cost of complying with multiple different regulatory regimes. there are benefits to standardization and uniform production. so all the eu needs to do is regulate the single market. then, the business has global companies that transform the eu role. shery: welcome to daybreak asia counting down to asia's major market opens.

haidi: the top stories this hour, asian stocks set for a positive start with investors shaken off the boj surprise policy tweak and embracing the signs of the latest u.s. economic strength. money markets and economists split on the rba move tomorrow as its policy tightening campaign enters the final stages. and we look at how the metaverse is influencing the business outlook for japanese internet media company gree. shery: locale u.s. futures trading are that early in the asia monday session. we are seeing a little bit of support extending gains from the previous session with the s&p 500 rallying for three consecutive weeks. we were watching some key economic data on the friday session providing a rosier outlook. key gauges of inflation easing. not to mention americans are growing more optimistic about the outlook for the economy. we are waiting for more on. -- earnings. 160 nine s&p 500 companies reporting earnings this week,

$11 trillion of market cap including the likes of amazon and apple. the nasdaq 100 getting about 2% on the friday session. we are seeing futures continuing to rally. perhaps, treasury yields stabilizing a little bit. they fell friday after jumping to mid eight-month high the previous sessions after concerns about the boj. the last anchor of low yields globally now treat -- tweaking their yield curve control program. we have seen a global bond selloff last week. we are seeing more stability under the last couple sessions. look at oil prices. wti under pressure. still above the $80 per barrel lever after five weeks of gains for oil already on it tighter global supply, not to mention optimism that perhaps fed tightening is coming to an end. haidi: and of course, last week was really a milestone week when it comes to what central banks did and how markets had to cope and keep up.

it is looking like another big weeks when it comes to central banks. the rpi is top of mind for us in australia. investors and market participants are pretty split. economists are split too as to whether we see the rpi push it through another 25 basis point hike given inflation has been more favorable in recent prints. this is what we are setting up with equity trading in sydney, up about .3%, looking like an early gain of .4% when cash trading begins in about an hour or so. pretty flat, the session coming obsession blows with nikkei futures, a broader move down when it comes to stocks. the yen is one to watch given it feels like parts of the market are still trying to interpret what the boj tweak really meant. is it a move towards normalization of this extreme of monetary policy? is it the boj trying to get more flexibility in its toolbox to cope with the side effects of the program? a lot to watch but china is the other big story.

we had a beige book report really showing the chinese consumer, their brazilians may be wavering. or at least they are getting more selective restaurant spending. travel spending holding strong. everything else seeing more restrained. on the last night with the china beige book, fiscal spending going forward looked more positive suggesting there may be more of an embedded expectation that significant substantial stimulus measures are now on the way. shery: chinese officials will hold a news conference later monday after announcing plans to boost consumer, industries, and small firms. our global economics and policy editor kathleen hays is here with the latest. what new measures will kathleen: the government take? kathleen:kathleen: kathleen: what is so interesting about this and so important is that so many people around the world have been waiting for china's government to lodge more aggressive monetary stimulus. cut some rates. more aggressive fiscal spending, just push the money out there. the government has signaled over and over again they will do targeted stimulus.

in this case, it is very interesting because they are looking at consumer industries. that is light industry. that is one of the things they are targeting now, everything from home goods to plastic to leather to batteries. but it's not a small thing because these light industries out more than 25% of china's exports, 16% of the industry value add. they are trying to boost the value add to 4% by the end of this year from about 0.4% in the first half. it includes really specific things like supporting people going to trade fairs, getting involved in overseas r&d develop and. all kinds of things. then again, there is this other part of this where the government is going to aid the beijing exchange, which was a setup in 2021 specifically to get funding for smaller companies, smaller businesses. so, they are taking some steps to increase liquidity, keep the

cost down. it will include financing to tech startups. that's very important, isn't it? it is one thing to boost your big tech companies. they are already there. how about the new entrepreneurs coming up? this is what they are looking at. it seems like they are fallen -- following through on what they said they would do. it may be that investors, markets, even other officials within china are waiting for the bigger steps. but, haidi, i am kind of delighted by the fact they are doing something that is so specific, understanding you need to rave up -- rev up the small engines of growth as much as the big ones. haidi: we are still watching the fed with a top official more upbeat about inflation avoiding recession and keeping the door open to more rate hikes. this is the kind of optionality balancing act we have seen from so many other fed and a officials. kathleen: a lot of the commentary after the decision last week to get back on the

rate hiking path, hike by 25 basis points, after that pause in june. oh, paolo was dovish. powell opened the door to rate hikes. but they are at a position now where they are watching every thing very closely. neel kashkari was on cbs face the nation, one of the two top sunday new shows in the u.s.. he said his base case is that the economy will continue to slow but it will avoid recession. he is still concerned about inflation. it's not realistic to think the fed can stop inflation without "a cost to the labor market.". otherwise, anything unemployment -- he thinks on a playmaker get up to 4%. that is still an awfully low unemployment rate. he said he would consider that a soft landing. let's look closely at the june numbers we got from the personal consumption area expenditures report in an time important become a inflation. bpce -- the tce core.

you can see the numbers here. the core getting down to around 4.1%. the headline even lower, 2.3%. the court takes out food and energy. annualized trade is slowing down even more. still way too high. that is what neel kashkari said, again, the president of the minneapolis fed. jay powell said last week we have big reports between the july report and the september meeting. two jobs or ports. one friday sequester show 200,000 jobs created for the third month in a row and two big inflation reports. this is what we are waiting for that will ultimately determine that. you kashkari seems to be a hawk that is open to the pause, but open to doing more if needed. >> our global economics and policy editor kathleen hays in new york. we will bring you breaking news at the moment. we are now getting on the terminal that walmart has paid $1.4 billion to buy out a large investor in fluid card according to the wall street journal that

has now seen a letter that says walmart bought the remaining shares of flipkart owned by tiger global according to a letter that hedge fund sent to investors. the transaction values flipkart at 35 billion dollars down from $38 billion when it sold shares to walmart, softbank, and other investors in 2021, further cementing walmart's control over the indian e-commerce giant flipkart. guest: --haidi: it is another big week when it comes to central banks with traders bracing for further volatility, science a new era for monetary policy is emerging. let's get more from bloomberg chief rates correspondent for asia garfield reynolds. you probably cannot top what we got this week. garfield: far fewer central-bank

readings this week for a start. but the shockwaves from the three biggest central banks. they all, to some extent, surprised. even, starting with the fed, that was the big boost. everybody was certain they would like. and they did, but there was far less certainty about what they would come out and say. as kathleen alluded to, they kind of shocked everybody by being less certain about their forward guidance. you know, you could look at what powell said. that could be laying the groundwork for, that is it, the final hike. or it could be laying the groundwork for, we have more than another hike. remember the most recent meeting. they gave the projections. they projected two hikes by the end of this year. based on that the base case would still be for another hike. but, powell indicated maybe we would be open not hiking in september. if they do not hike in september

that brings it to a stop altogether. but he did not rule out another hike or even more. again, with the data. then, the ecb also surprised by sort of, going to the other side . yes, they hiked as expected. but, lagarde indicated that might be it. they are considering certainly holding in september because europe's economy is not in a good way. certainly, short term. then, finally, of course we had japan, the noisiest of the lot. and is still the unclearest. all that will play out across markets. in australia we have a meeting tomorrow from the rba, one where there is a lot of uncertainty regarding both whether they will hike and also if they do -- do they have anymore hikes left in them? so, economists are 15 to 11 i think it is in favor of a hike. markets are 75% sure they will

hold. that in of itself sets off plenty of volatility tomorrow from the rba. then on the ongoing basis as is the data releases start to come in elsewhere and we look at what japanese investors do now that yield curve control has been kind of relaxed. maybe it has been double. maybe it has not. you also wait to see how the bank of japan carries out its interventions in the bond market. because it will now be nimble and flexible about what it does when it comes to controlling 10 year yields. so, there is a lot of uncertainty just in that. do not forget, japanese investors hold an enormous amount of bonds from other markets including australia, also europe and also the u.s.. so, that is a source of volatility. almost on a day-to-day basis. the bank of japan and starts to sketch out for us all what nimble he carrying out market operations means.

shery: we have addressed all those major economy said we have not even touched upon the fact that emerging market central banks are now starting to ease, right? what a surprise it was when chile capped the week with a jumbo rate cut up 100 basis points. this week we expect result also come out with a cut. so now there is a shift in rhetoric, in expectation when it comes to the narrative of where central banks are going around the world. what does it mean for the 2023 year of the bond market? and, this avalanche of demand for equities now? garfield: yeah, well, i mean, interestingly enough in emerging markets, it kind of has been that your -- is the year of the bond. relatively emerging markets have done mostly much better especially relative to developed bond markets and in equities it has been the inverse where this was supposed to be the year when emerging-market equities came roaring back. that has not happened so far. some of that is to do with

trying of course. but, as you said, the equity set up a very strong impulse for global equities to rally. now that the fed and others, other major central banks, are seen as being done, when it comes to emerging markets, they were first off the rock apart from new zealand -- rack apart from new zealand in really looking to address inflation. a lot of them hike to buy a lot. now they have the capacity to bring the rates down. latin america is leading the way down. the same way it led the way up. that will make equities and their. it will also reinforce those investors that have been saying emerging markets are the place to go in bonds. shery: garfield reynolds there with a look at all of the big central bank decisions around the world. coming up, here why moody's analytics believes inflation rates in asia are on their way down.

your economist katrina ell join -- senior economist katrina ell joins us next. this is bloomberg.

>> it's certainly possible we would raise funds again at the september meeting if the data warranted. >> we have an open mind as to what the decisions will be in september and in subsequent meetings. >> i want to stress that the decision today to tweak the yc see is not a step towards normalization. the aim is to enhance the sustainability of the monetary

easing. >> we are comfortable cutting rates when we are comfortable cutting rates. that won't be this year, i think. >> central bank leaders on their policy outlooks and of course it's another big week for central banks. here is what we are looking at. coming off last week's fed, ecb, and boj decisions come attention in asia now turns to policy because in pakistan, australia, and thailand. the rba case to stand pat on tuesday has been bolstered by inflation rates slowing more than expected second quarter. the bank of thailand's decision will come wednesday after the governor signaled more rate hikes. we will hear from the bank of brazil as well that same day. in england investors are beta not other -- betting on another rate hike the boe meets thursday, a tossup between 25 basis points and 50 basis points. other economic data note is china's manufacturing pmi data out monday. we get inflation number from south korea and the philippines later in the week and u.s. job numbers are due friday.

of course, plenty for investors to watch. yes. you mentioned the rba, one of the key events we are watching. one last rate hike in its back pocket is what our next guest says, to give inflation a final knowledge if -- knowledge if prices remain sticky. the odds of that a rapidly decreasing. joining us is katrina ell, a senior analyst at moody's analytics. looking at market expectations with the chart, the change in pricing we have seen from rba expectations, particularly in light of the more favorable inflation numbers we got reasonably. do you think the rba, particularly, given the political, i guess, environment that they have been operating in, will opt to kind of fullback and just go more, this is where we will let it set for longer for transmission to take effect? that's a good point. it is coming back to the fact the rba has delivered a lot of rate hikes already.

rather than focusing on the political side of things, i think they really want to keep the focus on the data. what is happening with the data? we got good news on the inflation print for the june quarter. inflation is heading down. but it is still sitting at 6% headline inflation and core inflation that is still quite well above the inflation target. so they are kind of sitting on the sidelines hoping for the best, hoping that inflation continues to come down as expected. our expectation is they will hold tomorrow. but, it is likely they will have to deliver another rate hike just to keep inflation on the entrenched downtrend. haidi: two tantalizing options. one you can potentially see also wanting to give a clean slate by pushing it through. but also, is there a good argument not just for the rba, but a lot of these endgame central banks, to just stay where they are for longer? katrina: exactly. we are in a situation where it looks like inflation is

comfortably passed its peak, not just in australia, but globally. now they just need to wait for inflation to continue to head down. but, given we have unknown factors like underlying inflation pressures, those are sticky at it takes time for them to come down, particularly looking at labor markets. they are very tight still, particularly here in australia. we do certainly need to keep rates at more elevated levels. some discussion a starting to come in about, when will rate cuts materialize next year? i think that's too premature. our estimation is that inflation in australia will not return to the central bank target until late 2024 so restrictive rates need to remain for quite some time. shery: that is what the bank of korea governor has been emphasizing the last few months. core inflation remain sticky. we are getting cpi numbers from a number of countries including south korea this week. what are your expectations? katrina: our expectation is we will see headline inflation in

korea continue to trend down, but let's not forget the bank of korea was the first major central bank in the asia-pacific to really move. they were the first to get on the tightening bandwagon. so, they are a little more further along than other central banks. like here in australia, you know, they have started to move a bit later than others. shery: what a different picture it is for china facing disinflationary threats, right? tell us about where the economy is and what we are expecting from pmi numbers. katrina: our expectation is china's manufacturing pmi will remain at 49 in july. that is really the combination of the domestic economic recovery continuing to disappoint, as well as ongoing weakness in offshore markets, particularly, the u.s. and europe area i mean, the u.s. and europe, you know, they had a lot of monetary tightening that has been delivered to them, so, it is to be expected that a domestic demand picture is weak

and flowing through into weakness in manufacturing conditions. china is more broadly benefiting and will continue to benefit over the course of the remainder of this year into next year from the ongoing and targeted stimulus that has been released. at that as a positive, at least, picture in all of this gloomy picture we are seeing. haidi: so you are expecting the external demand picture to pick up her china? -- for china? katrina: yes we expect that china's domestic conditions will improve over the course of the are at the result of the stimulus. the government is really making an aggressive attempt to change the narrative from china's post-covid recovery as being disappointed too, look, we are progrowth and we will continue to support recovery to achieve our gdp growth target this year. haidi: always great to talk with you, katrina ell a senior analyst at moody's analytics. get a roundup of the stories you need to know to get your day going in today's edition of

daybreak. terminal subscribers can find it at dayb . it is also on the web on the bloomberg anywhere out of. play around with the settings to just get the news on the industries and assets that matter to you. this is bloomberg. ngry® smart bed. plus, 60 month financing on most smart beds. shop now only at sleep number®. a master's degree in business into your busy day. your graduation team led by your own gcu counselor provides you with the personal support you need to succeed! find your purpose. visit gcu.edu

♪ haidi: gemini announced investments worth $2.2 over three years in a portfolio of generative ar service assigning partnerships with google cloud and microsoft and training staff to integrate ai in their operations three of the global i.t. and consulting giant says it will provide generative ai services for strategy, customer experience, software engineering, and enterprise. records of over 600,000 in the

u.s. medicare program may have been exposed after a data breach. the information was on systems belonging to maximus federal services using the file transfer software movers. authorities are contacting the affected patients and intend to offer free credit monitoring services and instructions on how to replace compromised cards. walmart paid $1.4 billion to boost its stake in flipkart buying the remaining shares owned by tiger global. it is one of india's largest e-commerce companies with a customer base of more than 450 million people. look at our set up this morning morning -- monday morning in asia seeing equity futures largely pointing to gains across the region with markets reopening following a rally on wall street with investors shaking off worries over the boj policy tweak. it was a big shocker the end of last week. and, the latest, more favorable u.s. eco-data and consumer data is really becoming the key to the narrative there. we are seeing futures contracts

for japan and hong kong in the positive. sidney futures up about .3% with about .5% gain at the sutter -- start of cash training in about a half-hour time. kidneys -- kiwi stocks off session gains see on between gains and losses this morning. s&p futures up about .2%. we are looking out for broader china and hong kong equities. chinese equities putting on 4.5%, the best for since november last week. tech stocks in hong kong entering a bull market. there's more to come on daybreak hs we count 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,

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it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> upbeat about the growth prospects for asian business despite china's shabby economic recovery. the winter also notices loosely effects tenant's troubled market

to that effect. quickly asian markets. the recovery has been sporadic in china. ultimately, the reason is -- we are aggressively digitizing our business. >> let's hone in on those asian markets. you say it is positive. your cfo said china's property market is not getting materially better. are you saying there is improvement? >> we took some impairments against china birthday.

we still have a substantial overlay. we have taken a provision against risks that have not materialized yet. we feel very well provided from the downside. these can stabilize, albeit at a lower level. the public support, the government support is taking up. that is encouraging. we will see. it will probably take another six or 12 months before we can say the market is back. quite how much are you benefiting in terms of wealth management? >> we had really good info was -- and. some of that came from credit suisse. wealth is rising. there is a natural growth. we are picking up a bit of market share. it feels like we are.

they are diversifying away from the combined ups. the underlying economic trends are our -- are all boding well for that business. ? and how ethics is trading at the moment. -- look at how it affects is trading at the moment. we have the 50 level for the bloomberg dollar index. this of course after we saw two weeks of losses against the greenback. now we are headed toward an rba policy decision on tuesday wherein communists are pretty split. whether or not we will see a hike or a hold. look at how the opsware you want is trading. prestudy. it is trading in an hour -- in a

more narrow range. the expectation is for her to recover other bit but still willing to gain a lot of traction. this as we continue to see the economic pressure in china. we are seeing a little bit of strength for the japanese yen. that 140 level against the dollar. >> let's look at the tension between the gulf states and israel. sources say day -- they have expressed frustration in israel. including the recent deadly raid on a refugee camp. west african leaders say they stand ready to use force to the store democracy. they have so far imposed economic and diplomatic

sanctions on the country after the military took power last week in a coup. the group is giving the coup leaders a week to reinstall their captive. this is the strongest on record signal yet that they will resend the controversial pact with beijing. the u.s. will supply taiwan with 145 billion dollars in defense of quitman services and training. you can see the fast track authority that -- the defense department did not give specifics on the web priebus as the package was good antiarmor and anti-defense capabilities. the chinese u.s. embassy says beijing is firmly opposed to the ties and arms sales to taiwan. united states will also expand

its footprint here in australia. the announcement in may was a military exercise that kind underway in northern australia. this really brings that defense alliance ever closer. question has always been closer. >> there is also the nuclear submarine arrangement between the u.s. u.k. and australia. this integration of japan that you mentioned. there are more frequent visits to the u.s. submarine by australia and also collaboration on guided missile production as well. the defense minister saying the u.s. australia relationships had never been in better shape that it is right now. let's have a listen to what lloyd austin had to say as well. >> interoperability, we are about promoting a common vision.

we will continue to stand by our allies. this helps us strengthen our unbreakable alliance. if this is the 10th time these exercises happen held. it started off just as u.s. australia. now there are 30 troops evolving from japan. china has been actively courting that. as to the purpose of all of this, the u.s. army secretary billy called a spade a spade here. this will have a significant deterrent effect on china. quarks want do we know? >> these exercises were suspended after the crash. the bodies had not yet been found. 50 pieces from the debris -- of

debris have been found. but the main section of the aircraft. there was another crash landed back in march on the beach not far from sydney. they are not granted by -- while an investigation is underway but there is speculation that even though they are due to be retired in 2024, they may never fly again. chris tells joining us from sydney. -- >> that was paul allen joining us from sydney. asian futures are now pointing upward. sidney futures up .3%. this as we had the aussie dollar falling against the u.s. dollar or two weeks at the moment. that after a little bit of support with trading around at 60 says level. he restocks not doing much at

the moment. we are seeing the cave futures unchanged but this as we have seen significant pressure on japanese stocks at the moment. they are on track for the first monthly decline this year. dry would be the only one in the red so far. we had some earnings misses. we know the japanese yen is trading much higher against the u.s. dollar, jumping after the doj announced that tweak to its yield curve control program. class talking about is in japan. major banks reporting this week including the results for a japanese top lender including all of them as well. let's bring in garrett allen. what are we expecting today? chris we have the megabanks reported today. if they try to do it at the same

time, it will be a massive data drive for both of them. what are we looking for? all of the megabanks have raised their forecast. it will be their previous ratios and income on track. how far ahead are they? how far are they? it gives them a bit of a window on how the year is looking. the bha moved on friday. it already showed a positive impact on these banks. it is a two-sided sword. when losses going forward as interest rates rise. there could be more losses on japanese bonds but the general consensus is that it will be a positive for the banks as margins start to eke out again.

into a world where we actually have some interest, that gives them a bit of potential going forward. it is exciting to look at those. >> as i japan, what are you watching? -- outside of japan, what are you watching? >> not only megabanks but tomorrow we have a few other big earnings. this comes after brenda's fourth quarter. that is there third consecutive year of lower earnings under their current ceo. also, we have toyota coming out of this for supply chain problems. we have to see if they are looking positively.

quick that was garrett allen joining us from tokyo. we do have much more to come on daybreak isa. this is bloomberg. ♪ 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. ♪♪

>> class time for japan had on

daybreak isa. japanese markets will open at the top of the next hour. we are watching the dalian given that even as markets have had a couple of days to persist, the bearded -- doj surprise decision signals a lot of problems to come. that creates quite a bit of a predict ability. particularly if the doj is seen to be taking one step toward normalization or is this just a case where the bank is giving itself a bit more flex ability to cope with the side effects of its ultra-loose monetary policies? we saw it we can when it comes to the broader dollar. this is just shy of 141 for the dalian at the moment. most asian equities are gearing

up for some at least some modest gains coming into the start of equity trading's. we had to belly in wall street pushing momentum a little bit higher. despite the fact that we are going into a risky rba decision as well. of course, we have seen in some asian markets including hong kong that tech has actually seen reliable hong kong tech stocks. but when it comes to the rate sensitive environment that we are in -- we will get the more insights into the tech giants with earnings from the likes of apple, amazon and qualcomm. investors will be closely watching the buzz around ai. let's bring in our next guest who runs the meta-verse. great to have you with us. think you for your time. last week we had tons of

earnings from big tech as well. including the likes of mark zuckerberg talking about the meta-verse and perhaps for the first time ever, showing a little bit of uncertainty about his but there. what do you make of the outlook for the meta-verse going forward? what about the big tech companies focusing more on the shift toward ai? >> thank you for having me today. our company's main focus -- for me, the meta-verse is beyond this large shift from people spending and they are finding more time online.

as we spend more time online, the importance of the virtual presentation is getting more important. i think the meta-verse is the big trend. so to have a more copy has a vision of the people spending more time online, they will find. those big tech trance getting more longer-term vision. class you are focusing more on smartphones. what about vr headsets? >> now we are focusing on vr smartphones.

in the near future, when we see more and more of these devices the people are using, they were adopted the vr headset where people can use internet in the 3d virtual world. the virtual presentation in 3d environment is more important. >> is the generative ai or better versed -- meta-verse bigger if you are an investor? >> it is the way to include productivity. it is a different concept compared to the meta-verse.

they will design a new concept art for the virtual world. it is a very powerful way to improve our productivity. cracks for an investor, what are the actual monetization opportunities and growth opportunities here? >> i think of monetization for the meta-verse is similar to what we have been seeing. as of right now, just including fortnite from epic games. they are making billions of revenue every year.

even the creators can create their own games or own virtual environment. it is a greater economy. >> that was the senior vice president of the meta-verse. if you missed any part of this conversation, tv go is your function. you can watch us live and dive into any of the securities and bloomberg functions we talk about to become part of the conversation by sending us instant messages. this is for bloomberg subscribers only. check it out on tv go. this is bloomberg. ♪ the first time your sales reached 100k with godaddy was also the first time your profits left you speechless. at the counter or on the go, save 20%

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>> >> we are getting some breaking numbers just crossing the bloomberg. retail sales as well as industrial production out of japan. i comes to industrial reduction, they are rising 2% month on month. the june industrial output, a contraction of .4% year-over-year. that is missing estimates over .3% on that year on year number for june. retail sales look marginally better. it was better than the

contraction of .7% that economist had been expecting. that is better than expectations of 5.4%. we are seeing authorities sayings like output is expected to fall. we will see the recovery in august. course they're hoping to use it as a gateway to the u.s. market. undermining the biden administration efforts. let's get the details from the global business reporter. cracks we have at least five different chinese companies that allows the big vestment and south korea. the reason is as you say, the

biden administration is pushing carmakers to reduce the reliance on chinese minerals and then they made the chinese companies think maybe we can build the plants in south korea and then they are doing this just because south korea is one of the few countries in asia to sign the free trade agreement. that is a critical condition for carmakers to get a subsidy from the biden administration. >> i don't want to say that these partnerships with chinese firms can be risky because it could result in the u.s. blocking the jvs from any tax benefits? question it is true. u.s. officials are now discussing more details on the agreement. they may consider tougher rules in terms of using china's

minerals in electric vehicles. the point is china is now dominating all kinds of supply chains for ev's and they are now -- we are not just talking about the batteries but all sorts of mining's and refineries. processing the chemistry. it is not easy to exclude china from the ev supply chain for now. and the u.s. -- fus really wants to do that, they might need to slow down their ambitions for going green. >> others as we continue to watch the commodity space. we are seeing downside pressure on the oil prices at the moment. still, wti after five straight weeks of gains. the longest run of weekly gains. the global oil demand picture is well into a record in july.

we have seen prices rising on expectations of tightening global supplies. not to mention expectations of fed tightening and we are watching the volatility and futures around the conflict in ukraine. not to mention copper prices. they were up last week, the expectation of more stimulus coming from china. the market opens in sydney, seoul and tokyo are next. this is bloomberg. ♪ you fit a master's degree in education into your busy day. your graduation team led by your own gcu counselor provides you with the personal support you need to succeed! find your purpose. visit gcu.edu

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>> this is daybreak asia. we are counting down to the major market opens. and the expectations of perhaps

a gain in u.s. stock prices as futures continue to defend those gains was on the friday session. rozier economic data helping that picture. this as we go toward more central-bank decisions this week including from the iba. we should mention the bank of thailand as well as the central bank of brazil. >> we should be positioning for more volatility to come. the rba should put another 20 boys -- 20 basis point hike. >> this after we saw that doj surprised -- surprised policy to week. we are now seeing the nikkei is coming online in the positive gaining. this month has been a down month for japanese stocks. the first down month this year.

we are looking at the japanese yen gaining ground against the u.s. dollar of .3%. we saw that jump after the doj policy tweak. we are watching the reaction also from industrial production missing expectations. not to mention the retail sales decline. perhaps a little bit more resiliency in the consumption side of things. we are watching the bond yield space because we saw jgb yields really surpassing that limit of tolerance given the b is a surprise announcement on allowing more findability there. the 10 year yield holding at the 395 level. look at with the cosby is doing at the moment. this after we saw the korean one declining. we continue to see data declining. wraps more downside for economic growth and south korea.

-- perhaps more downside for economic growth in south korea. we will be watching those kapok stocks. cracks are big earnings week i had. a big week when it comes to central-bank decisions. the rba is really one we are watching very keenly in terms of the directional sense we get for risk assets here in australia as well. it is the aussie dollar and the bond markets in the wake of the fed last week. this is the staggered up and looking pretty flat at the moment. following that broader trend higher for the rest of the region. we are also watching the aussie dollar at 66.60. whether they choose to stay on hold but higher for longer, there are political applications into their decision as well

given the changeover when it comes to the new rba governor. we are also watching the strength of the labor market as well as the consumer. all of this will play into what the rba decides given that inflation numbers have come down perhaps a little quicker than expected in the most recent ones today. a lot of this seems to be more of the tightness supply situation. more so than demand but on the demand picture, we are starting to see a little bit more confidence in china stimulus and whether that can revive domestic demand but also potentially if at this point in the rate hike cycle we can start to see a revival of more of that external demand in some of these key economies for trade. ? bring in our next guest who prefers high quality bonds over equities.

always great to have you with us adrian. 2023 was supposed to be the year of the bond in developed economies. we have not necessarily seen that and we see this year's demand for equities. do you see a reversal here? >> bonds have done well. interest rates are volatile. that also creates volatility for the bonds themselves that they're actually doing quite well but you're right, equities have done better. we actually think he was equities have a very high valuation. we have an economic slowdown which will hurt earnings. we see ernest slowing down. if the economy is so strong, you will see interest rates going up. there will also hurt tech stocks. from this perspective, they are

a bit more cautious on u.s. equities or tech stocks. >> what about emerging markets? especially those that have perhaps been one of the laggards in that space. >> interestingly enough, the economy is doing quite well. some of the cyclical stocks are really aligning. energy stocks are basically flat your today. these are some of the laggards. then look at china. it is a clear laggard. there is enough liquidity, enough credit available. but the policymakers are going into the air where they want to show confidence among private investors. i think that is what they want to see. they have seen very strong performance of china.

>> does it feel like a proper game changer when it comes to sentiment for chinese equities now? >> i think china was almost on investable in the eyes of some western investors, even internally at ubs, we have a big debate. my colleagues sitting in europe are sitting in the u.s.. and yes, growth has been weaker. i don't think stimulus can actually change that. what can really change is the confidence among investors because we basically have a strike on the investment side. i think they are doing a fantastic job on bringing this together. we have seen a great outcome. they have dropped sensitive statements that housing is only

for a living and not for speculations. it is clear that policymakers want to regain the trust of the investors, international investors. i think that is key. that is why the market is starting to trend toward these positive moves. >> how much volatility should investors be bracing for? i think with the beer is a decision on friday and certainly given the session that came before it, there was a taste of just how impactful any kind of actual policy change could be. cracks in general, rate sensitivity has gone up. i was a it is most important indicator to watch for equities globally. the rate sensitivity will stay high. we could see stronger trends

with india on the right side. but you mentioned the blg for example. we think they are moving in the right direction. they have started to lose in a little bit. moving a little bit away from the yield curve control. there is more to come. there are structural trends in japan that would allow inflation to stay high. fema participation has surpassed the one in europe and the u.s.. this component of deflationary pressure has been addressed. there is another component where the lifelong employment contracts are now coming to an end as these people are retiring. there was more volatility within the labor market in japan. i will drive inflation more -- that will drive inflation more structurally. >> tell me whether doubling down when it comes to the end? is that how you are expressing your favorite japan trained at the moment? is there any room for young bearishness?

course the market -- >> market reacted friday after the unexpected news that the endless was trading a bit weaker. i do think this is one of the best to plague japan currently. we are not that positive on equities. they also benefited from a weak currency. there are really low and weak interest rates in japan. the market will react to more economic data going forward as the doj has brought a bit more flexible into that. i think inflation in japan might not roll over as quickly as testimony expects. therefore, the japanese yen is the most attractive currency to play in this view.

we see fair value around 124. course it was great to chat with you. still had, we get a preview of china's july pmi numbers. taking steps to boost consumer business. this is bloomberg. ♪

>> as china's recovery comes

through, there is a plan to boost consumer industries. let's get more from our china economy editor. when it comes to market sentiment, it feels like risk sentiment has turned the corner. is there a reason why accumulation of these steps finally feels to investors like they will be impactful? >> i think what is happening with market sentiment right now is that the continued rollouts of incremental measures -- it is like beijing is acknowledging that there has been this slow down in recovery, they need to get this growth momentum going again. i was a a lot of the measures we have seen so far are fairly incremental. what beijing just announced friday over the weekend, these new consumer-based measures is this idea to sort of push to get

to companies that sell consumer goods, home goods, get that kind of thing going again. what we are seeing in china is there are still some spending activities there. i think they said people are still spending money on travel and restaurants. those other consumer goods, the home goods, that is not really caring through here. we are seeing all these measures come through here. at this point it just feels very incremental. it is more of this post, this communication from beijing. cracks that is why we are not necessarily expecting an event to be reflected in these pmi numbers. >> yes. i will say that these pmi numbers we are looking at for july, a lot of this comes in place before we see any concrete follow-up action. this is for july. july is also traditionally a little bit of a week or month. we are likely to see some impact especially in the manufacturing pmi numbers from extreme weather

across the country. whether that be flooding affecting output. we were expecting to see a continued contraction for those manufacturing pmi's. maybe a little bit of softening in the service sector. but yes, ultimately, i think we are getting this data before we see any concrete measures take effect and carry through. cracks that was -- >> that was bloomberg's china economy editor. higher unemployment will be the cost of achieving a soft landing. our global economics policy editor is here with the latest. kathleen, we heard from the minneapolis fed president. what did he say? >> inflation proved much more consistent, not pescatore. he was on face the nation today, one of the leading u.s. sunday

news shows. he is definitely upbeat on inflation coming down. he does see the need for more job losses. there is a hawk in him but also inflation is looking better. he did say very clearly his base case is a slowing economy that avoids a recession. that is great. they don't have to raise rates more. it is not realistic to think the fed can stop inflation from rising without some cost to the labor market. there would still be near a 50 year low. the next jobs report on friday she stay at 3.6%. this is the main inflation indicator from the fed. you see the core deflator coming in.

you see the headline pce. the problem is he is way above the fed target. you still have a long way to go. he thinks the job report on friday will be important. that is what we expect to see another gain of around 200,000. that is down from where the jobs are growing six months ago. maybe over 300,000 or so. but a common fed estimation is you only need to have about 150,000 jobs added in the u.s.. at 200,000, you have a reasonably healthy and strong labor market. for now, very little progress has been made. cracks one number that flew in

the face of this -- you see 15 of the economists we surveyed saying they will do another 25 basis point hike. then there is 11 saying they are going to hold. the red line, you can see that. that is the rba key rate. you also see that why these key -- while these key measures have come down, they are way above the one to 3% target. phil roe has three more meetings. maybe he wants to do whatever hike he needs to be done in order to get inflation stable so when the inflation comes, she will not have such a hard task to do. the number here is retail sales. can they really hike again? what is going on is the retail

sales numbers are down. 0.8%, that is the sign. perhaps on the rate hikes, a sign the cost of having to finance your mortgage going up with these rate hikes, taking some money out of your pocket book is hitting the consumer and showing that they are very close to the point if not there when they don't have to do more. despite the fact that you can see there is this consistent trend. across the brazil central bank is also available mobile. you only get that news and assets that you care about.

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>> major bank earnings are underway in asia this week including the results from japan's top lenders. let's preview the numbers with gareth allen. what should we be watching out for? >> that is right. it isn't full swing until yesterday. we have two out of three reporting. there would be a massive data drop. the main metric we are looking at is how it is looking against boosters for the full-year forecast.

we expected to be around 25%. if it is more than that or less and that, we will get a bit of a view on how they are doing. we had a bit of abuse from the bank of japan on friday. they twitch their policy. this will give it a little bit more meat in the lending business to japan banks. we were speculating on this a little bit earlier in the month. they say they see the positive side of this and the potential for greater losses and potential unrealized losses on the japan portfolios. that is what we are looking for with the effects. cracks aside from the banks, what are you keeping an eye out for? >> it is a huge week this week. tomorrow, we will have japan's

largest brokerage. they are coming up here pretty horrendous fourth quarter. in the third consecutive year under the committee that has been down here on your profits. they say they are underestimating and looking to do some tweaks and reviewing the business structure. it is have they recovered from that? we also have toyota going to the industrials. they are working toward their big eb shift. they're looking at how the semiconductor and supply-chain shortage is affecting them again. what the airport -- output forecasts will look like a crescent was gareth allen joining us from tokyo. they are a bit growth prospects for the asian business.

the winters is pulling his gospel. he expects china's property market to bounce back soon. cracks the asian markets are doing relatively well. we heard about the slowness in china. that is true. recovery has been sporadic. fundamentally, the region is opening up. that is the backdrop for all of our colleagues. we have added thousands of people over the course of the past year. we are also aggressively digitizing our business. that means people are going and people are coming all the time. but this is a gross story. first let's hone in on the asian markets. you say it is positive. your cfo said china's property markets is not getting materially better. are you saying that there is no further pay in chinese commercial real estate? >> we took a little bit more pain in the second quarter.

we still have a substantial overlay as well. we feel very well provided against a little bit of a further downside. it feels like things have stabilized albeit at a lower level. government support is picking up. that is encouraging. it will probably take another six to 12 months before we can say this market is back on track. cracks the credits we stay ubs, how much are you benefiting in terms of wealth management? cracks we had really good inflows in the first half of the year. some of that is the organic growth we have been experiencing. it is a natural growth. course you have to see how we are really picking up. if you like we are.

a combination of some of the credit suisse money diversifying on the combined ubs. some ongoing chinese and other asian investors are argument letting wealth and they want to invest in high-quality international product. >> bill winters speaking exquisitely to bloomberg. we have much more ahead when it comes to those regional bank earnings. the bank of the philippine islands posting 4.5% profit increase for it second quarter. their president and coo will be joining us at 9:10 a.m. hong kong time. look at the european future setting up given the upbeat mood here. this follows a third straight weekly gray for european stocks. this is the longest ministry for april since those -- for those equity since april.

a great deal of volatility. we had consensus for 25 basis points. not much is certain going into this week's decision. plenty more to come on daybreak asia. this is bloomberg. ♪ hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side.

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>> our inclination is to continue to lean into the ai thing. >> this is not going to be a short-term story. >> super expensive relative to the rest of the market.

>> i look at this as a 1995 -- >> there is a massive growth opportunity ahead of him. the ai creators and the beneficiaries seem to be censored in large cap tech. >> this is what is going to happen. it is the start of a tekele market. >> are guests on bloomberg tv reacting to our question. do you intend to increase or decrease exposure to tech stocks over the next six months? interesting. only 33% editing exposure here. they are already using ai when

it comes to trading and investing. about a half-hour into the start of castrating here in sydney, tokyo and in seoul, we are seeing a pretty upbeat session. we did see quite a bit of volatility across japanese assets. we are seeing the cost be up by about .1%. economists and investors are quite split on whether we will see another 25 basis point move from the rba. he restarts getting back to session highs. so much of this market direction depends on what happens when it comes to the china recovery. they are expected to show that

the economic recovery is still failing to gain traction. likely to shrink for a script -- a fourth straight month. this is the chief economist here. great to have you with us. if it is a market sentiment has turned a corner when it comes to what they are expecting from chinese government stimulus and the various measures that have been announced last week and in prior months before that. does it feel like it will take some time for industry to catch up given the weakness we have seen across industrial production in others? cracks good morning. yes. i think it might take a little bit of time to catch up. it doesn't look like pmi is going to pick up even on the manufacturing side were server-side in a meaningful way. they have already sent a pretty clear progrowth tone that puts

the markets and a bit more of an optimistic mood. cracks we are just getting some news breaking from the property developer announcing that loss due to an increase in their growth profit margin. they are seeing a net loss for the first half of 2023. they are actively considering countermeasures of cash flow and actively seeking support from the government. they are seeing a first-half loss of this contrasting against 1.9 billion a year ago. so much of the recovery centers on the fate of these property developers. do we expect more meaningful support measures for the sector? cracks he has. we are seeing negative rv across the board.

even a little bit worse in the second quarter quarter than the first quarter. country garden is one of the largest ones. they have overseas bonds. it is coming to in the next couple of months in big numbers. and the cash flow continues to wear down. the deck repaying capability could come into question again. two weeks ago, there is a lot of attention on how to deal with this cash crunch. the upcoming crunch in cash flow. there will be more measures but so far, if you take those measures together, it is more about stimulating demand rather than in terms of the banks being ready to step in on a case-by-case basis. were to put out fires and so on.

but there hasn't been a sustainable blanket solution for the cash flow problems which in the end i think part of it is -- a key part of it is on presales. if the sentiment can pick up. however, another part of it is dependent on the local government control so far. i think so far, the developer disclosed cash levels and it doesn't seem to have turned around. i think this country garden case is very -- you should watch this case very closely and see how it evolves. whether it will be materially different than how the next one

wears off. cracks it can be the chinese economy recovery without that blanket support that china has been reluctant to provide. when will that time come? when we just need blanket support? >> i think if it were up to a lot of economists, i think they started calling for blanket support a couple of months back already. as soon as it was confirmed that the opening boost is starting to fade. in terms of the government threshold, i think i think their expectation for growth is for 5% this year. targeted support may be able to

talk about stabilizing. i think a growth stabilization -- we should see more targeted policies. it comes to whether the economy can recover to the rates it was growing up. we really need them more -- the property sector to turn around so that people can see that the balance sheet is being repaired. that way they can start to spend. cracks we are getting pmi numbers out of china today. what are some of those data points you will be watching in order to first gauge whether this turnaround is starting to happen? cracks i think in terms of pmi, most people are more focused on manufacturing pmi. it will be a mixed number. it will be a wash because they

did see some heavy industrial activities pick up a little bit. but property sector related data continued to weaken. >> in that sense, i would watch the new export orders. the daily export tracker shows that she liked be even worse in growth than june. august might look a little better. in that sense, the export order is one to watch. and service pmi, i would watch very carefully for the construction activities because it is very clear that some or traveling is -- demand is going pretty strong. construction is the one that continues to drag the service pmi down.

" thank you so much for joining us. we will be watching the impact on the markets for the day had. let's bring in asian equities reporter charlotte young. we already had chinese stocks seem to smoke weed globally among other major indices. we will see this beijing support measure providing more of a boost today as well? cracks yes. a couple things are happening today. we are likely to see a pretty upbeat session given over the weekend we had more news coming in that shows officials in china are really following up after everything last week, starting with consumption, we had several ministries together saying they will provide support, the industry focused on home goods,

etc.. there is another person coming at 3:00, hosted by several ministries to support consumer grows. we heard over the weekend from local housing authorities in several of china's first-year cities like beijing and shenzhen saying they won't be releasing measures of follow-up on the housing demand. how to boost demand for for first time buyers. i think that will likely to boost -- that is likely to boost inset -- investor sentiment today. but is likely to to china's recovery. but the more important thing is what countermeasures the government could come up with to support economic recovery. cracks to that end, it will be measures we can see supporting

the sector. they are saying they are actively seeking support from the governor, actively considering countermeasures when it comes to cash flow. is there more optimism as to how much more we could get for the property sector? cracks for the property sector, i feel like equity investors are looking at this as a tactical trade because we are actually looking at china's developers at just about 2% closer to borough market. but the total fundamental side, apparently this recovery takes a long time even though the government is making it very clear they will be optimizing policies for the sector but this is a manned problem tied to many aspects of the economy. i would say that this is a training opportunity. we could be seen more action

there today. cracks were also watching japanese markets. bond market in particular. this after japanese bonds suffered their worst day in three years on friday, we are sort of seeing this selloff extended. the japan tenure yield rising to 0.65 percent, extending that nine year high after friday's selloff. they are taking treasury contracts down with them. we are seeing ggp traders waiting for the start of the next big short in japan. the effective removal of motor control. the tweak that we saw in the support decision from the bha on friday seems to be the starting point starting on now. the bank of japan against most market expectations saying it will allow yields to arrive -- yields to arrive. we are seeing japanese government bond futures dropping for a second day after the big

selloff that we saw at the beginning on friday. much more to come on daybreak asia. this is bloomberg. ♪ grand canyon university specializes in helping you fit a master's degree in nursing into your busy day. your graduation team led by your own gcu counselor

provides you with the personal support you need to succeed! find your purpose. visit gcu.edu >> >> the u.s. was a black-tie one with $345 million in defense equipment and training. let's bring in bonnie quinn for more.

beijing won't be happy about this. >> beijing is not happy with this. we already have a response from the china embassy in washington dc to suggest as much. this is the dance we see quite regularly in washington and china and when it comes to matters of taiwan affairs. this was the first time the u.s. actually provided arms to taiwan directly. previous lee, the u.s. approve the sale of weapons to taiwan but this will allow taiwan to receive arms from stockpiles in the united states. the ft will include air defense capabilities but beyond that we don't know what will be on the stockpile. >> previously, there had been efforts to get arms to taiwan. sorted in a roundabout way, it resulted in a $19 billion backlog that made -- that taiwan has not seen yet. this mechanism we are seeing this happen through the same mechanism that allowed arms to get to ukraine.

it is the presidential drawdown authority. it means the u.s. does not have to contract out arms and figure out how to wait for them and then deliver them. this can be done immediately. congress had already given the president the authority to offer a billion dollars worth of arms to taiwan. that is this year alone. that is from the national authorization act. potentially there will be more charges of arms sent to taiwan. we know the u.s. is constantly and consistently saying it wants to bolster taiwan's self-defense mechanisms and capabilities. it also said it is not anticipating any type of imminent attack on the part of beijing. but obviously does exercises and military drills and exercises around the waters around taiwan are concerning and china was building up its military capabilities extraordinarily quickly. their leader said they want to be able to invade or whatever

word you want to use by 2027 and the u.s. has warned that is a very strong possibility that is now happening. there will be the capability for that to happen. this is one of the one step forward and two steps back types of scenarios. cracks in the u.s. would say these are not a contradiction at all. the u.s. is always providing moral and other support to taiwan, said the self-governing island and that has always been in conflict to a certain extent with where china feels the u.s. will should be. the statement read they should abide by the one china principle and the three joint u.s. china communiques. they are urging them to stop creating new factors that could lead to tension in the taiwan strait. there was always that sort of difficulty, their conflicts but

on the other hand, the u.s. very much one student -- to improve ties with beijing in terms of trade and in terms of relations just to have everything work a little bit smoother and it has actually been very much trying to have talks and continue to have talks. we know antony blinken was over there in the treasury secretary was there just weeks long. there is always this little needle in the haystack. since nancy pelosi is visit to taiwan -- nancy pelosi visiting taiwan caused disruption as well. in his defense minister says the government needs to get out of this investment pact with china while avoiding what it was a disaster. this is the strongest on record signal yet. italy is the only g7 member that signed up to beijing past initiative. the deal renews automatically this year unless it only

abandons it. west african leaders say they stand ready to use force to restore democracy in niger. so far, diplomat extensions on the country after a military took power last week in a coup. the group is giving them one week to reinstate the president who is being held captive. tensions are rising three years after historic peace deals. fiction is slowing down for investments. probably settling back u.s. efforts to further integrate the region. let's bring in bruce einhorn. talk us through the latest developments and what we are really watching out for next. cracks in 2020, the united arab emirates, bahrain recognized israel had somatic relations. this was part of an effort by the trump administration called the abraham accords.

according to people familiar, bahrain and the uae have expressed frustration and disappointment with progress made in relations largely because of the situation between the israelis and the palestinians. there have been some postponements or delays, other setbacks when it comes to visits for instance, the israelis had been hoping for an invitation for a one-on-one meeting between prime minister netanyahu and leaders in the uae. morocco and -- morocco is another country that was part of this initiative and they had postponed an arab israeli meeting last month citing a situation in the territories netanyahu's office has said since then, there has been an

invitation. he will be going to morocco. no further details on that yet. the bigger significance of this looking ahead is that the biden administration has been trying to broker a deal between the most important of the arab countries when it comes to relations with israel, that would be saudi arabia. so far, the de facto leader, the crown prince has been -- has not moved ahead on that. instead, the saudi's bistro relations with iran. that was in a deal brokered by china. a lack of progress with the countries in the abraham accords does not bode well for making quick progress between the israelis and the saudi's. there was bruce einhorn there with the latest on those tensions between gulf states and israel. we are planning more to come on daybreak asia. this is bloomberg.

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2014. this comes after the doj announced its tweak to the yield curve control program, the doj surprising investors on friday and that selloff in jgb continuing to today's session to see that to your yard rising for the first time since january. the doj announced it would allow yields to rise above the ceiling it now because a point of reference which seems to paved the way for future normalization of policy. sort of laying the groundwork for licensee. we are watching this very closely after what happened when the reserve bank of australia finished in 2021 as well. cracks that is right. really the uncertainty when it comes to the last part of the tightening cycle when it comes to this.

china is much more focused on the flip side the coin. that is how much more meaningful stimulus we are expected to get out of china. we have chinese pmi numbers expected to fall into the continued slow down my comes to that post-covid recovery in china. we are watching some of the property developers. we have country garden saying they are really in need of assistance in terms of restructuring their cash flow of men and we are watching taiwan as well in terms of some of these conversations around the plan to increase our defense budget. the defense aid from the u.s. as well. they could see across different stocks. ♪

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