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00:00HAIDI: A VERY GOOD MORNING. WELCOME TO DAYBREAK AUSTRALIA. WE ARE COUNTING DOWN TO ASIA'S MAJOR MARKET OPENS. SHERY: GOOD EVENING FROM NEW YORK. THE TOP STORIES, U.S. STOCKS SLIDE AS ZETA SIGNALS INFLATION IS SET TO PERSIST, FUELING CONCERNS THE FED MAY UNLEASH FURTHER TIGHTENING MEASURES. HAIDI: HONG KONG DEFENDS ITS DOLLAR PEG FOR THE FIRST TIME IN THREE YEARS AS THE CURRENCY HITS THE WEEK END. SHERY: AND DISNEY+ MORE STREAMING CUSTOMERS THAN EXPECTED BUT WARNS SUBSCRIBER GROWTH MAY SLOW. U.S. FUTURES REBOUNDING AT THE OPEN RIGHT NOW IN THE ASIAN TRADING SESSION. THIS OF COURSE AFTER WE SAW THE S & P 500 FALL AGAIN. IT WAS A RELENTLESS SELLOFF WE HAVE SEEN THIS WEEK. WE ARE TALKING A LOWEST LEVEL FOR THE S & P 500 SINCE MARCH OF 2021. THOSE TECH GIANTS LEADING THE DECLINES. TESLA AND APPLE FALLING, AND THE NASDAQ 100 REALLY UNDER PRESSURE. AND OF COURSE RISK ASSETS CONTINUE TO BE UNDER PRESSURE WITH BITCOIN FALLING BELOW THE $30,000 LEVEL. THE ASIAN SESSION IS REBOUNDING SLIGHTLY BUT THE SELLOFF HAS BEEN REALLY STRONG FOR CRYPTOCURRENCIES, ESPECIALLY THE FAVORITES. WE ARE SEEING CRUDE PRICES AT THE MOMENT ABOVE THE $100 A BARREL LEVEL. GIVEN THIS IS THE FIRST RISE IN ABOUT THREE DAYS BUT STILL ABOVE THE $100 BARREL LEVEL. WE ARE SEEING SAUDI ARAMCO OVERTAKE APPLE AS THE WORLD'S MOST VALUABLE COMPANY. NOT ONLY ABOUT OIL PRICES RALLYING BUT THE INFLATIONARY FEARS HITTING THOSE TECH GIANTS. THOSE INFLATIONARY FEARS OF COURSE PROBABLY WELL-FOUNDED. U.S. CPI NUMBERS AGAIN TODAY RISING MORE THAN EXPECTED FOR THE MONTH OF APRIL. YES, IF IT EASES WITH THE HEADLINE NUMBER. BUT WE ARE TALKING ABOUT THE HIGHEST NUMBERS IN DECADES PRE-TWIN IT COMES TO CORE CPI NUMBERS ALSO TOPPING ALL ESTIMATES, WE ARE TALKING ABOUT THE REALLY STICKY PARTS OF THE ECONOMY LIKE SHELTER, AIRFARE, FOOD AND SO FORTH. WE ARE WATCHING THE CPI NUMBERS CLOSELY BECAUSE THIS WILL HELP SHAPE WHAT HAPPENS WITH THE PCE NUMBERS WHICH IS THE FED'S PREFERRED INFLATION GAUGE AND THAT WILL COME OUT LATER IN THE MONTH. HAIDI: CERTAINLY THAT WAS NOT THE RELIEF WHEN IT COMES TO SEEING PEAKING INFLATION THAT MARKETS WOULD HAVE WANTED TO LAST NIGHT. LET'S LOOK AT HOW ASIAN INVESTORS WILL BE TAKING IN ALL OF THIS ON. -- TAKE A LOOK AT SYDNEY FUTURES. FIRMLY DOWN AT THE MOMENT. LOOKING LIKE AN EARLY DECLINE OF ABOUT .6% WHEN WE GET TO THE START OF TRADING IN THE CASH SESSION. THAT .2% GAIN FOR TRADING IN AUSTRALIA IT WAS A BRIEF BLIP TO THE UPSIDE AFTER SEVERAL DAYS OF DOWNSIDE TRADING. THE AUSSIE DOLLAR STILL SETTING -- SITTING UNDER $.70 U.S. DESPITE SEEING THE DOLLAR ENDING THE FOUR DAY WINNING STREAK. NOT A LOT OF CHANGE WHEN IT COMES TO THE KIWI AND AUSSIE DOLLARS GIVEN THEY ARE STILL SO SUSCEPTIBLE TO RISK ALONG WITH A SELLOFF WE ARE SEEING A CROSS-BORDER. ENERGY AND SHAKINESS AMONG COMMODITIES PRICING. KIWI STOCKS DOWN BY ABOUT .1%. CONTINUING TO WASH DOLLAR-YEN, SEEING A LITTLE STRENGTH, UNDER THAT 130 HANDLE. SHERY: IT WAS ALL ABOUT THE INFLATION NUMBERS IN THE U.S. AND HOW THEY ARE SHAPING THE BROADER NARRATIVE WHEN IT COMES TO GLOBAL MONETARY POLICY AS WELL. THAT IS REALLY BEING FELT ACROSS ASSETS RIGHT NOW WITH THE TREASURIES VOLATILITY WE CEO'S WELL. YOU MENTIONED -- WE SEE AS WELL. YOU MENTIONED PEAK INFLATION. VERY HIGH. WE ARE SAYING IT IS PEAKING AT THESE LEVELS, HIGHEST IN DECADES. THE BREADTH OF PRICE PRESSURE IS INCREDIBLE. YOU WILL GAIN IN FOOD COST, THE BIGGEST SINCE 198. RECORD PRICE -- SINCE 1981. I DON'T KNOW, I AM NOT NECESSARILY FEELING IT EVERY DAY IN MY DAILY LIFE, BUT IT SEEMS PRICES ARE GOING TO GET HIGHER AND HIGHER ACT AS POINT. NOT SURPRISING WE CONTINUE TO SEE MORE FORMER FED POLICY MEMBERS, CURRENT FED PRESIDENT COMING OUT AND SAYING PERHAPS THERE NEEDS TO BE MORE DONE BY THE FEDERAL RESERVE. HAIDI: IT IS THE SAME STORY AND SO MANY OF THESE MAJOR ECONOMIES. GROCERY BILLS ARE GETTING HIGHER IN AUSTRALIA AS WELL. IT IS A HOT BUTTON ELECTION TOPIC. AND EVEN IN EUROPE WHERE WE HAVE SEEN THE RECOVERY PATCHY. NOW IT LOOKS LIKE ECB OFFICIALS ARE INCREASINGLY SEEING THE RATES EXCEEDING ZERO BY THE END OF THE YEAR. POLICYMAKERS PUBLICLY FLAGGING JULY AS TO WHEN WE CAN SEE RATE LIFT OFF. WE SAW COUNTY MEMBERS RALLYING AROUND A HIKE POINT IN JULY. CHRISTINE LAGARDE ALSO SAYING THAT COULD FOLLOW WEEKS AFTER THE END OF NEXT QUARTER. THIS WOULD BE THE FIRST RATE INCREASE IN MORE THAN A DECADE FOR THE ECB. SHERY: LET'S GET MORE ANALYSIS ON ALL THINGS GLOBAL MONETARY POLICY, ESPECIALLY THE VERY HOT APRIL U.S. INFLATION NUMBERS, WITH KATHLEEN HAYS AND ANDREEA PAPUC. THESE INFLATION NUMBERS SEEM TO BE VERY PERSISTENT. THE BREADTH OF THE PRICE PRESSURES. TELL US ABOUT THE COMPONENTS OF THE CPI NUMBERS THIS TIME AROUND AND WHAT THIS MEANS FOR THE FEDERAL RESERVE. KATHLEEN: PEAKING IS THE WORD I HAVE BEEN TRYING TO UNDERSCORE LATELY. IT IS KIND OF MEANINGLESS RIGHT NOW. PERSISTENT IS THE WORD THE FED IS FACING AND THAT IS THE WORD THAT WILL BE VERY IMPORTANT FOR POLICY. WHEN YOU LOOK AT THE HEADLINE NUMBER, IT WAS SUPPOSED TO GO DOWN TO 8.0. EVEN THAT WOULD HAVE BEEN A 40 YEAR HIGH. INSTEAD AND ONLY ONE DOWN TO 8.3 FROM 8.5 YEAR-OVER-YEAR. THE CORE CPI WAS SUPPOSED TO GO DOWN TO 6.0. IT ONLY ONE DOWN TO 6.2 FROM 6. 6. THEY ARE STAYING AT A HIGH LEVEL AND THAT IS THE PROBLEM. AND ANOTHER PROBLEM HERE IS THE MOMENTUM OF INFLATION IS SHIFTING FROM GOODS PRICES TO SERVICES PRICES. REMEMBER DURING AND COMING OUT OF THE PANDEMIC, ONE OF THE REASONS INFLATION WAS TRANSITORY IS IT WAS ALL ABOUT SUPPLY CANE -- SUPPLY CHAIN CONSTRAINTS. WHEN PEOPLE WENT BACK TO WORK, INFLATION WOULD QUICKLY COME BACK TO 2%. INSTEAD, SERVICES PRICES ARE RISING BECAUSE DEMAND HAS REMAINED STRONG. WAGES ARE RISING. ALL OF THESE THINGS ARE CAUSING AIRFARES, HOTELS. PEOPLE CAN AFFORD TO PAY A LOT OF MONEY NOW, THAT IS WHAT THEY ARE DOING. CORE GOODS PRICES WERE SUPPOSED TO EASE A LOT. HAVE STARTED TO EASE BUT NOT AS MUCH AS YOU THOUGHT BECAUSE NEW CAR JUMPING -- NEW CAR PRICES ARE JUMPING. EVEN APPAREL PRICES ARE COMING DOWN. WHAT HAS HAPPENED IS THE FED'S DELAY IN TIGHTENING HAS LED ALL THOSE PRICES TO SEAT INTO INFLATION EXPECTATIONS ANY POINT THAT BILL DUDLEY WAS MAKING IN HIS LATEST OPINION PIECE FOR BLOOMBERG OPINION, IN HIS INTERVIEW ON BLOOMBERG TELEVISION EARLIER, IS THE FED HAS TO BE CLEARER ABOUT HOW AGGRESSIVE IT WILL BE ULTIMATELY THEY'LL HAVE TO GET THE KEY RATE UP TO 5%. > > I THINK THE PROBLEM IS THE FEDERAL RESERVE IS NOT BEEN FORCEFUL ENOUGH IN STATING NOT JUST WITH HER GOAL PERCENT -- GOAL IS, 2% INFLATION. CHAIR POWELL DID NOT WANT TO TALK ABOUT WHY MONETARY POLICY MIGHT HAVE TO GO NEUTRAL BUT TIGHT. TIGHT MONETARY POLICY WILL BE REQUIRED TO GET INFLATION UNDER CONTROL. KATHLEEN: IN THE IMMEDIATE FEW HOURS AFTER RELEASE OF THE CPI REPORT TODAY IN THE U.S. AROUND 8:30 EASTERN TIME, ONE OF THE FIRST STORIES THAT CAME OUT WAS THE FED WILL MAYBE HAVE TO START MORE SERIOUSLY CONSIDERING THAT 75 BASIS POINT RATE HIKE. JIM BULLARD WAS THE FIRST ONE WHO SAID WE COULD USE IT IF WE HAVE TO, I AM STICKING WITH 50 BASIS POINT HIKES, CONTINUES TO SAY THAT 50 BASIS POINT RATE HIKES IS WHAT THE FED WILL BE DOING FOR A WHILE. SO, OBVIOUSLY NO CHANGE IN THE VISION FOR HIM. I THE FED TOO -- I EXPECT THE FED TOO WILL SAY MAY BE 50 BASIS POINT RATE HIKES BUT NOT 75 YET. HAIDI: WE SAW ASIAN STOCKS HALT THE SEVEN-DAY SLIDE BUT IT LOOKS LIKE WITH THE INFLATION, THAT WILL BE SHORT-LIVED. ANDREEA: THAT'S RIGHT. WE SAW THAT BROAD SELLOFF IN THE U.S. LAST NIGHT. THE ONES THAT UNDERPERFORMED WHERE THE TECH STOCKS AND WE ARE LIKELY TO SEE THAT, ESPECIALLY WITH CHINESE TECH STOCKS IN ASIA TODAY. THAT IS NOT SURPRISING, THE FLATTENING OF THE YIELD CURVE. WE KNOW THAT IS KEEPING TECHNOLOGY AND -- IT IS HITTING TECHNOLOGY AND GROWTH STOCKS THE MOST. AND WHILE INVESTORS ARE NOT PRICING IN THE 75 BASIS POINT, PERHAPS NOW THE MARKET IS PRICING AND 50 BASIS POINTS IN SEPTEMBER AFTER SIMILAR MOVES IN JULY AND JUNE. AND WHAT IS THIS GOING TO HIT? OBVIOUSLY TECH STOCKS UNDER PRESSURE. AGAIN, MORGAN STANLEY HAS COME OUT SAYING THIS ROUTE IS NOT OVER YET. THE MARKET HAS FURTHER TO CORRECT. WE HAVE SEEN INVESTORS SELECTIVELY COMING IN BUYING THE DIPS THIS WEEK, BUT IT HAS BEEN LACKLUSTER. SO IT LOOKS LIKE EQUITIES ARE GOING TO CONTINUE TO BE UNDER PRESSURE. SHERY: ALSO UNDER PRESSURE, THE HONG KONG DOLLAR. IT AUTHORITIES ARE NOT SITTING ON THEIR HANDS. ANDREEA: THAT'S RIGHT. WE HAVE SEEN THE HONG KONG MONETARY AUTHORITY COME IN FOR THE FIRST TIME SINCE 2019 TO DEFEND THAT PEGGED TO THE U.S. DOLLAR. THAT IS THE DE FACTO CENTRAL BANK IN HONG KONG. IT HAS STEPPED IN AS THE HONG KONG DOLLAR TOUCHED THE UPPER RANGE OF THE 7.85 PEG. NOW, IT HAS BEEN UNDER PRESSURE AGAIN. HIGHER U.S. INTEREST RATES. AND ON TOP OF THAT A SLOWING ECONOMY IN HONG KONG FROM THE PROLONGED CURBS TO STEM THE PANDEMIC. HAIDI: UNDER POP UP AND KATHLEEN HAYS. DISNEY'S PROFIT HAS FALLEN SHORT OF EXPECTATIONS. SUBSCRIBERS TOPPING ESTIMATES. > > WE BELIEVE THAT WE CAN MOVE UP AND CASCADE UP OUR NET PRICE OVER TIME GIVEN THE TREMENDOUS VALUE WE STARTED WITH AND THE INCREASED PRICE VALUE RELATIONSHIP OF ALL THE NEW CONTENT. BUT WE ARE PRETTY BULLISH ABOUT THAT. HAIDI: LET'S GET MORE FROM SENIOR MEDIA ANALYST. IT WAS A MIXED BAG EVEN THOUGH THE SUBSCRIBER NUMBERS WERE QUITE GOOD, THE OUTLOOK WAS PRETTY TEMPERED. > > YES. THEY DID TEMPER THE OUTLOOK A LITTLE BIT. BUT OBVIOUSLY IN THIS MARKET WHERE YOU HAVE SENTIMENT THAT HAS SOURED ON THE ENTIRE STREAMING LANDSCAPE, EVEN A SLIGHT HINT OF THAT IS GOING TO BE RECEIVED READY NEGATIVELY. BUT OVERALL I THINK THE PRINT WAS EXTREMELY SOLID. ON ALL THE METRICS THAT MATTERED IF YOU LOOK AT THE STREAMING SUBSCRIBER NUMBERS, THEY WERE WAY AHEAD OF ESTIMATES. PROFIT NUMBERS WERE WAY AHEAD OF ESTIMATES. THE STREAMING STORY IS NOT GOING TO BE LINEAR ONE OR ONE WHERE THEY CAN JUST BOAST MILLIONS OF MILLIONS OF GAINS EVERY QUARTER. BUT THE JURY IS STILL OUT ON STREAMING IT WILL TAKE A WHILE TO CONVINCE INVESTORS AND THE MARKET ABOUT THE VIABILITY OF THE STREAMING MODEL. SHERY: WHAT HAVE WE HEARD WHEN IT COMES TO CHINA AND THE COVID RESTRICTIONS THERE AND THE PARK CLOSURES? GEETHA: IT HAS BEEN CLOSED ALMOST THE WHOLE QUARTER BECAUSE OF THE COVID ZERO POLICY, SHANGHAI DISNEYLAND AS WELL AS HONG KONG. THAT IS DEFINITELY GOING TO HAVE A HUGE IMPACT ON THE INTERNATIONAL PARK PERFORMANCE. BUT INTO NATIONAL PARKS ONLY BRING IN ABOUT 15% OF TOTAL PARK REVENUE FOR DISNEY. IT IS 70% TO 75% OF PARK REVENUE COMES FROM THE U.S. PARKS, WHICH HAVE BEEN ABSOLUTELY GOING GREAT. THAT HAS BEEN HOLDING THE PARK SECTOR UP. BUT THERE IS NO DOUBT THAT INTERNATIONAL PARKS INCLUDING THE ASIAN PARKS AND PARIS, THERE IS A LOT OF SOFTNESS RIGHT NOW. SHERY: THAT IS REFLECTED ALSO IN THE DISNEY SHARE PRICE, AFTER HOURS DOWN MORE THAN 2%. LET'S GET OVER TO VONNIE QUINN WITH THE FIRST WORD HEADLINES. VONNIE: SRI LANKA'S PRESIDENT HAS PROMISED A NEW PRIME MINISTER AND CABINET WILL BE NAMED THIS WEEK TO END POLITICAL INSTABILITY. HE IS ALSO PLEDGING CONSTITUTIONAL CHANGES TO GIVE MORE POWER TO THE PARLIAMENT, A LONG-HELD DEMAND OF PROTESTERS. THE COUNTRY'S CENTRAL BANK CHIEF HAS THREATENED TO RESIGN IF STABILITY IS NOT RESTORED. NINE PEOPLE HAVE BEEN KILLED DURING PROTESTS AND AROUND 200 INJURED. THE PHILIPPINES PRESUMPTIVE PRESIDENT FERDINAND MARCOS JUNIOR SAYS HE IS LOOKING TO PRIORITIZE THE ECONOMY, ENERGY PRICES, JOBS, AND INFRASTRUCTURE. THE COUNTRY HAS BEEN FORECAST TO GROW AT ONE OF THE FASTEST RATES IN SOUTHEAST ASIA THIS YEAR. THE MARCOS CAMP CLAIMED VICTORY CITING AN UNASSAILABLE LEAD. CHINA HAS -- A FOREIGN MINISTRY SPOKESMAN HAILS THE MERITS OF THE APPROACH WHICH HAS LEFT THE NATION INCREASINGLY ISOLATED. THE W.H.O. DIRECTOR GENERAL -- HE SAID HE SHOULD GET A BETTER UNDERSTANDING OF THE FACTS AND REFRAIN FROM MAKING IRRESPONSIBLE REMARKS. HONG KONG MEDIA REPORTS SAY NATIONAL SECURITY POLICE ARRESTED FOUR PROMINENT DEMOCRACY ACTIVISTS WEDNESDAY INCLUDING A 90-YEAR-OLD CARDINAL. THEY WERE DETAINED ON SUSPICION OF COLLUDING WITH FOREIGN FORCES. THEY WERE LATER RELEASED ON BAIL. THE WHITE HOUSE CONDEMNED THE ARRESTS. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. ON VONNIE QUINN. THIS IS BLOOMBERG. SHERY: STILL AHEAD, THE AMERICAN APPAREL AND FOOTWEAR ASSOCIATION JOINS US TO DISCUSS THE HOTTER THAN EXPECTED U.S. INFLATION PRINT AND WHAT IT MEANS FOR BUSINESSES AND THEIR SUPPLY CHAINS. FIRST, RISK-OFF SENTIMENT CONTINUES TO PREVAIL IN MARKETS FOLLOWING THE CPI PRINT. WE TALK INVESTMENT STRATEGIES NEXT. THIS IS BLOOMBERG. ♪ > > THESE NUMBERS OBVIOUSLY ARE TOO HIGH. > > THE FED IS WALKING A SIGNIFICANT TIGHT ROPE. > > THEY ARE GOING TO HAVE TO BE A LOT MORE TOLERANT OF HIGH INFLATION FOR A WHILE. > > THE MARKET IS OVERPRICING WITH THE FED IS GOING TO DO. > > THE MARKET IS PRICING IN THAT THE FED WILL HAVE TO HIKE MORE. > > WE ARE EXPECTING A 50 BASIS POINT INCREASE AT THE NEXT MEETING. > > MAY BE PUT THAT 75 BASIS POINT INCREASE BACK ON THE TABLE. > > RULING OUT GREATER THAN 50 BASIS POINT MOVES, WHY RULE ANYTHING OUT IN THE EARLY INNINGS? > > IF THEY GO BY ANOTHER 50 BASIS POINTS IN JUNE, ANOTHER 50 IN JULY, THAT IS A LOT OF TIGHTENING OVER A COUPLE MONTHS. > > WHAT IS GOING TO BE REQUIRED TO GET INFLATION UNDER CONTROL. HAIDI: SOME OF OUR BLOOMBERG TV GUEST REACTING TO THE U.S. CPI PRINT. OUR NEXT GUEST SAYS IT WILL TAKE UPWARDS OF TWO YEARS FOR INFLATION TO MODERATE. MONA MAHAJAN, GREAT TO HAVE YOU WITH US. LET ME THROUGHOUT -- LET ME THROW UP THIS CHART. GLOBAL STOCKS ARE JUST WITHIN 2% OF THAT LEVEL NOW FROM ENTERING AN OVERALL BEAR MARKET. WHEN YOU TAKE A LOOK AT THIS KIND OF FREEFALL IN VOLATILITY, DO YOU LOOK FOR OPPORTUNITIES OR DO YOU LOOK FOR PLACES TO HIDE IF THAT INFLATION OUTLOOK IS JUST SO MURKY? MONA: THANKS FOR HAVING ME. LOOK, I THINK MARKETS TODAY REALLY REFLECTED NOT THE INFLATION CONCERN. AND WE SAW THAT PLAY OUT ACROSS ASSET CLASSES. WITHIN EQUITIES, THE OUTPERFORMANCE ASIDE FROM ENERGY CAME FROM DEFENSIVE PARTS OF THE MARKET LIKE STAPLES AND UTILITIES. REALLY SAW YIELDS MOVE LOWER, NOT HIGHER, AS YOU MIGHT EXPECT IF INFLATION WAS GETTING HOTTER. THAT REFLECTS SOME OF THE GROWTH CONCERNS. AND INTERESTINGLY WE SAW INVESTMENT GRADE BONDS ACTUALLY OUTPERFORM TODAY FOR THE FIRST TIME IN QUITE SOME TIME. THEY PLAYED THAT DEFENSIVE FLIGHT TO SAFETY ASSET CLASS THAT USUALLY SEE FOR THE INVESTMENT GRADE MARKET SO GENERALLY WHAT WE WOULD SAY IS IN THIS BACKDROP, UNTIL WE GET A MEANINGFUL MOVE LOWER IN INFLATION AND NOT ONLY ONE PRINT BUT A CONSISTENT TWO, THREEE, FOUR FRIENDS -- PRINTS IN THE RIGHT DIRECTION, THIS MAY REMAIN RANGE BOUND. WE HAD A REALLY STRONG VALUATION RE-RATING. BUT HISTORICALLY AROUND THIS 3% 10 YEAR YIELD YOU CAN GET AS LOW AS 14 TO 15 TIMES. SO THE DOWNSIDE MAY NOT BE IN YET, BUT WE'RE THINKING IF YOU HAVE TO BE IN THE MARKET, CASH IS NOT YIELDING MUCH. IF YOU HAVE MONEY TO PUT TO WORK, THE DEFENSIVE PARTS OF THE MARKET, HIGHER QUALITY AND MAYBE EVEN INVESTMENT GRADE BONDS ARE THE PLACES TO BE FOR NOW UNTIL WE GET SOME OF THAT MEANINGFUL DECELERATION IN INFLATION. HAIDI: DO YOU STILL LIKE ENERGY? MONA: ENERGY FOR US HAS PROBABLY SEEN A PRETTY BIG MOVE ALREADY. A LOT OF THE COMPONENTS THAT ARE DRIVING AT HIGHER ARE WELL KNOWN BY MARKETS. WHETHER IT IS THE GEOPOLITICAL RISK, WHETHER IT IS SUPPLY DEMAND CONSTRAINTS BROADLY. AND ON TOP OF THAT WE ARE SEEING A LITTLE BIT OF DAMPENING OF DEMAND COMING BECAUSE CHINA HAS THAT STRONG ZERO COVID POLICY THAT IS TAKING SOME CONSUMPTION OFF-LINE. WE THINK THE RISK REWARD IS LESS COMPELLING HERE. PROBABLY IF ANYTHING SECTORS THAT WE WOULD START TO GET MORE INTERESTED IN ARE THE ONES THAT ARE MOST NOT. BUT AGAIN, WE WOULD NEED TO SEE SOME STABILIZATION IN THE GROWTH PICTURE AS WELL AS THE INFLATION PICTURE BEFORE WE GET MORE INTERESTED IN THE GROWTH PARTS OF THE MARKET AS WELL. SHERY: WHAT ABOUT THOSE REOPENING TRADES, GIVEN THAT IN THE CPI PRINT WE HAD AIRLINE FARES PICKING UP? MONA: I THINK THE REOPENING, WHAT WE CALLED THE MANY REOPENING 2.0 THAT IS MAYBE OCCURRING NOW IN THE SPRING AND SUMMER, THERE IS PERHAPS SOME LEGS BEHIND THE VALUE TRADE PART OF THAT IS BECAUSE WHEN YOU LOOK AT REAL YIELDS, TIPS 10 YEAR BREAKEVEN YIELDS OR YIELDS MINUS BREAKEVEN INFLATION RATES, REAL YIELDS HAVE GONE FROM DEEPLY NEGATIVE FOR THE LAST TWO YEARS, NOW THEY ARE FINALLY INCHING POSITIVE. AND IN THAT BACK DROP, THAT TENDS TO VALUE FAVOR -- VALUE -- FINANCIALS ARE GETTING HIT BECAUSE OF CONCERNS ON GROWTH. BUT GENERALLY SPEAKING THE VALUE PART OF THE MARKET HAS PERFORMED BETTER RELATIVELY THIS YEAR BY A PRETTY LARGE MARGIN VERSUS GROWTH. AND WE THINK THAT IS IN PART BECAUSE REAL YIELDS ARE POSITIVE NOW AND WE THINK THEY WILL CONTINUE TO CLIMB HIGHER. THEY ARE 20 TO 25 BASIS POINTS, MAY BE HEADING TOWARDS 50 BASIS POINT. DURING THAT TIME WE THINK VALUE CAN OUTPERFORM GROWTH. SHERY: WHAT ABOUT VALUE IN THE BOND SPACE? MONA: I THINK THAT ONE IS WHERE WE SEE A LOT OF INTERESTING RISK REWARD RIGHT NOW. I THINK BONDS HAVE HAD -- ALTHOUGH WE HAVE FELT IT IN EQUITY MARKETS, WE FELT IT EVEN MORE MEANINGFULLY IN BOND MARKETS. THE ADJUSTMENT OVER JUST FOUR MONTHS AS BEEN DRAMATIC. KEEP IN MIND 10 YEAR YIELDS HAVE DOUBLED. WE STARTED IN THE U.S. AT ABOUT 150 AND WE ARE CLOSE TO 3%. THE TWO-YEAR PART OF THE MARKET HAS MORE THAN DOUBLED, UP 3.5 TIMES. SO DO WE THINK THAT WILL ANNUALIZE? DO WE THINK THAT RAPID RATE OF INCREASE WILL CONTINUE THE REST OF THE YEAR? PROBABLY NOT. A LARGE PART OF ADJUSTMENT IN BONDS IS PROBABLY BEHIND US, SO WE THINK THE RISK WE WORE IT IS A LOT MORE INTERESTING NOW THAT WE HAVE SEEN IN THE PAST. SHERY: MONA, IT WAS REALLY GOOD CATCHING UP WITH YOU. YOU CAN FIND A ROUNDUP OF THE STORIES WE HAVE DISCUSSED THROUGHOUT THE DAY. GET TO DAYBREAK, DAYB < GO > ON THE BLOOMBERG. AND YOU CAN FIND ALL OF THOSE STORIES. THIS IS BLOOMBERG. > > I THINK PEOPLE LOOK BACK ON THIS FIVE YEARS FROM NOW AND SAY I CANNOT BELIEVE THAT COMPANY WAS AVAILABLE AT THESE PRICES. BECAUSE THE ENTIRE FINANCIAL SERVICES SECTOR IS GOING TO HAVE TO TRANSITION TO INCORPORATE THE CAPABILITIES THAT PUBLIC BLOCKCHAINS PROVIDE TO LET CUSTOMERS OWN AND TRANSFER DIGITAL ASSETS AROUND THE WORLD. AND COINBASE IS IN THE SEAT IN TERMS OF PROVIDING THOSE SERVICES. SHERY: AND OF COURSE WE ARE WATCHING THIS COLLAPSE IN CRYPTO ASSETS. WE SAW A LITTLE BOUNCEBACK IN THE ASIAN SESSION, BUT BITCOIN IS STILL BELOW THE $30,000 LEVEL. OTHER FAVORITES TUMBLED MORE THAN 20%. IF YOU LOOK AT THE GALAXY INDEX, DOWN MORE THAN 60% FROM ITS PEAK. WE HAD THE COLLAPSE OF TERA COIN AND PEOPLE TRYING TO RAISE $1 BILLION. IT IS MAYHEM WHEN IT COMES TO CRYPTOCURRENCIES. WE WILL CONTINUE TO WATCH A LITTLE BIT OF REBOUND WE ARE SEEING IN THE ASIAN SESSION. PLENTY MORE TO COME. THIS IS BLOOMBERG. ♪ > > THERE ARE A LOT OF THINGS THAT ARE GOING ON. A LOT OF DISTURBANCES AROUND THE WORLD. BUT FOR US, IT IS REALLY ABOUT FOCUSING ON OUR LONG-TERM STRATEGY. > > HAS MORTGAGE RATES HAVE GONE UP, AND THEY STILL HAVE FURTHER TO GO, CLEARLY HOMEBUYERS ARE GOING TO HAVE TO TRADE DOWN TO SLIGHTLY LOWER PRICE POINTS. MOST OF THE DATA I HAVE SEEN AROUND HOUSING STILL PREDICT STRONG HOUSING APPRECIATION. > > I THINK PEOPLE ARE OVERREACTING TO SOME OF THE INFLATION WORRIES, SOME OF THE OTHER TRAVEL PLAYERS. > > WE HAVE BEEN STUDYING INFLATION CAREFULLY NOW, BECAUSE THE GROWTH OF INFLATION OCCURRED MAY BE BIT MORE SHARPLY THAN SOME HAD ANTICIPATED. AND IT CERTAINLY CONTINUES TO BE A REAL CONCERN. SHERY: BUSINESS EXECUTIVES ON THE INFLATION PRESSURES AND WHAT SUPPLY CHAIN DISRUPTION SENDING PRICES HIGHER GLOBALLY, LET'S DISCUSS THE IMPACT ON THE RETAIL SECTOR. JOINING US NOW IS STEPHEN LAMAR, PRESIDENT AND CEO OF THE APPAREL ASSOCIATION. ALWAYS GOOD TO SEE YOU. GIVE US AN UPDATE ON HOW MUCH OF THESE COST PRESSURES YOUR MEMBERS HAVE TRANSFERRED TO CONSUMERS ALREADY. STEPHEN: AND I WILL ALWAYS SAY THAT PRICES ARE DECISIONS THAT INDIVIDUAL COMPANIES MAKE. WE'RE SEEING UNRELENTING INFLATIONARY PRESSURE. IT IS UNPRECEDENTED. DO NUMBERS THAT CAME OUT THIS MORNING SHOW IT CONTINUES TO HAVE A DAMAGING IMPACT ON THE CONSUMER. THIS IS HITTING BASIC NEEDS. EVERYTHING FROM BABY FORMULA TO BABY CLOTHES, INFANT GARMENTS ARE UP, PRICES ARE UP ABOUT 9% FROM LAST YEAR. KIDS SHOES ARE UP ABOUT 5%. THESE ARE BASIC PRODUCTS EVERYBODY NEEDS TO BUY. AND WE KEEP ASKING THE BIDEN ADMINISTRATION, ASKING CONGRESS, TAKE STEPS TO RELEASE THE INFLATIONARY PRESSURES FROM THE SYSTEM. WE THINK THE BEST FIRST PLACE TO START IS TO RELIEVE THE CRUSHING -- AND WHICH SHOWS UP AS HIGHER PRICES IN THE FORM OF TARIFFS THAT GETS PASSED ALONG TO CONSUMERS. SHERY: WE KNOW THE U.S. TRADE REPRESENTATIVE IS BEGINNING HIS REVIEW OF THE CHINA 301 TARIFFS. ANY IDEA WHERE THOSE NEGOTIATIONS AND TALKS ARE, WHEN WE COULD SEE A REDUCTION THAT CAN HELP YOUR MEMBER COMPANIES? STEPHEN: IT CANNOT HAPPEN FAST ENOUGH. WELL ACTUALLY, IT CAN. THE PRESIDENT HAS THE ABILITY TO REMOVE THIS WITH THE STROKE OF A PEN. BUT THEY ARE SUBJECTING THE INDUSTRY TO A VERY LONG REVIEW, VERY UNCERTAIN REVIEW. SO IT IS UNCLEAR WHETHER ANY OR MANY OF THESE TARIFFS WILL BE RELEASED. BUT HERE ARE THE FACTS. WE SPENT ABOUT -- OUR INDUSTRY SPENT ABOUT $25 BILLION IN TARIFFS LAST YEAR ALONE. AND THE ENTIRE ECONOMY SINCE THESE TARIFFS HAVE BEEN IMPOSED, $136 BILLION IN TARIFFS JUST ON THE SECTION 301 TARIFFS. SO THERE IS A LOT OF MONEY THAT CAN BE PUMPED BACK INTO THE ECONOMY IN THE FORM OF COST SAVINGS, SAVINGS THAT CAN GO BACK TO COMPANIES THAT THEY CAN INVEST IN NEW WORKERS AND INNOVATION. SO THERE IS REALLY A LOT OF OPPORTUNITY. THE ADMINISTRATION COULD TAKE ADVANTAGE OF IT FAIRLY QUICKLY IF THEY WANTED TO. HAIDI: WHAT ARE YOU HEARING FROM YOUR MEMBERS ABOUT THE DIFFICULTIES IN DOING BUSINESS WITH CHINA AND HONG KONG RIGHT NOW GIVEN THE CLOSED BORDERS AND PRODUCTION HITS THAT KEEP COMING AS A RESULT OF THE COVID ZERO STRATEGY? STEPHEN: THE COVID ZERO STRATEGY HAS CREATED ENORMOUS PROBLEMS. CHINA HAS AN EFFECT EXPORTED SUPPLY CHAIN PROBLEMS TO THE REST OF THE WORLD. WE THINK WE SHOULD BE DOING EVERYTHING WE CAN TO PREVENT AND SLOW THE FLOW OF COVID BUT WE SHOULD USE UPDATED POLICIES. THE STRATEGIES CHINA IS USING RIGHT NOW, THOSE ARE STRATEGIES BASED ON 2020 THINKING, NOT BASED ON INFORMATION WE HAVE LEARNED ABOUT THIS TERRIBLE VIRUS LAST COUPLE YEARS. WE NOW KNOW HOW TO OPERATE, HOW TO MAINTAIN SAFE AND HEALTHY WORKPLACES, PORTS, LOGISTICS SYSTEMS. SO THERE IS NO REASON TO SHUT DOWN ECONOMIES OVER COVID RIGHT NOW. RIGHT NOW WE SHOULD KEEP THOSE ECONOMIES OPEN. THAT IS WHAT WE HAVE BEEN ENCOURAGING THE CHINESE GOVERNMENT TO DO. WHAT OUR MEMBERS ARE TELLING US IS THAT IS ALSO FUELING THESE PRICE INCREASES. EITHER SHORTAGES, LOGISTICS SNAFUS. ONCE WE CAN GET THE CHINESE SYSTEM OPERATING MORE EFFICIENTLY AND MORE EFFECTIVELY, THAT WILL LEAVE SOME OF THE PRESSURES AS WELL. HAIDI: AT THE SAME TIME WE HAVE SEEN DOWNGRADED OUTLOOKS FOR CHINESE DEMAND FROM EVERYWHERE FROM BEAUTY RETAILERS TO SPORTSWEAR. AND AT THE SAME TIME, BLOOMBERG INTELLIGENCE IS SEEING THAT THE AMOUNT OF INVENTORY U.S. RETAILERS ARE HOLDING AT THE MOMENT IS ABOUT 20% ABOVE THE THREE YEAR AVERAGE. HOW MUCH OF A RISK IS THIS TO PROFITABILITY, AND ARE YOU HEARING ABOUT ELEVATED INVENTORY AT A TIME WHERE WE COULD SEE CONSUMER DEMAND WANE AS A RESULT OF RATE HIKES AND INFLATION? STEPHEN: ONE OF THE THINGS THAT HAPPEN LAST YEAR, WE HAD THESE RIDICULOUSLY TROUBLING SUPPLY CHAIN DISRUPTIONS THAT REALLY MANIFESTED SELLS IN A LOT OF DIFFERENT WAYS INCLUDING DELAYS. ONE OF THE WAYS THE COMPANIES HAVE STRUCTURED THEIR BUSINESSES TO AVOID THOSE DELAYS IS TO SHIP MORE AND SHIP EARLIER. IF THEY ARE DOING THAT THEY CAN AVOID THE DELAYS OR TAKE STEPS TO MITIGATE THOSE DELAYS. BUT IF THEY SHIFT THAT INTO AN ERA OF DECLINING DEMAND PERHAPS FUELED BY INFLATION AND YOU ARE GOING TO SEE LARGER INVENTORIES. IT IS ONE OF THE REASONS WE ARE TRYING TO GET INFLATION BROUGHT UNDER CONTROL AS QUICKLY AS POSSIBLE. SO YOU DO NOT CREATE THOSE DEMAND PROBLEMS AT A TIME WHEN SUPPLY IS INCREASING. HAIDI: ALWAYS GREAT TO HAVE YOU WITH US. WE APPRECIATE YOUR TIME. THE FORMER NEW YORK FED PRESIDENT L DUDLEY SAYS THE U.S. CENTRAL BANK SHOULD STOP SUGARCOATING HIS MESSAGING ABOUT HOW HIGH JUST RATES NEED TO GO. DUDLEY, WHO WAS ALSO A BLOOMBERG OPINION COLUMNIST, WAS SPEAKING TO TOM KEENE AND LISA ABRAMOWICZ. > > THE FED HAS NOT BEEN FORCEFUL IN ENOUGH IN STATING THEIR GOALS WITH THE MEANS TO ACHIEVE THAT GOAL. CHAIR POWELL LAST WEEK DID NOT WANT TO TALK ABOUT WHY MONETARY POLICY MIGHT JUST HAVE TO GO TO NEUTRAL, BUT TIGHT. A TIGHT MONETARY POLICY IS WHAT IS GOING TO BE REQUIRED TO GET INFLATION UNDER CONTROL. > > WHY ARE THEY TIMID? > > IT IS NOT CLEAR TO ME. CERTAINLY THEY ARE NOT TIMID ABOUT TALKING ABOUT WHAT THE END GOAL IS. BUT 2% INFLATION, YOU HAVE TO DESCRIBE HOW YOU'RE GOING TO GET THERE. IF YOU START TO SUGARCOAT IT, THEN FINANCIAL CONDITIONS DO NOT TIGHTEN AS MUCH AND YOU RUN THE RISK THAT PEOPLE WILL LOSE CONFIDENCE IN THE FEDERAL RESERVE. ONE THING IN THE FED'S FAVOR IS PEOPLE ARE CONFIDENT THEY WILL DO THEIR JOB. UNDER PROMISING WHAT IS REQUIRED, THEN THERE IS A RISK TO THE FED'S CREDIBILITY DOWN THE ROAD. > > DO YOU THINK THIS IS REALLY SUGARCOATING OR DO YOU THINK JAY POWELL JUST DOES NOT BELIEVE YOU'RE GOING TO GET A MORE PERSISTENT LEVEL OF INFLATION THAT MANY PEOPLE INCLUDING YOURSELF ARE TALKING ABOUT? > > I THINK YOU CAN SEE IT ALSO IN THE FED'S OWN ECONOMIC PROJECTION. AFTER THE MARCH F1 MEETING, WHAT THEY SHOWED WAS INFLATION WAS MAGICALLY MELTING AWAY DESPITE A MONETARY POLICY THAT DID NOT TO TIGHT AND DESPITE THE UNEMPLOYMENT RATE DID NOT RISE. IT WAS STILL PROJECTED TO BE AROUND 3.5%. THAT IS MAGICAL DISINFLATION AND THAT IS NOT HOW IT WORKS. THE FEDERAL RESERVE HAS TO PUSH THE UNEMPLOYMENT RATE UP. SHOULD BE MORE FORTHRIGHT. > > DO YOU THINK ANDREW BAILEY AT THE BANK OF ENGLAND BASICALLY CHARTED THE PATH FOR FED OFFICIALS? SAYING WE ARE GOING TO BE HIKING RATES INTO A SLOWING ECONOMY. WE MIGHT EXACERBATE A RECESSION, BUT A NEAR TERM RECESSION WILL BE WHAT IS NECESSARY TO BRING SUPPLY AND DEMAND MORE INTO BALANCE TO ACTUALLY CREATE MORE GROWTH OVERALL? > > I DON'T THINK THE FED NECESSARILY HAS TO SAY THERE WILL BE A RECESSION. THE FED SHOULD STILL ACHIEVE FOR A SOFT LANDING. BUT SHOULD EXPLAIN IT IS DIFFICULT TO ACHIEVE WHAT YOU HAVE TO PUSH UP THE UNEMPLOYMENT RATE TO HOLD DOWN INFLATION. > > FROM WHERE YOU SIT, AND OF COURSE DECADES AT GOLDMAN SACHS AND THE GRIND AND ALL YOUR ACADEMICS AS WELL, I THINK OUR AUDIENCE IS FASCINATED BY WHAT POLITICIANS CAN DO. AND IF WE STRETCH IN OUR RECENT MEMORY, FROM LBJ TO JIMMY CARTER TO RICHARD NIXON, WHO WAS HANDED THAT FROM CARTER, AND ONTO THE CURRENT PRESIDENT. WHAT THE PRESIDENTS DO ABOUT INFLATION? ARE THEY EVEN PART OF THE DISCUSSION? > > I THINK THE PUBLIC HAS AN EXAGGERATED VIEW ABOUT WHAT ANY ADMINISTRATION CAN DO ABOUT INFLATION. THE BIDEN ADMINISTRATION, THE MOST IMPORTANT THING THEY DID WAS THE STRATEGIC PETROLEUM RESERVE, PROBABLY PUTTING SOME DOWNWARD PRESSURE ON OIL PRICES. THE REALITY IS THE PRESIDENT'S ABILITY TO DO SOMETHING ABOUT INFLATION IS EXTREMELY LIMITED. THE ONLY THING THE PRESIDENT CAN DO IS GET CONGRESS TO TIGHTEN FISCAL POLICY TO MAKE THE FED'S JOB A LITTLE EASIER. SHERY: FORMER NEW YORK FRED PRESIDENT BILL DUDLEY THERE. LET'S NOW GET TO THE FIRST WORD NEWS WITH VONNIE QUINN. VONNIE: PRESIDENT BIDEN SAYS THE FED HAS PRIMARY RESPONSIBILITY FOR FIGHTING PRICE PRESSURES, PLACING THE BURDEN OF HIS PROBLEM WITH THE CENTRAL BANK. BIDEN CALLED INFLATION ON ACCEPTABLY HIGH AND REDUCING IT IS HIS TOP ECONOMIC PRIORITY. MEANTIME, DURING A VISIT TO A FAMILY FARM OUTSIDE CHICAGO, BIDEN PRAISED U.S. FARMERS FOR HELPING TO CURB PRICE PRESSURES AND MAINTAIN GLOBAL FOOD SUPPLIES. ECB PRESIDENT CHRISTINE LAGARDE SIGNALED A MOVE ON INTEREST RATES AS SOON AS JULY. POLICYMAKERS AT THE CENTRAL BANK ARE INCREASINGLY OPEN TO TAKE AN INTEREST RATES ABOVE ZERO FOR THE END OF THE YEAR. SHE SAID THE FIRST RATE HIKE IN MORE THAN A DECADE MAY HAPPEN WEEKS AFTER BOND BUYING ENDS EARLY NEXT QUARTER. THE HONG KONG MONETARY AUTHORITY MOVED TO SUPPORT HIS LOCAL CURRENCY FOR THE FIRST TIME SINCE 2019. THEY ARE BUYING NEARLY 1.6 HONG KONG DOLLARS. IT COMES AS THE HONG KONG CURRENCY HITS THE WEAK END OF ITS TRADING BAN FOR THE FIRST TIME IN THREE YEARS. CHINESE PREMIER LEAGUE URGED OFFICIALS TO USE FISCAL AND MONETARY POLICIES TO BOOST EMPLOYMENT AND THE ECONOMY. CCCTV REPORTS LI OVERSAW A MEETING WHERE AUTHORITIES WERE URGED TO STABILIZE CONSUMER PRICES AND ENSURE GRAIN OUTPUT. IT ALSO SAID MEASURES WILL BE TAKEN TO SECURE SUPPLY CHAINS, SUBSIDIZE POWER PRODUCERS, AND FINANCE AND FOR STRUCTURE PROJECTS. --FINANCE INFRASTRUCTURE PROJECTS. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M VONNIE QUINN. THIS IS BLOOMBERG. HAIDI: NEXT, ARK INVESTMENT SEES AMAZING SALE PRICES IN INNOVATION ASSETS AS THE LIKES OF CRYPTO CONTINUES TO TUMBLE. WE WILL GET THE TOPIX FOR STOCKS JUST AHEAD. THIS IS BLOOMBERG. ♪ HAIDI: TAKE A LOOK AT THE WILD RIDE WE ARE SEEING ACROSS THE CRYPTO SPACE. SEEING A LITTLE BIT OF A PULLBACK AMOUNT OF VOLATILITY AND SELLOFF WE SAW IN MAJOR COINS LIKE BITCOIN. WE ARE STILL SEEING QUITE A BIT OF DOWNSIDE BUT BITCOIN SEEING A LITTLE BIT OF A RECOVERY BUT WELL BELOW $29,000. $39,000 IS SEEN AS A KEY THRESHOLD. AT ONE POINT SHEDDING MORE THAN 6% AS WE GET THIS NEGATIVE NEWS FLOW WHEN IT COMES TO THE CRYPTO SPACE. THAT DEATH SPIRAL. BACKERS ARE TRYING TO RAISE $1.5 BILLION TO SHORE UP THE TOKEN AFTER IT CRASHED. THAT DEALING CAME FROM THE DOLLAR PEG BEING SEEN AS A FUNDAMENTAL RISK THE BROADER CRYPTO INDUSTRY. WE ALSO HAVE COINBASE CONTINUING TO TAME TRHERE, AND PRESSURE COMING FROM THE SEC CHAIR ABOUT CRITICISM OVER DIGITAL ASSET EXCHANGES. ALL OF THAT IS WEIGHING ACROSS THAT SPACE. MEANWHILE, ARK INVESTMENT DIRECTOR OF RESEARCH BRETT WINTER SAYS AMAZING SALE PRICES ARE CURRENTLY AVAILABLE TO INNOVATION ASSETS. HE SPOKE WITH BLOOMBERG ABOUT THE OPPORTUNITIES AND WHY HE THINKS EVERY PORTFOLIO THAT HAD -- SHOULD HAVE SOME EXPOSURE. BRETT: IN THE LONG-TERM, YOU ARE THE BELIEVE THAT THIS DECADE WILL BE ONE OF TECHNOLOGICAL INNOVATION OR YOU DON'T. YOU EITHER BELIEVE THAT THE COST OF AI TRAINING FALLING IN HALF EVERY NINE MONTHS WILL YIELD MASSIVE PRODUCTIVITY OR YOU DON'T. AND IT IS CLEAR THAT RIGHT NOW MARKETS ARE NOT PRICING ASSETS BASED ON FUNDAMENTALS. THEY ARE BEING WHIPPED AROUND BY ASSET FLOWS BETWEEN ASSET CLASSES BY ALLOCATORS. AND SO FROM OUR PERSPECTIVE, YOU'RE GETTING AMAZING SALE PRICES IN INNOVATION ASSETS. AND WE BELIEVE THAT EVERYBODY NEEDS TO HAVE A MEANINGFUL EXPOSURE TO INNOVATION IN THEIR PORTFOLIO. THERE ARE MANY INVESTORS WHO HAVE BENCHMARK EXPOSURES TO TRADITIONAL INDICES HAVE UNINVENT -- UNINTENTIONAL INNOVATION SHORTS. WHERE IF BEING ABLE TO GET A CANCER DIAGNOSIS FROM A BLOOD VIAL IS A FULL ADVANCE AND GOING TO DRIVE BILLIONS OF DOLLARS IN REVENUE, THEN ASSETS WILL APPRECIATE ON THE BACK END OF THAT, AND THAT WILL PUT SOME TRADITIONAL SERVICE PROVIDERS AT RISK. IF EV AUTONOMOUS TRUCKS WILL BE COST COMPETITIVE WITH FREIGHT RAIL OVER THE COST OF THIS BUSINESS CYCLE, THEN THOSE TRADITIONAL RAIL LINES BE MATERIALLY LESS VALUABLE THAN YOU CURRENTLY THINK THEY'RE GOING TO BE. AND SO THAT POSITION IN YOUR CORE INDEX EXPOSURE IT WILL BE PUT INTO STRESS. SO YOU BETTER OWN THE INNOVATION OPPORTUNITY ON THE BACK END OF THAT IN THE EVENT THAT THESE TECHNOLOGY PROMISES COME TO FRUITION. SHERY: BRETT WINTON THERE, AND CRYPTOCURRENCIES HAVE CRATERED. A STAMPEDE OUT OF MANY DIGITAL ASSET'S POPULAR TOKENS. LET'S BRING IN STACY MARIE ISHMAEL. SO WHERE ARE WE RIGHT NOW? WE HEARD BACKERS WERE TRYING TO RAISE $1.5 BILLION. STACEY: THE LUNA FOUNDATION GUARD, THE PEOPLE TRYING TO HELP BRING THESE FOLKS BACK, HAS BEEN DOING A WHIP ROUND OF SOME OF THE MOST PROMINENT NAMES ON WALL STREET AND TRADITIONAL FINANCE AND ALSO IN DEFI AND TO DATE THEY HAVE NOT HAD A LOT OF SUCCESS SO FAR. WHAT WE ARE FINDING INSTEAD IS THAT WE HAVE BEEN HEARING AND REPORTING THAT THERE ARE TWO CAMPS TO THIS CONVERSATION. ONE ARE THOSE GOING ON THE RECORD SAYING WE ARE NOT INVOLVED EITHER POSITIVELY OR NEGATIVELY. THEN SOME FOLKS ARE TELLING US ON AND OFF THE RECORD THAT THEY HAVE A LOT OF QUESTIONS ABOUT THE SUSTAINABILITY OF ANY EFFORTS TO REALLY BAILOUT THIS ALGORITHMIC STABLE COIN. THERE IS A PHRASE FOLKS ARE THROWING AROUND A LOT, WHICH IS DEATH SPIRAL, IN REFERENCE TO THE FACT THAT WITH EVERY MINUTE THAT GOES BY AS THESE VALUES DECLINE AND DECLINE IT BECOMES MORE AND MORE EXPENSIVE AND LESS AND LESS FEASIBLE TO DO SOMETHING THAT RESEMBLES A COMPLETE RESCUE. HAIDI: WE HAVE SEEN A LOT OF VOLATILITY FOR CRYPTO BROADLY THROUGHOUT THE COURSE OF THE YEAR. DOES THE DE-PEGGING FROM THE DOLLAR AS WELL AS INFLATION PRESSURES CONVERGE TO CREATE A PRETTY NEGATIVE SCENARIO? STACY-MARIE: THAT IS EXACTLY RIGHT. WHAT WE HAVE SEEN OVER THE PAST COUPLE OF WEEKS IS CRYPTO BROADLY, BITCOIN AND EITHER SPECIFICALLY, HAS BEEN CORRELATED WITH THE MEGA CAP TECH STOCKS. THAT FLIGHT AWAY FROM RISK HAS AFFECTED CRYPTO AND WAS REALLY AFFECTING THE BIGGER TOKENS. CERTAINLY SOME OF THE OLD COINS GOING INTO THIS WEEKEND WHICH IS WHEN WE STARTED TO SEE TERA USD WAS LOSING ITS PEG. THE CONVERGENCE OF THESE TWO THINGS SIGNIFICANTLY DENTED SECOND -- SENTIMENT. HAIDI: STACY-MARIE ISHMAEL THERE. COMING UP, AUSTRALIA'S OPPOSITION LEADER WINNING THE FINAL DEBATE AT HEAD OF THE ELECTION ON MAY 21 ACCORDING TO AN AUDIENCE OF UNDECIDED VOTERS. WE HAVE THE LATEST NEXT. THIS IS BLOOMBERG. ♪ SHERY: AUSTRALIAN OPPOSITION LABOR LEADER HAS NARROWLY WON THE THIRD AND FINAL ELECTION DEBATE SELECTED BY AN AUDIENCE OF UNDECIDED VOTERS. THE FEDERAL ELECTION IS NINE DAYS AWAY. OUR SYDNEY BUREAU CHIEF JOINS US NOW FOR NOW -- JOINS US NOW FOR MORE. TO PUT THINGS INTO PERSPECTIVE, THIS WAS ASKING PEOPLE AT THE PUB WHO WERE WATCHING THE DEBATE WHO THEY THOUGHT THEY WOULD VOTE FOR AFTERWORDS. AINSLIE: THEY HAD AN AUDIENCE OF UNDECIDED VOTERS AT PUBS AROUND AUSTRALIA, A VERY AUSTRALIAN WAYS OF DOING THINGS. 50% SAID THEY WERE SWAYED. ONLY 34% SAID THEY WERE CONVINCED BY SCOTT MORRISON. 16% REMAINED UNDECIDED. SO IT IS A CLEAR WIN FOR ANTHONY ALBANESE LAST NIGHT. IN A LOT CALMER AFFAIR THAN WHAT WE HAD PREVIOUSLY. HAIDI: LISTENING TO ESPECIALLY THE YOUNGER VOTERS, THEY DON'T THINK EITHER OF THE PARTIES ARE DOING ENOUGH ABOUT CLIMATE CHANGE. THE PRICE OF HOUSEHOLDS IS A BIG FACTOR. HOW DID THEY ADDRESS THOSE ISSUES? AINSLIE: BOTH LEADERS SAID THEY WOULD NEVER INTRODUCE A CARBON TAX WHICH WAS INTERESTING. THEY WERE A BIT LIGHT ON COLISEUM -- ON POLICY DATA FOR CLIMATE CHANGE BECAUSE IT IS SUCH A CONTENTIOUS ISSUE. NO ONE WANTS TO DELVE DEEP INTO THAT. THEY WERE ADEPT AT CHANGING THE SUBJECT ON THAT. IN TERMS OF COST-OF-LIVING, IT WAS AN INTERESTING DEBATE BECAUSE INFLATION IS RACING HERE. WE HAD THE OPPOSITION SAYING THEY WOULD TRY AND MATCH INFLATION WITH WAGES AND WE HAD THE PRIME MINISTER PROMISE WAGES WOULD NOT RISE THAT FAST UNDER HIM. SO WE HAD THE PRIME MINISTERS SAYING HE WOULD KEEP WAGES DOWN, WHICH IS INTERESTING. BUT THE COST OF LIVING IS RIGHT AT THE FOREFRONT OF PEOPLE'S MINDS HERE, AS THAT IS AROUND THE WORLD. SHERY: I WAS JUST GOING TO ASK, HOW IS ALL OF THAT PLAYING INTO THE PUBLIC SENTIMENT OF THESE CANDIDATES? WHAT ARE THE POLLS SAYING? AINSLIE: THE POLLS ARE POINTING TO A MODEST WIN FOR LABOUR. SO, A CHANGE IN GOVERNMENT. WE HAVE A SERIES OF INDEPENDENTS RUNNING ON A CLIMATE CHANGE AGENDA PLATFORM. AND INDIVIDUAL STATE POLLING AS SHOWN TO GOVERNMENT LOSING SOME OF THEIR KEY SEATS TO THOSE SO-CALLED TEAL INDEPENDENTS WHO ARE PROMISING ACTION ON CLIMATE CHANGE, INCLUDING JOSH FREUDENBERG, THE TREASURER. ACCORDING TO POLLING UP TODAY HE IS POISED TO LOSE HIS SEAT TO AN INDEPENDENT. SO THAT IS ONE TO WATCH. HAIDI: INES LEIGH CHANDLER THERE. GET MORE INSIGHTS YOU CAN LISTEN TO OUR PODCAST, AUSTRALIA DECIDES. THAT IS UPDATED WEEKLY AS WE HEAD FOR THE VOTE ON MAY 21 AND AVAILABLE WHENEVER YOU GET YOUR PODCASTS. SHERY: FOR NOW LET'S GET A QUICK CHECK OF THE LATEST HEADLINES. THEY ARE ASKING A COURT TO LET THEM VOTE AS CREDITORS IN A DEBT RESTRUCTURING OF THEIR BRAZIL JOINT VENTURE IN FILINGS OBTAINED BY BLOOMBERG THEY HAVE NO CONFLICT OF INTEREST. IT WILL TEST BRAZIL'S NEW BANKRUPTCY LAW WHICH ALLOWS CREDITORS TO PRESENT THEIR OWN RESTRUCTURING PLANS. SAUDI ARAMCO OVERTOOK APPLE AS THE WORLD'S MOST VALUABLE COMPANY ON SURGING OIL PRICES AND THE ONGOING WEAKNESS IN TECH STOCKS. ARAMCO TRADED NEAR ITS RECORD HIGH ON WEDNESDAY WITH A MARKET CAP OF ABOUT $2.43 TRILLION. EARLIER THIS YEAR APPLE BOASTED A MARKET VALUE OF $3 TRILLION BUT HAS FALLEN NEARLY 20%. PANASONIC SAYS TESLA ASKED IT TO SPEED UP DEVELOPMENT OF ITS NEXT GENERATION BATTERIES. THEY SAID DEMAND REMAINS ROBUST FOR ITS POWER SELLS INCLUDING THOSE IT SUPPLIES TO THE LEADING EV MAKER. COMING UP, PANIC, PARALYSIS, OR PATIENCE. REMINDING INVESTORS TO STAY RATIONAL DURING A BEAR MARKET AND OFFERS THEIR TRADING STRATEGIES. THAT IS IT FOR DAYBREAK AUSTRALIAN BUT WE HAVE PLENTY MORE COMING UP ON DAYBREAK ASIA NEXT. THIS IS BLOOMBERG. ♪

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'Bloomberg Daybreak: Australia' Full Show (05/12/2022)

Haidi Stroud-Watts in Sydney and Shery Ahn in New York drive to the Asia, Australia and New Zealand market opens while wrapping the biggest stories of the previous day on Wall Street. (Source: Bloomberg)

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