shery: qualcomm -- counting down to asia's major market opens.

haidi: top stories, asian risk assets losses. hot u.s. job data sending the s&p 500 to its worst day since april. while, sliding after the bell as a tepid forecast shows that mobile devices remains weak. a jumbo 50 basis point cut in result, the bank of england is expected to hike later. we have data crossing the bloomberg when it comes to australia. pmi indicators coming in. the composite coming in at 48.2, weaker then we saw in the previous reading. the services number is weaker. marginal weakness from the preliminary reading. both of those indicators looking weak in shrinkage territory. take a look at the reaction and

it comes to the aussie dollar, downside pressure along with the kiwi. we have seen the increased haven demand for the u.s. dollar in the wake of the fitch downgraded of the rating. taking a look at broader spectrum of markets trading in asia, yesterday for a number of these markets, it was the worst day all year. the asia-pacific lost 2% across the session. it does not look like much of a better set up today. about an hour away, new zealand already i down by .5%. and of course, you can us expected for china stocks given that tech stocks in hong kong saw a selloff. shery: when it comes to u.s. futures, we are seeing a rebound

of .1%. it was really a lot for investors, including hot jobs numbers, the adp private payrolls numbers exceeding expectations. showing how much more difficult the fed job can be in taming inflation. the treasury debt issuance, the bonds yield we have coming up into the selloff in treasuries. the 10 year yield at the highest level since november, accelerated after we got the resilient labor market data. take a look at oil prices, rebounding a little bit, up .3%. as we had pressure in the new york session despite u.s. stockpiles falling, the dollar also finished at the four-week high. haidi: we have breaking news when it comes to qs bancorp area -- u.s. bancorp.

we are hearing they have announced a equity conversion with mitsubishi. 24 million shares to the affiliate of beachy ufj financial -- mitsubishi qft financial. that debt to equity conversion is expected to lows on august 3, it will be for the banks ratios. u.s. bancorp has said it has increased its capital ratio and the second quarter by 60 asus points. -- 60 basis points. this is all adding up to effort to cut risks. regional banks as a trend, shrinking their balance sheet,

stricter capital requirement and liquidity rules. our next guest says when it comes to training volatile arcus, -- markets, excellent opportunities for investors in small caps. joining us now is lucy meagher. where are you seeing these opportunities. ? guest: there is a great dispersion from equity markets. the rally we have seen is largely in the u.s. and the mega caps in the u.s., driven by up to ms. him around the economy and exuberance around ai driven productivity. the s&p 500 forward earnings, looking at around teetimes. which is very expensive, we have only been there twice for. the tech boom and the free money europe of the covid lockdowns. -- money era of the covid

lockdowns. if you look at the s&p 600, an index that tracks small-cap businesses, it has fairly. -- barely moved. that makes in a lot of expectations for earnings that cannot disappoint, a riskier time to be in the mega caps. we are seeing rate opportunities to rotate into the small-cap. we look at that data, that is really of better risk reward trade-off for clients and investors. haidi: i will start off with china, that is a company specific analysis as opposed to feeling that are about the router outlook. -- broader outlook. lucy: the rally that we saw in

china last week was a general asus, that was on the back of special bureau meeting last week. there were no specific measures committed to, it gave the market optimism around the fact the government is committed to doing something about the week economic recovery in china. it is also encouraging for the market that the government has a lot of different levers it can pull. we saw a lot of titans of industry coming out and having a coordinated response. the ceo of tencent, in support of the government. in terms of, part of it is company specific, given how depressed the evaluations are, you will get the upswing across the market. shery: when you talk about rotating to ems, she

yes chile also cut rates. -- chile also cut rates. lucy: when we look at emerging markets broadly, they tend to be cyclical nature. if we look at the optimism in the u.s. economy, that is looking at strong canonic indicators that have suggested the soft landing scenario is not out of the question. that would be supportive of ems. given the valuations, it is about the risk reward. a lot of bad news is already fact it in when we are looking at asset allocation, and various markets where we are more likely to see appreciation, e.m. is more attractive. shery: is a potential recession

in the u.s. factored into the risk assets? one of the decisions by fitch is that they are expecting a mild recession. lucy: the fitch downgraded was interesting. we have seen our range of responses to that from janet yelling -- janet yellen saying it is arbitrary. it is in the detail around what futures are saying, that is not new news. their view on the situation in the u.s. is working taking -- worth taking note of. whether that impacts the bond markets, they moved in a moderated fashion, it does not seem to be taken to importantly. it is important to think about -- we were saying that it had been 48 trading days since we

had seen the s&p 500 in a negative direction. we are seeing a negative reaction overnight, harkening back to the perception that we are valued in the u.s.. and indications like this from fitch, it does not take much to move the dial. haidi: futures move to downgrade u.s. government debt, moving to the back burner, focusing on the chances of a recession area more analysis next. this is bloomberg. ♪ 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.

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shery: markets are digesting the implications of fitch's downgrading of the u.s. credit rating. richard francis explained that decision. >> we did right after the resolution of the debt ceiling, with the fiscal responsibility act, we indicated we would resolve the rating watch in the third quarter.

and we want to take our time. we wanted opine upon fiscal responsibility act, the deficits and the debt level, update our own numbers and where we think the fiscal trajectory and that is going. and we wanted to take stock of the actual debt ceiling debate and its resolution. we want to take our time and get a thoughtful analysis to the fiscal picture and the evidence issues. >> it is worth talking about the criteria you set out a year ago about what it would take to get to a downgrade. some of the things have changed in terms of the picture. let's start with the rise of debt gdp ratio. the rise did not be so significant or sustained.

why is that not after a are in terms of the decision made? >> well, the debt level has been rising quite significantly. before the great financial crisis in 2007, that bp was at a low -- jet -- debt to gdp was act or below 60%. now it is 113%. it is more than twice as high as the aa meeting -- median. sustained deterioration over the years. debt gdp peaked after the pandemic and has come down. that is because inflation, ddp growth and withdrawal of stimulus last year. now we are seeing debt levels rising again. we did not see them stabilizing, he them and ewing to rise in the

next years and more over the medium term. and that 113% is 13 percentage points higher than where it was a fourth -- before the pandemic. shery: fitch cohead of america richard francis speaking with bloomberg. despite the fact one of the reasons kind the decision to get -- downgrade the u.s. debt was expectation of a mild recession. many economists and investors are growing their bets that the u.s. will avoid a recession. kathleen hayes is here with the latest. we are seeing a rapid shift. >> a lot of economists are dismissing fitch out of hand. they agree that the u.s. debt version is art and growing. they agree there is physical

access, but the u.s. is not on the verge of a default. with a debt feeling resolve, upside surprise on second order growth, the timing seems odd. larry summers, the country's ability to service its debt is not in doubt. paul krugman, he says fitch's move has been ridiculed, it is a story about fitch, it is not about u.s. solvency. former chief advisor of the economy barack obama says, think u.s. is within the aaa zone, small changes should not matter. contrast that to what we got today. bank of america rejects the forecast it has had four months of the u.s. heading for a recession, getting on board saying slim chance. u.s. economy is still in good shape. the main thing that people look at is jobs. let's look at the number on

private jobs. we got it today from adp. it shows an outsize gain of 324,000, above the forecast. the size of the forecast with the official u.s. jobs report we will see on friday. it makes people think this will be at least the strongest forecast, if not even stronger. the upside surprise we were having four months until recently -- for months until recently. the debt problems are big and have to be faced sometime by congress and the white house. but for now, investors, analysts, economists saying it is a ripple. haidi: the bank of england faces another decision, the meeting is 24 hours for now. a hike is expected, will it 25

or 50? kazunori: the tilt is -- kathleen: the tilt is toward 25. it is all about inflation. the headline number has come down from .7% year over -- 8.7% to 7.9%. they are a long way from their target. and their policy rate of 5%, you still have a policy position that is not strict if enough -- not restrictive enough. the question is how much. it will not be a big surprise either way. markets are expecting, 75 basis points more of hikes. if they do to 50 -- 250, will they 25? this will have to do with central banks and messaging.

the brazil rate cut, 15 instead of -- 50 incentive 25, what a strong signal they sent about another 50 basis point cut. shery: global economics and policy editor kathleen hays, live coverage of the bank of england decision load by governor bailey's conference from 7:00 p.m. thursday night hong kong time. this divergence around the world, when we have major central banks tightening in a hiking path and emerging markets starting to ease, sales move surprised rate of only 11 out of 41 economist had expected a big cut coming from the central bank, which has been aggressive in hiking rates due to the fallout of the pandemic. this is coming at a time where

annual inflation has eased in brazil. we have started seeing emerging economies start to ease, chilly lead -- chile led the way with a rate cut. a key question is who is next? peru hiked 18 consecutive times, and now goldman sachs says they could potentially cut rates this month or next. haidi: the vulnerability when it comes to risk assets in currencies will be an interest. this risk with a regular type of tightening cycle from the developed world, this divergence will be interesting to see play out. a lot of this is what happens with china. in and of itself, we are seeing a struggle when it comes to how

many different types of stimulus measures will we see and which will deliver on the progrowth push beijing has the pressure we have seen on chinese local governments in this push. regulators are pushing them to eat up spending. the pboc is urging lenders to cut. i need to sell bonds to fund infrastructure spending to use up the quota of special-purpose funds --. we have been following what has happened previous cycles in china. this sets off warning bells, the inefficiency and productivity questions about how these proceeds get put. will it be infrastructure that will be useful, will they be investments that create growth, or is this something that will add local government balance

sheets which are stretched? shery: especially when we have seen monetary policy happening in june with the unexpected cut. i'll a lot of people going out to borrow money because the demand and confidence in the economy is not there. we will monitor that as we head towards the china more to come on daybreak, this is bloomberg. ♪

shery: qualcomm shares sliding market after it gave a tepid revenue forecast. vonnie quinn crisis now with the latest. we have been watching the smartphone market that has been in a slump. >> there was nothing here that

made it sound like we are getting out of the slump anytime soon the ceo says it is continuing. the demand for handsets is not there, that is a major part of their problem. it gets 50% of its revenue from handsets. it did beat expectations on the bottom line. it did miss on the revenue line, and the forecast was week. close to analyst projections for next quarter. the other problem is china and the region. qualcomm gets 60% of its sales from that region and demand has not return. we have seen that for a number of countries, playing out for qualcomm. it is taking steps to reduce expenses. we knew there was some costs associated with layoffs. the ceo saying, expect more of that, layoffs and attrition.

a lot going on at qualcomm. david traynor pointing out that it is a competitive market. he says they need 5% revenue rose in order for the current stock price to flight valuation. we will see what the stock prices are in session. haidi: what other steps are we seeing from qualcomm? vonnie: the stock is down 12% over here, it has not have the runoff that other companies have had. have been speaking that with recent days. it is trying to diversify and not be dependent on one product. the handset. the smartphone market is unreliable. hear more about that tomorrow after apple earnings. it is trying to sell more chips. it is investing in new products to capitalize on the spread of ai smartphones.

it is trying to hit the right points, but we will have to see if it delivers and if people start buying more handsets her. haidi: vonnie quinn there. more to come on daybreak asia, this is bloomberg. ♪

>> take a look at the set up here in asia. a horrid session when it comes

to u.s. equities. the rally has hit the wall. that is passing through to more negativity coming through the set up in asia. if you recall, it started in asia with a number of these markets in this part of the world suffering their worst days out of all of this year when it comes to that wednesday session. we see losses being extended for a lot of these asian markets. for australia, the set up is pretty negative. we didn't get much good news when it comes to the pmi's either. falling further into contractionary territory. we are watching kiwi stocks off by .4%. one of the biggest laggards overnight. some strength in the yen, some strength in the dollar. a full week high. the irony of the safe havens a man when it comes to u.s. treasuries. dollar is playing out when it comes to these asian currency pairs as well.

>> there is lots of earnings to digest this week as well, nintendo coming out today, expected to hit a record first quarter operating profit after the latest legend of zelda game boosted sales of the switch counsel. joining us more is the director of equity research at morningstar. i did not even mention the potential contribution of the super mario movie. what are your expectations for today? >> yeah, well, as you mentioned, they were expecting record high first-quarter results. we expect the operating income for nintendo to exceed $140 -- 140 billion japanese yen, which is up 50% from the previous year. we roughly estimate half is coming from the zelda software and the rest is coming from the

super mario brothers movie. it is still somewhat unclear how much of them movie sales actually contributed in those financials, but we are expecting a strong boost from those two factors. >> nintendo shares have been up about 10% in the past year, which sounds great, but then you put it next to the topix, rallying almost 20%, why this divergence? >> i'm sorry, the divergence between what and what? >> the nintendo share price and the broader market. why isn't it catching up to the rally? >> yeah, i think nintendo's share price has already been quite resilient. many of the tech stocks have been declining significantly during 2022, but i think nintendo's share price has been quite resilient, because people

know nintendo's business is quite resilient. so when the entire tech market has rebounded from the beginning of this year due to the completion of the mentor a correction, nintendo's share price had had been already had, that's why we see some -- had been already high, that's why we see some beverages on the performance. >> we talked a little bit about the super mario movie. do you expect that to have a meaningful impact? >> yes, yeah, exactly, typically, it is said that just the fee of using the characters in the movie is 5% or 10%. but the executive for nintendo, the creator of mario is heavily involved in the movie. nintendo is also funding to the movie. we believe the fee should be much higher, making winning full

contribution to the q1 financials -- meaningful contribution to the q1 financials. >> what are the gains in terms of the marketing flow on effects from the film? >> in the longer term, we see right now that the nintendo switch counsel shipment is ahead of our expectation. for this fiscal year, nintendo has guidance of shipping 50 million switch counsel units for this fiscal year which seems to be somewhat, aggressive at the beginning of this fiscal year. but because of the smash hit of the movie, we are seeing the switch counsel shipment has re-accelerated as a result of the movie contribution. so, yeah, i think the possibility of reaching a

somewhat aggressive target seems to be much higher than the beginning of this fiscal year. so that is one effect from the movie. in addition, nintendo's pipeline for this holiday season -- nintendo's launching some of the mario games. that should also boost software sales. in the short run, i think the movie contribution is revitalizing the switch ecosystem. and game shipments have been increasing. in the long-term, the movie will attract more people coming into the nintendo ecosystem. >> how is nintendo faring in comparison to its rivals? what are its results telling us about the broader gaming industry? >> yeah, i think since nintendo's console rivals,

playstation and xbox, have just started their cycle, meanwhile the nintendo switch is getting closer to the end of the cycle, so i think it is somewhat different. the impressive thing is that the nintendo switch ecosystem is still maintaining the high user engagement. we estimate that the number of users is still gradually increasing. so that's why switch is trying to achieve the longest lifecycle -- the longest lifetime among nintendo's platforms. since we see more of the gaming users coming in, because of the new xbox and also the playstation5, also the switch ecosystem seems to be quite resilient in maintaining the high user engagement.

as a result, for the entire gaming industry, the entire gaming console industry is still growing. >> the director of equity research at porn -- at morning star. let's get more details from our asia stocks reported, who joins us -- reporter, who joins us from seoul. the numbers for earnings were amiss. what are investors looking at when it comes to the earnings call? >> we were expecting cacau the report week earnings. indeed it was amiss during the second quarter. there seems to be three key reasons. one is the advertisement related to the most popular messenger and south korea. it's been pretty week as people go outside their home during

this post-pandemic time and spending less time on their smartphones. on cacau talk. there seems to be week recovery in the entertainment business. there might have been some spending, cacau want to launch their own chatgpt service before the end of this year. there might have been spending related to this upcoming ai service that weighed on its bottom line. when it comes to what investors are watching, they are looking for some more details about the upcoming service, what the service would entail, what kind of functions that would carry. that kind of detail is something investors will be looking for. also guidance for the cacautalk

business, that is the most important business for cacau, it is the most important messenger app in south korea. >> we are seeing action when it comes to kakao's stock. what is happening to that rally? >> even though the stock price has rebounded in recent days, it still has severely underperformed the broader kospi so far this year. the kospi is up more than 20% this year but the kakao stock remains pretty unchanged, down about 70% from its 2020 during the pandemic one it was one of the most popular stocks for retail investors. we have a lot of retail investors that bought kakao during the pandemic era still suffering from huge losses. there are still retail investors

with hovering losses. it might have been triggered by short covering. that's after its bigger rival neighbor had some reports on short-sellers that have come to unwind there short position. it remains to be seen whether the stock price rebound is going to last because this type of internet stock does not perform well during the high interest rate era. so it still remains to be seen. >> are asia stocks reporter, joining us from seoul with a look at kakao. let's get other earnings reports. we are tracking ebs group, net income rose 48% to 2.7 billion u.s. dollars while net interest margin rose to 2.16%

from 1.58% a year ago. the ceo is a signaling a higher margin in the second half. southeast asia's biggest lender has joint global peers including hsbc enjoying profit from higher interest rates. >> shopify enjoyed sales and profit that beat analysts expectations. $1.69 billion, beating average estimates of $1.62 billion. the canadian e-commerce giant says it's shipping products faster and expanding its global merchant base. india's biggest airline posted a record quarterly profit thanks to a surgeon demand for travel and the collapse of its small arrival go airlines -- smaller rival, go airlines. it flow more than 23 million passengers during the quarter, of 12% from last year.

we have plenty more to come on "daybreak: asia." this is bloomberg. ♪ the chase ink business premier card is made for sam who makes, everyday products, designed smarter. genius! like 2.5% cash back on purchases of $5,000 or more, so sam can make smart ideas, a brilliant reality! chase for business. make more of what's yours. 76% of 23andme health customers surveyed reported taking healthier actions. chase for business. because they know health isn't just a future state.

health happens now. start your dna-powered health journey today with personalized insights from 23andme. 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. >> let's get you the latest on politics from around the world. singapore's prime minister has vowed to protect the integrity of governance

following a series of scandals that have tested his party's reputation. he told parliament the government will do what it needs to do, in accordance with the law, even if they may be politically embarrassing. he was answering questions over his party's transparency. >> i have been asked why i took so long, more than two years to ask. that is a fair question. in retrospect, certainly now knowing how things eventually turned out, i agree, i should have forced the issue sooner. >> a party linked to the former thai prime minister says it is creating a new coalition with the potential supportive conservative parties. thai will stick to -- will nominate the property tycoon for prime minister. conservative parties have rejected the coalition that included the move forward. washington has ordered

non-emergency u.s. government employees and eligible family members to leave its embassy in niger following a military coup. u.s. is calling for the junta to reinstate the democratically elected president, who has not been seen in public since being detained last month. >> i talked to the president. he is physically well, mentally very strong, and again, his security -- >> the latest measure of u.s. crude piles show they fell by a record 17 million barrels last week. bloomberg's su keenan joins us with the latest. we didn't necessarily see that price rally in the new york session. a little bit of a rebound in asia right now. >> if you take the data for face value, it is a huge draw down. a record for u.s. declines in

stockpiles. some traders are indicating the latest government data has had subsequent revisions, so they relied instead on the july monthly data, less subject to revisions and more reliable. what you are seeing in asia trading is a bit of a rebound because oil was actually down a few ticks in the u.s. session. no rally whatsoever, on stunningly bullish data. 17 male that included the -- 17 million included the cushing hub in oklahoma. is it a sign of a tightening market or is there skepticism on the data? a lot of that will probably come out in subsequent revisions. one analyst tells us these draws are undeniably huge, but traders are looking at the seasonality, they say going forward, we will

lose momentum here, and the macro risk trade is starting to rear its head. there is concern that perhaps there will be more economic headwinds. you are looking at the drop in the u.s. session. a similar drop in brent crude. you will see how the strong dollar is also putting pressure on commodities. limiting any rally that might have been seen. gas demand fell for a fourth straight week. crude exports jumped to the third highest level we have seen since the u.s. lifted its ban on overseas shipments. >> meanwhile, he was oil exports to asia -- u.s. oil exports to asia are set to hit a record. >> many exports are asia borne. that has to do with the fact that saudi arabia has been imposing the steep cuts to output, and traders are saying they are likely to extend those cuts into september.

the last tally, around 27 or 29 supertankers booked this month. in industry consultant said -- an industry consultant said exporters are on track to send a record amount of oil to asia in the month of august. the region's seeking replacement from the supply from saudi arabia. they are seeing demand from china, south korea, taiwan, india, europe is expected to take less oil in august. earlier this week, bloomberg reported asia had seen robust demand in recent months, taking it a lot of exports -- taking and a lot of exports, but we are told that is going into storage and stockpiles are almost at a record. there is a concern about economic recovery post-covid in china. concerns remain about the u.s. going into a recession. and has a lot of bulls being a bit cautious even in the face of

what would normally be very bullish data. a lot of uncertainty out there. >> bloomberg's su keenan there. much more to come on "daybreak: asia." this is bloomberg. ♪ an get someone to shop for you? with stitch fix, it couldn't be easier. i share my style, size and budget. and they shop just for me. my shopper sends me stuff i feel good in. i keep what works, and send back the rest. stitch fix.

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let's get to the latest corporate stories we are tracking. jp morgan's ceo has called new u.s. plans first more stringent capital rules hugely disappointing. regulators revealed plans last week requiring big banks to set aside more capital with the eight largest facing an increase of about 19%. dimond told cnbc jp morgan is going to adjust for it but he is not sure it's the right thing for america. >> it's truly disappointing. i think these rules -- i've always thought g 50 was a joke. models make no sense to maybe it would about was the fed i'd be very careful about saying models are perfect. >> adani is set to be buying a majority stake in saghi industries. the acquisition will likely buy out the owners with a deal -- the deal giving the company around $606 million in

enterprise value. this will be adani's first major acquisition after months of damage control following u.s. short seller hindenburg researchers allegations. >> a possible policy change at the bank of japan has been considered one of the biggest risks for japan's power. rally this year. it appears traders are still placing bullish bets on japanese shares following last week's policy tweak. is the sense now with the big policy surprise, boj watchers are not expecting any further policies or price for the rest of this year, is this clearing the way for the next leg of the rally? >> exactly. the boj's latest policy change doesn't seem to have dented optimism on the japanese market. if you compare what happened this time with what happened

in december when the boj suddenly changed its ycc target completely out of the blue, in december, the yen strengthened quite sharply and japanese stocks underperformed for almost a month after that. but this time, the japanese shares are in line with other markets and the yen actually used. that is a -- basically because bond yields have not risen much. that is basically because the boj's strategy is a little bit complicated and they introduced all these systems to break any sharp rises in the yield. despite this being a little bit of a surprise, basically the market took this policy decision as dovish tightening. >> does that mean the original

drivers of that bullish sentiment that we saw in japanese stocks earlier in the year are maintained? >> yes, i think that's generally the perception here. many strategists came up with bullish calls on japanese stocks after the boj -- like heidi said earlier, basically this boj's decision has removed the overhang on the market. some think it might be difficult for japanese stocks to extend gains further because even though you think the market will be supported, the valuation has risen quite a lot, and the market meaning another catalyst to extend the rally. having said that, at the moment,

most market players seem to be sticking to their belief that the japanese economy is in good shape, with a good chance of reaching inflation. >> bloomberg's senior asia stop reporter -- stock reporter. coming up, mr. ho bank tells us how its debt rating could weigh on emerging-market assets. and would take a -- and would take a look at the market open in sydney and tokyo, next. this is bloomberg. ♪

>> this is "daybreak: asia,"

we are counting down to asia's major market opens after a risk off session on wall street. we have stocks and bonds falling. investors, digesting the jobs numbers, not to mention the treasury debt issuance on top of the credit rating downgrade of the u.s.. then we have a brazil central-bank rate cut ahead of the bank of england's expected rate hike. a lot going on. >> it's a lot for investors to digest. there -- the irony is this comes at a time when we see further positive out greats to the u.s. economy and less chances of recession. we are perhaps seeing a bit of capitulation or a bit of repositioning in this rally. >> take a look at how markets are opening across japan. we are watching the treasury space very closely. we saw yields rally in. the 10 year yield at that november hi already with the treasury debt issuance weighing on the treasury markets. this, as we are now seeing the

japanese yen holding at that 143 level. we are not seeing much momentum. it's been trading in the narrow range, related to with where u.s. yields ago, where the risk of sentiment goes at the moment. you are seeing the 10 year jgb yields also pushing higher. we will see if that continues in today's session given that we heard from the boj deputy governor coming out and saying that there might be some action coming, depending on how the yield gains go and the pace of that rise. take a look at the nikkei, losing about 1% at the moment already. we were at that one week low. we are seeing the downside pressure. a big day for earnings in japan as well. we have nintendo coming out today. take a look at how the kospi's opening up. we have seen the downside pressure in yesterday's session. the rebound, being led by the kospi. but still weakness on the korean

won against the u.s. dollar for a third consecutive session. we have seen weakness in the pressure coming after that inflation rate came out of korea for the month of july lower than economists had expected. perhaps leading to more speculation the be ok will not necessarily have to tighten more from here. >> still a bit of uncertainty as to what to expect on the central-bank front, even as we get into the end of the cycle. take a look on how we are setting up in the first couple of minutes or so. . a staggered open here in australia. we are expecting a downside, .1% lower in cash trading at this point. we are watching bond yields, it was the spike in yields that caused that repositioning when it comes to tech stocks in particular. given that leadership of this part of the market is perhaps unsurprising. we could see a little bit more of that when it comes to semiconductors. the semi conductor index, falling the most since december overnight, that could extend

that pain trade through the markets in asia. we are also watching the fact that we are just getting that repositioning, given the broader risk of sentiment particularly when it comes to china as well. hong kong tech stocks had a really -- had already been a significant leg lower yesterday. the aussie dollar is mostly unchanged. the kiwi, a laggard amidst the u.s. dollar strength. we are also watching crude markets as well. interestingly a little bit of upside for brent crude but broadly we saw that record dropping u.s. inventories, really not making much of an impact on the broader momentum of that market. there is much focus on potential lack of demand when it comes to china even as we see more pressure on local governments in china to spend and build out when it comes to infrastructure which could of course have that demand-side effect. we are still sort of looking through the market impact

reaction or lack of a reaction when it comes to the fitch u.s. downgrade. >> our next guest says that downgrade and the market reaction is showing the pro version of a risky haven. always good to have you with us, vishnu. the consensus seems to be after this downgrade. but there is no better alternative to the u.s. dollar, to treasuries when it comes to really looking for these havens. is that what you are talking about when you talk about that proversion? >> pretty much. it doesn't matter that the u.s. has been knocked back a notch. if you ask global markets how they price, it would still be the usd's. for all intents and purposes, it remains the benchmark for risk-free rate. above that, whenever we see

bubbles and sentiments -- bubbles in sentiments, the dollar remains as the haven. that's partly due to the financial architecture. but we can argue about the structural issues around here. but the bottom line is, the downgrade is in effect how financial -- downgrade does not affect how financial markets perform. it increases selloff outside the u.s. and so far that higher yields or uncertainty raised on the higher beta assets and currencies. >> we have seen em stocks and currencies down today, how will this end up being a problem for broader em's? >> i think broader em's need to face two angles of turmoil. in the very near term, the first thing they need to look at in particular is whether u.s.

numbers continue to come out strong. as we saw from some of the adp guidance yesterday. with a september meeting and that a dependence being decomposed, distilled into watching the next couple of jobs, inflation data, that would lead to a lot more upside yield volatility of the numbers come in strong. and typically, the em space and em universe doesn't to will under these conditions of a strong dollar, higher yields. there has been uncertainty exactly at which point the u.s. would ease the fed -- the fed would ease beyond that. between nirvana and getting conditions that are fairly tight financially, i think it is a fine line and a delicate balance to achieve. >> i like the note where you talked about nirvana.

is there a pretty good argument that could materialize given that what we are seeing for now is sustained disinflation and a very resilient labor market? >> that's a really good point. if i were a normal, happy, chirpy person i would say it is possible, it could happen. the disinflation trend remains intact. and for reasons that are partly structural, the labor market resilience is also there. the fact that i am miserable as a person, i'm looking at the credit tightening. one of the issues here is leverage has tightened quite quickly. and historically, we have not had credit not tighten one leverage has tightened. if it happens with a leg,

there's a risk that we are premature in declaring a soft landing, or even better, nirvana. just to extend that .1 step further, if we are really going to say, hang on, the fittest close to the top of the cycle, it should really be good news, the trouble is if you look back, a lot of the tightening that led to economic downturns have taken place even to bring rate cuts because of the lagged effects. peak fed is not as much of right consolation is markets -- of a consolation is markets make it out to be. >> what is the endgame for markets when it comes to the drip feed of china's stimulus? the meaningful progrowth policies will again fall to local governments. which we kind of know how this story ends for them, right? are you optimistic at all? are there any other triggers that they could pull? >> i think to be fair, it is a challenging situation. you cannot at the same time

have bubbles and control financial stability risks and rigid fashion while stimulating the economy. there's a trade-off involved here. my greater concern is that the property market -- i think the measures taken are olive branch is being extended but it does not address the underlying issue of restoring spirits and confidence enough for sales to pick up and for developers to have the confidence to take on new projects. all of the focus is on cash flow to finish the projects, which leaves consumers less confident about buying properties. the negative wealth effects, the constraints cash flow effects will hold back growth the players and the ability to stimulate china's economy. at the risk of being overly downbeat about this, i think the bar this time is much higher which is why the drip feed has not really excited markets yet.

>> always great to chat with you, vish. coming up next, we are counting down to the bank of england's rate decision. economists are expecting the central bank will hike at a slower pace. this is bloomberg. ♪

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>> i think it's fair to say they have been timid in their actions, if anything, fitch's action is simply confirming what smp decided back in 2011. here we are in 2023. >> the former head of smp sovereign debt rating committee, talking about fitch's downgrade decision. take a look at how treasuries are trading at the moment. not a lot of movement after the 10 year yield hit that november hi. -- november high. yields jump to 2023 highs during the wall street session. investors, spooked my plans of

government debt issuance. later on we saw signs of the labor market strength and yields picked up momentum after the adp private payrolls data exceeded all estimates. we continue to see the yield curve steepening at the moment extending the trend we saw since the boj's ycc tweak. we will continue to watch how jgb's also trading in today's session. really, the focus in the last couple of days has been was happening in the treasury space, especially with fitch's downgrade of u.s. government debt. this already seems to be moving to the back burner. many economists and investors, turning their attention to growing bets the u.s. will avoid a recession. kathleen hays here with the latest. we are seeing this rapid shift. >> we certainly are. when we had the news break

ing 24 hours ago, the markets quickly settled down. as was discussed overnight, going into trading today, we had some high-profile economists saying this doesn't make any sense. yes, there's clearly a fiscal situation that has to be addressed and high and rising debt to gdp ratio that looks worse every year, but does this mean a downgrade? bloomberg economics, saying today that the debt ceiling was an issue, and has been many times, but it's been resolved. there's been an upside surprise on second quarter growth. "the timing of this seems o dd." the country's ability to service its debt is not at all. the story is more about

fitch and not about u.s. solvency. but on the heels of all of this, bank of america throws in the towel saying there's not going to be a recession. they joined a lot of other voices saying that's not going to happen. certainly is not on the horizon. we got the adp private payrolls gain for the month of july. it is often a little bit of a curtain raiser for the u.s. numbers that are coming out on friday. . 324,000, well above the forecast. it shows you momentum. the numbers may not match up. the gain on payrolls may be 200,000 on friday. or a lot more than 324,000. but the move is definitely in the right direction if you want to say you are avoiding recession. this was another thing coming out.

it's not as though people don't pay attention. this is a long-term political problem. it's a long-term problem that has to be solved. but for now it's more of a ripple than some big upset to the market. >> we've had a few upsets from central banks recently. the bank of england, facing another decision less than 24 hours away. are they going to slow it down? >> well, they did 50 basis point s in june. they have an inflation problem. you can see it's come all the way down to 7.9% year-over-year from 8.7% the month before. this is obviously very far ahead of their target. it is obviously an inflation rate that is well above their key policy rate, meaning their key policy rate may not really be restrictive yet. inflation has to come down a lot more for that to be true. that's why people are saying, 25 basis points is probably on the

cards, but they could surprise us with 50 basis points. markets right now ahead of the meeting are saying they see about 75 basis points more of rate hikes the inflation problem is high, because core inflation only came down to 6.9% year-over-year from 7.1%. looking kind of sticky when you take out food and energy. perhaps they do the 25 basis points, 25 and future meetings, or 50 -- it's andrew bailey, the boe governor, any messaging that he provides after the meeting, if there is any dissent to that kind of thing that will give us a sense of where the boe will go next. >> and of course, that is the want to watch. let's take a look at how futures and europe are opening at the minute. we are seeing a bit of downside when it comes to the asian trading session.

not a great handover when it comes to what is expected in europe. a bit of a muted downside. not a great deal of movement when it comes to trading in the euro at the moment. we saw european stocks slump the most in almost a month after the fish trading downgrade of u.s. sovereign debt triggered the wave of selloff -- the risk of selloffs across the board. so many trades were a pain trade in the previous session. the picture of earnings didn't do much to offset the negative sentiment when it comes to the broader picture. as kathleen mentioned, the big one to watch will be the bank of england. katie: >> >> the latest measure of u.s. crude stockpiles shows they followed by a record 17 million barrels last week. even so, that data failed to spur a big price rally in the

new york session. bloomberg's su keenan joins us now with the latest. a little bit of a rebound. >> it was a bullish inventory number, yet we saw the biggest loss in crude oil prices in five weeks and the u.s. session. something doesn't quite add up. there is the green you are seeing. wti is back. not that far away from the mark. what you got was a weekly inventory number that showed a record 17 million barrel draw down last week. particularly in question, oklahoma, a supply hub in the u.s.. you see the drop off in u.s. trading. is that a sign of tightening oil market or is there some skepticism about the number? that's what the traders were asking. many explained that these weekly inventory numbers that come from the government are subject to revisions.

of late, there's been huge swings in the numbers. we saw traders rely on the monthly data for july which tended to be in line. and also to focus on the macro risks. the risk off sentiment really helped sway in this latest session. take a look at the bloomberg, you will see the strong dollar also weighing on commodities and limiting any upward move. also in the latest statistics, we saw gas demand fall for a fourth straight week in the u.s. and crude exports jumped to the third highest level since the u.s. lifted a ban on overseas shipments. >> u.s. oil exports to asia appear to be close to hitting a record. >> exporters are saying that the asia bound shipments have really gone much higher sense saudi arabia -- since saudi arabia took a lot of oil off the market. they have been imposing steep cuts.

traders expect these cuts into september. industry consultants, now forecasting that u.s. exporters are on track to send a record 2.2 million barrels a day to asia this month, in august. the reason has been seeking replacements, demand from china, south korea, taiwan and india is much higher, they also say europe is expected to take less oil in august because of refinery outages there. bloomberg reported while asia has seen robust demand in recent months, a lot of this is going into storage. concerns remain about economic recovery and asia post-covid 19. and has not really played out the way a lot of oil forecasters had thought. there are continued concerns here in the u.s. of a not so soft landing. that has made oil investors a bit risk off for now. back to you. >> bloomberg's su keenan joining me here in new york. we have more to come on

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health happens now. start your dna-powered health journey today with personalized insights from 23andme. >> take a look at our asia chip stocks after it difficult, challenging session overnight. we had the philadelphia semiconductor index falling the most since december of last year and we are seeing that trickle through asia big tech stocks, dropping, following u.s. beers on the back of the spike in yields. we are seeing some weakness in the sk high next -- sk hynix. sustaining losses of 1.9% pure also watching qualcomm as well. we see the after our session still down by about 7% there.

we did see that extent weakness -- extent weakness, weighing on sentiment. >> investors, saying the demand and china has not really returned to projected levels. let's bring in bloomberg's vonnie quinn. it seems that the slump is not really recovering. >> we got spoiled with intel and amd, saying things were improving. not so for the handset market. it'll be another quarter or two of weakness, and that is playing out. they missed on the top line. revenue was down 23%. that forecast range, analyst projections were closer to the high-end. that is what disappointed investors initially. then came the conference call in which the ceo, percent of another, not cristiano ronaldo, christiane said demand remains

weak. ordering fewer parts after stocking up earlier in the year. that is the story all around for qualcomm the stock up that happened, we have reverted to more normal levels in terms of chips for handsets. customers just are not buying handsets. so those who make them don't need any extra chips. the main problem all connected of course as china. qualcomm gets 60% of its revenue from china and the region. the man just has not returned, as we well know, from china. >> bloomberg's vonnie quinn there. let's get you a look at the other corporate stories at this hour. net income missed average estimates for budweiser, nearly below forecast despite an almost 10% jump in beer volume. record-breaking heat waves in china drove demand.

topping estimates on the back of gains dor dbs. net interest margins rose to 2.16% from 1.58% a year ago. the ceo's signaling a higher margin in the second half. southeast asia's biggest lender has joined global peers including hsbc ripping profit from higher interest rates. much more to come here on "daybreak: asia." this is bloomberg. ♪ hi, i'm lauren, i lost 67 pounds in 12 months on golo. golo and the release has been phenomenal in my life. it's all natural. it's not something that gives you the jitters. it makes you go through your days with energy, and you're not tired anymore, and your anxiety, everything is gone.

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>> we are getting some breaking news out of singapore and hong kong. we are seeing singapore pmi

slowing down from the 54.1 we signed the previous reading of june, that is a pretty steep decline. this after the official july pmi saw a gain to 49.8, still in contraction territory. a little bit of an improvement in the electronic sector. pmi for july, falling quite significantly to 51.3. still some expansion but some of the macro weaknesses when it comes to external demand, the labor market is expected to see cooling in the coming quarters as well. also looking at hong kong, where the s&p pmi's falling into contraction territory from 50.3 in the previous reading pier where some of the broader economic concerns for hong kong have been pretty well flagged. there are concerns that broader reopening momentum may not be

sustained. >> we are getting the final pmi numbers out of japan as well. when it comes to the july final composite pmi, 52.2, slightly revised up from 52.1. the services pmi downgraded a little bit for the final number to 53.8 from 53.9. both numbers indicating expansion territory. a little bit of a tepid change when it comes to those pmi composite and services numbers, that broader global factory picture, the services picture with the reopening factoring in. the japanese yen, not doing much as well, really little change. narrow range of trading the last few days. the driving direction of the yen has had to do with u.s. yields and risk sentiment. of course we are seeing the korean won recouping perhaps a

little bit of those losses we saw the last couple of sessions against the u.s. dollar the inflation rate and south korea and july coming in lower than expected. expectations of what the bok will do filtering through the korean won. factor the dollar has jumped to that four-week high, making a big difference when it comes to what's traded at the other side. all this having to do with haven demand of course, with the u.s. credit rating downgrade as well. >> yeah. it was the stronger dollar we continue to focus on. let's bring in our next guest. the senior currency strategist at [indiscernible] good to have you with us. we have seen the 50 dma for the first time since july slump. how difficult does it make it for some of these trading pairs?

in a lot of ways, that divergence, that gap is growing. >> it comes back to the resilience of the u.s. economy. we had the gdp for the second quarter stronger-than-expected. recession talk is really fading in the u.s. they have clearly signaled they are keeping an open mind. the markets think they probably won't. the risks are still there. the economy ends up being more resilient. that does put pressure on emerging markets and other currencies. the aussie dollar appears to be on hold for a while. we don't see it going back to where it was last year. it's definitely on pretty good footing right now. >> our previous guest called that the nirvana trade, the sustained disinflation without the labor market taking a knock. is it really tantamount on that being able to materialize in the longer term?

>> that would be very helpful. if you are betting against the u.s. dollar, a lot of us have been for the past 6-12 months, counting on the fed starting to ease, ones that -- once it does, that the u.s. all there will lose strength. if it is resilience, that is a pretty good situation. you might still look for other currencies to diversify but it is hard to be super bearish the u.s. dollar if that is that sort of goldilocks outcome. >> what's driving the japanese yen right now especially when you have the 10 year yield continuing to really be pushed higher? are you expecting the boj to step in again? >> that is a very good question. we did think that what the boj delivered last friday was yen support. it was very messy trading on the day. we had bouts of yen weakness. there were hedge funds outside

betting on a very major change. to us it is significant to raise to 1% for the 10 year. the fact is, they have said themselves that it's the 1.0 level that is the key to them now there. that is a notable change, particularly if they keep underestimating the strength of cpi. it is a multi week, multi-month story perhaps for the yen to make a recovery. for the most part we did see about 24 hours ago a little bit of support for the yen against the u.s. dollar on the ratings downgrade. but while treasury yields are trending back upwards again, that does suggest yen weakness. >> you are also saying you are euro short, short yen -- give us a little bit of the background for your rationale here. >> we think obviously the market

is very divided on the pound near-term. and had a good year overall. we do think it's getting stretched on some of those cross assets, sterling yen. we are seeing signs of inflation easing. the u.k. has had horrible inflation for the past couple of years. a run worse than any major economy. you do want to see that improvement. in terms of the prices, there are signs that price pressures are easing and that will take a little bit of pressure out of sterling. the economy's avoided a recession but it is still not tracking that will. it just looks stretched to us. >> it is hard to see upside for the aussie from here? >> it is. the rba is a real setback. it does look as though the

tone the use gives the impression it is a quite bar for them to hike again. if the aussie has lost that yield support, it is a 50-50 chance christ and of another hike by the end of the year -- chance priced in, in terms of another hike by the end of the year. the u.s. dollar is on a pretty firm footing. risk aversion has returned. when it to see markets settle down in order to get the aussie stoped again. china, i think there is upside potential from the china story but near-term the markets impression is authorities are just tinkering at the edges and really not providing the sort of stimulus that would make them want to allocate more funds to keep trading partners such as australia. >> is not going to create problems for the yuan again? >> i would say so. certain levels seem to be sensitive for the pboc.

we don't really know them until we see them jumping -- jump in there. it does give the impression, if we've got a resurgence in the u.s. dollar, that's really their concern, the strength and the u.s. dollar and lack of confidence in the local currency by the local investors. that is what worries them. they will certainly be standing by to tempt the bricks down -- to tap the brakes of they need to. -- if they need to. >> we have more to come on "daybreak: asia." this is bloomberg. ♪ at cdw, we get the importance of clear communication. and when your teams are spread out, that's not always easy. our experts can help by implementing poly audio and video solutions to keep you connected. from headsets to collaboration tools, poly solutions offer simple setup

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>> welcome back. let's get to the top stories making headlines. the canadian prime minister and his wife are separating after 18 years of marriage. trudeau's office released a statement the couple signed a separation agreement but still plan to spend time together with their three children. he has credited his former partner with helping shape is feminist politics. chinese authorities are intensifying a crackdown on transactions they view as offering little economic benefit. sources tell bloomberg

authorities escalated probes into trades they suspect are being used to obtain cheap financing or government subsidies rather than serving the real economy. the move is leading to a pullback that is poised to reduce both volumes and volatility in the domestic market. singapore's prime minister has vowed to protect the integrity of governance following a series of scandals that have tested his party's reputation. he told parliament the government will do what needs to be done in accordance with the law even if they may be politically embarrassing. he was fighting back the opposition's questions over his party's transparency. >> i've been asked, why did i take so long? more than two years to act? it is a fair question. in retrospect and certainly now knowing how things eventually turned out, i agree, i should have forced the issue sooner. >> an indonesian government

minister's reportedly due to meet elon musk in california later on thursday as the country looks to secure heavy rate ev investors. we are joined now for more. what's going on when it comes to this between tesla and indonesia? >> this courtship has taken place over the last few years. we have had musk visiting indonesia before. you had indonesian officials going abroad meeting musk several times. initially in january, earlier this year, indonesian officials said they were close to a preliminary deal but they backtracked and said talks were ongoing. talks are still ongoing, as you rightly pointed out, the prime minister is on the way to san francisco to meet elon musk. this comes after tesla decided to make an investment and establish presence in

neighboring malaysia, which is just one plane right away from indonesia. this has rattled indonesia, because indonesia has these grand ev ambitions. the plan to secure more than $30 billion of investment, in terms of getting ev battery production plants in the country -- plants in the country. now that has a has established its presence and malaysia, it raises questions as to whether tesla is hindering indonesia. >> what does this mean for the ev ambitions then? >> indonesia may be concerned about, first of all, there is a distinction with what tesla is doing in malaysia. it is creating an ev charging infrastructure and also selling cars. what indonesia wants is more of an ev battery production plant.

what's going to happen is, i think, from indonesia's perspective, now that tesla has established presence in malaysia, could it also set up a production chain? this would affect indonesia's ambitions. that's why the sentiment is, it is unclear what do you could be reached -- what deal could be reached, if any deal is reached. >> extreme heat around the world is starting to trigger covid like restrictions on public activity. iran has declared a two day public holiday with temperatures forecast to reach 50 degrees celsius insome places.

in recent months, schools in india, mexico, and the philippines have sent children home and monuments and hiking trails have been closed from greece to the u.s. china has reportedly activated a level for emergency response, the lowest tier of its four level system, against a typhoon. it is said to have sent a work team to assess typhoon prevention work. authorities forecast that it is likely to dump heavy rain on the coastal province, 8-10 meters high in the coming days. >> we are seeing more environmental activism from fans of korean pop sensation bts. they are turning their love for the supergroup into more environmental action. they are fighting big coal companies to protect a beach made famous by the boy band. we have reports from south korea. ♪ reporter: this is south korea's butter beach, where k pop superstar bts shot their -- shot

the video for their megahit "butter" in 2021. since then, a coal plant has been built, set to open in a few months. now climate activists are leveraging k pop's global reach to draw attention to the environmental impact to the country's growing use of coal while also protecting its photo hotspot. protesting means more than just preserving a place of cape a pilgrimage -- of cape -- of k-pop pilgrimage. >> sincerely care about the climate issue andclimate change . reporter: according to climate activists, the plant is expected to release more than 13 million tons of greenhouse gas emissions every year, once they start operating. the plant developer did not

respond to requests for comment. adding fuel to the fire for some local protesters, who now come out daily to voice their frustration. construction of a new port for the plant which has caused coastal erosion to this mecca. >> this area was known for its long stretch of sand that extends for one point five kilometers, but now it is turning into a grim place for tourists, as it's been experiencing erosion and sedimentation simultaneously. reporter: the province where the butter beach is located will have 10 coal units by the end of next year, with a combined capacity of 7.7 gigawatts. that will cover almost 20% of korea's total coal power generation. while south korea's energy ministry denied to comment on the country's use of coal, the government data compiled by

bloomberg showed a total of 7.3 gigawatts coal capacity will be added between 2020 and 2025, but only 3.6 gigawatts will be removed in the country. bloomberg news. >> more to come here on "daybreak: asia." this is bloomberg. ♪ the chase ink business premier card is made for people like sam, who make- everyday products, designed smarter. like a smart coffee grinder, that orders fresh beans for you. oh, genius! for more breakthroughs like that- i need a breakthrough card. like ours! with 2.5% cash back on purchases of $5,000 or more. plus unlimited 2% cash back on all other purchases. and with greater spending potential, sam can keep making smart ideas- a brilliant reality! the ink business premier card from chase for business. make more of what's yours. 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.

>> welcome back. let's get to the latest on banks. jp morgan's ceo has called new u.s. plans for more stringent capital rules hugely disappointing. regulators revealed plans last week requiring big banks to set aside more capital with the eight largest facing an increase of about 19%. dimon told cnbc jp morgan is going to adjust for it but he has not sure that it's the right thing for america. >> it is hugely disappointing. i think these rules are -- i've always thought it was a joke, now we have equally bad models which kind of make no sense to me. if i was the fed, i'd be very careful about saying there models are perfect. >> ubs is winding down the electronic trading platform it inherited from credit suisse.

it looks to shed more assets from its now defunct rival. should sources tell -- sources tell bloomberg they plan to cut off -- shut off crossfinder. the platform was once at the forefront of electronic trading on wall street. >> dbs group has joined global peers and reaping profit from higher interest rates. the bank's second-quarter earnings topped estimates while it also sees higher margins and the second half -- in the second half. so, what drove the results for dbs? >> thank you very much. dbs reported a very strong set of results on a year or year and quarter by quarter basis, surpassing consensus forecasts. it is reflected in its 33%

rise in its dividend reflecting optimism for the second half of this year. and really the results were supported by a myriad of factors, a pretty big boost to net interest income, further margin expansion on the back of the fed's rate hikes, and also on lower than expected deposit repricing and liquidity management. that management picked around 1.1%, 1.2%, but it's risen about 6% this quarter and rise more as it progresses. the bank also some very strong fee income as wealth management activity for the bank did gain momentum. in comparison to uab which reported last week. and also saw quite strong credit card demand as well, which is likely to continue into the second half. >> what else should we look for in the second half? >> i think there is room

for further net interest income gains on the back of the last fed rate hikes. and the potential for a further rate hike the cards in the september meeting, the skin is likely to upset relatively subdued loan growth in the second half of this year, but then dbs does have a healthy pipeline of norm trade -- non-trade corporate loans which could help it. momentum and wealth is likely to continue for dbs, particularly in the aftermath of the takeover of credit suisse. it'll see tailwinds from its 12 million new money gains in the first half of this year. fee income however is likely now to only hit mid single digits. this is the second time the bank has revised down its guidance this year. that is why there's more subdued and cautious investor sentiment. the other thing to watch out for is the integration of citi's retail banking dbs' lead

in greater china. >> this is the picture across the future sessions we are seeing, just about half an hour away from the start of trading in greater china, mainland markets as well as hong kong. a bit of positive momentum when it comes to u.s. futures after a pretty terrible session overnight. the rally, hitting a wall, as which on risk off on so many trades. we are seeing china futures looking pretty flat. we had some pretty steep declines already in the previous session, particularly pertaining to hong kong tech. tech started a selloff with chips. in general, continuing to be extended today. we are seeing of course the u.s. dollar sitting above the 50 day

moving average. we are seeing strength, a four-week high as well. this, leading to the picture of a broad asia stock weakness, have a selling in the u.s. session, in the course -- and of course a spike in yields. investors looking at potentially harder than expected u.s. jobs numbers as well as implications for the fed. where also watching taiwan closing markets -- we are also watching taiwan closing markets and the typhoon whether disruption there. we are looking to the start of trade and hong kong. "bloomberg markets: the china open" is next. ♪

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david: this is my kitchen table and it's also my filing system. over much of the past three decades, i have been an investor.