it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> good morning and welcome to

daybreak australia. >> we are counting down to asia's major market opens. >> the top stories this hour, u.s. stocks and bonds followed. yields and treasuries ration the highest levels this year. paul: central bank policy makers seeing significant upside risk which could require further rate hikes. >> let's take a quick check on wall street. some small gains here from the futures market. the day started out pretty well.

the weakness piled up after the fed came out at 2:00 and's showed the vast majority saw more rate hikes will be needed. in terms of individual stocks, big tech names. in terms of china, the lack of china stimulus does far to return around a fallen stock market. this is also weighing on stocks. treasuries lowest across the board. the two-year got close to 5%. parentheses, we started by looking at the british pound. -- currencies, we started by looking at the british pound. more rate hiking as well for the bank of england. we are going to start the day looking at the dollar-yen, up to 140 six. now the highest since november of last year. traders are testing what the

bank of japan resolve is on policy. futures down 4.5% this week. paul: let's talk a little more about the latest fed minutes. concerned inflation may fail to receive and further rate increases will be needed. let's discuss this with stephen stanley from santander u.s. capital markets. thanks so much for joining us. let's take a look at those minutes. one of the key takeaways, most participants the upside risk to inflation. how accurately do you think markets are reflected the potential path ahead for the fed here? >> i think the markets have been more dovish than the fed recently. you look at fed fund futures and other measures of what the market is expecting and only a small chance of the -- another

rate hike. the fed has been pretty consistent that they see more to come. we are starting to hear more about the possibility of a pause given that we have had two good inflation numbers. most officials pretty far from being comfortable that the rate hike cycle is over. paul: a cup half full approach here. these are minutes from a meeting from a few weeks ago and since then we have heard from a few fed managers speak, some of who have been dovish. has enough been done to contain inflation? >> i have one more height coming in november, but i think we are getting close. how long will they have to stay on hold? at this point, i think markets are in a big hurry to transition

from no move to easing. i do not think the fed will be that quick to turn direction. kathleen: in terms of what inflation is doing, everyone is focused on headline one the core has stayed so much higher. what did you get from the minutes as you went through them about how that debate is looking? >> you are right, the fed is focused on the court because they are thinking in terms of underlying inflation. it is one thing for gas prices to come down or food prices. but those more sticky prices have not shown quite as much progress as the fed is hoping to see. the other thing that comes out in the minutes is the dichotomy that chairman powell talked

about, which is that while the inflation data was better-than-expected, the economic data have been stronger. the labor market continues to be red-hot. the growth numbers have been particularly good. second quarter gdp better-than-expected. we have gotten off to a good start in q3. the fed did say they really need to see a period of below trend growth and a loosening in the labor market. until they see those things they will not be comfortable that inflation is coming down at a sustained basis. kathleen: we are always so focused on the fed funds rates. looking at this idea of the fed continuing to tighten, that debate about that is borne out in the minutes.

what do you see in the minutes and what does it tell us about how the fed is strategizing between rate hikes and continuing with the balance sheet? >> i think there was a little bit more separation between the two than the markets have assumed. the market view had always been as soon as they start -- stop tighten and they will start to balance the sheet. chairman powell noted at the press conference three weeks ago there are circumstances in which the fed could be shrinking the balance sheet at the same time rates are coming down. at the time i think that surprised a lot of market participants. it almost seemed like a bit of a random statement, but it turns out there was a significant discussion of that at the fomc meeting because the minutes note a number of participants took that point of view.

they are not talking about it a lot publicly, but they are doing their due diligence behind the scenes. kathleen: as paul pointed out, we have four important reports. two inflation reports into jobs report's. when you look at the minutes, how we did is this divide between those people who are ready to say let's pause and versus those who say we cannot stop yet. >> i think it is getting more even. you look back at the june meetings and 12 of the 18 have at least two rate hikes. you look at the july minutes and the majority wanted to keep going or thought they would end up going. now that we have gotten a second

more benign inflation number, we have heard a few officials are willing to be more patient and let the data play out. it is not a once and for all deal. it is not like they will come in -- to us in september and say we are done forever. they will continue to consider moving policy as the data dictates. i think it is a choice between urgency and patience, not so much between saying we are done or not done. kathleen: i love that. stephen stanley from santander u.s. capital markets, thank you. later on daybreak asia, we speak to the rbnz governor adrian or. let's get to annabelle for the markets in asia. annabelle: we are focusing at

what we are seen in the kiwi bond space. yields move in a little bit higher following the decision yesterday. the rbnz indicating inflation could take a little higher. one more rate hike may be needed. the question revolving around how long do rates need to stay elevated. the key rate in new zealand could be at 5.5% until 2025. in the equity space, futures will open in the red. kiwi stocks online to the downside. we have been watching the moves in the japanese yen. we are above the level the dollar again crossed in september when intervention first started.

while above that at this point. the question is whether intervention risk is on the horizon. anything that will lead to meaningful appreciation of the japanese yen will need to be an exit away from the negative rates. we have seen a lot of currencies depreciate amid the dollar strength over the course of this month so perhaps the boj are unlikely to act just yet. paul: still to come, our exclusive interview with argentina's leading presidential candidate. here about his bold fiscal plants. a, tough times for china tech. jd.com results disappoint. details coming up. this is bloomberg. ♪

kathleen: protests reported in beijing against one of china's biggest shadow bank's after it skipped payments on several products. it is underscoring how trouble in the property sector is spreading deeper into the financial industry. stephen engle is in hong kong.

bring us up to date. what do we know? >> any time there are protests in china, it is rare and interesting, particularly in beijing, which is almost nonexistent to find these kinds of protests. in other cities perhaps far away from the nation's capital you will see protests, but we are hearing up to about a dozen protesters rallied around zhongrong international trust, major shadow bank that provides funding at very high interest rates of course. there long time cnet fairly safe places to park -- they are longtime seen as fairly safe to park money. we are going to talk about country garden in a second. but also the slump in the stock

market and other signs of weakness in the chinese economy is showing this slump is going beyond the property sector and into the financial sector and heading equate -- a key provider of liquidity. the government obviously concerned with even a dozen protesters gathered to seek explanations as to why they are not providing those redemptions on their investment products. right now, zhongrong is not saying much. when we approach them for comment, we did earlier this week get comments from one of the board secretaries who has a stake in zhongrong, the secretary said they missed payments on august 8 on top of missed payments earlier in july.

at least 30 products now overdue and zhongrong said to have halted those redemptions leading to those protests. they do not have an immediate plan to cover payments as short term liquidity has dried up. he admitted to receiving a tsunami of questions from investors and their own wealth managers. i am sure those questions will be coming in as zhongrong international mrs. payments and is not explaining as to why it did so. paul: you didn't mention country garden. let's circle back. we have more developments there. >> that is right. this was once the largest developer in china by sales. earlier last week, and missed a dollar bond interest payments.

they have suspended trading of 11 onshore bonds right now. the cash crunch really hitting this company quite hard. country garden in a statement saying it is warning of major uncertainty in redemption of its bonds and says trading in some of the local bonds will remain suspended. this is on top of what we are hearing from one of evergrande's units. in a statement they said it is being investigated by the securities watchdog perhaps for information disclosure violations. that is not uncommon for chinese companies and does not necessarily lead to penalties. but it is another sign a stress in the property sector. country garden has four times

the number of projects across china been evergrande. -- van evergrande. paul: bloomberg's chief north asia correspondent stephen engle bear. tencent adrs are slumping in u.s. trade. sleighs -- sales rose, games or cloud services underperformed. the company giving investors reason for optimism, develop an i i model -- ai model. jd.com shares fell after general merchandise revenue saw a 9% decline in the second quarter. profitability missed estimates.

goldman sachs also expressing concern about third-quarter growth. kathleen: you can get a roundup of the stories you need to get your day going by going to dayb . you can customize your settings. this is bloomberg. ♪

kathleen: argentina's leading presidential candidate is plugged into close the central bank while making efforts to avoid a debt default. in an interview, he told us he

will make the u.s. dollar the official currency of argentina. >> i think there is a previous discussion of dollarization, to get rid of the central bank. the dollarization is a instrumental issue. one argument has to do with the moral issue which is best dealing is wrong. -- that stealing is wrong. if we consider it is wrong, one of the greatest thieves is the central bank. in argentina, it is more evidence when a product has no demand its price is zero. if the local currency has no demand its price should be zero. whatever amount of money a central bank wishes to impose, the counterpart is the price level is infinite. equilibrium, real balance is

zero. whatever amount of money a central bank wants to impose, the price level has infinity. >> what do you do with the central bank? would you close it? >> what you do with a building is a problem of what you decide to do with it. what i am saying is that the institution does not exist anymore. in the transition until you can transform the banking system into a free blinken system -- banking system, they will have to fulfill the function of regulating the banks. >> in that idea, fewer president, all the bills in circulation in argentina would be dollars? >> yes. paul: bloomberg's exclusive interview with argentina's leading presidential candidate javier milei.

that interview was conducted in buenos aires. what were your impressions of javier milei? >> my impression was he talks business. this is a person that is very clear of his idea. he is a libertarian. he sees it as -- the current inflation is around 2.5%. one of the highest inflation rates in the world. his proposal while radical is touching a nerve with argentine voters who were tired of the situation. kathleen: i am interested in the proposal to dollarize argentina's economy. some countries have done it when

you are in such dire straits. how would it affect the economy? it seems like it would oppose -- impose some hardship. >> exactly, but inflation is so high and we have an election, so his proposal, while radical, is having some good reception with voters. it is a plan that he wants to send to congress s soon as he starts his government in case he wins the election. his ideas 6-10 months after congress passes this, all bills in argentina will be dollars. paul: javier milei also had

choice words when it came to china. what with the fate of chinese investment in argentina be? >> we are looking for reactions from the chinese government. i have never seen a candidate be so outspoken against china. this is as harsh as you can get. when i asked him are you will and to talk to china, he was very clear he is not willing to engage with the chinese government. this is very important because china is the second largest buyer of argentine products. it provides $18 billion currency swap that the central bank is

using to pay part of the debt with the imf. the lifeline the chinese gave is crucial. what javier milei is saying is we are not going to have any official business with the chinese. paul: at one point he said would you trade with an assessing when referring to china. still to come, gene goldman joins us next. 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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>> you take 2.5 and for

inflation you take 1.5 which is not especially aggressive for real rates, and you take 75 basis points for term premiums. you are looking at 475 on the 10 year and it obviously could end up being higher than that. it seems to me we are in a very different era than the arrow we were in in the aftermath of the financial crisis. kathleen: that was a former u.s. treasury secretary larry summers. we want to check on u.s. futures. stocks were kind of mixed. they were up and after the fed minutes came out, we saw some

mixture at the close in terms of some losses. maybe people are over that and they are looking ahead. our next guest says equity investors are too optimistic. let's bring in gene goldman from cetera financial group. thinking for joining us. -- thank you for joining us. in terms of the fomc minutes, they bear out what you were expecting, hawkishness. this is something that will not be so good for equities. what is the message? will this be a blockade? how will this play out? >> thank you for the opportunity to be with you on this you. -- the show. if you read them meeting minutes, they said inflation is

high and we will probably need to raise rates. there was also confusion. they said we still need to watch how it will affect the overall economy. there was confirmation the fed is data focused. july retail above expectation. second quarter gdp above expectation. ppi above expectation. all of this together with high valuation in the stock market. today rates were rising. it does not usually happen that way. kathleen: bonds are selling off. maybe they were anticipating what larry summers just said. suggesting yields could go over 5%. what will bat mean for stock investors? >> that is a great .2. bonds offer great yield.

the markets are little freaked out by the fed. we believe the fed is done, that they are pausing and it will be higher for longer. why pausing? if you look at the tightening, if you look at the bank crisis, if you look at the downgrades, this suggests a pause. higher for longer means we still of inflation well above 2%. the last thing is powell is a huge history buff of the fed and he wants to avoid mistakes. he always talks about the 70's. all of this is causing confusion in the markets. paul: you talked about the three c's amended to go. can we add another see for the

consumer which is very resilient. to talk about potentially avoiding a recession. do markets have to forget this idea of rate cuts? it is seeming rather fanciful. >> the consumer is in good shape right now. we are starting to see some cracks, increasing usage of credit card. this is a stress on the consumer. whether we have a mild recession or not, we think we are in what is called a rolling recession. the consumer is starting to weaken a bit whereas other parts are starting to stabilize. again, very mild recession, but the consumer starting to show cracks. paul: in this environment, where do you look to put money to work at the moment? we can see the s&p may be

looking to consolidate near the bottom of its range. where are you putting money to work? >> we are cautious. from a portfolio standpoint, we are using liquid alternatives to mitigate risk. we are overweight credit. we are underweight high-yield. high-yield spreads are super narrow right now. high-yield seem pretty flat. we like industrials. agriculture spending and defense spending surging dramatically. we also like health care due to the fact that a lot of drugs are coming off patent. we like financials. we think the valuations are pretty attractive, potential m&a

activity. last year, very little ipo's. that is great for year-over-year comparisons. kathleen: do you think 2022 will be a good year for stocks? what is my strategy then? should i start putting money in now? is there any fixed income play? >> we are big fans of diversification. small caps are attractive. markets near term will pull back a little bit. we just breached the 50 day moving average. i think there will be opportunities we can get more small-cap, more value. down the road, more international exposure. the dollar we expect will weaken

, especially with the bank of england reason rates faster. there are some opportunities from a currency translation standpoint. kathleen: sounds good. gene goldman from cetera financial group, thank you for joining us. we are looking ahead to market opens across asia. so far come out risk off treating given the lead from wall street and concerns about china's economy. annabella strachan the moves in the crypto space. >> if you were to ask anyone a couple of years ago what would be something they would associate with crypto, volatility could have been the first thing to come to mind. now, the dynamic is different. taking a look at the moves in bitcoin, ether. these are the largest tokens by market cap.

we are pretty much sitting in a very tight range. investor interest perhaps shifting somewhat. let's take a look at bitcoin in more detail. this is a token where it would not be unusual to see price swings of 5-10% in a single session. on a seven day basis you can see we are continuing to see the volatility trending down as it is on a longer term as well. shifting focus from crypto into other parts of the market. paul: perhaps stability equals maturity. in terms of the next big thing, is crypto competing for -- with ai? annabelle: that is the big thing we have tracked over the course of the year. this chart putting those moves into perspective. you can see the line in white is

not quite as promising, but still a mere 15% for the robotics. you compare that to nvidia, up more than 200%. morgan stanley saying we are near the peak for the price into ai. but we do have the likes of nvidia and other companies signaling the interest is still strong. there is a project trying to combine the two. this is something called world coin. it is looking at a world where it will be difficult to distinguish between robots and humans. take a listen. >> a quick's grand of your iris is all he could take -- a quick scan of your iris. it is the basis of world coin, project aiming to create a global network of identities. more than 2 million people are

signed up since its launch. sam is the cofounder. you need to scan your eyeballs using an orb like this. it is available in more than 30 cities worldwide. a unique online id is created and digital tokens are created as a reward. these are also called world coins with token prices rising above #3.50 before dropping. >> i am making money are -- even in my sleep. >> part of the mission is to tackle challenges arising from ai. >> whatever is interacting with the device is actually a human being. there is no centralized entity that has the information of who you are or where you are from.

annabelle: world coin has sparked plenty of controversy because sam bankman-fried was one of its early investors. there is also a debate on whether a sensitive data has been safely handled. >> it is quite questionable. it is not really public. annabelle: this is a step toward a crypto base universal income. it has face criticism from m.i.t. for targeting consumers in the developing world first. >> a lot of vulnerable people feel inclined to participate because they do not really have a lot of other income. annabelle: broadpoint has raised more than $500 million -- world coin has raised more than $500 million to date. >> i think it will deliver real

utility.

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. paul: we are looking ahead to australia's july labor market data. we are expecting a modest left in jobs and a higher employment rate. let's bring in our economic

reporter. we have a very strong labor market in australia. >> australia is experiencing the same trend as elsewhere. a really tight labor market, at -- unemployment near a 50 year low at 3.5%. strong job vacancies, more job vacancies than there are people. we still need people to come into the country and take some of the jobs. it is a very strong market. this is something the bank is grappling with. they have had two interest rate hikes. that has not had an effect on the labor market yet. kathleen: will a strong number for the rba to resume rate hikes after two consecutive pauses?

>> we have wages data earlier this week which was not a very strong number. it does not indicate the type labor market is driving the price spiral. as long as we have evidence that wages in the country are contained, the rba will take some solace from the fact that inflation will also come down. a strong labor market will give them the confidence that they can engineer a soft landing. paul: 12 rate increases from the rba over the past year. what has been the impact on the broader economy? >> we have seen the largest in cap on the consumer, deeply pessimistic. retail sales volumes have fallen for the third consecutive

quarter, which is pretty unusual. we are not seeing so much impact on the corporate side get. business confidence remains resilient. the labor market remains strong. i think this is what the rba is trying to do. he wants to cool demand but does not want to push the economy into recession, which is why they have been moving more cautiously. they have moved slowly then the fed and new zealand. this is the desired that they can cool demand, but preserve their job gains and have the economy growing. paul: new zealand producer output prices rising 0.2%, bit of a slow down from the first quarter.

import prices contracting. a modest expansion of 2/10 of 1% in the prior quarter. ppi input prices in contraction. cpi runs hot. we get the next read in the middle of october. later in daybreak asia, we will be talking to the rbnz governor adrian orr. that interview is coming up. be sure to tune into bloomberg radio to hear more from the newsmakers. we are broadcasting live from our studio in hong kong. plenty more to come. stay with us. this is bloomberg. ♪

i need it cool at night. you trying to ice me out of the bed? baby, only on game nights. you know you are retired right? am i? ya! save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add a base. kathleen: the hong kong stock shop now only at sleep number. exchange missed profit estimates in the second quarter. nicholas augustine told us he sees encouraging signs in the second half. >> hong kong is a very international market. there is no restriction in the flow of capital. we are very exposed to all

activity that happens around the world. it is the same as most markets around the world. free flow of capital, access to information and what we want to do is continue connecting east and west. that is our core objective. >> how much are you seeing companies and investment banks shipped to singapore, which is something we hear about as an alternative to hong kong as it gets more connected to mainland china. >> i do think that during the covid period it was a challenge and period for hong kong. at this point, i am not seeing a lot of that. i do see a lot of people returning with new availability of flights and being able to move around. we are seeing more people coming

to hong kong. international bankers, hedge funds, etc. a much more vibrant environment compared to the last two years. >> five years ago, a lot of the bankers were from the united kingdom. has that demographic shifted? are you seeing more from other places? >> we are seeing people come from all over the world. last year, we hired our cfo from brazil. people are coming from southeast asia, from the americas, europe. the demographic continues to be very international in hong kong.

paul: let's have a check on asian markets. australian futures pointed to the downside at the moment. yesterday the worst day in seven weeks for australian stocks. we are expecting the selling to continue today. nikkei futures pointing modestly weaker, down by 2/10 of 1%. the aussie dollar little changed. the yen 146.28. potential intervention from the minister of finance. the yen very weak at the moment. talk about something that is not week. the world cup women's semifinal was not a dream finish that australia was hoping for.

it is difficult to feel bad for the match because england was the better team. it was reminiscent of what south korea did in 2002 by go another the way to the semifinals. the bronze medal match up next for australia on saturday. i suspect they will be very well attended. australian fans not quite ready for the party to win. kathleen: there is excitement around the world for women's soccer. corporate australia getting a quit -- quick kick are from the competition. seek a limited set its tuesday earning call sub boost across hospitality likely due to the world cup. commonwealth fund of australia,

four year deal to back the national team. use cup australia said they wrapped up their website during the competition with traffic up 90%. kathleen: it really has been a terrific tournament. stadiums packed, viewership figures out of the park. this will put a lot of weight behind the campaign to get equal prize money for the women's game and tournaments going forward as well. kathleen: women are catching up with men in every regard. in the first three england games, 21% of bats -- bets were from women. i would say ladies, keep going. i am not a huge better, but it

gets your excitement up a little bit more. i think he is speechless thinking about betting. coming up, we will talk strategy with the samsonite ceo with the company said to be exploring a second listing in the united states. that is it for daybreak australia. daybreak asia is next. this is bloomberg. ♪

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