>> you are watching "daybreak:

asia." coming to you live from new york city and hong kong. >> we are counting down to asia's major market opens. paul: the top stories this hour, asian stocks poised for the next open with china's july activity data ahead. argentinian assets and -- in freefall with the government valuing the peso is a political outsider shakeup the election race. china's property crisis is rippling into the $3 trillion wealth management industry. miss payments on investment products highlighting wide arrests. we meet the man who could be taiwan's next president. he tells us exclusively how he plans to reissue voters and maintain peace. shery: look at how u.s. traders are issuing. we are seeing outside after we saw major indices in the new york session gaining ground. tech stocks leading the gain, seeing the best day in two weeks. it was low volumes across the board. we are talking about august as a slow month.

even small moves can make a big difference. . the russell 2000, smaller stocks, falling to that one-month low hello. we are following treasury yields as well. they were hired with the 10-year yield at the november high with the 2-year yield nearing 5% level. this as we had corporate bond sales weighing on prices. we had the real yield inflation protected 10 year rate climbing to 14 year high. we are talking about traders thinking interest rates will remain higher than inflation for quite some time. that spurred those gains in the dollar. the bloomberg dollar index, at one point, breaking above the 200 day moving average. . on the other side of that trade, the argentinian peso, we saw it on a freefall already given the sunday primary lead to an unexpected result with a victory of outsider have year malaise. we have the government stepping in and devaluing the currency. an 18% evaluation of the

argentinian peso not to mention the central bank hiked rates 118%. we are watching these moves across moves especially on emerging markets at this hour. annabelle: that's right. the emerging market in focus in asia, is china. given those moves we have in the offshore yuan. pushing near the 7.3 level. it is an expression of the continuing weakness we see in china's economy. we will get more of an update on them when they get the monthly activity numbers due this morning. but there are concerns around the property sector. we are also monitoring the flow on affect to other parts of the financial markets inside china. that will be something that weighs on sentiment in the session. we are setting up for a mixed start. we can already see kiwi stocks online to the downside. japan, the other focus, this is the market that is in focus, because we have that second

quarter gdp number coming out. the expectation broadly from our bloomberg economics team and others as we will see a pickup in growth. yes saw begin trading about 145 level. the growth data, as i said, the devil will be in the details. when you look at the second quarter gdp, it is expected to accelerate. the inflation is the focus here. goods services, where is that a and prices coming from? it does here that it could be from more external factors. consumers weak inside japan. we could see a down take in conception -- in consumption. a lot to get through with those numbers later this hour. paul: red flags are popping up across china's financial markets, making investors anxious about the health of the recovery. we will get the latest economic activity data out of china in a couple hours. let's cross to beijing and are greater china's senior executive editor.

travel in china's property sector is nothing new. but what is the contagion risk now? how is this spreading? john: the newest spread is with the trust company. they were a big lender to the developers. now the developers are in trouble. they are in trouble itself, according to stock exchange statements from the number of orbits. they did not get paid under trust product issued by them, that has sent a lot of concern rippling through the financial system. the company, which has a trillion yuan, or 140 billion u.s. dollars under management, will default miss payments on more and more of its products. shery: chinese trusts have been under pressure for years. we have seen regulators take more actions. will this continue to be the case, or could we see some let up? john: this is leaked to the real estate issue here in china over

the last couple of years, as the regulators here in china have tried to insulate the banking system. the trust companies, non-bank financial institutions, or shadow banks, have become more important lenders to that industry. over the last couple of years, as china has tightened their grip around developers and we see home prices fall, we see developers not being able to pay their debts, the people, the company's most at risk, they are taking the brunt of this, or the trust companies. we are talking about 3 trillion u.s. dollars under management overall. some proportion of that will not be able to pay their debts. we have seen tens of billions of dollars of defaults. that looks like it will continue. paul: an important day for data out of china. we are not expecting any change to the medium-term lending facility. industrial production, retail sales, want to talk about retail sales in particular. we are anticipating a slight uptick. considering the state of the property market, does that seem

optimistic? john: i think again, i would say it is a year on year comparison. last year, there was a big surge after the reopening following the covid lockdowns. during the summer, there were many lockdowns around the country. we have a low base of comparison. at the same time, real estate has been a drug. we have deflation, the economy in deflation we have data showing that savings across china has gone up 11% in the first seven months of this year. all of that suggests people are choosing to keep the money in the bank, in their wallets, and not to spend. paul: john liu joining us from beijing. let's head to argentina. the central bank has hiked interest rates. policymakers have devalued the peso to curb mike it chaos following the -- two market chaos following javier milei.

let's bring in our correspondent from when osiris -- from buenos aires. what can we expect in terms of economic implications for argentina? patrick: a stunning vote yesterday in argentina with javier milei upending the political class. he was told to finish third, he came out finishing first above the two established political parties. that caused bonds to fall below $.30 on the dollar. as you mentioned, the official exchange rate was devalued 18%. in the real economy, we are seeing businesses hike prices 20% overnight to try to shield themselves from a huge jump in inflation which will only fuel prices and increase -- and create a vicious cycle. another aspect that investors and markets will pay attention to is something we published on the terminal. that argentina will seek a larger imf disbursement in

august according to a senior government official. that is something pettus come out -- something that has come out. . the government to schedule to receive $7.5 billion from the imf, from an agreement they already reached a couple weeks ago. the key now will be if argentina can rework that agreement and get more out of that disbursement in august. they were hoping to get dispersants in august and november. now they are hoping to have more money frontloaded, brought forward, into august. it remains to be seen if argentina can redraw the lines from a program that has faced one setback after another. paul: the presidential election set down for october 22, which funnily enough is javier milei's 53rd birthday. it will be quite the thing for him. if he wins, how do we wrap our head around this possible economic policy? we better get familiar with them. what is he proposing? patrick: javier milei's chief

economic proposal is to dollarize the markets. where the peso in the dollar or both of official legal tender in the country, and people can choose. in a country where everyone saves in u.s. dollars, one would think if there were two currencies in circulation, the dollar would become the dominating force. it remains to be seen how he is going to do this. his economic team has not been informed. i think the real concern for markets in the near term is that he is vilified so much, the current government they are so at odds, on complete ends of the political spectrum. it is difficult to see, especially as javier milei is competing against the incumbent candidate, if milei is the candidate, or wins the election, how there would be a smooth transition. it seems difficult for those two

teams to be coordinated policy in a transition phase if milei wins the presidency. and how he would dollarize the country, he has not provided specifics. he wants free-market reforms, to lift a huge tax burden in argentina, he wants to cut export taxes. it is a very -- it is a wish list right now and sounds difficult to achieve, and a interventionist protectionist countries like argentina that is not used free trade. shery: i will be what -- that will be what causes market uncertainty. perhaps we could see another round of voting in november. tell us about this candidate himself and the populism that seems to be running with his campaign. he is an admirer of former president trump. he has a dog named elton friedman. -- milton friedman. tell us what this means for the change in the political environment in argentina. patrick: milei's results last night in the election is a

rejection of argentina's established political class. you have had two parties for the better part of two decades fighting for power in argentina. neither being able to show concrete economic results to stabilize inflation and let the country grow, despite a huge vast resource of natural resources, future lithium reserves, huge natural gas and oil reserves. yet the country is jumping from wrote -- from one crisis to another. javier milei is this colorful character who is rejecting the political class, and has found a couple key messages. very much a drain the swamp message that his resignation -- resonating with a lot of voters, many suffering from poverty. there is clearly appetite for a massive change of direction in argentina and milei, the approach on dollarization, policies, and a rhetoric style that is very much like donald trump in the united states.

like shire bolsonaro in brazil. channeling and tuning into that anger that so many people have. like you also mentioned, milei did win the race. he won by a couple percentage points. . from the second-place person. we are likely in a three-way race that could head to a runoff between the top two candidates in november. this uncertainty, this market volatility will extend for the next few months. paul: bloomberg argentina blue -- bloomberg chief, right there. potential strikes in australia threaten to shatter the fragile balance of global supplies. we will have details of that story later this hour. wells fargo investment institute tells us why they expect steady to high u.s. inflation in the coming months to trigger further fed hikes. a global market strategist joins us next. this is bloomberg. ♪

>> the administration remains committed to taking actions to lower prices for americans where we can. and we continue to monitor developments, particularly those abroad, that may affect prices in growth. shery: u.s. treasury secretary janet yellen on the path to easing prices. our next guest is expecting steady to higher inflation in coming months that will prompt further fed rate hikes later this year. let's get more from gary schlossberg, global market strategist at the wells fargo investment institute. it is great to have you with us. does this mean all of this bullish sentiment in stock markets are not really warranted? what will that mean for further gains? gary: something of a mixed bag for the stock market.

one reason we may see slower progress, if any come against inflation is the fact that the economy is on the gradual trajectory toward what we think will be a recession by early next year. but away from that, we see inflation track -- pressures developing better outside the control of the u.s. economy. higher fuel prices, food prices moving up in response to global warming, and disruptions overseas, the war in ukraine. even rent could be turning the corner as well. all about nudging inflation higher between now and the end of the year. shery: when you say you prefer of the developed market equities over emerging-market stocks, does that you are looking outside the u.s. and perhaps in the likes of europe and other markets? gary: we continue to focus on the u.s. market. we think we will continue -- that will be the stronger performer during the balance of the year, just get growth prospects here. we are on the leading edge of what growth -- what the global

economy is able to maintain. outside of the u.s., to the extent we are invested overseas, we are tilting toward developed markets. we think they are better positioned to deal with the slowing global economy, the economic environment over the next six to eight months. paul: if you are right, if inflation is not defeated, do you anticipate significantly more tightening from the fed? gary: not significantly. but we do think there will be one more rate hike this year. we think there is the possibility of another rate in early 2024. before the slowing of the economy, it improves the inflation outlook, allows the federal reserve to move to the sidelines. paul: so you know the slowing of the economy, does that mean a recession, or are you in the soft landing camp? gary: we are leaning toward a recession, unfortunately. we think the tightening in the financial markets that we

anticipate over the next 5, 6 months, combined with the economy's slow unwind, the unwinding of the post-pandemic supports that could be the economy moving, all point toward some sort of slowdown in the economy. shery: how will china factor in? we have seen disappointing economic data lately out of the world's's second-largest economy. at the same time, we are speaking to an analyst before you that this is going to export this inflation, and that was actually going to help those em's. gary: i think it can, to some extent. if the dollar maintains any sort of strength, that tends to weigh on commodity prices. keep in mind, if the global economy is winding down, china is an important part of that. but we are also seeing europe struggling a bit as well. that's weakening demand for economies cannot bode well for

emerging markets. during a recession, that is a difficult environment, more so for emerging and developed markets, we believe. shery: we have seen southeast asian commodity oriented economies doing well, especially with the reopen and tourists starting to head that way. what are you expecting for those markets? gary: we think they will hold up better than the northern asian economies. taiwan, south korea, more exposed to the slowdown in china and to the weakening and technology generally over the cycle. their domestic economies, in some cases, are in better shape. indonesia benefiting from strong domestic spending. india doing well. between that, tourism, and the fact that commodities, while softening, will not be as hard-hit as manufactured goods exports in northern asia, we will keep southeast asia better insulated.

but not entirely so, from then economic slowdown. shery: gary schlossberg, great to have you back. wells fargo investment institute global markets strategist. thank you. you can get a roundup of stories you need to know to get your day going in today's edition of "daybreak." go to dayb . also available on mobile and the bloomberg anywhere app. you can customize your settings so you only get the news on the assets that you care about. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

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shop now only at sleep number. shery: we are getting our quarterly glimpse into where billionaires and big hedge funds are placing their bets from their 13f findings with the fcc. su keenan joins us now with the latest. one major investors selling off a stake in alibaba and jd.com.

su: that would be michael burry who rose to fame after predicting housing crisis and as -- and has a huge social media following for his ability to predict looming risks. chinese tech giants had been his hedge fund's biggest holdings. now is filing showed he ditched them months after doubling down on them. he exited positions in alibaba, jd.com and his cutprice inking stocks he bought in the first quarter. he loaded on mining, shipping, and energy stocks and placed bearish bets against the s&p 500 and nasdaq 100. this was last quarter. we don't know if these positions are still held. but they work as of late june. is filing showed he put options on two exchange traded funds, the s&p 500 and invesco qqq. the big take away from the thousands of filings bloomberg has been analyzing is that hedge funds bought into tech in a big way and were writing the big

tech rally. institutional investors added 5.7 million cheryl's -- shares of meta platforms. they boosted microsoft and apple holdings and piled into ai. nvidia advanced micro devices were in a lot of the funds. bloomberg analysis finds that intel is the outlier, about 41 million shares were sold off between them. one of the biggest buyers of tech was capital management out of london. they popped more than 2.7 billion shares in the qqq, part of their multibillion-dollar bullish tech that. also bought calls or bullish positions in alibaba, took a new stake in taiwan semiconductor, and formatted more than 14 billion -- it has more than 14 billion in assets, that is why it is watched closely. it also added macron, and, boosted a stake in amazon. microsoft was one of the largest holdings when you consider all of these funds as a group in

terms of value. paul: there is always a lot of interest in warren buffett's berkshire hathaway. what were the key takeaways? su: berkshire hathaway is fall -- is followed because they hold positions for a long time. see a little bit of difference where they are getting rid of previous holdings and picking up new ones. one of the new stakes that is catching a lot of attention is a big bet in builders. berkshire hathaway buying into a trio of homebuilders, d.r. horton, nvr, and lennar. because of its real estate focus in its portfolio, some observers say they are viewed as having some insight here. berkshire slashed its take in activism blizzard i 70% in the second quarter, this came amid the delays with microsoft. also trimmed positions in chevron, exited the -- and added to occidental, now holds 25% of that stock.

very interesting position there. stay tuned. shery: su keenan there with the latest on those 13f filings from the fcc. take a look at how currencies are trading at the moment. we are watching the dollar and the strength there. we are seeing that study with the bloomberg dollar index, breaking through its 200 day moving average. higher yields spurring those gains for the dollar against their major peers, especially when it comes to real rates or inflection protection yields. the 10-year yield at the highest since 14 years ago. traders betting interest rates will remain higher. perhaps we are seeing a new paradigm for the dollar, when before we were thinking it was running out of steam. the other side of the trade, the peso was under pressure. two minutes confirm an easing cycle. the russian ruble, at one point, breaking through that 100 level. also reversing those declines.

the bank of russia announced at a meeting that chinese yuan, weakest level since november. we have plenty of data to digest and a devaluation of the argentinian peasant. 18%, following -- falling to that $350 per level. coming up next, leading presidential candidate speaks to bloomberg exclusively while keeping the peace with beijing, as the islands leadership polls next year. this is bloomberg. ♪ wow, you get to watch all your favorite stuff. it's to die for. and it's all right here. streaming was never this easy, you know. this is the way. you really went all out didn't you? um, it's called commitment.

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annabelle: this is then about

drillers -- annabelle, a lot of economic data given what is coming up, second quarter gdp. it could tell us that gdp growth has been accelerating in the second quarter, but could be driven by external demands. speaking of, you are expected to confirm the slowdown. stepping up with further stimulus measures, quite a heavy day but let's change on and take a look at what we are seeing in terms of futures, looking fairly range bound given in particular,

futures coming online in chicago are firmer. paul: he told us about his plans for managing relations. >> we must abide by the truth which is what i mean by pragmatism, it is the taiwan is a sovereign independent country, it's not part of the people's republic of china, it is not necessary to declare independence. >> what is your roadmap to

formal independence? >> protect taiwan. no such framework exists. we must maintain the status quo because taiwan is already a sovereign country. >> taiwan keeps pushing, it is simulating the naval blockade. increased tensions have not originated from taiwan, it hopes to change the rules-based order. under these circumstances we

must be clear, peace and stability in the taiwan strait are aligned by international interests. because challenges are a global concern, a global redline will be taiwan's redline. >> president zelenskyy rose to the challenge when russia invaded. what to do learn from his leadership? >> democracy is a universal value, irrespective of borders. they are protecting their land and people, fighting on behalf of of democratic values. >> the unprovoked invasion of ukraine has let us see the

dictatorships are inherently unpredictable. we also see that president zelenskyy's courage all contributed to ukraine's resistance. you have said provocative things in the past how be changed? i have been way of responsible and clear channels of munication.

the other choice is to accept the one china principle to stand together with china. i believe they will support us on the first path. the u.s. is a close friend of taiwan, they were partners in a number of areas. taiwan's security challenges are a global concern, the upkeep of peace and stability and indo pacific region for filled the common interest of the international community. i believe all democracies in the

world would be aware of how to respond if such a scenario were to take place. the semiconductor industry is not just made up of one or two steps, the advanced processes are located in taiwan so if they choose to set up operations in the u.s. or other countries, this is an expansion of power. i would take these developments positively. i am a rational and steady leader, i know how we can respond to the challenges we face as a country, i also understand those issues call for rational and steady leadership.

this will enable our country -- shery: speaking exclusively to joe weber. you can read more about the cover story, that interview is also the subject of today's big take. let's bring in the taipei bureau chief. what we are key takeaways? >> good morning. his first interview with foreign media and see became vice president three years ago, he gave bloomberg a series of exclusive access, he opened up about his humble upbringing, telling us how hard-working was

because his father died young. he took us to his official residency to see how he hosted those closed door meetings to see how he interacted in the ruling democratic progressive party. trying to convey through the interviews to his life, he had presented himself as a continuity candidate. right now, he tried to convince the voters and people around the world that he would be a reliable and predictable leader because the president, he had -- that's how they had linked each

other. he was compared to barack obama and joe biden. this is the foreign policy to be a continuity candidate, so his main responsibility would be to maintain the status quo and avoid war as much as possible. paul: what about exporting tsmc to other countries? >> there is a feeling that with all of the chipmaking, who will come to taiwan's aid.

he said he would take those developments policy. it's also taiwan's responsibility to give back to the international community. still, major strikes about australia plans next.

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with personalized insights from 23andme. paul: katz's back is a risk to the global economy as a strike threatens global supplies. let's get an analysis. what impact strikes have on asia

prices? >> thank you for the question. that will depend on the duration and amount of capacity to take away metric tons from the market. this is between two weeks to two months and we have taken into account because the strikes have had a stronger outage more likely than having full capacity going off-line. it means the market was a week or two to the early september

period in europe, the longer duration. japan, china, south korea. it impacts smaller markets with a significant portion from the three plants. there are two ways to make up for the supply shortfall,

because of the lack of seasonality but for legacy buyers in japan, china, storage is another option. in japan, we have seen storage withdrawals in the past two months because of the strikes forcing them to come back to the stop -- stock market. paul: the weather is an important factor for winter supply. >> the estimate is 7 million tons and this may bring back

from europe. the demand may rise that will further increase prices having said that, this will be beneficial over the coming winter which may bring warmer weather. shery: we are counting down to the annual summit. leaders and energy, transport, government to shape a cleaner future.

this is bloomberg. ♪

paul: we have had a bit of a rally in oil prices recently but supply is remaining tight, some fresh concern over the state of the economy, west texas is $82 a

barrel. of course, the potential of strike action is a factor here. we have a natural gas producer, this is obviously a discussion which could avoid a strike and potentially send a price higher. inventories seem to be in good shape. gold futures are easing off a little bit, not really seeing. i typhoon has reached the coast to central japan, heavy rain, flooding and landslides.

>> we are not seeing much impact , some light rain, and central japan a typhoon made landfall this morning near osaka in japan. authorities have warned that heavy rain, flooding and mudslides and have advised some residents to evacuate. the transportation has announced 500 flight cancellations. shery: we do bring you the

quarter, mrs. beating economists expectations was for 2.9% growth so it's a whopping beat, 6% annualized and acceleration of growth from the previous quarter which was revised upwards from 2.7%. we are talking about growth of 1.5% for the second quarter, beating expectations. the hot deflator will lead to concerns that we are seeing that has missed expectations. when it comes to the breakdown of what is leading to the growth, private consumption has

contracted, we are seeing business spending is flat, percentage of gdp, net export, this is one concern by economists. the neck that's for contribution of 1.8%. paul: impressive numbers there. let's get back to what we were talking about, we don't just randomly see the typhoon

sweeping through urban areas. let's bring in bloomberg intelligence, what are the potential insurance claims looking like? >> good morning. we are looking at about $1 billion in terms of ensure losses, the reason we say that is because if we look at the track and impact area, it's actually quite similar to what we had in 2018 in early september, so that one cost industry over ¥1 trillion. the insurance companies have actually bought less coverage than before. it's going to be very tricky in

terms of tallying the losses when the dust settles. what are the possible impacts when it comes to earnings? >> based on our estimates, we are thinking digits, we don't think the storm will be equivalent. but mind you it is the rain and flooding.

right now as of this morning, it's probably going to be over one foot of rain. shery: the latest on japanese insurance. the 6% annualized growth in the second quarter, the estimate was 2.9%, we saw the nick ayers falling in the previous session, we are seeing in a little bit supported, we continue to watch the japanese yen after falling to the 2023 low. the japan and australia open our necks. this is bloomberg. -- is next. this is bloomberg. ♪

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>> we just had those incredible gdp numbers out of japan, 6% for the second quarter, those if you take out the pandemic. numbers we haven't seen in 10 years. annabelle: certainly very strong fears coming through from japan gdp figures. coming in an annualized basis of 6% growth. estimate 2.9%. more than doubling here, but the question is when you dove into it, are we seeing a stronger consumer. we have the open for japan and australia and taking a look at the private consumption figures because the second quarter and japan showed a contraction of .5% on the quarter. the estimate had been for 0% so

it is a little bit weaker than had been expected. what does that mean? that tells us a lot of the strength and the japanese second order gdp figures is coming more from the external demand-side, not from the internal consumers in japan facing weakness, given you take a look at the real wages figures. what exactly that tells us, any normalization from the boj is likely to be gradual, it will be a long shift out of that negative rate setting and also out of the yield curve control program. the moves that we are seeing that are fairly range brown, japanese yen is still holding above that 145 level. just fractionally firmer at the start of the base session for equities, which are rising 9/10 of 1%. what else is going to be playing into the session today is that read through from the wall street session. it was low liquidity so we are watching trading volumes quite closer. stronger tech numbers coming

through. we have tech stocks in focus. let's change on as you mentioned, korea is shut for public holiday but australia is coming online and it still the earnings focused coming through. csl nab not trading just yet. we will watch them in a few minutes from now. but we are focusing on the eco-data given those rba meeting minutes that are due in the next hour. it will give us more clues as to the rates trajectory from here. we have seen bond yields taking higher. the aussie dollar is still seeing weakness throughout the session. sitting below that $.65 level. just a reflection more wrong what's happening with china's economy and we will have monthly activity data numbers due out as well that's also what oil traders are focusing on. the focus is on japan gdp figures. >> kathleen hays with more details. even the highest estimates for those gdp numbers were about

4.5%. the japanese economy seems to be doing pretty well. kathleen: certainly on the headline. the net exports were strong. this is been the boj's concern that the economy will pick up. if you see the economy being driven by exports and not so much by demand, that is the concern that the governor has been expressing, that they have to see final demand, they have to see consumer spending, they have to see their confidence. that's one of the reasons why the boj is waiting to see how wages continue to do over the rest of this year going into the all-important spring wage negotiations next year, are they strong enough, do they support the idea that not only exports are going to do better, and of course a weak yen, which is been the big story the last several days, that's good for exporters, but in terms of imports, what if the yen weakened so much on the prices of food and energy go up,

what if that continues to apply where it doesn't really help the prime minister's popularity. that's one of the delicate things that boj has to be balancing as well and we might have a trade that we could put up. what was expected on this report and where we got, and more than double the forecast, this is the sort of think that would allow the boj to look at all these different aspects. i think it would be interesting to see -- we see a bit of movement in the dollar yen but it is something that is not as dramatic as we've seen. of course staying below that 145 level. at any rate, a very surprising report, i think it will be great when we get a little more information and analysis from our eco-team in tokyo as well as our guests. paul: bloomberg global economic and policy editor kathleen hays. japan is in the thick of

earnings season right now. our next best thing sweeney's to cut through the noise to see what is or is in tracking well. our asian equity investment director at aberdeen joins us now. obviously a blowout gdp number as we've just been discussing, still with a very weak yen, easy monetary policy in japan, is this just a slam junk -- slamdunk or do you need to be a bit more nuanced in the approach? >> you called it quite right. you have to be nuanced in the approach. we look at what has driven the strengthen japanese equity this year. it has been a couple of things. expectations of monetary policy normalization, and there's hopes of inbound demand, inbound travel helping with demand. i think on the speculative side on monetary policy, as we also discussed, it's a bit harder to call whereas inbound travel is

perhaps a bit more visible. i think where we see companies that can see earning supported by some of that is probably a bit safer. emma: i mention that weak yen, one 4540 six didn't really move on that gdp data in a meaningful way, but which you see happening next in terms of boj policy? we've got inflation above the target range. is this an economy that really needs negative rates still? >> that's been quite a difficult position to take on. you do see some of these data points that support policy normalization or move away from the policy stance, but at the same time some moves you see from the boj are still quite fragile, but it's why can go by to the stands that it's very hard to say that they're going to move quite meaningfully away from that, even though you see

some positive data points that way. shery: we have seen many investors convinced fincen really liking japan as opposed to china. people who have not been too convinced about the chinese story. do you see any opportunities in that market? christina: china at this point has been extremely tricky for investors. this entire year i would say we've had the disappointment at the start of the year where everyone got recovery would be coming back and that didn't happen in a meaningful way. we are back at that point where people are wondering if recovering will come through. there is expectations and there probably will be stimulus coming through the second half of this year. things that have been tricky's consumer sentiment not coming back. people not spending as much on the ground there. so the opportunities, it's gotta be quite selective were things within mobility or travel or

things like that have been better. our policy alignment has been -- or when companies are more aligned with policy, particularly within the eeev space, that has been holding up better. you have got to be even more select live in the current times when it comes to china. shery: do you bet on exporters with the weakness of the yuan? christina: not so much, if we think about how china has been trying to grow the domestic economy, and you look at the headlines, one of the key focuses right now is to ensure that they can spur domestic consumption. i think that's where you want to be on the right side of things. exporters, there could be benefits there given where currencies are, but if we really look over the long-term and where policies are lining, that's not a consumption side. more on trying to build out supply chains locally. wherever we are more comfortable on taking a stance on.

emma: in terms of some of the themes that you like, i know you are still cautiously enthusiastic about electric vehicles, batteries, i'm just wondering how you play that? do you buy battery manufacturers, lithium stocks or do you look at the whole chain? christina: when you look at the entire chain we will have certain times were certain segments will do a lot better. currently if we look a fundamentals we've got many of the korean players that would step up quite well that came out to its end of last year. the tricky nest now is even on the fundamental side when things are holding out well, you have auto books going. a lot of the good news is getting priced into where valuations are and you are already seeing some of that froth in that sector with the result of a few corrections in stocks over the past month or

so. i think you have to be careful when it comes to expectations versus where fundamentals are. the ev penetration story is one that will take time and sometimes you get sentiment that runs ahead of that. that's where some of that caution comes from. shery: how is south korea doing in terms of the ev battery space and broader tech hardware? christina: with korea you've had some of the positivity that we've discussed. there have been some flow driven movements that have contributed to that froth. that's where i think we add another layer of complexity when it comes to analyzing how much is priced in with the korean ev battery makers. with the tech hardware space it's been clear. if you look at where we are relative to bottoming off of her fundamentals, we are a lot closer than when we last spoke about tech hardware.

that has provided some comfort if you look at samsung and hynix as a result. particularly with memory. investors have become a bit more comfortable in the next couple of quarters. that's where visibility has gotten a bit better relative to a few months ago. shery: director for aberdeen, thank you so much. the south korean market is closed on holidays today but we are seeing the korean won trading under pressure at that three month low against the u.s. dollar. that's see what else is moving in the market. what are you seeing? paul: we've -- anabel: this is the third heaviest waiting on the asx 200. a major pharma company and essentially a just released its earnings out. we did see that profit rebound and a couple of different profits behind that. they had plasma collections in the company said that hit record levels.

they had extremely strong drug sales so they lifted their underlying profit by 10%. stock market reaction this morning. nab, that's the other one we are tracking today because this is one of the big banks in australia and its planning to buy back as much as 1.5 billion aussie dollars were near 970 million u.s. dollars of its shares. it's going to help boost its balance sheet but that stock is trading have percent higher. let's change on because there's another company focusing on the session on this is listed in japan. it is a taiwanese company. this has -- it's one of the best ways to play the ai trade inside the country. why exactly that is, it's a software-as-a-service company, and uses ai to help brands, retailers increase their customer engagement. one way it does that is by integrating ai into chatbot

systems to increase the human likeness of its products. but that stock is surging today. a very strong earnings coming out from the company yesterday after the bell. the court or marking the highest second-quarter growth rate since its ipo. paul: still to come, standard chartered says investors bearishness on china is now reaching its limits. they join us later to preview the july data dump. this is bloomberg. ♪ 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

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shery: u.s. futures slightly higher in the asian session after major benchmarks rose in the new york session. tech stocks were leaving and gains. the best thing in two weeks. it was a low liquidity session. august is typically a slow month. we have the russell 2000 of smaller stocks under pressures falling to the lowest level in the bottom appear let's get analysis on u.s. equities with jenna martin adams joining us from hong kong. we have been hearing these

warnings about the u.s. market rally. rbc capital markets saying we could see a risk off dropping as investors are getting too bullish. how are the fundamentals looking for u.s. markets? gina: i've -- i take the point. it suggested at the end of july we were getting a little overbought. but for the most part, it does appear that the market has eased those overbought conditions and now are already stabilizing. part of the reason is the fundamental outlook. our global bellwethers where we look at the broad array of global stocks and we take the 150 largest across sectors and countries in the global markets and it's broadly beating expectations. in particular x energy and materials sectors that are input costs for the rest of the groups. even in the united states we see revenue revision momentum at its fastest pace all year as most companies continue to beat

expectations, forcing analysts to revise expectations higher. at least as far as the fundamentals are concerned there is quite a bit of support for stocks. paul: let's look at the analysis that you've done on global bellwethers earnings. we will start with the key takeaways there. gina: the biggest key takeaway is really the commodities prices of markets with the greatest extent of commodities producers tend to be the biggest jack. areas of the world like canada and australia continue to underperform mostly because there commodities sensitive segments are underperforming the rest of the world's. they have a greater exposure to those commodity groups and as a result their earnings are lagging. on the contrary areas of the world like japan, continue to dramatically beat expectations. europe excluding the u.k. generally strong earnings overall in comparison to the rest of the world. we are seeing that commodity is

a distinguishing factor, the areas of the world that have heavy exposure to the commodities complex underperforming as you would expect when commodity prices are down year-over-year. shery: we continue to see the rising treasury yields with real rates rising to the 14 year high. what is this mean for equity risk premium and returns going forward? gina: the equity risk premium has fallen below average and we did sit at an above average premium from 2010 to 2019, which would've implied strong double-digit returns to stocks. we have seen the equity risk premium fall below average. it's now down in second when tile of history. at that point in time you see in the second quintile average returns for the equity markets to slow closer to mid single digits to double digits given

the competitive landscape is changed. we call this terror, there are no reasonable alternative to stocks. it doesn't mean a grim outlook that it does mean potentially below average returns as long as those interest rates remain relatively high and attract capital. shery: we continue to see the rally intact but health care stocks of really gained ground. what are the fundamentals in those sectors? gina: the fundamentals for health care are improving rows the fundamentals -- protect our improving whereas the fundamentals for health care are deteriorating. this is looking at year-over-year earnings growth trends. we see the momentum tailwind emerging protect. that emerged in the first quarter and continues to be relatively strong with this group largely leading earnings growth. particularly when you include communication services stocks, which i would consider to be tech adjacent stocks, you see double-digit growth emerging

from the space. for health care you have reasonably high valuations but also deteriorating earning growth prospects. some is because health care performed well he year ago when we saw strong fundamental stance of the comparisons are more difficult. we are seeing a slowdown in revenue growth and still a bit of margin struggle in the health care space. paul: bloomberg intelligence chief equity strategist gina martin adams joining from hong kong. bloomberg users can interact with the charts that we've shown using gtv . browse recent charts featured on bloomberg tv to checkup on key analysis and save charts for future reference. this is bloomberg. ♪

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shery: getting a quarterly glimpse into where billionaires are placing their bets from their 13 filings from the of cc. su keenan joins us with the latest for one major investment sold alibaba and jd.com. su: he is widely followed because he actually predicted the housing crash back in 2009. his ability of moving risk and chinese tech giants have been the biggest holdings. a lot of overhaul of the portfolio in addition to exiting alibaba and jd.com, and some of the bank stocks he was able to pick up at cut rate prices in the first quarter, he's now piling into mining, energy and shipping costs and placing bets against the s&p 500 and nasdaq using options. expedia emerges as his top

holding. the big take away from the thousands of filings, you are looking at it. hedge funds were writing the tech wave and the ai rally piling into a lot of the stocks. they added meta-, they bought microsoft and apple, and they piled into the two stocks that have been known or associated as ai stocks. that is nvidia and amd. one example of a fund that really piled in and spent billion on tech is the widely followed fund out of london. they bought close to 3 billion shares in the qqq trust, that's the proxy for the nasdaq. they bought calls on alibaba, new stakes in the semiconductor and they bought tech and chip stocks. what's also interesting, microsoft was the most -- i

guess by value, biggest holding of all funds together even though some funds are paring back microsoft holdings, and we did see some notable funds, tiger, global, maverick and lone pine actually reducing their overall exposure to tech in the second quarter. paul: there's always a lot of interest in berkshire hathaway. what have we learned there? su: berkshire hathaway is closely followed because they typically buy-and-hold, although this latest filing showed they change that up quite a bit. another interesting factor is because of the real estate focus in the portfolio, the headline that they are taking new positions in a trio of homebuilders certainly has gotten a bit of attention. they bought shares in d.r. horton -- d.r. horton. that's a bet on the

homebuilders. meanwhile, they cut their stake in activision blizzard by 70% second quarter. this video gamer has had a delay in its merger with microsoft that could be part of the reason . they also trim their position in chevron, they exited the insurance broker and added to occidental. that stake is now some 25% of the company, with is fascinating is that thousands of companies have had to put in their 13 of filings and it does look like tech and ai are the big themes here in terms of what these billion are traitors and funds were buying. paul: bloomberg su keenan there. let's just take a look at how we are tracking on asian markets this tuesday morning in the asia-pacific. the nikkei leading the way. up by 8/10 of 1% right now. we do have those blowout gdp numbers out of japan for the second quarter a short time ago. 6%, we were expecting a little

less than 3%. more than double what the market was anticipating. the topics up by one point 5%. modest gains in australia. on trading in south korea. markets are closed for public holiday. still to come, standard chartered bankshares their outlooks on chinese economy ahead of jill activity data. we will preview those numbers next. this is bloomberg. ♪ (jennifer) the reason why golo customers have such long term success is because we focus on real foods in the right balance so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy. release sets you up for successful weight loss

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annabelle: this is "daybreak asia". 30 minutes into the session for tokyo and sydney. so shut for a public holiday. we are very much focused on the market reaction to japan second-quarter gdp figure. they headlining sensually growing 6% on more than twice what economist had been fixing. it's actually pretty muted this morning because we see the japanese yen barely changed and that is down to the private consumption figure because we saw a contraction of .5% on the quarter and that was bigger than what economist had been predicting for zero change to the end just sitting flat. perhaps it's not really going to be a figure that gdp number, the headline wanting to shift the boj reasoning, and we could still expect a gradual shift away from those easy policy settings. they move higher that we are getting from bond yields. equity currencies are little bit

under pressure and we see stocks here moving to the upside. the nikkei focus of 1%. we roll into more of the reporting season, one of the names is a taiwanese company -- to make them more human life and we will discuss the blockbuster numbers in the next hour. that's an exclusive interview. shery: jp morgan warning that missed payments of investment products by major chinese shadow lender may trigger a vicious cycle for property development financing and more delinquency for the products. it's weighing on investors minds as they china the activity data

out in less than two hours. let's discuss this with head of china microstrategy at standard chartered. great to have you with us. given the defaults that we have already seen by trust firms on those investment products linked to property developers, how big is the risk of contagion? becky: we believe there would be implication when it came to the conditions, but we are not, at least at this stage, expecting impact into the rest of the market. what we know is that the trust industry has always been pretty exposed. for certain products, if they are more exposed, than the risk will be higher. also more than two years ago, many have been scaling back their exposure to the sector. we see the developers have some

supportive measures when it comes to their refinancing. we saw them able to extend their bonds on the shore, the majority of the bonds onshore and there are other measures. while there would be implications with what we believe the risk remaining contained in the foreseeable future. shery: what will it take for us to see a turnaround in the property sector in china? becky: the simple answer is it's highly unlikely to be a complete turnaround anytime soon. if we look at the lattice -- the latest data in the secondary market across the old hearing of the cities, it is now far -- falling far below last year's level. if we look at the implications of growth, it's mitigating from last year's level but it's still very severe. so from that current stands, it's quite unlikely to see a complete turnaround in that's also not the desire of the authorities as well.

if we read the meeting statements, it's clear that they are continuing with this so-called new model. they are patient to engineer a change of growth driver of the chinese economy and therefore for the so-called old drivers, including that of the real estate. the goal is to stabilize the sector instead of to revise the sector to the extent that it becomes a growth contributor again. paul: let's turn to some of the data we are expecting today in the policy decisions. we aren't expecting to see change throughout the medium lending facility. not surprising since there's not a lot of appetite. how do policymakers address that question? do you see these current policies being enough to stir the animal spirits? becky: from a monetary policy point of view, we expect easing of monetary policy but we also need to keep in mind that under

the current environment, monetary policy easing is the measure that has to be there to support other policies. the real hope comes from other policies including fiscal. for example, we believe china will be cutting the rrr very soon, especially when we start to see the redemption rise materially from this month onward. subsequently, we also do not rule out the possibility for rate cut, but the rate that's needed to be cut would be the five-year lpr, given the very strong desire for the set to be repaying mortgage loans. the fiscal policy is likely to play a larger role. if they were able to fully implement the budget deficit that was confirmed in the march npc, we should look for a rise of fiscal expenditure by 45% in the second half, relative to the first half.

paul: we are also going to gain industrial production numbers today, retail sales. in the terms of their retail number, there is an expectation to see it grow, on year it's not that surprising. do you think there might be a risk of a downside surprise because consumer sentiment obviously is pretty closely linked to a rather depressing state of the real estate market right now. becky: indeed. in general we are looking for a further moderation of the real activity data for july. for the retail sales data, it could possibly be boosted by the summer holiday expenditures. but if we look across the other leading indicators, for example, china's official pmi has been staying under 50 for the fourth consecutive month. even our own system has been declining for the fifth consecutive month. also, if we look at the latest real estate data, they are all pointing to further moderation of economic activity for july.

at this stage we do hope for slight improvement of stabilization from august onward because we are seeing the very beginning of a series of more supportive economic policies to implement what's outlined at the july politburo meeting in 2021. paul: head of -- at standard chartered. let's get more of our trading day ahead. david ingles joins us now. let's start with the yuan. just seems to keep on getting weaker. what are your expectations today? david: you are right. it certainly broken out of the range. we can blame the dollar and we can blame the other side of this deteriorating outlook on the economy on the market on the property market. the exchange rate is nearing a level at which it's almost an implicit agreement within the

market that 7.3, we would be bobbing around that level in a tight range, but we are very close to that now and forward point, record low. you did get a very strong fixed yesterday relative to estimates, so i would expect nothing less then a stronger fix them to send a signal to the market, if that is the policy intention today. we are within .5% or .6% of 7.3 on the onshore rate, that's what i'm watching closely. you also have a couple of big expiry's right now on strikes among 7.3. a lot of things to watch in the currency space, but to make it simple, 7.3 is what we are watching today. shery: what are you watching in the equity space? david: i don't know. where do i start is the question. we've seen outflows out of the onshore market for six straight

days. i will see if we get day seven. we are looking at this dimension, we did get some momentum going into the close yesterday. we closed well off on the day. the declines we had overnight on wall street did indicate that the losses were of eating somewhere. there is an etf that actually bets against this. it's an in for the devil -- it's an inverted double. if you want to bet on more declines, this is one way to do that. country garden, the stock in the bond and high yields. we are down six straight days on the bloomberg high-yield index. that's what you want to watch. if we declined further on msci china, this is one to watch. uptrend, higher and higher lows could be at risk. we will see what happens. paul: let's take a look at the earnings front, how is your report card looking for the season so far?

david: we don't have a big enough sample size yet to make a determination. what the season is going to look like, if you base it on tech earnings, and we have big tech earnings, that specific sector is looking promising. apart from that we are 10% through and it's almost where we have the information to compare the estimate, it's almost a perfect split between beats in line and profit mrs.. on a week late this week where about openness, it's about 50 minutes away. shery: bloomberg markets coanchor and chief markets editor on what to expect in the chinese markets. coming up next, our exclusive interview with the taiwanese vice president. his thoughts on keeping the peace with beijing just ahead. this is bloomberg. ♪

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shery: the taiwanese presidential candidate is currently on an overseas trip including you -- to u.s. stopovers that have angered beijing. bloomberg businessweek editor joe weber exclusive access to

the homeland on the campaign trail to find out what's motivating his desire to lead taiwan. >> further taiwanese presidential hopeful, events like these have become the new normal. meeting with dp be faithful between his duties as the parties chairman and serving as taiwan's vice president. >> welcome to my hometown. >> but it's in his hometown 25 miles north of taipei where we first meet up. >> this is my father's. this is my mother's. >> i know you had a very close relationship with her. >> my mother took care of me all her life. she has been my inspiration. >> he grew up in this modest

family home where he opens up about his family, political future in the future he sees for taiwan. do you feel that the international community treats taiwan justly? >> i think so. i think so. because taiwan's issues are a global issue in the peace in the pacific region benefits all the country. >> so this is the home you were raised in by her mother who was widowed, she wanted you to become a doctor. and later told you not to enter politics, which you did anyway. what advice would she have for you right now? >> in the past, it's true, my mother did not approve of this job, but she loved me and she

said to me that if the people support what you're doing, then continue doing that. if they do not, then come back to being a doctor. if she was still alive today, i believe she would encourage me in this route i'm taking and encourage me to win the support of the people and take care of many more people in the years ahead. >> i know this may seem obvious to you but why do you want to be president of taiwan? >> i want to lead this country so our citizens can have better lives. i want to lead this country in a time of growing geopolitical countries to be a stable force in the in pacific region. >> to become president, he must court the all-important youth vote, which is what he doesn't taipei. -- does in taipei. being here must remind you of your two sons and your grandson. how do you explain to the

younger generation that someday they may have to stand up and fight? >> i will tell my sons, everyone grows up in different circumstances. i myself had a difficult upbringing in the countryside, but regardless of how we grew up, we must work together. we must work together to take care of those less fortunate. we grew up on this land, we should fight for this land and ensure that taiwan's people can have fulfilling lives here for generations. >> but the questions all generations of taiwanese have heading into the election, how will he handle the delicate relationship with china? >> we don't want to be enemies, we can be friends. we like to see china can enjoy democracy and freedom just like us, as long as there is dignity,

our doors always open. we are waiting to cooperate with china to have peace and prosperity. >> in taipei, taiwan, joel weber, bloomberg businessweek. paul: joel, very interesting and important conversation as well. tell us more about who he is and what you've discovered about him. joel: got his back story, one thing that stood out to me was that before he was a politician, he was a doctor. i think that really has informed his worldview. so the vice president has not been a doctor for years now, but he still approaches being a politician as what's wrong with you and how can i help fix it. i think that really informed his rise as a politician in taiwan

and also reveals a little bit of his approach going into the selection, which will be genuine. shery: what's the state of the race now and why is 2024 so interesting? joel: it's a heated race with three official candidates and a likely fourth. you've got a doctor, a surgeon, a former detective and a likely candidate in a billionaire entering the race. that basically has everyone looking at this because if the election were tomorrow, he would probably be the winner. he's got between 30% and 40% of the vote but their means -- that means there's 60% plus up for grabs now. but with those three other candidates in that position, they could end up fracturing the boat, which would probably tipped towards his favor. paul: what is at stake for

taiwan and for the world? joel: i can't understate how important taiwan is to the global economy and that was a real eye-opening fact during my visit. that really comes down to semiconductors, chips that come from taiwan power the global economy. it reveals how fragile it is and we learned that during the supply chain trenches. a lot of that chip diplomacy is playing out in the election and form some of the tensions between the parties and where the elections could go. also larger geopolitical issues between china, taiwan and the united states. the stakes for this cannot be higher in taiwan finds itself as being part of this triangle between the u.s. and china and has pressed her -- prospered because of that. in return, the world has prospered. going into the selection you

would have to assume that any escalations and in tensions between china and taiwan in the united states, all of that prosperity that the world has enjoyed has taken for granted are almost at risk. shery: what did he have to say about taiwan's relationship with china? joel: you got a sneak peek of it in the interview. he says the doors open. i do think he believes that. it catches that china may not view the doors being open and that goes into the really complicated geopolitical situations that underlie word taiwan sits in the world. ultimately, if there were conversations, we have no idea what those could look like, and it's probably too early to say as much and he underscored that. what it really speaks to, and when we say that, it is a

democracy in this election is really about the taiwanese deciding their future. paul: what is you learn about him in your interviews with him? joel: he was very thoughtful but stuck to his talking points. that also speaks to the geopolitical tensions. you've got a little glimpse of him speaking english there, but by and large she preferred to speak in chinese so he could stick to the talking points. it speaks to how important it is he be perceived in taiwan is a continuity candidate. he's inherited legacy from president tsai, the vice president -- who he's the vice president of. and he has to maintain the status quo and continued the same policies that president tsai has benefited from. if he's able to do that, that should have widespread appeal not only in taiwan but the

international community as a whole. shery: bloomberg businessweek's joel weber joining us from new york. you can read more about this in the cover story in the latest bloomberg businessweek. plenty more to come on "daybreak asia". this is bloomberg. ♪

shery: hey look at how markets are trading across asia.

we are seeing health care and industrial leading the gains in the session today. this is we have a little bit of a mixed picture across markets. the nikkei is recouping some of those losses we saw the previous session. we have very strong numbers when it comes to annualized gdp growth of 6% for the second quarter, really beating expectations by economists the growth of two point 9%. consumer staples and real estate lagging in the asian session. kiwi stocks are under pressure as the asx 200 is gaining ground for 10th of 1% per just 4/10 of 1%. paul: markets open ahead of hong kong and china are property space front and center. country garden seeking to extend a mature bond after holding local bonds. the city's planning to lower

down payment requirements for second-home buyers. we will keep an eye on hong kong and china guests. and big names with earnings releases scheduled saturday. ubs global wealth management shares their market strategy as they expect china's economy to grow at or above 5% this year. plus the ceo of ai card software services company joining us exclusively to break down their second-quarter earnings. that is it from "daybreak asia". markets coverage continues as we look ahead at the start of trade in hong kong, shanghai and shenzhen. bloomberg markets china open is next. this is bloomberg. ♪

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