paul: good morning and welcome

to bloomberg daybreak australia. annabelle: where counting down to asia's major market opens. shery: softbank's chip unit files for what could be the biggest ipo of the year. paul: around the in big taxpayer not rebound in u.s. stocks. shery: goldman sachs will further unwind its --. u.s. futures coming online in the asian session per muted at the moment. we saw mixed finish. tech leading the gains in the s&p 500, which rose for the fourth time. tesla game in the most since

march. we are watching the dollar swinging between gains and losses, finishing unchanged. oil falling and continuing to feel the pressure in the asian session. we do have more signs of a rebound in supply. take a look at the treasury space. volumes were quite low, 75% of activity. that is leading to big moves in the yield space. two year yields rise in about 5%. if you are looking at the inflation protected treasuries, yields pushing over 2% for the first time since 2009. the 30 year also, a 2011 high.

a major shift as we are seeing the ads of recession in the united states receiving. let's turn to our top story. softbank's semiconductor unit arm has filed for an ipo seeking to list its american depository shares on nasdaq under the symbol arm. it could be the largest in the u.s. this year and could be among the biggest tech listings ever. let's bring in liana baker. this could be a welcome relief for softbank's founder. >> we will not know how this ipo will price until there roadshow which will start in a few weeks after labor day. we know what the revenue figures

are, how the company is doing. we have a good snapshot of how the company is performing. will it reach the $70 billion valuation? hard to say. softbank is looking to float about 10% of the company. they are still going to hold on to 90%. it will be a nice outcome after some of the losses earlier this year. paul: it is an unusual situation. this is a very mature company coming to market. what are the growth prospects here? >> arm will have to convince investors that it is a different company than when it was acquired by softbank in 2016. under the ceo rene haas, arm has been trying to diversify away from mobile. in mobile it is almost ubiquitous.

but it is trying to get into the more lucrative area of servers, personal computers, data centers. it will have to convince investors it is a different company than when at last traded in 2016. shery: what does this mean for the broader ipo market? >> other companies that are waiting in the wings to go public are definitely watching. we have reported instacart could file its financials any day now. there are also other tech companies. the ipo market needs a shot in the arm at this point. any news is good news right now and the ipo market. paul: talking about the upcoming arm ipo. a rally in big tech. concerns over higher treasury

yields. alexandra, how are the moves in treasuries playing out in the equities picture? >> the u.s. bond market continued its selloff today. the move up we have seen in yields comes as investors position for hire for longer interest rates. we have seen economic data show resiliency in the face of aggressive interest rate hikes. but today, we saw a rally in technology shares because investors are overlooking their concerns about a hawkish federal reserve and instead are focused on excitement over artificial intelligence. we have earnings results from nvidia on wednesday, which will make or break the rally. nvidia is up more than 200% this year. the bar is really high for this company, especially with a lot

of analysts revise and expectations for nvidia, increasing their price targets ahead of results. shery: it has been a difficult august. we are expecting five months of gains for the s&p 500 to end this month and yet there are few signs of outright bullishness. >> wall street is at a crossroads about what will happen with equities. we have mike wilson of morgan stanley coming out today saying investors if they begin to doubt economic resilience we could see sentiment start to weaken. goldman sachs sees this pullback as being short-lived. that hedge funds are positioned in a way that suggests there is more room to boost equity exposure. a lot of people i spoke to her not so concerned about the

pullback. they are seeing this as a potential opportunity to step in after they missed out on the rally in the first half of the year. hsbc said they are waiting for jackson hole and a potential sotloff to buy the dip -- sell off to buy the dip. annabelle: we are focus on china's economy. it really is this issue around china's ballooning debt loads. taking a look at the total debt as a percentage of gdp. last year at 360%. this is painting a big picture. we are seeing symptoms of

excessive debt coming through because you sought to fall the property sector. country garden one of the ones we focused on. also there is stress in local government financing vehicles. these are symptoms of excessive debt. it is becoming more difficult to manage. country garden, investors are still very nervous. country garden bondholders are demanding full repayment on an outstanding note that is due next month. country garden is asking for a three year extension to avoid default. another stock we will be focusing on in the session. paul: still to come, a big week for all see earnings -- aussie

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paul: we have trading underway. u.s. futures seeing a little bit of softness. similar story for nasdaq and doubt futures as well. it was a reasonably positive day for u.s. equities, particularly for tech stocks. it looks like we are setting up for modest gains in the asia-pacific as well. joining us now, nancy sherif daoud from ameriprise financial services. notwithstanding the bounce we saw in u.s. markets, you like utilities. are you getting more defense in broadly speaking? >> yes, of course. today was sort of a different

picture for technology stocks, but the entire month of august has clearly showed a pullback and may be helped the market take a breather and ease overbought conditions. august historically has not been a good month for the stock market anyway. however, this is not an all clear sign. when we look for opportunities, we look for what sectors have taken the biggest beating or have been oversold more recently or in the last 12 months. the utility sector would be one to be more defensive. looking ahead, especially further declines are expected, but not so much information technology today made a very big combat after just friday was technically oversold.

paul: we are seeing rates moving higher over the past year, which has been good for financials. what are your expectations for the future of rates as we count down to jackson hole and the fed meeting after that? >> it is not difficult to predict. mr. powell said and waged the war on inflation. the stronger-than-expected economic data implies further fed rate hikes. some of the deterioration we are seen in china, the mortgage rates are north of 20% -- am sorry, north of 7%, which is the highest in 20 years.

these are all indications we need to keep moving forward in the battle against inflation. shery: when it comes to the broader market sentiment, we have seen few signs of outright bullishness. when it comes to hedge funds, they are narrowing their positions in s&p 500 futures. when are they going to see the impact of these calls? >> it is hard to tell. i think we should be cautious moving forward for the rest of the year. recession is still not out of the question although less likely now. maybe the soft landing will be achieved. until we overcome the battle for inflation, it is difficult to predict what is coming next. i would like to advise my investors or my clients to be more defensive and more cautious

and make sure to test their appetite for risk. i think we might actually be in for a couple of months of big swings. shery: when it comes to specific sectors, what about financials given rising yields? >> that is good news for the banking sector so i would expect financials to do well. i would expect health care to continue to do well because that is a sector where there is almost any economic condition. there is some narrow opportunity in the information technology sector as well. there was always an opportunity when the market takes a breather like this. it gives everybody an opportunity to consolidate and look for where the next upside will be. shery: we saw the energy sector today taking a had to oil prices

falling. is there anything in the commodity space you like? >> i think that is a little bit further out. looking ahead, we expect things to be very rocky and we are taking a very defensive posture. shery: how much of that has to do with the u.s. dollar strength? >> looking outside the u.s., i think western europe and outside the u.s. has been slow to recover. the u.s. dollar has been fairly strong so it has been difficult to make a good profit overseas. we tend to stick with overweighting u.s. equities as opposed to outside the u.s.. however, it is not far ahead in the future where emerging markets may become a very good opportunity.

the deterioration in china may change that outlook. paul: shares in asia-pacific on a losing streak. this symptomatic of what you see in a normal august? >> august has in general not been a good month in the stock market. we are going into the season with august and september very volatile and sluggish. i think the conditions in china and the strength of the dollar will make all the difference as far as looking outside the united states for investors. paul: nancy sherif daoud from ameriprise financial services, thank you for joining us.

bhp get in earnings for the full year out a short time ago. 13.4 billion underlying profit, that was a mess. -- miss. dividend $.80 per share. bhp sees inflation and labor tightness continuing to impact cost but sees china and india remaining sources of stability. it was weakness in china that caused difficulty for one of their competitors, rio tinto. property dividends falling there as well. bhp's full-year profit dropping as china's metal demand wanes. a bit of a miss on underlying

profit. you can catch bhp ceo mike henry later on today on bloomberg markets: asia. shery: you can find a roundup of all of these stories on daybreak. terminal subscribers go to dayb . you can customize your settings so you only get the news on assets you care about. this is bloomberg. ♪ my cpa told me i wouldn't qualify for the erc tax refund, so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies.

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shery: actavis hedge fund engine number one ceo says it is time to invest in u.s. factories and railroads. she told us we are at the beginning of getting supply chains back to the united states. >> they are complicated systems. we are just at the beginning. if you look at i think last year we saw almost 400,000 jobs come back. huge mega projects. if you think about it, these megaprojects across different sectors, we are building factories. the factories need to be smarter. they need automation. we are seeing real ways for

example having a huge opportunity to create value because we are working with in one geographical value. it is time to get into supply chain. >> let's also talk about engine number one under tcw. tcw known as an active investor. putting that together, it is in the future you will be looking to launch active products in more traditional bond spaces? >> when you think about what engine number one does today, we are in the equity space. tcw is not just the bond and fixed-income shop. you will continue to see more active equity products. there is also an opportunity to look at the income side. paul: engine number one ceo jennifer there. let's get a quick check as some of the top corporate stories.

permian resources to acquire earth stone for $2 billion. they will operate 11 shale oil plants in texas. hedge fund the sculptor capital has received multiple takeover bids and higher valuations. the company was offered $12 per share. rourke capital in talks to acquire subway.

the sale could be finalized as early as this week. shery: take a look at how currencies are treating. the u.s. dollar swinging between gains and losses. 10-year gilts rising to a six year high. -- 16 year high. rising yields seen as a positive sign for the dollar. investors very much waiting chair powell's speech this week. the japanese yen very little changed against the u.s. dollar. we are watching jgb's because the 10 year yield has risen past the .6% level and the korean yuan has also weekend. a little bit of pressure for the

kiwi because of everything that is happening in china. paul: let's take a look at how we are shaping up for the asian open. in australia, futures pointing higher by a quarter 1%. not a lot of change for nikkei futures. plenty to watch when we start trading in sydney. bhp pretty much missing on all estimates with full-year results. plenty more to come on daybreak: asia. this is bloomberg. ♪

shery: take a look at schwab for

stocks after hours. a little pressure. let's get details from vonnie quinn. more belt cutting measures. >> exactly. the stock is down 29% this year. we will get to reasons why but it is a way to appease investors. the statement from the spokesperson at schwab saying schwab is taken a series of actions aimed at removing costs and complexity from the firm and that it will result in some eliminations. we are talking about a brokerage that has 36,000 people employed, but is also integrating te deum air to. -- te deum air to.

-- td ameritrade. paul: to what degree are these aftershocks affect the make? >> we saw schwab was very badly heads during the turmoil in the spring. it was one of the banks that lost deposits. in the last quarter management said the worst is over. by the end of the gear we will be seeing growth once more and net interest margins will be improving. it got over the hump. it issued $2.5 billion worth of bonds. it took advantage of programs which it is now paying back to get itself over the hump. this has to be another way of appeasing investors.

he says it is planning annual savings of about $500 million. we do not know the extent of these job cuts. the filing did not say. in left it very open, but it is reducing its real estate footprint and that makes sense, taken advantage of the environment we are in in order to save money on real estate costs. paul: bloomberg's vonnie quinn there. what is happening on wall street with citigroup considering reshuffling its ranks. su keenan joins us with more on the stories. let's start with goldman. >> this is clearly a continuation of a move for goldman to distance itself from

a that into consumer banking. this was the first big signature deal of david solomon so it is noteworthy. the deal to buy united capital, goldman now saying we are evaluating alternatives for that business as we determine where to invest our resources and where we see the greatest opportunity. it is symbolized the earlier effort to expand business lines. the purchase of united gave goldman an instant footprint into the mass affluent market. at the time of the deal united had 220 advisors. it is now at $29 billion which shows you did not grow that much. there has been a lot of internal

discontent within goldman because of what is going on. a lot of moves to unwind these initial moves by david solomon to expand goldman. there are many who say goldman should stick to what it does best, which is handling money for the rich. goldman sachs down a bit in the latest session. shery: let's turn to citigroup. we are expecting potential changes. not only in leadership but in structure. >> the ceo is said to be considering an overhaul of the firm's decision-makers. this comes as a way to prepare for the departure of a key deputy.

he is expected to leave in the coming months according to sources. he has had a vital unit as citigroup. the institutional client group makes up about 75% of citigroup's profit. citigroup has a plan to break up that unit now. the financial times was the first to report this, calling it the most significant shakeup of citigroup's structure in years. they would split the key division into three parts. investment and corporate banking, global markets and transaction services. a spouse spain -- a spokesman from citigroup has declined to comment. the ceo says this would allow her to simplify the company.

that should not come as a surprise that becoming a leaner organization is a priority for me. a lot of changes both at goldman sachs and citigroup. paul: bloomberg's su keenan there. elmore -- more earnings from coles, the supermarket chain. a narrow miss. full-year supermarkets comparative sales up 5.8%. we do of course have a bit of a situation with inflation in australia. there shares have been down 10.5% over the past year, underperforming the broader asx. in terms of outlook, we are

still waiting on some news on outlook. a reasonable performance for c oles. shery: goldman sachs and morgan stanley at odds over the outlook for u.s. stocks. annabelle joins us with the details. there is a bowl and we bear here. annabelle: this is coming from goldman sachs's equity strategy. there is room to increase exposure to u.s. stocks. he says we could be on course for a soft landing. goldman sachs also has an internal indicators to determine whether there is that space around equity exposure and looks at nine different indicators.

goldman sachs said the moves on the index could be short-lived. take a look at what we see in terms of positioning in markets. when you take a look at shorts, they are at their lightest point in a gear. perhaps more people are starting to build the case for further moves higher for u.s. equities. paul: that is the bull case. how about the bear case? >> this one is coming from morgan stanley. market sentiment will likely deteriorate further. investors are becoming a little bit too optimistic about the prospect of a soft landing. even if that is the case, we still do not know it will appear

just yet. it makes a sense that we will have very fragile market sentiment in the months ahead. that is being backed up when you take a look at u.s. stocks over the past few weeks. down for three straight weeks in a row. very different views coming from morgan stanley and goldman sachs. shery: we now take you live to hawaii where president biden is paying a visit, meeting with first responders given the massive disaster that has claimed at least 114 lives. this was the deadliest u.s. while firing more than 100 years. you can see earlier pictures of the president arriving on the

island. he has received some criticism for his response to the historic disaster. he is meeting with first responders to surveyed the destruction from the wildfires. we have more to come on daybreak australia. this is bloomberg. ♪ 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.

shery: market index fell for an eighth session monday. it is turning into a messy august for broader em assets. for more, let's bring in our analysts. we have seen these risks with em. how bad has it been? >> has been a bad month for emerging-market assets. when you look at the index for dollar bounce they basically have the gains for the year, only 2.5% up for 2023. if you look at the currencies and the gauges for stocks, they are almost done wiping out the gains for 2023 as well. it is august, you can argue there is very little liquidity and that some people are out on vacation. but for em, seems like the risks

are coming from everywhere. dismal economic data from china, elections in argentina and ecuador and guatemala. u.s. shocking revelations like what happened last week with the central bank of nigeria finally releasing statements and reserves were much lower than estimated. paul: that is what em investors have been dealing with. what is coming over the horizon? >> the round of elections not quite done yet. both argentina and ecuador have to choose a president. investors will be watching that. a wildcard candidate in argentina was a winner in the primary last week. they will also be watching for a second round in ecuador.

they are watching russia were capital controls were brought back. they are still looking at nigeria, where there is a new administration. shery: despite the risks, our next guest is seeing emerging market equities as the most preferred and their global portfolio. joining us now is alejo czerwonko from ubs. great to have you back. what drives your optimism? >> the think this -- the thesis has to do with the economic outlook and the earnings outlook is less bad than what is priced in. there is a lot of gloom and doom and it takes a little bit less pessimism to transpire for portfolios to do relatively well when it comes to emerging-market

equities. within the asset class, you have the situation in china which is absolutely dire, but we think there will be policy easing which should help stabilize sentiment. you have brazil and chilly, where recently you had interest rate cuts, plus relatively stable political risk. finally, countries such as india where we see secular drivers driving performance in terms of economy growth. shery: the political risk in latin american countries, can you really call that stable when argentina is headed to elections and the election results of ecuador? what do you make of those economies? >> elections delivered surprise reloads -- results.

when you look at mexico, brazil, colombia, i would argue you have seen a recent decline in political risk. relative stability. relative to the cases you bring to the table, i think the larger economies are exhibiting declining political risk. when it comes to argentina, we need to recognize that 70% of the voters voted against the administration, which does not have a great track record. 60% of the voters went for center-right options when it comes to economic policy. this is healthy to shift the debate in a country that does not have the best track record with economic results. paul: in the case of argentina,

the stage was set for the emergence of a populist candidate. when we look at some of the candidates ideas, we still have to deal with congress. how likely are any of the policies going to happen? >> you are absolutely right. there are a range of economic policy proposals that are quite extreme. one thing is what politicians say while campaigning, and a different thing is what they wind up doing once in office. there is going to be a gap undoubtedly. given the challenge and macro economic status quo in argentina, something needs to change. voters were demanding that. paul: if we take a look at

ecuador, whoever wins the runoff , they will not have much time coming just 18 months. >> the political situation in ecuador is undoubtedly challenging. it is a sad situation. this election will not solve the entirety of the instant tea -- uncertainty. a very short runway, a limited honeymoon period. i want to take a step back. your talking about two economies in the region. when you look at the wider picture, there is a stabilization of political risks. shery: you mentioned in and china and the optimism they bring you. we have seen this decoupling when it comes to chinese assets

and broader em assets. will that continue? >> i think chinese economic and financial performance will continue to be very important for broader emerging markets. they are -- there are very clear trade linkages. unless policymakers come out more aggressively to stabilize sentiment in china, emerging markets are unlikely to recover. to the india question, i think there are secular trends benefiting economies such as india. the situation in mexico. the geopolitical map is being redrawn and this is yielding winners and losers. in the falls in the winning camp

-- india falls in the winning camp. shery: how closely do you watch the geopolitical tensions and the different groupings taking place in the world order? >> we have moved to a multipolar world. the geopolitical map is being reshuffled. in terms of the summit, it is interesting, i do not think it is too relevant from a financial markets perspective. as a concept, it turned 20 years in terms of its age a couple of years ago. very little to show for concrete integration and financial coordination. i think the summit is unlikely to change the trend, but should be understood in terms of a broader shift worldwide.

shery: alejo czerwonko from ubs. we take you to live pictures of president biden giving a speech right now in hawaii. he is visiting the island in response to the wildfires that authorities say claimed 114 lives. this is one of the worse wildfires in the united states. it is expected to cost $5.5 billion in terms of damages. president biden earlier was meeting with residents and also with first responders in surveying the destruction from the wildfires. we have plenty more to come. this is bloomberg. ♪

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paul: breaking news out of australia.

woodside, the oil and gas producer earnings. $1.47 billion, up 6% on revenue. we have seen natural gas prices soaring around the world. woodside a beneficiary of that. $.18 per share dividend. we are waiting to see what happens with strike action. the shoreline says there will be strike action at woodside if there is no agreement on their demands around paying conditions by the close of business wednesday. we could see workers go out by september 2 and that would impact 11% of global supply and that would see gas prices continue to rise. woodside performing well. net profit 1.4 -- 1.47 billion

dollars. we will have an interview with the ceo on tuesday. stay tuned for that. shery: we are seeing a little bit of upside in oil and the asian session. we saw declines in the new york session. investors very much focused on signs of rebounding supplies so we saw trading in a range of almost two dollars per barrel. that is it for daybreak australia. daybreak: asia is next. this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

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but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company.