lizzy: good morning. the says -- this is "bloomberg daybreak europe" treasury study after global bond yields on higher for longer rate that's. the u.s. 10 year yield hits a 2007 hike and japan's 10 year yield rises to his highest in nine years. s&p downgrades a slew of small and midsize u.s. banks sang a decline in deposits is squeezing the liquidity, making life tough for lenders. and chip design giant arm files for what could be the biggest u.s. ipo of this year. targeting a valuation of 60-70,000,000,000 dollars as it looks to ride the ai boom. good morning and welcome to

tuesday. as we await clarity from fed chair jay powell in jackson hole on friday on how high you as rates will have to stay for how long, it has been cast in the bond markets. treasury yields have studied now but overnight, you saw a major selloff. the 10 year yield topping 2% and the real 10 year yield hitting 4.35%, the highest since the financial crisis. the 2-year yields momentarily pushing over 5% in late trading. this is august and volumes are light. these moves are exaggerated but still, this question of whether the u.s. can avoid a recession is also dividing strategists on the outlook for stocks. the s&p 500 had a four-day drop yesterday but morgan stanley's michael wilson is at odds with goldman's david kostin over what happens next. wilson says sentiment is likely to weaken further whereas david kostin says there is room for investors to increase their exposure if a soft landing is in

the cards. the nasdaq closed up 1.6%. all eyes on softbank's arm. it filed for what is set to be america's biggest ipo this year. softbank shares rising 3.5% of the most since mid june. the big question is can't the phone chip designer thrive in the world of artificial intelligence? i know the ominous absence of morgan stanley on the draft filing. speaking of chip designers use on nvidia shares rocketing yesterday, the biggest gain since late may. 8.5%. this as analysts razor price target on the stock, a sign of growing optimism about the results tomorrow. as we look ahead to the wall street open you have futures currently flat. let's get over to bloomberg's asia executive -- markets effective editor paul dobson in singapore. it looks like a sea of green across the board. houses looking in asia touching?

-- how is this looking in asia session? paul: we have taken comfort on the nasdaq which helped the japanese market. some of the other metrics as well. china started out strong but it has tailed off to the day. the csi is lighter at the midday break. the negative cloud still hanging over those markets and putting things lower as well. towards the european session, we are little bit off the highs and a little bit less confident in the outlook again. meanwhile, still shuttering from the impact of the higher bond yields. lizzy: i mentioned japanese bonds. how have the bond moves been playing out? paul: the higher treasury yields are acting as a stop for the rest of the world as well.

everywhere where bonds are trading, they have been heavy again today, particularly in japan where as we know, the bank of japan has stepped back a bit from its control of the yield curve allowing the 10 rates to rise further but not too rapidly. today, we saw them switch to a new high above the previous ceiling that we have seen in the cycle of .66%. no sign so far of too much from the boj. we are on alert to see whether they may weighed in with unscheduled purchases through the day to try to keep that cap on the yield curve. and elsewhere as well, the repercussions from those higher treasury and particularly the higher real yields will be felt across the yield curves into the rest of the world as well. lizzy: in terms of the yuan you have seen increase pushback against further weakness there. paul: there are interesting

developments which were overnight and started towards the end of the day yesterday. we started to see the amount of liquidity in the yuan available in the offshore market starting to get mocked up. it'd largest additions were not offering as much into the market or they were taking down what was there. that pushed up the borrowing costs and funding costs and offshore markets. that has impact of making it more defensive to short the end. as the result, the currency gained strength overnight and has continued to carry through to today's ran session. we have seen a bill auction in the yen in hong kong, larger than usual, mopping of liquidity and authorities making a harder for speculators to hold onto those short positions are making it much less desirable.

analysts are so bearish around the currency across-the-board and everybody is looking for further weakness. at the very least, this action will make people think twice or slow down their depreciation. that is where we are right now. thanks -- lizzy: thanks to bloomberg paul dobson. time now for the morning roundtable. i am joined by jill disis in hong kong, peter elstrom in tokyo and jennifer zabasajja in pretoria. i want to start with the u.s. banks. it was only two weeks ago that moody's rattled markets by downgrading a slew of them and now the s&p is following suit, looking at keycorp, america and others. a decline in deposits has squeeze liquidity while the value of their securities which make up a large part of their liquidity has fallen. let's go to joe first. -- jill first feared it seemed inevitable that this would happen. how will banks respond at the fed keeps rates higher for longer? jill: i think that the s&p

downgrade accompanied with what would you put out a couple weeks ago says it all. the situation certainly seems like it gets worse. without deposits, that is especially for small and medium-sized banks, the regional banks, that is what is funding the loans and other assets on the balance sheets. what do they do if they don't have that money and need to find other sources? you see them replacing that with more extensive sources of funding such as broker deposits are using them start selling off other assets on the balance sheets. given the rate environment, they would be selling at a loss. there's a couple of options that are not favorable for banks or you could see them start trying to find mergers are there combinations to figure this out. lizzy: thanks to jill disis for that update. and now, into what is said to be the biggest ipo from the u.s. this year. softbank's semiconductor unit arm has filed an this could rank

among the top tech listings of all times. let's bring in peter now. where are we on the numbers? what sort of valuation is expected at this point? we got --we got the filing overnight. they talked about taking a company public. we are report aiming for evaluation of 60-70,000,000,000 dollars. the above the company for 32 billion dollars, roughly the valuation doubling at this point. it is not clear how much money they want raised in the offing -- offering. it could be 8-10,000,000 dollars. it would be the third-largest ipo's ipo's in the tech industry ever after alibaba and facebook. it may be little bit less than that because softbank group bought a chunk of the stock from the vision fund which is a different entity. it will be very large valuation

and it will be billions of dollars at the end up raising in the ipo for a chip designer that has been very widely used in industry over the years but has not been able to make the profits that you have seen in other companies. it is not clear how investors will react. they will start the roadshow in september and we will get a reaction at that point. it is not over the line yet. what are the risks facing the ipo? peter: let's start with the china risk. they spent more than 2500 words detailing exactly what the risks are for arm in china in particular. as the biggest market and accounts for a quarter of the revenues. they don't control the unit that runs most of their operations in china. that is because beijing compelled them to sell a majority stake in the past. this is an operation where they sell arms designs and some of

its electoral property but they don't have the control that typically you would want especially if it is going to beat one largest markets and most important markets going forward. arm is at the heart of the tensions between the u.s. and china right now. the u.s. has imposed export restrictions on technologies that can be sold into china, especially ai chips for example in chipmaking equipment. arm sits right at the heart of those tensions. in the risk festers -- factors, the detail the tensions between the u.s. and china that could weigh on the business in the future. they need to make sure they can keep control of the business in china. right now, they are in a minority position there at the same time they are trying to boost revenues. lizzy: thank you to peter elstrom. i want to stick with the geopolitical theme because the south african president cyril ramaphosa is hosting chinese president xi jinping in pretoria ahead of the brics summit which

kicks off today. it is a rare trip abroad for xi jinping. jennifer zabasajja has been well across the story. what is on the agenda for the meeting? jennifer: this is an of cans because as you mention, the brics summit is happening this week but this is the only state visit we will see this week. this is important for the two countries. they enjoy very vibrant economic relationship and they have done so for the past 25 years. on the agenda from what we have learned is figuring out how to really strengthen and develop that partnership and collaboration that we have seen. china is a important investor into this economy in south africa and vice versa. south africa is important to china. it has been china's biggest trading partner on the african continent for 13 years in a row. there's a lot of opportunity to deepen the relationship and we have seen were business leaders coming together with chinese

leaders over the past few weeks talking about opportunities in various sectors. we are anticipating that these leaders will continue to talk about that and also talk about how to reduce the trade deficit in particular from the south african perspective. and how to get more south african goods exported to china. that is so they can reap the benefits as well. this is proceeding what we are hearing at brics this week about how the two countries amid all the countries in the global south can increase and enhance their own voice on the multilateral stage. lizzy: thanks to jennifer zabasajja. i want to get a look on what is coming up today. at 7:00 a.m. london time we will have the latest official u.k. public finance is data. economists expecting public sector borrowing to fall from 17.7 billion pounds to 3.9 billion pounds in july. then before the ballots in the u.s. we get second-quarter macy's earnings. analysts say they will be the

worst since 2021. citi noticing how price-sensitive customers are. finally, at 3:00 p.m. we get u.s. existing home sales data. the consensus is for them to take down slightly -- taick down slightly. we will get all the stories you need to get your day going and more on the days break newsletter. today the lead on china extending its defense of the yuan to stop the cello. we also have arm filing for the ipo and s&p following moody's to cut u.s. bank ratings. to find those stories, terminal subscribers can go to dayb. as global bond yields sore we discussed the higher for longer rates scenario investors are positioning for and the u.s. economic resilience that seems to be driving it. that is next with our markets live team. this is bloomberg. ♪

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lizzy: welcome back to "bloomberg daybreak europe" global bond yields are soaring as investors position for higher for longer interest rates. the 10-year treasury yields hit the 2007 high and the 10 year yield reached a level not seen since 2014. for more, bloomberg mliv strategist mark cranfield joins

me now. we have seen some lovely scenes with the soaring yields, will they extend beyond jackson hole? mark: you have to ask the bison about that one. really what the traders are doing is behaving as though jerome powell is going to be truly hawkish this week at the jackson hole symposium but they might be in for a surprise actually because if you look at the global data that is going around, there is certainly reason for the central bankers to some cautious, especially christine lagarde and what she sees in europe is a pretty dour picture. the german economy is about to go into recession and the has been hit hard by the weakness in china especially in exports from the whole of europe to china are suffering. that is a picture of caution certainly. even jerome powell will probably looking at the situation and it will be hard for him to justify coming to jackson hole and telling everybody there are more rate hikes in my pockets.

when people look at the way the u.s. economy is behaving, it seems to be going for a soft landing which is hard to achieve . but he does appear to be heading is in direction. inflation is certainly edging lower and we already have a situation where treasury yields in most parts of the curve are well above the headline inflation already. that is a restrictive situation. the buzz word we may hear from jerome powell is don't tighten too much eared if that is the way he comes across after the weekend, yields increase we are seeing this week will not sustain going into next week. lizzy: ok, and what is going on with japan's 10 year yield? what is your analysis there? mark: people are getting to speculate that the boj will not able to hold is a yield curve control policy it's in place. the one that they recently tweaked to the 1% level although yields have reached 1%, the bank of japan has been buying so many

bonds. they own such a large part of the japanese bond market that it has distorted behavior in the markets. there is growing calls for them to pull back and let the market function normally. if they do that, then yields will probably rise to a much higher level. of course this is being reflected by what is happening outside japan, seeing the yields rise around the world and wage rises in japan finally are reaching a decent level. the bank of japan has said many times it needs to seek sustained wage increases in japan. finally, we appear to be getting that so there are quite a few negative factors at home regardless of what is happening outside japan. it finally is getting traction on the inflation front and yields are going higher. lizzy: mark, as you have written , the pboc was to show us that it really, really, really wants a stable yuan. what is it mean for other currencies, this support? mark: if they really can achieve

stability particulates in the dollar yuan exchange rate that is a bearish factor across the globe because it's in the past, when we have seen the dollar yuan start to turn lower, it affects the asian currencies and gradually spreads around the world. he would probably see initially the singapore dollar, korean won start to track the yuan movements but the g10 currencies would start to follow that as well. that is a way off. first off, they have to be sure they have clamped down on the speculation against the yuan and they are pulling the big levers here. have had aggressive rate fixing from them in another big one today. they are squeezing short-term funding costs, making it more expensive for people that want to attack the yuan. the pboc is pulling out all the stops here. they have a national holiday coming up in the first week of october. if they can g through september, the seasonality of it will start to work in favor of them. the next couple of weeks will be

rocky for anyone trying to trade yuan. lizzy: thanks to bloomberg and my strategist mark cranfield. plenty more ahead. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak europe" bhp is trading lower in sydney after reporting its lowest in your property in three years. -- profits in three years. a warrant on the outlook china as an certainty looms over the still intensive constructive center -- construction center. we caught up with mike henry and asked his thoughts on china. >> it is fair to characterize it as uncertain. i would start by saying there are a number of sectors in china that are going quite well including green infrastructure, other infrastructure, automobiles and so on.

the key sector that everybody is focused on which is relevant to our business is a property sector. some property, we have seen strong completions which are up 19% year on year but what is lacking is new starts. that has been recognized for the central government level. there policies in place to stimulate it but they are not translating as effectively interchanges on the ground. we were anticipating that and others as well. that is what we are keeping an eye on over the next 3-6 months is how effective is the translation of policy into practice. if we see that take hold and we think there could be good growth momentum flowing from fy 23 and calendar year 2023 into calendar year 2024, outside of china, i was in india a month back in the energy on the ground there and optimism is palpable. so we are seeing solid momentum in india, a big market for us for commodities like metallurgical coal and copper concentrate. overall, we are seeing india and

china comprising about half of the world gdp growth in the period ahead and the other point is a long-term fundamentals for the sector and bhp remain healthy. >> we would like to talk more about the opportunities and that is a growing market of yours. i went to pick up on the points you're making on china. almost every ceo is uncertain over the environment there and we hope, let's put it that way. what are you seeing across short-term pricing on many of your products in china? what is the outlook in pricing the next six months? mike: of course, is going to depend on what happens with the overall economy, with demand for commodities like iron ore. there are rumors about potential mandated production cuts in steel but it is not like industry starting with high inventories in iron ore or steel. any cuts that would occur would start eating into those cemeteries. if there was lower demand that

has a vocations are pricing. one important part of point to note is the marginal costs of production across the commodities that we produce is higher than it was re-covid naturally given the inflation we have seen in the external environment. we expect that will provide a downside cushion on pricing at a higher point then may have been the case previously. iron ore is 80-100 dollars per ton and that's is where the cushion caixin on the inflation front. -- on the bhp perspective, since we have done a better job at controlling costs than our competitors, the higher cushion means our margins, relative margins end up being more protective than might be the case for others. lizzy: that was the ceo of bhp, mike henry speaking to bloomberg a short while ago. the shares are trading in the red in sydney this morning. let's check in on markets for you ahead of the stock cash equities trading. the euro stoxx 50 futures are

currently up 0.5%. that is head of the wall street open. the s&p minis -- s&p e-minis are down 0.2% after the s&p 500 ended a four-day drop yesterday and the nasdaq closed up 1.6%. the focus is on softbank's arm which filed for what is set to be america's biggest ipo this year. softbank shares rising 3.5%, the most since mid june. the question of whether the u.s. can avoid a recession dividing strategists on the outlook for stocks. will we get a soft landing or will recession fears weigh on sentiment further? we will look more into that ipo

>> good morning is bloomberg daybreak: europe in london and these are the stories that you are waking up to. treasury studies after the global yields sore on higher for a longer rate bets, the u.s. 10 year yield hit some 2007 your high and japan's 10 year yield high -- rises to its highest in nine years. s&p downgrades a slew of small and midsize u.s. banks saying a decline in deposits is squeezing liquidity making life tough for lenders. plus, chip design giant arm files for what could be the biggest u.s. ipo this year targeting a of 60 to 70 billion dollars as it looks to ride the ai boon. good morning. welcome to tuesday. we are waiting for fed chair jay powell in jackson hole on friday to tell us just how high rates are going to stay for how long. in the meantime it has been chaos in the bond market. treasury yields have studied now but overnight you saw a major

selloff. the 10 year yield topping 2%, the real two year yield hitting its highest since the financial crisis. in the two year yield momentarily pushing over 5% in late trading. don't forget, this is august volumes are light. moves are exaggerated. this question of whether the u.s. can avoid a recession is dividing strategists as well on the outlook for stocks. the s&p 500 ended a four-day drop yesterday, the morgan stanley's michael wilson is at odds with david cost and over what happens next. wilson says sentiment is likely to we can further cost and says there is still room for investors to increase exposure if a soft landing is in the cards. the nasdaq closed up one point 6%, all eyes on softbank's arm now in late u.s. hours it filed for what is set to be america's biggest ipo this year. it softbank shares rising as

much as 3.5% the most since june. the big question is can this once obscure phone chip designer thrive in the world of artificial intelligence? and in the ominous absence of morgan stanley on the draft filing. speaking of chip designers you also saw nvidia shares rocketing yesterday its biggest one-day percentage gain since may 8 point 5% and that as analysts raise their price targets on the stock a sign of growing optimism. thanks to this growing design and -- demand for chips. as we look ahead to the wall street open you have got futures currently pointing to the downside but let's get over to paul dobson on how asian markets are translating all of this. take us through the equity picture where you are. >> the equity picture is a little bit mixed. it was looking more positive earlier on particularly on the chinese markets, of course a lot of economic clouds still hanging

over china. we had more positive momentum coming through from the u.s. session so that has left us a little lower in the mainland. still more or less on the hang seng, but not looking so confident as we were in the start of the trading session. >> and then how have the bond moves been playing out in asia? >> bonds have been super interesting as you are saying. there is a rising treasury yield particularly the 10 year hitting that new size and scope taking us all the way back to the early part of last decade. starting to really feet across the rest of global markets as well, we had higher rates in australia and new zealand but really where the focuses is japan where the bank of japan has been allowing interest rates to rise. slowly but steadily toward the new top of its yield curve control. today we got to a new high in

that process above .66% on the 10 year so we will be watching quite carefully whether the boj acts to slow the pace of gains for those yields or whether it is allowing them to go even it is in line with what's happening in the rest of the world. >> meanwhile we have also seen a push back against further weakness of the yuan. >> really starting to intensify their. i think it is really interesting to follow that at the moment. not only are we seeing that currency fix on a daily basis coming in, way stronger than the market expects for the yuan offering some support, remember it can trade in that band around the fixing. but we are also seeing a reduce of the liquidity in the u.n. of offshore markets and the effects of that as it creates that scarcity which pushes up the overnight rates, the one-month rates, makes it much more costly

for those investors running short positions betting on further weakness. that is giving us a little bit of a stabilization in the exchange rate right now, all of these different tools and levers that they are pulling to stabilize the currency. and overall the market is bearish, the strategist that we speak to are seeing a weaker yuan over time and seeing that is a good thing. as a way to help ease the pressure on the chinese economy. >> thanks to bloomberg's paul dobson for that update on asian markets. i just want to take you through a few of the other global news stories that have been happening overnight. s&p global downgraded and cut the outlook for smaller and midsized u.s. banks. the decision comes two weeks after moody's lowered credit ratings for 10 u.s. banks. s&p says deposit decline in these banks have squeezed

liquidity intern pushing stock values lower and it comes as clients move funds into accounts with higher interest rates elsewhere. meanwhile charles schwab is planning to cut jobs and offices to achieve $500 million in annual cost savings as the brokerage response to pressure. the company says redundancy and other costs will amount to four to 500 million dollars. schwab said earlier this month it is expecting -- experiencing temporarily lower inflows of client money as it sees attrition of some assets while it integrates te deum air to into its business. and elsewhere sbb, the center of sweden's commercial property crisis has been downgraded five notches by which ratings with a warning that more cuts could be on the way. the move to be minus puts sbb into junk status and follows a downgrade by s&p last month. fitch noted sbb's deteriorating cash position stemming from insufficient progress on asset

sales as well as unfavorable real estate conditions. now chip designer arm has filed for an ipo on the nasdaq taking a step towards what is set to become the biggest u.s. offering of the year. we will have more details with bloomberg's alex webb. he joins me in the studio. just how big a deal is this? >> on several different levels, of course we have the political element. the concern in the u.k. that are biggest tech company is going to be listing in the u.s.. >> it is an embarrassment really. >> that is one way of looking at it not if you are arm itself. the other way of looking at it is the ipo market more broadly, there are plenty companies out there, not the least of one's owned by private equity firms that are looking for annexes. this will be a big test of whether it can open again, particularly given some of the appetite towards ai applications. there are lots of other companies chomping at the bit ready to go if this is a bit of a bomb they might be more

nervous about doing so. >> i know you have been combing through the filing documents what more did we learn about arms business from them? >> this one is not growing right now. that has been the case, large swaths of the chip industry have not been doing terribly well. it is seeking a generous -- between 60 and $70 billion. that would value it at something more than 100 times its earnings. we of course don't have a forecast of what they are expected to do in the upcoming 12 months. that is a generous premium for semi conductor stocks in the u.s. right now. the philadelphia stock exchange semi conductor index, though stocks trade an average of 85 times earnings, heavily skewed -- 85 times historic earnings my apologies. that is heavily skewed by nvidia and amd which have very generous multiples. because they are growing very

quickly. arm is not. it does not have quite the same ai exposure as those other companies do so there will be hard work to get that valuation. that might explain why they have mandated quite so many banks on the ipo to make it happen. >> if this debut goes well it will give an enormous windfall for -- his vision fund loss that record 30 billion last year. what is this going to mean for softbank? collects there are two pieces to this the vision fund and softbank itself. softbank controls vision fund it is not the only investor in it. softbank has bought out the vision fund stake, that has generated double the returns for it. but if you had put that money, the 30 billion on dollars they paid for arm back in 2016, if you had put that money into an index that tracks the semi --

philadelphia semiconductor index he would've had a better return. excluding dividends and things but the share price or price return looks to be just over 100% versus that if they get that valuation. going into that index you would have had about a 300% return. i think a lot of softbank investors out there right now are like let's just capitalize on this, let's just get some money out of this. they are only selling a minority stake at this stage. if it outperforms better down the line they have the opportunity to sell bigger stakes. if they don't, they can sit there for as long as they want. >> there is a lot of focus on the fact that arm chose to list in new york rather than london. the u.k. government did put a lot of energy into trying to keep arm here. do the numbers that we have now seen further explained that choice? >> i am not sure there is anything in these numbers, we know more broadly the market conditions. if you are the average multiple at which companies trade in the

u.k. is about 13 to 14 times there earnings in the ftse 100 -- in the u.s. the s&p 500 trades and average to 20 times its forward earnings. that is heavily skewed by the massive tech companies that have enjoyed significant growth over the past year. for softbank they are probably hoping that arm starts to ride those tailwinds. we have seen tech adjacent companies, i am not sure you would call delivery really a tech company but they have not done brilliantly since listing in london. when you speak to vc's taking about taking the company's public, sometimes if they have listed their company here they wish they hadn't and wish they had done it in the u.s. or in the future they may only want to list in the u.s. because they would say investors there understand tech companies better. think about that growth piece. in the u.k. the argument could be made that that would be punished a little more than in the u.s. where they would say there is more bullishness around tech. >> i want to pivot from arm to

zoom because we had earnings from zoom overnight. >> zoom, it is interesting the way they have been developing. the numbers were slightly better than anticipated. there had been some skittishness that coming out of the pandemic, appetite resume was waning. it is not as bad as we would expect. >> thank you to bloomberg's alex webb for that update. elon musk is reported to have told pentagon officials that he has spoken personally to russian president vladimir putin. the new yorker says the space ceo volunteered the information during an october conversation with the top policy official at the pentagon. he later denied speaking with the russian president. let's take a look at some of the other events we are watching today. the summit kicking off in johannesburg later, south african president expected to meet with chinese president xi jinping this morning. and we will bring you the live pictures as it happens. at 9 a.m. u.k. time thailand's

parliament set to hold a fresh vote for a new prime minister. a coalition of political parties is seeking to form the next government pledging to stimulate the economy through a mask of -- mix of fiscal measures. on stateside expected earnings from chinese and the firm by due in a few hours. at 3 p.m. u.k. time we will get a check on u.s. existing home sales for the month of july. i mentioned the brick summit coming up. leaders will kick off those talks later. chinese president xi jinping arrives in south africa where he will be hosted by his counterpart and we are going live there next. this is bloomberg. ♪

>> welcome back to bloomberg daybreak: europe.

the brexit leaders summit kicks off today but before that chinese president xi jinping is being hosted by his south african counterpart, and for more bloomberg jen is joining us now. one of these two bricks leaders discussing? >> this is significant this is the only state visit we are going to see amidst the other activities and meetings happening this week. this is significant for both of these countries. they are also celebrating 25 years of diplomatic relationships and flourishing as they call it economic ties. but what we are anticipating these leaders are going to talk about is how to deepen those ties and to strengthen their collaboration in the partnerships they already have. and they do have a lot. china is the biggest investor into the south african economy and on the others have things south africa has been china's biggest trading partner for 13 years straight. there is a lot of opportunity there for them to deepen the

investment and we have seen over the past few weeks a number of trade ministers have been talking about what it is they can do and in particular how south africa can reap more benefits and export more things and raw materials. not necessarily raw materials but produce materials into the chinese economy. we are anticipating that and also talking about the role that both of these countries have as leaders of the global south. and what that could potentially mean as they tried to reform a lot of these global governance institutions and multilateral forums. a lot for them to pay attention to and we are going to wait for xi jinping to arrive in a few hours. >> it looks like it's going to be a busy week for president xi jinping, also reportedly meeting with the indian prime minister. what is on their agenda? >> this is still rapport, this is significant because these two leaders, these countries in

particular share very close economic ties. of course they share a border in that border has been the reason behind a lot of their strained tensions over the past few years. but what we are confirmed going to see is the first time that president xi jinping and the south african president are going to share the stage since the g20 last year, whether or not they are going to meet is still up for debate. but these are the two biggest countries at this point in time within the bricks coalition and so they carry a lot of weight within the block. and of course carry a lot of weight about whether or not this expands. we are unclear about whether or not that meeting could happen but we did get indication from the indian delegation that the prime minister schedule is still being finalized in terms of bilateral meetings. we are going to have to see whether or not that happens and there is a lot to pay attention to if they do meet. >> everybody wants to see president xi jinping, we learned yesterday the u.k. foreign

secretary has a trip to china in the last week of august for talks on russia and ukraine. that report on the terminal. let's go back to bricks because in these conversations it must be difficult because all the different country leaders have their own problems at home and yet they have goals to achieve together at this year's summit. >> right and i think that is really at the core of why people are calling this the most consequential summit in a number of years since we saw the development of the new development bank. because as you mentioned they all have differing ideologies, they are across the political spectrum. what we have heard consistently from all of these leaders is this desire to really reform multilateral forums and have a seat at the table and more of an inclusive voice of the global south. i am talking about places like the united nations, the g7 -- excuse me that united nations,

the imf and other multilateral forums. we are going to have to hear whether or not there is cohesion on what that reform looks like, especially because there is a bit of competing interests based on what they want on the global stage versus what they do need at home. >> thank you to jennifer across every twist and turn of this summit. coming up not just gassing woodside energy says it is having constructive talks with lng workers. we will bring your conversation with the ceo meg o'neill next. this is bloomberg. ♪

>> as you can see woodside energy shares are lower in sydney trade this morning, australia's biggest oil and gas producers first half results are being overshadowed i strike talks with lng workers.

ceo meg o'neill weighed in on the current state of the european lng market. >> the fact that the market has responded in such a significant way to the rumor of a potential industrial action suggest to me that the market is still quite fragile. european buyers in the european market is concerned about the levels of supply that they will have going into the northern hemisphere. >> that was the woodside energy ceo meg o'neill. the company shares extending losses in sydney. bhp reported its lowest annual profit in three years and we caught up with the ceo of the world's largest mining company starting by asking his thoughts on china. >> it is fair to characterize it as a bit uncertain. i would start by saying there is actually a number of sectors in china going well including green infrastructure, other infrastructure, automobiles and so on. the key sector that everyone is focused on which is very

relevant to our business is the property sector. in property we have seen strong completions, completions up 19% year on year but what is lacking is new starts. that has been recognized by the central government level there are policies in place meant to stimulate the starts but they are not translating as effectively in changes on the ground as we were anticipating. that is what we are keeping an eye on over the next three to six months, how effective is that policy and practice and if we do see that starting to take hold we think there could be good at growth momentum flowing from fy 2023 into calendar year 24. outside of china, i was in india a month back in the energy on the ground there, the optimism is palpable. we are seeing solid momentum in india. that is a big market for us for commodities like coal and copper concentrate. overall we are seeing india and china comprising about half of

world gdp growth in the period ahead. the other thing i would note is long-term the sector remains really healthy. >> we would like to talk more about the opportunities because certainly that is a growing market. i want to pick up on some of the points you are making on china. almost every ceo we speak with is uncertain over the environment there, we certainly hope. i want to ask you about what you are seeing across short-term pricing on many of your products in china. what is the outlook on pricing these next six months? >> of course it is going to depend a little on what happens with the overall economy. with the man for commodities like iron ore. there are some rumors about potential mandate for production cuts in steel but it is not like the industry there is starting with high inventories in iron ore or steel. so any cuts that would occur would start eating into those inventories. if there is lower demand that has implications for pricing.

but one very important point to note is that the marginal cost of production across the commodities that we produce is higher than it was pre-covid given the inflation we have seen in the external environment. we expect that is going to provide a downside cushion on pricing at a higher point that may have been the case previously. in the case of iron ore we are seeing anywhere from 80 to $100 a ton and that will he wear the cushion kicks and given what we have seen on the inflation front. because we have done a better job in controlling costs and our competitors we have doubled -- that higher cushion means that our margins end up being more protected and might be the case for others. >> up next to markets today. this is bloomberg. ♪

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