>> cries every morning, welcome

to daybreak australia. i am heidi stroud watts in sydney. >> the top stories this hour. -- this reinforces bet that the fed may pause this month but not call an end to its tightening cycle. pricing is appear at the top of the range with the biggest listing of the with trading on the nasdaq to start thursday. plus, the white house labels china's iphone band aggressive retaliation as beijing flags security incidents with the flexor product. we actually had apple down in the regular session. look at how u.s. futures are opening in the asian session after we had a pretty mixed picture for markets. we had them finishing slightly

higher but the doubt underperforming. the core cpi was a bit disappointing. more about what happens later in the year. we are talking about the meetings in september and december as well. we have treasury yields down across more than a two year yield falling below that 5% level. we are also watching oil prices right now. this follows another opec report that tightens the market -- >> let's get the latest correspondent.

we are whining about the stickiness of inflation. they seemed like this was not a great rate from either angle. what does this mean? more caution from the fed? >> i think it is a reminder of the u.s. inflation story. disappointing on the headline number. disappointing on the core gauge. a lot of it has been pinned on increase in gas prices. even beyond that, there are signs of a broader stickiness in the cost of medicine, the cost of student accommodation and the cost of new cars and particularly the cost of car insurance. of course, topping it all off, even though food prices are broadly stable, they are elevated to where they were a couple of years ago before inflation prices broke out.

i think had the very least, this is a reality check. the fed will keep more tightening on the table for the months ahead. >> is it the same story we are seeing at the ecb? >> in the ecb, they are warning of inflation being at the top of their priority list. they have gotten a very tough call. it is a really tough judgment call. the ecb is juggling high inflation with signs of a material slowdown. especially in the industrial sector in europe and in germany's industrial sector. and of course, the slowdown in trade. they say that the ecb should not be hiking rates. but this is a challenge that is applicable to central banks here.

inflation is slowing down. growth is also slowing down. these are really tough judgment calls for monetary policymakers over the next couple of months. now we're looking into domesticating. >> it has only been a very negative headline. they give a briefing a few days ago. that said, i am not detecting any real sense of unease or panic among the investors. that is kind of understood. the manufacturing the trade story, that is understood. they are wholly open their. broadly speaking, the economy is on track for the 5% growth

target by the end of the year. that is still a very hefty clip. there are negative on china as is the confidence. it is not as bad as the headlines suggest. >> that was the latest on global central banks. softbank backed chip designer arm is pricing its ipo at $51. the top end of the market range. they are expected to start trading on the nasdaq on thursday. how significant is this? >> it is great. we are just waiting for it to happen tomorrow when the listing goes on. we will see if the aftermarket is good. there is enough demand for ipos even the ipos are riskier assets

compared to other publicly listed companies. >> does that have an impact when it comes to the longevity of how much this sustains any momentum across broader tech? >> it is not unusual for ipos to actually have this mother. they are all secondary shares on offer by the shareholders. the existing shareholders. softbank's are not only floating 10%. there are all secondary shares as well. some of the funds may not be able to invest in something that is tiny or doesn't actually --

softbank still owns the majority of it. >> how important is it that it treads well not only over the first few days -- there also seems to be some skepticism right now. >> i think it was the first month, the first 30 days, there is an option where there is stabilization by the banks and we see some of the demand but also some stabilization by the bankers. it is unclear how much to use it. at the end of the day, it is not about the first month. with amy here with the latest on that.

we have news from citigroup preparing for a wave of job cuts. suki and joins us now with the latest. major changes mentioned our regional leadership roles will be largely -- job cuts and back office functions primarily may result in the company not having any firm targets as to how people will be impacted by these thoughts but they are likely. 19 members will now be part of the executive management team. that is an expansion of the

ranks. they will be five key business leaders purporting directly to frazier. that underscores that there are five key businesses. these include operating units such as the services unit. it will be on frazier's executive management team. there is no expense to a total of 19. thank shares were initially up. better than 2%. it has been a story of a stock price lagging behind that of his peers. this should limit a lot of the five dems. these will be indifferent and it's herself has conceded this

will likely result in some of within the firm and all of it designed to take city to a better place. >> what is the motivating strategy here? ? of any strategy is to simply by the management structure and of what many of -- that reporter more accountable as she tries to push for more profit. you will notice that the ceo jane frazier stands out because she is the only ceo of the major wall street banks. this is to improve the competitive that she believes will result in a lot of changes going forward. she admits these aren't strong and bold steps but part of it is to free up some of the key players within the firm to focus

more on trades and do the deal. she believes that will show improvement in the stock price performance. >> let's get a look at how asian markets might react to this it is not a great but not awful cpi print. class we will see a bit of a yawn. we are asking for another payment extension. country garden is asking for that to be extended out the deadline for repayment on that. we have already seen a slew of these things.

this is whether investors will be prepared to do that once again. we do understand the interest on that september 14 note has been paid. we heard that from two different sources. these debt repayments really kicks the can down the road. let's change on and the focus is very much on what investors are saying about the cpi print overnight. coming in a little bit unsurprising for markets here. we are seeing most ahead have the start. the big focus is on the japanese yen given that rate differential remaining in focus with the prospect of another fed hike later this year. quite still had, we meet a third party candidate shaking up taiwan's presidential race.

an unconventional campaign that includes a rap video. but first, we talk investment strategy why they see september becoming the worst month for the markets. this is bloom ♪ ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

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>> it is moving in the right

direction. the market has not fully bought into this does inflationary trend idea. >> i think they will remain some anxiety as to whether this profit inflation is transitory. >> on one side we see inflation coming down but we also see parts of it that are still up. that is very concerning to consumers. >> they might still have to step a little bit harder on the brakes. >> they will not feel really good about this until six months or nine months. having a good trend toward local inflation. request based on need to keep rates elevated to make sure that the service sector starts to slow down. >> bloomberg tv guest reacting to the latest u.s. cpi data. the latest inflation reading should add to market anxiety. leading up to next week's meeting. joining us is the chief investment strategist. great to have you with us.

can we expect equities to remain under pressure after mark especially on this month of september? that is not great in terms of seasonality. >> yes. i think that we did not get any more clarity today because of the cpi and i think investors are holding their breath as to what will happen tomorrow with the ppi and the retail sales report. most are anticipating the fed does nothing. they wonder whether they have finished raising rates. they are wondering if it will be the last time they raise rates in this tightening cycle. >> we always thought of the u.s. as being resilient if american consumers cap spending. do these start to concern you? especially if we are headed toward more headwinds? student loans having to be paid now? the rates being higher,

inflation continuing to really hammer americans pockets. >> we continue to have an overweight recommendation on the consumer discretionary sector. we are encouraged by the fact that the market has not rotated away from this. certainly we are keeping and i on the savings rate that individuals are incurring in order to have their summertime travels as well as their additional goods answer. and with higher interest rates with the strikes likely to occur with the auto unions and the effect that will happen on auto prices etc., we'll have to keep our finger on the pulse of the consumer. it is usually the case with the consumer starts spending only when the banks stopped lending. >> how much are you watching the situation in china? are you inspecting that to have spillover effect in terms of the demand outlook? >> certainly with china being

the second largest economy, it is very important for what happens there to have a rippling effect around the globe. our economists are still anticipating a 4.5% growth in gdp in 2024 on top of the 4.4% we see for this year. however, from an inflationary perspective, expectations are only for a rise of 2.2% which is the lowest of the areas we follow from the developed and emerging-market basis. the dis-inflationary picture in china is something that is of concern. and someday we will be watching. >> lsu vet tech and i. we are watching the appia inspecting to be really well received. given the big run up and exuberance across artificial intelligence, what more would you want to see from an investor perspective that could warrant the valuations and pricing we

are seeing at the moment? >> you are absently right. the s&p 1500 semiconductor group is up 75% on a year-to-date basis. we will see a decline in terms of earnings. next year, expectations are for a 40% rise in earnings. more than twice that expected for the tech sector itself. and also, a basis, it is training at a 9.7% premium to the s&p 500. >> how much are you factoring in geopolitical challenges in the tech sector?

quotes with the technology hardware group -- earnings are expected to be up about 30% in 2024, a bit less than the technology sector itself. pretty close to the s&p 500 as a whole. it is trading in terms of valuations. this group is currently trading at a pretty hefty premium to its longer-term average pe. probably a few more challenges in this hardware area as compared with a semiconductor. >> when it comes to these big multinationals who have operations all across the world, what do the fluctuations in that currency represent? especially when we have the dollar peering back a little bit

of the gains but still around this year's highs? >> the dollar is certainly important. because of the ebb and flow of earnings and so forth for domestic players. when i look to the areas below that are currently offering the most attractive valuations on a relative basis. here in the u.s., i look to mid-and small-cap stocks that are trading at close to 30% discounts to the relative p/e ratios. china itself is that is at a 20% discount. there looks to be attractiveness if investors are willing to buy and hold for the longer term. they have to wait for that earnings turned to occur. >> great to have you with us. the chief investment strategist. you can get a round up of those stories that you need to know to get you going in today's edition of daybreak.

these subscribers can go to davie go. you can get the news on the industries and assets that matter to you. this is bloomberg. ♪

>> taking a look at the latest corporate stories we are tracking this era. the head of the united auto workers union say they remain automakers when they come to contract talks. they hope the strike can still be inverted. >> while not directly affected

-- these are two factors. quick sources tell bloomberg's that they paid tens of millions of dollars to hackers who broke into the company system. howard schultz is stepping down from the company's board. they built the company into a global coffee powerhouse. he also served as the chief executive also three times.

coming up, apple drag to deeper into a your political struggle as the u.s. and china trade accusations over the iphone. we get the details next. this is bloomberg. ♪ i may be known for my legendary football career, but truth is, i love a bunch of sports. the only trouble is knowing where to find them. that's why i got xfinity. so, i can easily find and watch whatever sport i'm into all in one place without missing a thing. even if it's football, australian football, or football football.

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>> apple is being flung further

into the u.s. china tensions with both sides trading fresh allegations about beijing's bands on the iphone. dave is concerned about security problems. the white house as the bands are aggressive and inappropriate retaliation. let's dig into this with dan flatley in washington. >> that is right. i think that if you look at what the u.s. has done over the last couple of years with restrictions on certain high-end tech exports to china and now we see in the last couple of weeks some counter moves by china including the unveiling of the huawei phone, the new huawei fund that has 5g like performance and it is really kind of a shot across the bow of the u.s. tech industry to show what china is able to do on its own. and now this potential iphone

been, we don't have great fidelity on how big it will be or how extensive it will be but we certainly know that this is where a lot of these issues are playing at. >> the eu is launching a domestic investigation into chinese subsidies. this is just another element into these geopolitical tensions. this has been kind of a long-standing debate.

they are joining us from washington with the latest on the u.s. china tensions. no other geopolitical news where following, north korean leader kim jong-un met vladimir putin in the far east on wednesday. this is the first face-to-face on that and more than four years. this feature launch rockets that can carry a payload into space. they have tried twice this year to deploy my satellite. kim could be looking for some help in this area. the japanese prime minister has kept his core economic policy team unchanged in our reshuffle and at refreshing his government's image. he is looking to unveil new stimulus measures soon as price gains continue to outpace wage increases. he also added five women to his cabinet lineup with the most prominent being juncker,,.

with just four months ago before taiwan's presidential election, stephen eva has a closer look at the man who could be the election's biggest wildcard. they are mixing up the rest for the taiwan presidency. this former trauma surgeon turned third-party politician is taking on what has been an entrenched political duopoly of the incumbent dpp and opposition

kmt with a straight forward not unconventional approach that posts just resonate with younger voters. >> we are different from traditional politicians. they are too fake and younger people don't like that. >> bloomberg news that the better part of two days with them on the campaign trail. quite frankly, we should not be thinking about who would be the best president of taiwan rather than who is the most suitable. they would maintain tension with china. taiwan's economy will continue to deteriorate because china will definitely do everything possible to block taiwan.

>> he is in favor of a bigger defense budget but that must be accompanied by better communication with beijing. >> we should not fantasize that we can completely change the currency in one day. but even what we should not fantasize that if we don't do anything, the situation will change on its own.

foreign investment does not dare to come in and the outflow of capitalism is already causing damage to taiwan. that is why we must lower the risk of war. >> he sees himself as a straight talking a political pragmatist.

>> do you enjoy meeting with people and talking with them? >> did it desensitize you? >> the accidental candidate has resonated with them and

otherwise pull my collection. stephen nagel, bloomberg news. this is largely being seen -- it is showing that the inflation sticky enough. futures are looking pretty muted at this point. asian stocks more broadly looking like a mixed open after.

japanese and australian bond futures suggesting yields will all the direction of u.s. treasury slightly lower. we are also seeing that sort of needed trading of u.s. dollar being inflated. this is where the aussie dollar is headed with a little bit more of a move when it comes to dalian at 147. of course, we will be re-watching china with the domestic activity out. the chinese property developer is facing a new deadline. they must bow by 10:00 p.m. on thursday. we are tracking the latest out of singapore. >> this is the last note in a group of eight.

the principal around 492 million to one. it is issued by a unit of the company. the president is here. this is the last one in a group of eight notes they are asking to extend their payment on and the other seven have already been approved today. this would be a huge impact of the china housing market more broadly. the country has had four times more property projects done in june. the likes of china program because some the issues back when they had a landmark to fall into 2021. >> are we seeing, signs of country garden managing its debt load? >> these actually came through. you can see the country garden

had more interest payments that were due by thursday. beijing at the latest here. we are actually hearing from different sources for 62.1 million yuan have been paid in full. that is for two different investors and bondholders that comment more in private matter. country garden has been able to push down. we have seen the market reaction coming through. there is anticipation that we will see further support come through from beijing as well. the victories don't really alleviate the longer-term challenges because the next major payment test is going to bloom in january when the company has $1 billion of

maturing at that level. the big question when you have these notes that are trading at very distressed levels, where they will be able to make good on their repayments. coming up next, we have the outlook on energy markets with csis. this is bloomberg. ♪

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>> take a look at how all of this is trading. we have seen some upside. the market will tip into significant supply deficit in the second half. this could be the biggest deficit in more than a decade. look at gas prices as well. that rally we saw, especially in european gas given that we continue to see supply concerns with key exports struggling to exit lengthy measures. australia has more to do with potential strikes and the

continuation of those labor disputes. i've heard that from at least three elementary ones. they have been canceled due to an outage. >> yes. let's get some more here. these drives are partial to date. i hearing on the dispute said here. joining us is the senior fellow in this climate change program. this is one factor we have seen in this incredibly complicated environment when it comes to climate and energy change. what do you see as being the impact of these strikes and

these not being the last of the strike action that we might see? >> thank you. it is good to be with you. the strike is pretty significant. they make up about 5% of global lng supply. if that happens, that will move about the million elegy for the market. it doesn't seem huge. the fact is that it is a pretty fairly balanced market. >> how much of a buffer cadet

potentially last? we are in a relatively good position. it was surprising to a lot of people. we have this kind of gas storage in europe. the reality is that they are inherently prone to volatility. hurricanes, labor strikes. any number of things can happen that could create shortages in the market. the prices have been relatively soft. the market is keenly focused on what is happening in australia.

>> there was always a long-term question about the role of gas and energy transition. the huge amount of gas that unites united states has added into the lng market has been a big blue -- big of global energy. there are plenty of voices that want to call for a faster transition. it is a question of time. what makes gas at elegy more concentrated among the few countries. a little bit less lack when compared.

>> what are the implications and effects of this shift toward renewable energy away from the oil and gas supplies produced by some of the more vulnerable economies that depend on commodities exports? >> australia is an interesting example. there've been a lot of concerns recently about new policies that the government has introduced over the past couple of years. if they're worried about a domestic up -- domestic supply shortage. this is the result of a relatively tight market in eastern australia. the three giants of the global lng world are here. i think these places have been seen as very reliable suppliers. places with limited aboveground risk.

it has them thinking about diversity of suppliers. look into the middle east and other players from being so dependent on one country. >> the broader implication is it will thin inflationary pressures. we so oil prices. we continue to hear there will be supply shortages in the second half. where do you see the balance toward your end? >> i think they point to a tightening oil market. one million barrels per day. so far we have had really robust response. the two of them cancel each other out.

heading into the fourth quarter, the market looks a lot tighter. it looks like we are headed for pretty significant supply deficit. i think policymakers here in washington are concerned about the price at times. >> when it comes to the broader energy transition, we are seeing something's pointing in the right direction. all this despite all these declarations to be going the other direction. are things happening fast enough given how quickly we see the climate side of things changing?

strong support in europe i really accelerated the pace of ledger vehicle adoption to create all kinds of incentives for them. but it is really important that we continue to invest in traditional fossil fuels and traditional energy as well. it takes a long time for these transitions to take place. we want to avoid a situation where we are under investigation and creating potential scarcity and price shocks. that makes it transition messier. we have to do all things at once. that is the toolkit. >> great to have you with us. be sure to tune into boomer radio to hear more from the days big newsmakers. get in-depth analysis from the debris team. listen through the app radio plus or bloomberg radio.com.

plenty more ahead. stay with us. ♪ rgan stanley client experience? listening more than talking, and a personalized plan ♪ to guide you through a changing world. ♪

>> take a look at how bond markets in australia and new zealand are faring. we are expecting that to follow the lead as we saw, suggesting

yields will follow. we are seeing a bit of damage in the picture they when it comes to australia and new zealand. the cpi numbers out of the u.s. largely reinforce that the fed may pause its rate hikes. giving a little bit to terms of what you think. that is just about it for daybreak australia as we set out for what is looking like a pretty mixed and muted picture on asian stocks sets come online. daybreak age is next. this is bloomberg. ♪

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