kathleen: you're watching daybreak: asia, coming to you live from new york and hong kong. autonomous where coming down to asia's major market open. haidi: oil hitting a high for the year on investors settling for a 10 year yield below 4% in the latest treasury auction. disney gaining after the bell and a folk at -- forecast for lower capital spending. china says u.s. is weaponizing trade as president biden signs an executive order limiting investment in some of his companies. kathleen: let's take a look at u.s. futures. it was a down day in stocks ahead of that big cpi report in the next 24 hours. you can see a bounce back but at the close, the nasdaq was down about 1.2%. the s&p 500 down 7/10 of 1%. nvidia, big move down.

one of our reporters saying earlier that people wonder what has gotten the cpi report so nvidia was down, tesla was down, amazon was down and then there was a big surge in lng prices. 28% in europe, caused by the threat of a strike in australia among union workers there. couple that with the concern about increasing tensions, intake -- increasing conflict between ukraine and russia. we had oil up to a nine month high, well over $84 per barrel. pretty strong rally. futures did quite well today. the 10-year sold $103 billion. big sale every three months. just below 4%. even with all the uncertainty about the economy and inflation, where are yields going? when you are an investor, you want to snap some up.

who knows what happens next? you can put some of that yield in your pocket for now. haidi: -- annabelle: a level of uncertainty that will keep investors on the sidelines, looking pretty subdued so far. it's not just about u.s. inflation. we are in the midst of the earnings season here in asia. alibaba coming out later thursday in the u.s.. that will be a key stop to watch for us later in the session, particularly as it will give us further clues on the health of the chinese economy. china futures looking under pressure. in the disney earnings, a bit of weakness in the u.s. but it was partially offset by some of those stronger numbers coming through for its theme parks and the likes of shanghai. that could be something to monitor, the health of the chinese economy and consumer. otherwise, it is that story of

commodities. we are seeing the contract there for the u.s. contract. at the bottom, the european contract. we saw that surgeon the price, partially feeding across as we see it come online. broadly, we are seeing currencies just looking fairly range bound. that is the story of the inflation report. the yuan, we are seeing it holding onto slight gains there. geopolitical tensions between beijing, washington still in focus. haidi: always top of our minds. after two years of discussion, president biden has limited u.s. investment in some chinese companies. china has responded through its embassy in washington, accusing the u.s. of weaponizing trade. let's bring in eric martin. we've been talking about this for some time. when you read through the content, the focus, is there a

feeling that the strongest of the holds are perhaps needed here? >> this is the day that a lot of people never truly believed would finally come. we've been hearing for months now that this executive order was basically ready to go. there have been some considerations about potentially delaying it beyond the g7 meeting that president biden had earlier this year in japan. in order to be able to work with allies. we saw janet yellen in china and beijing in july as well. telling some of her counterparts about the plans from the biden administration. the general feeling is that this is narrower than some people expected it to be. there was a belief that it could include buyouts and energy.

that didn't happen. it is more hawkish than some senate proposals which would not have included potential prohibition. it would have been about notification. we are seeing that this could include some prohibition of more advanced technology, investment in quantum computing and semiconductors. kathleen: is there a little bit of a shift here to have the optics, the pr of, we are being tough on china. some subtle little dance where maybe they are just softening things up so they can find a way to move forward. >> certainly we've seen a greater dreams to diedrich interest here.

having opened the avenues for communication. we saw the visits in july by secretary yelling in -- eln. we've also seen raise speculation that the secretary of commerce could be visiting china and beijing in the coming weeks. certainly this executive order and this investment screening has been something that's been in the works for a couple years. different iterations of this. this is the first time that u.s. or any country has screened the kind of investments being made by its investors in other countries. this is something novel that the u.s. is trying. this is something that hasn't

been done before. that's one of the reasons why the administration would argue that they took so much time to put into place because they want to be sure to get this right and avoid any undesirable consequences. kathleen: eric martin. now back to the markets. the u.s. treasury sold $30 billion and 10 uriel -- 10 year notes. let's get more on the bond market reaction with our mliv stratasys h-mart cranfield. i've been watching core labor fundings for many years. it's always a test of how investors see the market right now. this is pretty well received so far. what do you think the take is at this point? >> at the moment, you have a bunch of investors that are really very hungry to lock in relatively high yields. you may see some of it in the 30

year auction later today. we haven't seen 4% plus yields on u.s. treasuries for such a long time people --. people expected to improve going into 2024, the fed being in a position where they can start lowering interest rates next year as well. you have a lot of forward-looking people in that respect who want to grab the yields while they can now, even though inflation is relatively high in the short term. they will ride that through and lock in the yields for the longer term. of course, there's also the uncertainty in relation to china . that uncertainty and that weakness in the chinese economy started to become a global thing as well. that's also a reason for people to be on the defensive. treasuries is the right place to be for that as well. the short term factors are coming into play to support the treasury market, plus the long-term yields. we will see a decent 30 year

today. in the background, people will need to see that inflation comes under control. some of the factors such as gas prices going up, rice prices at the highest for a couple decades, and oil prices rising to the highest in a few months. those things could affected in the weeks to follow. how the secondary trading those will be a big indicator for markets. today, it looks pretty good for the auction. haidi: one thing that has been interesting has been the renewed interest in 20 years. this time it's different. >> that's purely a yield factor. it's the cheapest part of the curve. people looking for 4% plus yields. it's a relative bargain. it's an unusual shape the yield curve at the moment. on a relative basis, 20 year is certainly the most attractive if

you're a long-term investor. it will probably stay that way. the 20 years tend to underperform most arts of the curve anyway. if you are hungry for yield, that's where you go. the twenty-year sector. haidi: bloomberg's mliv strategist mark cranfield there. disney shares sprung from losses to gains in extended trading. we are trading off the highs of more than 6%. lower capital spending, narrow losses in its streaming business. let's bring in chris palmeri in los angeles. the previous guest that we spoke to focused on this massive restructuring as opposed to today's numbers. the numbers were encouraging. >> they be tom profit. had some other news. raising the price of their streaming services. disney plus in the u.s. is going up 27%. they are also starting a crackdown on password sharing

with those streaming customers. that is something that netflix has implement it this year successfully. lots to be positive about. kathleen: what do you make of the long-term challenges? one of the things that our guest pointed out is that disney is small relative to companies like apple that are in this business of moviemaking and such. they are so dominant in theme parks. what does bob geiger have to do? what suggests that they realize this? >> among the bigger surprises in the report is a steep drop in profits in the traditional tv business. abc, espn, disney channel. they are facing challenges of viewers migrating to streaming services, advertising is lower, the cost of things like sports rights has been increasing. that business is really

challenged. iger acknowledged the company's ongoing problems in the movie business. they had a huge run a few years ago with all those big marvel movies and star wars but they've been on a cold streak recently. the film studio lost money in this quarter. the summer is normally a good time for them. haidi: a lot of the cost benefits came from production cuts. does that create a pipeline issue? >> this is something we've seen with all the big media companies in this earnings cycle. they've been reporting better-than-expected numbers because of that. disney said, $3 billion reduction this year and content spending. of course, that's temporary. when actors and writers return to work, they will have to start spending money again on all those new movies and tv shows. at least for the short run, they are saving money in a time that they are trying to cut costs.

haidi: one of the other bright spots, the china reopening momentum and activity in the parks. can that be sustained, given how downtrodden consumer sentiment really around the world? >> that is something we saw domestically in florida in particular. the theme parks were weaker. it seemed like people had just moved on after initially going out to parks in droves. now with the reopening, disney parks business did better-than-expected largely because of the international parks. so whether asian consumers and those in europe follow the same trends that the u.s. customers have in that initial rush to attend the parks but then cools off a little bit, it remains to be seen. kathleen: going through the disney report, the pluses and minuses.

still ahead, expecting alibaba to report strong growth rates despite the slow down in the chinese consumer spending. we preview these earnings later this hour. why they own just one category of chinese stocks. more on their investment strategies, coming up next. ♪ me health customers surveyed reported taking healthier actions. because they know health isn't just a future state. health happens now. start your dna-powered health journey today with personalized insights from 23andme.

>> the big challenge is not only the premium but the neutral rate of interest. there are a number of factors contributing to an environment where the neutral rates of interest is likely higher than it was, certainly pre-2008. i think that's the biggest driver for the market right now. kathleen: citadel securities global head of rates trading michael to pass. joining us now to discuss the markets in more detail as --, chairman and founder at nava lear and associates. it's great to see you again.

i want to start by asking, we are all geared up for the big inflation report, coming hours from now. how much difference does it make now, what happens to inflation? i know you are excited about inflation being imported -- deflation from china. so far in consumer prices, we are not seeing anything like that. what is the key for investors? >> the cpi may not be that exciting tomorrow but friday's ppi report will be wonderful. through june, it was almost -- only up 1/10 of 1% on a long-term basis. we are hoping that it will follow little bit more with all the deflation we are getting in china. obviously we are importing less from everywhere. from japan, china, south korea, vietnam.

there is deflationary pressure everywhere. what happened to china today, that news was devastating. i think it will start to spread around the globe. kathleen: we saw oil prices jumping today. west texas and -- intermediate crude at a five high purity concern over ukraine and russia, more intense conflict. if oil is rising, we have rice up, especially in thailand. that will push producer prices up again. with your assumption in mind, we are having deflation. what do you buy? what is your investment strategy coming out of that? >> first of all, i have some stocks. i have a potato company because there's a potato shortage that dominates french fries. 30% of my portfolio is an energy. -- in energy.

a lot of oil is being stored offshore. so we can profit from inflation as it emerges. i haven't been able to profit from the weeks shortage -- wheat shortage. i will try to profit from that inflation as i see it. i think the deflation we have is mostly on goods. the factories just aren't running on also litters. -- all cylinders. china's unemployment is the highest and 1989. what happened then was tenement square. we don't want to see anything like that again. it will be interesting to see if china can stimulate its economy. you know, i'm just going to pick my spots as they come about. we are in peak seasonal demand for energy in america. we had our inventories depleted the most ever recorded since records began in 1982. we had another inventory drop in refined product today.

it will probably get better in september. we will see. haidi: you mention the only chinese exposure you have directly is trying to take 380. as alibaba one of your picks -- is alibaba one of your picks? >> it's nso. shop holdings, the ips. those are both internet retailers. alibaba never quite hit my criteria. i pick everything up on my fundamental grades. chinese adrs, they do wonderful accounting. i've been hand checking the accounting for years. when they list in america, they are dead serious. those are two internet retailers i really like. and then sl and the ips. haidi: are you adding to the dips when it comes to the big ai trades of the past six months? >> absolutely.

our big ai plays are nvidia, super micro computer, a pra which is a norwegian adr. they have websites and things. there's other plays. extreme networks. rambus. things like that. the big by today is super micro computer. they just announced that their sales are up 73.5% but somebody hit them 20% because they thought that wasn't enough. the ai crowd is a little greedy. if you want a second chance, you will be able to buy now to get smc i is the best one. kathleen: we've seen good demand so far this week. looks like high yields, people want to put them in their pocket before they find out where yields go next. for an investor, thinking about buying treasuries or trying to figure out how this good -- is going to affect equities, what are you looking at?

>> i'm fascinated at how well the refinancing has gone. it was just so big. over $1 trillion. i'm very pleased. china helped us with their news this week. it will cause more foreign buying pressure. yields will be lower because i expect these deflationary forces to spread around the globe. kathleen: thank you so much for joining us. we are watching the cpi and ppi now more. get a roundup of the stories you need to to get your days going. terminal subscribers. also available on mobile. you can customize your settings so you only get the news on industries and assets you are following most closely. this is bloomberg. ♪

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kathleen: global headlines. pakistan has dissolved the lower house of parliament as the prime minister moves to hand power to a caretaker government. an interim prime minister has yet to be appointed. the speculation is that elections could be deflated -- delayed due to a population census. the u.s. is signaling they still have a long way to go before saudi arabia official license recognizing israel in exchange for security guarantees. the national spokesman says the sides haven't agreed on a set of negotiations or a framework for normalization. israeli markets have rallied after an agreement on the ground outlines of the deal.

china has warned japan over remarks made by a former prime minister during his visit to taiwan. he said japan, the u.s., and taiwan must show basing -- beijing they are resolved to deter invasion. the beijing embassy said, they interfered in china's internal affairs. the chinese foreign ministry called the comments irresponsible. up next, as we look ahead to alibaba's earnings, hereby credits ice house their bonds among their top picks in chinese tech. this is bloomberg. ♪

annabelle: we're counting down

to the opens, the sentiment today, the u.s. inflation report and also in terms of what we are watching is the pressure exemplifying for some benchmarks. in terms of >> driving mag, the news was country garden failed to make interest payments. bondholders are saying equities

are slipping further into distressed territory and it goes without saying it has severely impacted the wealth of china's richest woman. essentially, her wealth has slipped more than 80% since 2021. property developers are struggling to not only mission audits but generate further sales. a lot of issues, a lot of sessions. kathleen: let's move on to

taking a look at alibaba. shery: haidi: the context is the slowdown in consumer spending. going in. earnings are due out. let's bring in our next guest. why do you see this? >> in the online retail spending

, for the last quarter, the base of comparison is easier. , we expect international for food delivery services. we observed the competition has intensified which has been very targeted. within the cash flow, it's going to improve. haidi: how much spending will be required? >> we think the competition will be targeted in the china

e-commerce area. i think the management is full, but because regulators are focused so we don't expect them to do large-scale competitions. >> in your notes and analysis,

it's an interesting way to get your groceries. could boost market expectations. tell us more. >> we are observing units for ipo and marketing services, the lossmaking business are capital-intensive. it might be able to do separate equity fundraising seeking additional capital to moderate the pressure and reduce risk forecast burning. from this angle, it's preserving cash.

kathleen: is it a global recession? >> the key risks is macro headwinds, now, the base case is a gradual recovery of discretionary spending and we expect the companies going to stay strong. topline growth, dollars bondholders this could be the

second risk. kathleen: it is in certain credit markets. again, a lot of uncertainty in china's economy. what do you think is the strategy? quotes for the company, it is focused on international business expansion but the key focus has shifted focusing on profits. we are seeing stringent cost control other business platforms. in terms of excessive spending, geopolitical tension is unavoidable. a lot of them are trying to

expand into ai content generation to improve the monetization but if chip supply is going to be a business headwinds for this company. >> thank you for joining us. you can turn to your bloomberg for more on alibaba. plenty more to come on daybreak: asia. ♪

76% of 23andme health customers surveyed reported taking healthier actions. because they know health isn't just a future state. health happens now. start your dna-powered health journey today with personalized insights from 23andme. kathleen: oil climbed to the

biggest in nine months. this is a problem that has not gone away. it's always in the background. >> there is a confluence of factors. the technical indicators are tightening, heightened tensions.

that puts west texas intermediate. we have seen a little bit of retreat, this comes despite the latest u.s. oil stockpile showing a rise in inventories. there has been a show called. clodagh ms. lindsay said ukraine would retaliate.

the ukrainian drone attack on an oil tanker this would prove a snapshot of how tight it is. the post opec high. it means the people web and skeptical. meanwhile, because of concerns about the chokehold. >> the possible strike of actions in australia.

>> this means there would be the first time, what to they want? want to stop outsourcing jobs. they say they have been engaging in good faith. during the profound.

there will be more meetings but it's early, quarter to eight. those buyers are going to be competing as well. they are betting the gas prices are going to come down. a lot of volatility ahead for gas prices. a lot of volatility.

kathleen: the concern is because rice is a stapled of diets, it could have inflationary pressure. this comes. the asian benchmark claim to 648 a time. this brings the increase. a lot of concern from thailand.

doesn't look like there is any relief. haidi: the cadillac escalade has long been one of the largest, most luxurious suvs on the road but now general motors as a plan for an all electric model. the price tag is $130,000. >> we know there are people more wanting a full-size suv to bring it here, so we know this is in addition >> the hummer is on the

cutting edge of everything. >> the platform here we are talking about is very flexible. you will see it in the proportions where we are going after 450 miles of range, that's a big deal for families and people who travel. it is 750 horsepower. the hummers are 1000. it's a little bit different but it is still built on the mod pack we use. >> there has been some

controversial things about the new battery packs. how do you respond to that? >> those are some of the price points that are the most affordable, in the wheelhouse. we're going to do that. technology changes. anyone who thinks we will have the same technology even a year from now is not thinking about it quite right. you get into silicon, chips, all of those things.

history books will see this as the first step. >> that is general motors president. plenty more to come, this is bloomberg. ♪

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producer prices in japan are coming through softer than expected, 01% gain. we .6% urine year is a little bit stronger than was expected. this as the governor is fueling the end to negative rates, as we see a sustainable uptrend in inflation. diminishing wage growth signals. the june data so far has been mixed when it comes to labor cash earnings, more or less in line with expectations. kathleen: let's take a look at

small-cap terms staging a rally this year. let's bring in the asian stocks from order. why did the index do so well in south korea this year? >> good morning. it's because of the battery stocks in the retail, it shows how narrow it's been. that was mainly because they have basically contributed to more than half of the gains, however they have been drawing

concerns and a lot more investors and analysts are believing this might be inevitable because as stockmarkets markets try to find balance and we see the rotation of money to other beaten-down sectors. haidi: what about small caps? >> with the money rotation to

other sectors, that includes superconductors that may not last, however other sectors such as the internet which has been beaten down quite a lot may see some inflows from investors looking for cheap stocks. others include biotechnology, pharmaceutical stocks. these are some sectors we may see gains going forward where tv materials might seeks onset -- might seem expensive for investors. haidi: that was the bloomberg asia stocks were ordered. we are five minutes away from the start of cash trading in australia, we are looking mixed

with a potentially softer session after the tech lead selloff on wall street. the inflation data that might shape the outlook for what the fed does next. hong kong is sitting weaker, australian equities looking the best out of the lot. watching for some upside when it comes to oil. we have the market opens almost upon us as we get into this thursday session of trading. this is bloomberg. ♪

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the nasdaq is down 1.2%. tesla, apple and amazon contributing to the losses. there was a jump in oil prices to a nine-month high. we will see how this carries over into the asian trade. haidi: commodity volatility is one theme we are watching out for, the oil with a big jump and how that goes through to the emerging markets in this part of the world. big earnings, alibaba is one we are watching. annabelle: setting the tone for china tech earnings that will continue into next week, but the open for japan, south korea and australia, the front and center data point for investors will be the u.s. inflation data that will come out thursday.

it will be setting the course for the fed going into the third quarter this year. it will essentially dictate whether they will hold the upcoming meeting, but in terms of market direction, we have the contract for japan coming online weaker as trading gets underway. we had producer prices coming in in the last 10 minutes firmer than expected, rising 3.6% on the year. the estimate was 3.5%. japanese companies have been slow to pass high import costs onto consumers. essentially traders are shunning risk ahead of the u.s. inflation print. it came out in the wall street session, particularly felt in the tech sector with the nasdaq closing down more than 1%. concerns around whether investor

optimism around ai has gone too far. nasdaq futures looking firm but the tech heavy index in line with declines with the kospi down 0.6%. focus on the korean won which has been declining around a five-week low against the greenback, fairly flat in the session but an indicator that risk of tone. in australia the focus on the moves across commodities. brent crude coming online weaker in the session but concerns around u.s. stockpiles and supply concerns given what is going on in the black sea, those escalating tensions between russia and ukraine. that is fitting across the sentiment for the aussie dollar. also tracking the contract

starting to trade online. essentially it has been a -- looking weaker, but the contract is around a five-year high. haidi: we are really watching some of these geopolitical concerns given that we did here the confirmation of president biden's executive order imposing limits on u.s. investments in china restricting in a targeted way china's ability to develop key nexgen technologies relating to semiconductors and ai. we are getting reaction when it comes to the ministry of finance responding, saying they are concerned about u.s. investment curbs. we had seen that reaction from the embassy in washington, also expressing their concerns, and the accusation that the u.s. is

weaponizing the issue of trade. we are getting that response from beijing saying they are severely concerned about these u.s. investment concerns, and china reserves the right to take measures in response. another element when it comes to current trading conditions, let's bring in hayden briscoe, head of apac multi-asset portfolio management, ubs asset management. when you look at something like this, it is a situation where perhaps the loudest of the hawks in the administration did not get their way, it is a more targeted set of actions. does this give you confidence the relationship in trade and investment might be better manage going forward, or is this a big risk for investors? hayden: you have seen key figures visit china recently. we went from the private sector so we had the likes of heads of the banks, and on top of that you saw various ministries

starting to go, we saw janet yellen and trade ministers are back again. it is clear that we need to get along with each other, and they are dependent on each other. in a lot of cases, you might be imposing restrictions on one side but you will need the resources for the high-end chips , and somebody else has those. they need to work together. it is a joint relationship. we are noticing targeted measures and that rhetoric will pick up in the political situation next year in the u.s. in particular. we are noticing this is having less and less effect on the market. the market is probably discounting when we hear this rhetoric, it is more about where is the leg coming in the domestic market to take the equity market higher. haidi: whether this builds more

expectation for wholesale stimulus, how are you liking your china exposure now? hayden: we like the stock market now. when we see the big selloffs and global markets, we noticed less and less is happening on the china died. we know the stimulus is there from a financial perspective but it is stuck in financial markets. repo rates are closer to 1% when they should be closer to 2%. there is a lot of money and financial markets. this is the single largest deposit china has had, so effect it's deployed into the local stock market, we could be in for a boom time. expectations are it will rally slowly over the next 2-3 years. kathleen: i have to ask about korea. in november i was in seoul when korea's legoland credit crisis began, and it had a ripple effect in that part of asia.

there is another situation, rising default rates at credit cooperatives has sparked deposit outflows from lenders and interventions from regulators. are you following this? is there something brewing here again? hayden: obviously they have tight restrictions that have flowed through the episodes in the past but a lot of people look at those banks and the way the housing market works, a deposit you have to put up front for a renter is different from other parts of the world. you have to borrow more money from the banks essentially. on paper it looks levered. the banking sector will get through this. they are conservative banks in our perspective but the market right now is latching onto it, putting pressure on the bonds and on equities. it is something to watch for the second half of the year but my

general starting is korean banks are pretty conservative. kathleen: and closely regulated. you say in your notes that you want to maintain healthy allocations to fixed-income relative to value strategies because you think they will benefit from the current environment in asia. explain what you are looking for. hayden: when you think about value in a price sense, asia is cheap, and particularly the china piece. it is cheap relative to the rest of asia. a lot of the key countries like japan, taiwan and south korea benefit from the ai in the first quarter, so china looks extremely cheap to us. we want to own some bonds, yields are back. if you make a mistake in the yields go higher here, you have quite a buffer. it is hard to get a negative total return now.

portfolio construction, a bad idea to own bonds and equities. this year you want to own bonds and equities again. the value trap is not the case. we have supply and stimulus coming through, and on the china side we have government willingness which is done a 180 degree turn to support the market and they have some positive comments around supporting the stock market, very specific. stay tuned for that. it is a 2-3 year rally, not a v-shaped recovery. it is a grind market. haidi: hayden briscoe, head of apac multi-asset portfolio management, ubs asset management , great to have you with us. we have some news relating to the ecuador elections, and the latest development that a candidate has been shot dead.

it is the breaking news, a journalist has been reporting that. in terms of who has been leading , he has been trailing when it comes to the left-wing candidate who continues to lead. she has about 26% in the latest polls. we are hearing the anticorruption activist has been shot and killed, he was coming in second in the latest polls at 13%. one candidate needs to get 40% with a 10% margin, but we are hearing that the second leading contender, the anticorruption activists and former journalist has been shot and killed. we will bring you further updates and details as we get them.

he has been shot according to the latest reports and killed during a political rally in quito. much more to come here on daybreak asia. this is bloomberg. ♪ or filing returns. avalarahhh ahhh 76% of 23andme health customers surveyed reported taking healthier actions. avalarahhh 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. haidi: we are 13 minutes into

the start of trading in sydney, seoul, and tokyo. you look at sony and there is pessimism. annabelle: it does appear investors are focusing on the negatives. they are particularly concerned around news flow on the semiconductor and film business. we are seeing this slide even though the company results are largely in line with expectations for the latest quarter. and the company is opting to leave its full-year guidance as before, and not lifting other targets. honda is another stock we are keeping because that is rising after its first quarter profit beat. they also announced a stock split. we have seen quite a few of those in the japanese market to lock further value for shareholders. other companies in focus this morning include the energy

giants. after we saw wti hitting a record, we have brent crude weaker in the session but in focus for investors, turning to u.s. stockpiles, supply concerns and constraints. it is further exacerbated by tensions or the escalation of conflict between russia and ukraine in the black see. these have moved higher in the session, notable because of the big drop for those names friday. not just a focus on oil, other key commodities, natural gas is the key focus. we saw the contract for the dutch contract spiking near 30% to the close. we had workers at a facility in australia voting to strike, the exact timing of that is

unclear. one more notable stock is the korean game developer, ncsoft, that is sliding but it has been under pressure because of shortselling a video that the korean exchange has banned for one day. that day is thursday. haidi: let's look at other top stories we are following. president biden has -- the action was more narrow in scope than hawks hoped. china has responded through its embassy in washington as well as through the ministry of commerce. they accuse the u.s. of weaponizing trade. does it seem like the most vocal hawks have been muted? >> yes, as far as what further action on the legislative side in the u.s. could happen because

the biden administration has taken the council of businesses as well as its allies like in the european union who said a tough line on china in investment in supercomputing and quantum computing chips and artificial intelligence with the aim to limit those investments is too tough and will hurt their economies. the eu is vocal on that, and businesses have been vocal. the biden administration sources told us this would happen, and this is something that biden administration has working on for the better part of two years, and early vision of it was it would be hard and fast. we do not want prior -- proprietary technology in the hands of the chinese military. this is more targeted than

originally planned, and janet yellen alluded to that when she went to beijing a month ago. this new program would prevent u.s. investments accelerate those technologies. these export controls the united states has done in addition to this executive order will spur china to build out its own indigenous chip and ai industries. the biden administration wants to limit their ability to do that by using u.s. technology. you mention the ministry of commerce in china in addition to the chinese embassy in washington has come out saying they oppose this move. i'm using a rough translation paraphrasing the chinese. the u.s. is using decoupling and breaking of chains in the

investment field under the guise of de-risking. this deviates from fair competition that the u.s. has always advocated. as expected, china is responding loudly. will this be a lasting protest is yet to be seen. kathleen: we are hearing the chinese backlash, not surprising. what about the lawmakers who want tougher action and will look at this and say -- especially on the others of the aisle -- what is going on? are you trying to make nice to the chinese and leave wiggle room? >> as you know there are a few china hawks in washington. whichever i'll they may be on -- whichever aisle they may be on, and they may perceive this as water down but business

interests are strong, and they have a vocal lobby in the white house. at the same time, the biden administration is trying to be nicer and make nice and repair the relationship with china. this is a balancing act and it will not take effect immediately. it will take about a year or so. there will be another 45 days of consultation. it will not be retroactive, and it will be narrower in scope. david: stephen bringing us the latest on china. front and center in the china tech spaces alibaba, set to releases quarterly earnings. the commerce revenue, which accounts for two thirds of its total sales, is projected to return to growth after four consecutive declines. let's preview the numbers.

where are the potential bright spots? can they turn investors bullish on the outlook? >> we are talking about a low based in 2022 same time last year because of the shutdowns that we are seeing, covid disruptions in china. alibaba has to come out with a strong set of numbers today to convince people what they will deliver tonight will be sustainable over the next three quarters, and specifically we are looking at customer management revenues which are linked to consumption in china, really showing a rebound. a sustainable rebound is what we are looking for. cloud is one we have our eyes on over the next three quarters. haidi: what should we be expecting when it comes to the cloud business given how

aggressive we have seen the strategy over the year to date? >> absolutely right on the aggressive moves we are seeing from alibaba. with price cuts and waivers for clients, to scale up to get to economies of scales and hopefully be in a better position to roll out some of the ai technologies to clients in china. for that business, we have seen a 21% cut to the earnings forecast for the cloud business. you will still look at a strong double-digit earnings growth tonight. hopefully when they report results, and the question is whether they have room to scale up to get more profitability out of the business going forward.

haidi: we await the alibaba numbers later on. you can get more on your bloomberg with commentary and analysis of our team of expert editors. ♪ oh, booking.com ♪ somewhere, anywhere... ♪ ♪ i just want to lie motionless in a chair! ♪ booking.com, booking.yeah ♪ ♪ 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.

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regarding up coming streaming price increases. i'm pleased to share our disney+ offering will become available in canada and select markets across europe beginning november 1. david: bob iger speaking on the earnings call earlier about raising the prices of its streaming services. looking at disney shares, the

entertainment giant said capital spending and outlays for movies and tv shows are coming in lower than projected. that is well received but at the same time, there are some spots on that report. >> absolutely, a couple of percent moves post trading is not huge, and at the same time there were positives. profit coming in at $1.03 a share. revenue was shy of estimates. if you want to blame someone, blame the winner of the cricket rights, and that is an obvious move but at the same time he allowed those rights to be free for everybody.

all the games were streamed for free. meanwhile bob iger, he made a lot of changes. 7000 job cuts. we saw content costs come down from last year. that is because of the writers and actors strikes but also because bob iger will reign in profit. and a massive increase in the disney+ for some customers, not all of them. 27% is the high-end of the range. investors want to know what will happen to the linear business. espn goes directly to the consumer.

right now it has not done something with those units. haidi: let's look at how european futures are setting up as we wait for the key u.s. inflation rate. we have really seen a turnaround when it comes to italian assets overnight with the diluting of the announcement on the windfall tax from italian authorities. italian banks stocks will be in focus another session. euro stoxx 50 futures up. a little positivity a look at to extend on the previous annabellk

asia, 30 minutes into the session for japan, korea and australia. the sentiment is range bound in the session. no big moves in either direction on the major contracts. broadly limited equity weakness, yields moving a little higher largely in line with what we saw in the u.s. session overnight and with the moves and treasuries. it does speak to the investor focus and looking ahead to u.s. inflation numbers due thursday that will set the direction for where the fed goes from here. investors starting to pass through the earnings release that we continue to see. if you look at the numbers that are dropping at the end of the last session and key ones investors are focusing on where you can see sony weakening in the session. numbers are in line with what analysts had an expecting but

investors are clinging to what came out in terms of the chip manufacturing. it is not just the earnings focus, we are also seeing big moves this morning in tourism stocks. these are some of the major tourism links in japan, and we have reports that china could consider lifting its restrictions on group tours to japan and korea. that is feeding across to some of the korean tourism names. some really big gains. haidi: the founder of noble group is suing over the debt structuring saying the deal was unfair t minority shareholders.

they are one of the major traders before collapsing insolvency in 2018. sony raised its full-year forecast as its playstation arm sustained momentum. it's net income forecast jumped 2% to $6 billion, short of analyst estimates. it cut its outlook on image sensors due to slow recovery in china, and worsening u.s. demand. roadbloc -- roblox plunged 29% . customer spent 14 billion hours on the program while daily active users fell 1%. kathleen: cathay pacific expect strong recovery from the covid crisis to continue the rest of the year after its biggest profit since 2010.

let's look closer at this with jason sum, research analyst, dbs bank. strong results, amazing recovery. but the market reaction seems muted to all of this. did they already price it in? why is that? jason: we think at this point in time even though it is operating at below 50% capacity in the first half of 2023, we think headwinds could happen for passenger traffic and passenger use. its latest results, passenger use was up 40% camp -- compared to 2019, that is an

impressive number. many investors are questioning if this is sustainable. if it were to come down, that would be impacted. kathleen: a lot of people are wondering if you are doubting it , are there catalysts you are looking at that you have to say, if that happens, the results continue, and if not, that will show the doubters to be correct? at this point we look at industry metrics and do not see signs of demand slowing down. i would say 2023 is the year international travel is due to make its comeback. 2022 was the year of domestic travel.

we are seeing international traffic normalize. it looks to be favorable for cathay pacific at this time. we see pent-up demand. we were pleasantly surprised yesterday that they are recovering at a healthy clip. on the supply side we think it will be constrained for years to come. airbus and boeing will extend into 2025. airlines in the region and globally will have a much more measured rate. this is positive for the airline. haidi: how quickly can they

scale up when it comes to the labor crunch? jason: as part of the pandemic, they had to let go of a portion of the workforce. demand was so depressed. they have let go close to 40% of the workforce. we think it is a more pressing issue especially since competition is very intense. but we think the recruitment is on pace and they will not be impacted unlike other airlines that were forced to retire aircraft during the pandemic. at this point we think

[indiscernible] to be quite reasonable and achievable at this point. haidi: cathay's oil hedging has not been great for the carrier. how is it looking we are starting to see volatility in crude prices again? jason: we think it is working as intended and smoothing out the volatility in crude oil. we see fuel hedging gains are coming down because the majority of the contracts during the height of the pandemic when oil prices were at an all-time low, so going forward we are seeing higher strike prices in place, but given the volatility in the

jet fuel market, the hedging program is prudent and will help their operating margins at this point in time. haidi: jason sum, research analyst, dbs bank, great to have you with us. more to come on daybreak asia. this is bloomberg. ♪

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candidate fernando villavicencio has been shot dead at a political event earlier today. what do we know? >> we know that fernando villavicencio was attending a campaign event in quito, and that he was shot exiting the event, and killed. haidi: can you give us context and background in terms of who this candidate was, how he was performing in the polls as well as what we know about a potential motive or the background to what has happened? >> the potential motive is that

he was someone known nationally as a navalny of ecuador who uncovered a lot of corruption in the previous administration, and who was threatened by alleged drug traffickers during the campaign trail. that is where the investigation will most likely lead to. the president said he would convene his security cabinet immediately, and blamed nice crime for the murder. ecuador snap elections are scheduled for august 20, and fernando villavicencio was one of the candidates who had a strong chance to make it to a potential runoff around that is expected to be held october 15 if no candidate wins the election outright in 10 days.

kathleen: when something like this happens, it is so shocking to people around the world, whether it is your country or not. what happens now in the campaign? he was second in the latest polls, following the leading candidate. do you know if they are increasing security or what this means now for the election going forward? if someone could be shut like this, it would be difficult for this to proceed without new measures or something. >> absolutely because several candidates have received increased security including fernando villavicencio who had a personal bodyguard. this comes a few days after the

mayor of a large city was murdered. there has been a huge escalation in violence, political violence and ecuador along with the general spike in crime. it remains to be seen. there were seven other candidates who are still running for office, so in theory of the election could proceed with just unfortunately one person less on the ballot. this all happened maybe an hour ago. it is very much breaking news. the decisions on how to proceed with the election will be made in the coming hours. haidi: we are also tracking

other political stories. uss signaling there is a long way to go before saudi arabia recognizes israel in exchange for security guarantees. a national security spokesman said they have not agreed on negotiations or a framework for normalization. washington and riyadh have agreed on a broad outline of a deal. china has warned japan over remarks made by the former prime minister during his visit to taiwan. he said japan, the u.s. and taiwan must show beijing they are resolved to deter any possible invasion. the chinese embassy in tokyo reported the official interfered in chinese affairs and demand stability in the taiwan strait. they also called the comments irresponsible. kathleen: rice prices, a big story today, soaring to the

highest in nearly 15 years in asia on mounting as urns of global supplies as dry weather threatens production in thailand. set the stage for us, huge rise in prices. what is the catalyst today that led to this big move? >> prices are the highest animals 15 years, and this is caused by a move by india, the top shipper. what happened was india decided to impose restrictions for a chunk of its exports, this is to protect its local market. after that because of concerns, other countries like thailand have encouraged farmers to

switch to other crops that consume less water. other countries in the region like indonesia are doing the same thing. rice needs a lot of water to grow. the heatwave we are seeing is causing concerns for governments and rice farmers. there are concerns over the supplies, and that is the main reason prices have gone so high. haidi: is there any respite insight, and we are seeing instances of more protectionist domestic policies taking place? >> domestic trade policies play

a big role in terms of how rice will be in the rest of the world because concerns over protectionist issues and how countries may decide to follow suit, and may want to restrict their own exports or curb their own to protect farmers. the risk is similar to what happened in the 2008 food crisis where vietnam and india began to ban exports over $1000 a 10. that is a big worry for a lot of people right now. it is a worry for a lot of people.

rice does makeup a huge chunk of the diet in these countries. kathleen: these big food price moves always hurt the people who can least afford it. let's move on to oil prices, another commodity that has had a big gain, climbing to the highest in nine months of her concerns over the escalation in ukraine may constrained supplies. we are joined by su keenan. over $84 a barrel is a nine-year high -- nine-month high? sue: nine-month high. we are seeing a pullback in asian trading but it is still above $84. this has very much to do with the fact we are already in a tightening oil market, and we are seeing increased hostilities between ukraine and russia.

there is concern you could have a blockage of oil out of that region. oil is on a move higher 3% in the past three sessions. let's talk about the inventory data in the u.s.. even though it was slightly bearish, we saw it build in u.s. stockpiles. the market is focused on the decline in the fuel products coming, those fell the most in three months. architect misses the narrative, and if you consider one analyst says west texas has broken above the post opec high made in april. the people who have been bearish are skeptical of the opec effort. the people who have been bearish about opec to tighten the market and boost price have been proven wrong.

opec-plus will release a report later this week that shows a snapshot of how high the oil market is, but if you look at the contracts of the closely watched technical gauges tell us this is a market that is tightening. let's move to australia and look how it is affecting european natural gas, which jumped the most since march last year. workers at the chevron in australia voted to strike, and this has a potential to disrupt and tighten the global market for fuel. haidi: more to come here on daybreak asia. this is bloomberg. ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ )

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the open of trading in mainland china and hong kong. we have a look ahead to what is on your radar. >> there is no momentum in this market. we have had this two day moving average and not going here or there. a lot of questions we are talking about, investment curves that the u.s. laid out, beijing has responded despite this being a high fence in a small yard as analyst have said, they are disappointed.

we are watching the tech space closely. we are off some of the weakness we have seen but if you look at the overall divergence of the dollar, maybe that fix could be telling today. pboc may be more comfortable with the level where the nimby is given that the basket is stronger. overall, sentiment is weak because you see growing evidence of this slowdown in the economy. haidi: such a part of that is property. we are in a position for the development. yvonne: you look at the dollar bonds trading around $.11 to the dollar. in some ways the markets are pricing in some crisis situation when it comes to this. is it an evergrande moment?

if there is a crisis with country guarding, could be bigger with the impact to the housing industry? it is a much bigger impact because the number of projects that country garden has is four times as much as evergrande. the impact it could have on confidence in buyers could be huge and we can the price significantly. is it in the price is a key question. you talk about the fortune of the chairman, she has lost more wealth than any billionaire out there. $28.6 billion, an 84% drop from the peak in june, 2021. haidi: alibaba is a big one we are watching, to what extent

will that be a reflection of the macro conditions? yvonne: we are watching closely the china sales and if there is an evidence of a slowdown across the headline numbers. domestic has been week as well. if there is any evidence we can see that the consumption side of the story is relatively resilient compared to what we are seeing in other parts of the economy, that will be key. any sort of news when it comes to restructuring. haidi: especially as competition remains tight. that is it for daybreak asia. we have the china open up next. this is bloomberg. ♪

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