking news when it comes to japan eco-data. japan pbi and core machine orders crossing the bloomberg and as we have been seeing what could potentially move further into this direction of a recovery of the japanese yen it. we are seeing june producer prices seeing a rise of 4.1

percent, that is a miss on expectations of 4.4%. producer passes month on month are seeing a decline of 2/10 of 1%, the estimate was for a bump of 2/10 of 1%. this as we continue to see the fragility when it comes to price pressures in japan. this is what the bank of japan has been concerned about and flagging the whole way through, this inflationary pressure that are not sustainable or resilient at this point. we are seeing that coming through on it comes to the factory gate price picture. core machine orders, let's look at those. we are seeing the contraction of seven point 6% after a massive 22% jump in the previous months reading. the survey was for a much more modest jump but still that 7.3 and 6% contraction is a big miss. core machine orders year on year coming in at a contraction of eight point 7%. there expectations were for a lift of 0.1% last month, we saw that month on month gain of

about 5.5% and that was the biggest reading we had in about 22 years. that is really seeing a pullback and we will be watching how that plays out when it comes to the yen. more to come here on daybreak asia, this is bloomberg. ♪ fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company.

the latest developments in streaming and tech are dominating conversations along with microsoft's court when to

by activision. bloomberg technology cohost has more from idaho. >> this year the conference is getting back to what it is known for tmt. technology media telecoms and deals. the big news item day one, activision's acquisition by microsoft, approved or greenlight by a judge in san francisco which rejected the ftc's request for a temporary halt. u.k. cma the following in quick order to issue a stay of litigation. the odds of that deal happening now improved. the relevance here in idaho is that the activision ceo is here. bloomberg will speak to him later this week, -- also expected to attend. elsewhere there is a lot happening in this industry, if you take streaming for example there are questions about the hulu platform. comcast owns a third of it and has an agreement which it can require disney to buy out its stake. will that happen? speaking of disney bob iger the

ceo is in town with two of his chief lieutenants. will we be talking about succession? we have seen from the warner bros. discovery ceo, in town already, the stock under pressure so far this year. questions about cnn which bloomberg's reported could go on to the max platform in terms of its live output in coming months. lots as well in the field of ai, sam altman is here in my understanding is he will be a keynote speaker is speaking on behalf of openai which has been the hot name in the field of artificial intelligence so far in 20. also lots to talk about in the macro. this is an industry when you think about media and entertainment that has faced cost cuts, headcount reductions, reduced advertising, the story a year ago was one thing. elon musk buying twitter. while he is not here this year but mark zuckerberg is and with the successful launch of threads over the last 10 days, could he be the big name that everyone wants to talk to?

this is just a one it will be a long week out here in idaho. bloomberg in sun valley idaho. >> we do have the market opens in sydney, seoul and tokyo next. we are seeing with the rbnz says this day as well with that decision out in a few hours time. we are seeing asian equity futures rising as traders waive that key u.s. cpi print. small advances so far as we get towards the start of cash trading, dollar-yen is also one to watch today. this is bloomberg. ♪

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>> this is daybreak asia we are counting down to asia's major market opens, we just got data from japan. the machine orders are on the slight side the producer price

is not quite as strong as expected, that affects the yen and expectations about the boj. and the bank of korea, labor market still tight, tight enough for them to hold policy. >> the rbnz, before that ride that will be really key. not just for the new zealand economy which we know has fallen into a technical recession despite the stickiness in some inflationary aspects that could be a problem, that will be key to watch for the rbnz and the nuance of that messaging. let's get you to the market open. >> we have got the rbnz, the bank of korea, it is all about the u.s. inflation print that is due later wednesday and the expectation we are going to see that headline number coming in at 3.1 percent. ahead of that we have been watching those moves in the bond space, that january pricing given some economic indicators coming through indicating price purchases are starting to moderate in the u.s. economy.

it has really been that story of dollar weakness starting to take hold. we are trading out around the lowest levels over the course of 2023 and off that we have seen the moves in the japanese yen and we are close to it hitting that 140 level. something to be tracking closely throughout the session today. a few weeks ago it was that story of 145, the risk of further intervention coming through from japanese government officials. part of it is traders exiting some of their positions in japanese equities. this morning the nikkei two to five higher but we do see it off around 4.5% from the month to date high it hit back on june 3. in terms of what else we are watching, that japan data coming out at the beginning of the last hour and producer price is still rising 4.1% on the year not in line with what economists had been expecting. other eco-data out, the south

korean labor market and that softening coming through in the latest print. on an adjusted basis the jobless rate at 2.6%. marginal softening but still tight enough to back the bank of korea's hawkish stance, that rate decision is due on thursday. in terms of what else we are watching, those moves are higher for the cause deck index against the kospi broadly flat this morning. the focus can be on gaming stocks given we saw that big deal coming through, or microsoft essentially moving to steps closer to finalizing its major bid for activision blizzard winning a court fight with u.s. regulators. we will have more details on that ahead i am watching those gaming stocks and how they trade. we have the asx 200 coming online, just a little higher this morning but watching those moves in bond yields and dividends particular the the kiwi to year yield. we are tracking the moves we have seen and treasuries but

traders are looking ahead to that rbnz decision and the expectation we are going to see the governor they're holding rates for the first time since october 2021 when they started that major tightening campaign. 12 straight hikes. also watching moves and brent crude, close to that $80 a barrel level we did see the u.s. reversing its forecast around the outlook for the global oil market. they are now see -- seen tightening over the months ahead. >> quite a lot has changed let's bring our next guest, he is positive on asian emerging equities. the snow was head of asia macro strategy state street global markets. in terms of asian equities we've got the cpi report, it's probably going to be better we don't know how much. we are watching numbers like we just saw out of korea, the number still looking pretty good. we are waiting for the rbnz, put it all together. what is the key factor for your

strategy right now when you we've all of those together? >> the key factor for asia, i know this has been spoken about often in recent months, but the key factor remains the potential stimulus out of china because when you consider trade links in the region, when you consider underlying demand conditions within the region, china is a large component of that. when you think about korea and even some of the developed markets in use -- new zealand and australia as well they are very highly leveraged to watch what is going on in china. the data so far has been disappointing, the stimulus thus far has been disappointing. it has been a little here or there but there is no real consistency in the stimulus program coming out of china thus far both on the monetary and fiscal side. we do think there is a continuation of a stimulus

package from china which even though it is piecemeal at the moment it will actually eventually feedthrough in two strength in the region. we are quite bullish on the region. >> we just saw that the first 10 day exports for korea were negative and it certainly has something to do with china. i am glad to hear somebody who is more optimistic on china actually doing something. people were downplaying the latest moves to help boost the property market, not that much, not aggressive enough. do you think they are gearing up for something more definite, more powerful than what we have seen so far and is not what is going to finally turn this economy up a notch or two? >> i would not overdo it because it is very clear over the last 15 years that each time we have had a stimulus program out of china the stimulus program in place has been somewhat weaker, somewhat less impactful than the previous one. we can see that the cycles of stimulus since the gse have been

progressively, less of an impact but progressively less significant in terms of the absolute terms. we will not overplay that but at the same time we have to realize the chinese are geared towards a growth target but they are likely if things persist, to fall shy of that growth target. as we go through the second half of the year i think policies are going to have to be put in practice that ensure that chinese growth for various reasons, social, employment, various reasons that the growth target is met. we do expect a little acceleration in the second half of the year. that should lift most of the boats in the region. >> for all of those region -- reasons there is a reckoning and investors minds that china is not the china we have to lift all boats more broadly every other time we have had global weakness because it is clear to most of us we are headed for

structurally slower growth. kind of opportunities are still compelling in an environment like that? >> we can think about it historically. when we think about the last 15 years the go to has always been infrastructure spending. if you are australia, indonesia, chile, if you are a big commodities exporter than stimulus out of china is a bit of a no-brainer in terms of the beneficial impact it has on your economy. at that is not happening anymore. the infrastructure spending, the investment spending is not there to the same extent. you need to adjust your focused a little in terms of china. the focus clearly is now still on consumption. it is still disappointing. we do think this is going to feed their eventually and we will see a pickup in consumption simply because of the overhang of savings and because of the normalization in the consumer sector within china. that should be beneficial to those markets that are highly leveraged consumer sector, the

rest of the region, may be korea, taiwan's, but not the same story we have had over the last 15 years which is the commodity exporters. that is still for us potentially a bit of a headwind as far as the commodity exporters are concerned. >> we are seeing both dollar gauges just about half a percent of setting new 2023 lows, are you still constructive on the greenback? >> the dollar for us is still a go to g10 currency. for a number of reasons. if the world is stronger than we expect in terms of global growth and certainly there are signs that this recession we have been anticipating for such a long time is still on the horizon, but if growth is strong it is likely that u.s. equities will outperform in the greenback will do well on the back of that. if growth slows materially and we go into a recession, when you look at the g10 the dollar starts to perform in a recession environment. whichever way the ball falls,

whether it is strong growth or weaker growth we feel the dollar is going to do well and certainly our investor flows we are seeing are supporting this strong dollar demand. still very constructive on the u.s. dollar. difficult to find another strong story within g10 i would have to say at this point so we are putting all of our eggs in the dollar basket at this time. >> so for lack of a better place to put your money dollars of the place to put it but also are investors like you betting that even the federal reserve stops hiking rates, it is not going to be cutting them anytime soon? >> correct. we are very much in the higher for longer camp as far as the federal reserve is concerned. this probably goes for most g10 central banks. we are not in a position yet where any of the g10 central banks are anywhere close to cutting cycle. we will see from the rbnz later on this morning and we have the bank of canada later today. we expect the bank of canada to

continue with its hiking cycle. keep talking about the peak in inflation and rates but g10 central banks are still moving toward that terminal phase on rates. at the same goes for the fed and that will be supportive for the dollar going forward. >> always great to chat with you, head of asia-pacific microstrategy at street -- state street global markets. let's head back to bell in hong kong who is taking a look at gaming stocks. >> these are fairly mixed. we are back to minutes in the session for japan, korea and australia but a lot of those gaming stocks are concentrated in the north asian markets. seeing a little bit of mixed moves this morning as we get underway. essentially the headline story is microsoft has moved to steps closer to finalizing its major bid for activision blizzard. it would be worth nearly $70 billion. it has won a court fight with u.s. regulators as well as what

is being called an unprecedented reconsideration from the u.k. and what could be the largest gaming deal ever. we are going to be tracking this throughout the session, bloomberg intelligence as well saying microsoft expected to move closer to finishing or finalizing this deal in the days ahead. another sector in focus this morning, the japanese construction restocks. we saw court machine orders for the month of may slumping here, down 7.6% on the month. the estimate for a gain of 1%. we still are seeing these names mostly moving higher throughout the session today. some other eco-data to note, producer prices data rising 4.1% for the month of june in japan. at the estimate was for 4.4% so something else that has been undershooting a little bit. >> all right, coming up we discuss the future of ai in china as beijing raised the

groundwork for regulations. the endowment for international peace joining us later and coming up but head of that new zealand central bank expected to keep rates unchanged when it makes its policy call in a couple hours. in-depth analysis next, this is bloomberg. ♪

>> we are getting further strengthen the end today take a look at what we are trading for the japanese currency, we have broken through 140 for a fifth straight day of gains for trading in the yen against the dollar. goals are finding -- the end is now the strongest in about a month up close to 3% this month the question is whether this is a turning point, we are getting more revisions upwards including ubs -- saying 128 is where we end up for 2023. research saying outside of 20% depending on the timing of when global growth really starts to roll over. all of this is playing into the fact that we are seeing the bloomberg dollar index as well as the broader dollar index just about half a percent away from setting new 2023 lows. the dollar weakness in the capitulation we are seeing their is playing a role. also playing a role when it comes to these other risk currencies the kiwi dollar in

focus today a bit of messiness in that trading given it is rbnz decision day. it let's get some analysis from our bloomberg economists on new zealand and australia, obviously what the fed and other regional and global central banks do, and the rbnz is truly the first to take his foot off the pedal. what is going to happen to the kiwi? >> we think the rbnz is going to sit on its hands today but it is not going to be sitting there comfortably given that balance it is trying to strike between rate hikes and what it will do to the housing markets for all of this year and households as those rate hikes pass through, versus if other central banks are still agitated about inflation. the rbnz is clearly not in their is some good reason why they will not be given what is about to hit within their domestic economy. where will that exchange rate fall out if we do see the fed staying aggressive while the rbnz is trying to sit uncomfortably on their hands and stay on hold. >> in the last hour we spoke to

you, you said you think a lot of these 25 basis point hikes have been some of the most aggressive and fastest moves in the world faster than the fed even. we still have not fully seen the bite from it, where are we going to see the bite next and how much of that is going to take out of growth and inflation? >> we have had a very fast tightening cycle, but of those basis point hikes we have really only seen about 210 basis points feet through to households. and as we move through those new zealand mortgages, we have very short-term fixes in new zealand between 1, 2 and five years as they begin to roll off and reprice to what are very expensive mortgage rates right now. that payment hit and cash flow is a very big drain on households and will see consumer spending remain quite suppressed

through most of this year. we have got housing construction rolling off with what is happening with building permits there but the consumer is going to be very weak as that cash flow hit from much higher repayments that the rbnz has already delivered. they don't need to do more this hit will be coming to the economy with a round about 40% or so of mortgages repricing over the next three to six months. >> third quarter of 2024 is when they see inflation returning to that one to 3% target, we saw a chart looking at the cpi forecast. do think they will get their given a lot of these elements of that inflation reading, tourism, core inflation, could be sticky? >> some well but there also some things on the others that are not quite going to be as sticky. we don't have the rental inflation problem in new zealand. we had some that has been resolved to some extent, we are getting calmer from the federal reserve in some respect in the u.s.. we don't have that part of the

inflation story so it is going to be one of those -- especially if we think about affairs and travel with everyone tightening up their belts within new zealand but also around the world, this is a very synchronized monetary policy tightening globally so households are feeling it everywhere. just as we do get that air travel capacity coming back, that thing that is currently keeping those prices high for things like air travel, that stickiness on the tourism side, as that finally gets resolved from a supply-side in that industry the demand won't be there given the households. we still think it is a mixed sentiment and in our view inflation will surprise to the downside of the rbnz and they will be cutting earlier than they have indicated. >> that is james mcintyre getting us ready for the rbnz decision in less than two hours from now. meanwhile you can turn your attention to bloomberg for more on this, go to tliv to get

commentary, analysis from bloomberg's expert editors just like james. china's new loans accelerated in june after pboc rate cut in the middle of the month aimed at boosting credit demand. let's bring in our greater china senior executive editor joining us from beijing. it is great to see you, there is so much going on in china right now but when you look at credit and people trying to figure out what stronger credit really is is it banks loaning money to each other, is it something picking up, what do you see? >> i think the initial take is this is the first bit of good news we have had about the economy in quite a while. the amount of credit extended, the amount of bank loans extended in the month of june was greater than what the market consensus was. what the market was expecting, that would suggest there is more confidence both in households

and corporate's to borrow. if you dig a little bit more into that number you see a big jump in household loans. you also see a big increase in corporate lending. the question as you raised, what are people doing with that money. if they are borrowing that money to pay back other loans, previous debt, then the support that is going to provide to the economy will be minimal. >> we are also hearing more telegraphing from influential media, the securities journal saying we are going to see more fiscal measures. >> that is the big question of the moment. what more will end can beijing do to help this economy? we have had mounting evidence that the recovery is weakening, property is a big drag on the economy, there were some support measures extended earlier this week. there is a lot of expectation

that beijing will do more. traditionally in july there is a politburo meeting in which the top leaders discuss the economy. that is a place where if there is going to be big stimulus that is where we might get news on that stimulus coming out. >> our greater china senior executive editor there in beijing as we continue to play that game. it speculation of china stimulus, when will it look like? you can get a round up of the latest stories you need to learn to get your day going on today's addition of daybreak today's subscribers can find the dayb on your terminals it is also available in the bloomberg anywhere app. you can customize the settings for the news on the industry and asset that you care about, this is bloomberg. ♪

>> bloomberg has learned that the ftc is leaning towards appealing a court ruling against its bid to block microsoft $69 billion takeover of activision lizard. a source says while there is no final decision the agency may file an appeal as soon as wednesday. the multibillion-dollar deal plus other developments in the tech space are dominating discussions at this year's sun valley conference. bloomberg technology cohost has more now from idaho. >> this year's sun valley the allen and co. conference is getting back to what it is known for, tmt. technology media telecoms and deals. the big news item day one activision's acquisition by microsoft, approved by a judge in san francisco which rejected the ftc's request for a temporary halt. the uk's cma following in quick order to issue a stay of litigation. the odds of that deal happening

now improved, the relevance here in idaho is that activision ceo is here. bloomberg will speak to him later this week and microsoft ceo also expected to attend. elsewhere there is a lot happening in this industry, if you take streaming there are questions about the hulu platform. comcast owns a third of it, and has an agreement you can require disney to buy out its stake. will that happen? speaking of disney bob iger the ceo is in town with two of his chief lieutenants. will we be talking about succession. we have seen from the warner bros. discovery ceo, in town already, the stock under pressure so far this year. questions about cnn which bloomberg has reported could go on to the max platform in terms of live output at some point. lots as well in the field of ai, sam altman is here in my understanding is he will be a keynote speaker speaking on behalf of openai which has been the hot name in the field of artificial intelligence.

also lots to talk about in the macro. this is an industry when you think about media and entertainment that has faced cost cuts, headcount reductions, reduced advertising spend. the story a year ago was one thing, elon musk buying twitter. he is not here this year but mark zuckerberg is, and with a successful launch of threads over the last 10 days could he be the big name everyone wants to talk to? this is just a one it is going to be a long week out here, ed ludlow for bloomberg news in sun valley idaho. >> let's get some of the latest corporate headlines we are watching, money market funds are set for a reprieve on swing pricing wall street's top like -- regulator will vote on wednesday to wrap up rules aimed at stemming rapid outflows during times of financial stress. our source says the sec still plans to impose other fees that will affect parts of the $5.5 trillion industry. disney is reportedly exploring

strategic options for it star india business including a jv or sale. there is a sign of strain at one of the premier properties it acquired from fox, they have said to have spoken to at least one bank about ways to help the india business grow while sharing some of the cost. more to come here on daybreak asia, this is bloomberg. ♪ back in the day, sneaker drops meant getting online to wait in line. now with xfinity mobile... ...we get the fastest mobile service and can get the freshest kicks asap. i got this. save hundreds a year over t-mobile, at&t and verizon with the best price for two lines of unlimited. nice job, little sis! they grow up so fast... i'm a fan. from xfinity.

>> this is daybreak asia, with a check on markets and a half hour into the session for japan, korea, and australia. it so far the big thing we are watching is the moves in the japanese yen because we have just fallen below that key 140

level. what is driving this, a couple different factors, when you look at the wci function you can see the japanese yen is the best currency so far. only a couple weeks and but on a month to date basis we are up more than 3% at this stage against the dollar. what is driving that, a couple different expectations. first we are starting to see traders thinking that the japanese yen could be a safe haven plate recessionary headwinds, there is also this expectation of what we will get at the boj meeting later this month because we have seen expectations building that we could start to see some hawkish tilt coming through. this is the state of play as we head through the session, the nikkei two nothing us playing into the currency moves because investors are unwinding their fx positions as they pull out of japanese stocks. that is down over the course of this month down 5% off the

nikkei 225 and eying what is happening in new zealand ahead of that rbnz position. the focus is on what's happening in china and these headlines around the expectation of a stimulus there. >> i am still waiting for it myself. interesting to see the headlines, and investors in chinese bank stocks are getting a painful reminder of who is likely to bear the brunt of government efforts to shore up the embattled real estate sector. let's bring in asia stocks managing editor, lenders seem to be most impacted here and are expected to lend more, people are waiting for something else stimulative that does not hurt the banks. >> we have seen steep losses for chinese bank stocks in the past few weeks, especially after bloomberg reported that top lenders are offering -- with maturity and this week bloomberg also reported that the bank --

the chinese government has asked banks to ease terms for property developers. essentially extending their maturity, so we saw as a result about $77 billion in market cap wiped out from chinese lenders since a peak in may. that really shows a loss of confidence in these lenders and they have huge exposure to both the property sector and lgf fees which both of which are struggling with back payments right now. >> how many global asset managers are shunning china, black rock remains overweight when comes to chinese stocks. >> yes it is a bit of a standout call from blackrock amid all the pessimism towards chinese stocks. they think investors have priced in the very worst case scenario and the market is over punished. they have also cited as near-term catalysts, resilient earnings, more potential stimulus, and a stabilization in u.s. pensions.

blackrock turned overweight on china in february, but that call has not been working out very well as we have seen the nfci china index plunging into a bear market in recent weeks. >> are asia stocks managing editor there, as we have been discussing this week china has been making substantial headway when it comes to ai. it is expected to draft regulations for the industry, let's get more analysis and bring in a fellow at the carnegie endowment for international peace. he focuses on the ai ecosystem in china. i have been reading your latest report where you attempt to reverse engineer this process to get a forward look at what this ecosystem for regulation on ai and china could look like. if we assume that the overriding goal for the parties is always control of inflation, control of the political environment and control of social stability, what are they aiming to get out of ai?

>> the overriding goal is always control, but there is a lot of supplementary goals to that. there is also leadership and add, we want to be the world's ai leader by 2030. there is also a lot of chinese regulators and academics trying to address the same problems related to ai that their counterparts in the west are. the government has been put to its biggest test in this regard when it comes to the generative ai regulation that we got a draft of an april. the final regulation should be coming soon and generative ai is at the forefront of the industry of the technology, where all the energy and money is going these days. it is obviously something china wants to be out in front of but generative ai is also one of the first applications of ai that really challenges those information controls. it generative ai is very unpredictable, is not the contract -- to control what a chatbot from baidu or what chatgpt says so they are faced with a conundrum of do we want to assert absolute control and

demand 100% compliance with these companies with political speech controls or do we want to give them a little wiggle room in the interests of staying ahead in the industry or maybe staying out so far behind. >> from the outset that seems to be two competing factors that sit uncomfortably, how do they control information but still want to retain some sort of global leadership either in the technology aspect or the governance aspect? >> this is a challenge that we have seen the meat before. back in 2008 through 2012 they were facing the same thing when it came to social media. the mobile internet. in those industries there was not even that huge economic upside but for a while there was the question of can they have a china only internet that is controlled that has a vibrant mobile digital economy. it took them a few years, but

through a mix of hard punishments, inducements, scaring some users and rewarding others, they were eventually able to create the ecosystem that they wanted. one that gave them a lot of economic upside and limited the political speech downside. with generative ai that is a different task we have seen them feel their way through these problems before, i would not put it past them if they are willing to play the game a little. if they demand absolute 100%, that these models are 100% in line with the speech and ideological controls that is going to be a huge problem and set them further behind. but if they are willing to work with companies and try to come to an accommodation where they give them a little leeway as long as they are doing their best to control the ideology and speech, then you might see them working their way through this over time. >> i don't know if this is a great comparison but you talked about the cyber and internet

regulation as being a blueprint for something we could see with ai. they have played the game a little or allowed free rein with some of these enterprises but we also know with that overhaul being wrapped up, alibaba for example, how that turned out. is that still the blueprint there? >> i think it is to a certain extent although with ai they probably just see more economic upside. not just economic but strategic. they see ai as an absolutely core strategic technology, and economic technology that will influence all aspects of national power. they know they have to rely on it in many ways in leading companies in this respect. while alibaba had given china a lot of economic upside i think the government, the regulators and to a certain extent the general public or other companies, felt alibaba had accumulated too much power. that it was abusing that power,

in some antitrust respects and they felt comfortable slapping alibaba down. they felt they already had what they needed in term of the economic upside and in ai i think that is a little more tentative. the government realizes they are behind in this technology when it comes to the generative ai aspects. a large language models. i think they might be a little more hesitant to just directly slapped on the company. i think there is more energy to say let's work with them, let's see if we can get these models to an acceptable place and then let's move forward from there. >> to a certain extent this is not just a china issue i guess it goes beyond ai. we have seen pushback in social media in the u.s. about the government working with social media companies to protect what they consider the right view on vaccines. on lockdowns. all kinds of things and more coming into question now. isn't this to one of the dangers of ai, with anything that is

political or policy oriented. can we really trust chatgpt, whatever, either to give us all of the information or make sure it does not cherry pick information? >> there is may be two different problems inherent in their. there is a content moderation problem that countries all over the world are facing, maybe 15 years ago a lot of countries in the west and in the u.s. and the companies were a little more absolutist when it came to free speech. we are not going to control what is said on our platforms. basically as they saw many of the harmful things that can be said in information that can be spread they started implementing their own forms of content moderation. china was early on content moderation and they do it in a way different way. the government sets the limits and the penalties for violating those limits are very severe. in some ways some of the same technological problems of how do you control what a model says,

how do you identify deepfakes, those are problems people all over the world are facing. that is one aspect. on the others, there is the problem of the reliability of the outputs of generative ai. a problem that is referred to as hallucination. the models are very impressive at pulling together a plausible sounding answer but it is not an answer that anyone should rely on four critical decision-making. they will often make up things because they are just attempting to, based on everything on the internet, predict what comes next. they should not be treated in that way as a source of reliable information although it may be some people are in that is a mistake. >> in terms of global regulation, and what you have written this is not just something china has to decide. if you had to recommend to a government to a country what kind of regulations need to be in place, what would be the main things they should be doing?

>> i would say get started. don't try to wait until you have the whole picture and you can tackle the problem with an absolute perfect regulation, it may take four or five years to put together. because that regulation by the time it comes out will not be perfect, one of the things china is doing that other countries can learn from is that they are being relatively fast-moving but being iterative. they are building up a set of regulatory tools, disclosure requirements for the companies around algorithms and ai. each one of these individual regulations is very imperfect, the information they are demanding disclosed may not be the information they need to properly regulated. that they are sort of building the regulatory muscles and the regulatory toolkit so they can tackle increasingly complex problems. i think that structurally is something other countries around the world can do, even if they disagree with the chinese system, they disagree with the content of chinese regulations, the fact of just getting started iterating and building up tools, knowledge, regulatory muscle --

i think that is a good approach. >> we have also got a little bit of buyer beware when it comes to ai and how to deal with it and how to assess things. we are reading that are generated by ai, he is fellow at carnegie endowment. a quick check of some of the top global stories, taiwan says it detected 29 chinese warplanes on tuesday in its self-declared air defense zone. the island's defense ministry says fighter jets, bombers, and other aircraft were taking part in training exercises with warships off its southeast coast. it taiwan says it deployed aircraft and ships in response, president xi jinping said last week he told china to strengthen drills in the taiwan strait. -- has called for the greater opening up of the chinese economy to focus on foreign cooperation, state media saying official focus should be on international investment, trade and financial innovation. china's attempts to encourage foreign investment have ramped up in recent weeks as its post-covid recovery struggles.

new data suggests abnormally high temperatures may persist for months in europe and parts of the u.s., the copernicus climate change service is a 70% chance for above average temperatures between august and october which may linger until december. global temperatures have been amplified by climate change and the el niño weather -- weather pattern. lenny more to come on daybreak asia, right here. this is bloomberg. ♪ what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today.

>> this is a picture across major stock indexes trading at the moment we are just about 45 minutes into the start of cash trading in japan, south korea and australia. zeeland heading into that rbnz decision in just about an hour 15 minutes time. we are seeing a bit of downside when it comes to the nikkei 225 down about one percent and traders weighing that u.s. cpi data for more direction. the bigger story when it comes to japan has been the yen breaking through that 140 level on a fifth straight day of gains. dollar weakness looking to set new lows for 2023 when it comes to the broader dollar index in the bloomberg dollar index but we are seeing another burst of momentum when it comes to this rally for the japanese yen.

the kospi also a little soft at the moment we are seeing some modest gains when it comes to trading out of cindy, sydney. both the currency and equity sentiment a little softer going into the central bank decision. >> let's move on to u.s. crude holding -- holding most of its trade -- gains after breaking above its 100 moving average on the new york session. it su keenan joining us now and a drop in oil flowing out of russia adding to tighter supply. the oil bulls much love it. >> they are holding close to 75 in asian trading which we will get to shortly and we have fresh indications out of russia of the oil flows are dropping to the lowest we have seen since february. this is a key development because oil prices have been held down in part due to the fact that russia has had stronger than anticipated crude exports. another depressive factor causing prices to be down year to date is the week china recovery and that is also

changing. fresh news which is adding to the bullish sentiment, news that china will take more steps to revive its economy with additional stimulus. that has hedge funders trading a new york resident what that $74 level. you can see it is only done action of a percent, same with brent which also has been up. that -- rising above 74 means it broke above its 100 moving day average. that is an important resistance level in the past month. breaking through is a bullish sign. and the fact of those voluntary cuts by the saudi's are quietly starting to take effect and you see commodities up, also stocks up for oil companies are reacting in the same way. green across the screen, traders will be watching the u.s. consumer price index on wednesday for clues on interest rates which could give the bulls more reason to run. >> u.s. government reversing the

22 outlook analyses a tighter global market. >> big turnaround there and that has to do with their recalibrating of the data that is available. the eia which is the energy information administration expects the world now to consume a bit more oil than it actually is producing. a small drop in production growth from opec-plus they say will trim supply to 101 point one million barrels a day, that is just short of demand according to the july report. later on the china stimulus plans aimed at accelerating the recovery and they are seeing a supply deficit. global oil inventories will move from builds in the first half of 2023 through 24 in the second half and they say that will put upward pressure on price so the near term view is higher from here.

>> bloomberg su keenan there, you can tune into bloomberg radio to hear more from the day's big newsmakers and get in-depth analysis from our team. art daybreak team is broadcasting live from our studio in hong kong, you can listen on the app bloomberg plus or bloomberg.com. much more ahead, this is bloomberg. ♪

>> singapore's state owned investor says they warn of an uncertain road ahead after posting its worst total shareholder return in seven years. at the firm also had a rare net loss. cio spoke to bloomberg about their performance. >> the net loss number is a bit of a misleading number because it refers to a new accounting standard that marks to market sub 20% investments, it takes -- so it is an accounting profit number. we don't measure ourselves by it, i we think -- we have always said the right measure for us as our portfolio value and i think that is what we focus on. >> you have maintained your holdings in china 22% of your holdings in total, what have you been buying? >> the areas we are looking at in china are twofold.

one that are driven by domestic consumption. china for china. secondly there are areas which china has unique advantages on. for example electric vehicles, batteries, solar, wind, the sustainability supply chain. then there are other areas like biotech and life sciences in china, huge domestic market. where there are opportunities and good companies there. in the very near term a lot of these companies are starved for capital and so therefore some are struggling, but there are also going to be long-term winners in that space and we are focused on them. >> is china still a risky market if you take a look at what hedge funds have been doing, they have been unwinding the position. 75% of their holdings, not believing in the china story, five percent are not. how are you assessing risk in china? >> from a capital perspective it is going to be difficult for u.s. capitol to flow in any significant way into china. the real catalyst in china for

the money to recover would be domestic money, there is a huge pool of domestic savings a lot used to go to real estate which is now less attractive. if you get consumer confidence back and that starts coming into the stock market that could be the real catalyst, we have seen that in india. when domestic money started coming into the equity market that made the market so much more resilient. we need to wait and see that happen in china, that will be the real catalyst but you need to see consumer confidence come back before that happens. >> the biggest risk for markets right now? >> geopolitics is probably one of the biggest uncertainties we have, i don't know where things go from that. that is something that could clearly create major risk out there. beyond that, it is stuff around rates and a slowed economy but those are cyclical. i think the biggest risk from a structural perspective is geopolitics. >> u.s. and china decoupling? >> it is going on, it's going in one direction only we don't think that will reverse.

we have to factor in our investment decisions, you have to look at companies with access to large domestic markets. you have to look at companies who are not caught in the crosshairs of u.s. china tensions, that is just sensible investing right now because i don't think that is changing. >> that was the thomas get cio talking to bloomberg. some of the stocks we're tracking ahead of the opening in hong kong and china in the next hour a property firmly in focus china's new loans accelerated in june following the pboc interest rates cut and beijing signals of more stimulus may also move some of these energy related stocks. we did have that china securities journal report about more fiscal being on the way, watching gaming related shares. tencent, billy billy and focus microsoft moving closer to finalizing it 69 billion dollar bill for activision blizzard but of course we know there could be an appeals process being filed by the ftc. >> let's take a look at currencies ahead of the rbnz decision coming up, over an hour

from now. they are pointing out that the kiwi is vulnerable to any dovish signal from the rbnz. not so much from a hawkish move but that is what people are watching, you have been telling us all evening about this dollar yen move. pretty interesting, the end it breaking below 140 dollar getting weaker yen getting stronger. we had data out i don't know what else will move it but currencies and focus. that is it from daybreak asia are market coverage continues, this is bloomberg. ♪ no upfront cost. sometimes you need a second opinion. irst step to see if your small business qualifies.

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