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00:00Welcome to DAYBREAK Asia. We're counting down to Asia's major market opens the top stories this hour of risk appetite to be tested in Asia as investors brace for a likely 75 basis points Fed hike of major corporate earnings this week. The clock's ticking for the world's most indebted developed Rory China ever. Ground is just days away from unveiling its restructuring plan after a leadership shakeup. And the World Health Organization declares monkeypox a global emergency trying to spur more than Ethan in testing and treatment. Let's get you a look at how it shaping up when it comes to the Sydney Open. We're looking like a pretty tepid outlook when it comes to the futures trading session looking like potentially not much change at the start of cash trading just about an hour or so. It is really on the precipice of a big earnings week for Australia. Though of course we have seen the resource miner energy dominated market really been a standout across the region when it comes to earnings revisions. They have though stalled since early June. So we look a little bit more uncertain when it comes to the growth outlook. We'll see how that's reflected in some of those earnings this week when it comes to the lead we're getting from us dogs. So we saw of course that first decline for the S & P for the first time in four sessions. But that weakness potentially continuing in the greenback is lending a little bit more support to Asian equities. Take a look at the New Zealand market. They're way off those session highs. So pretty much flat at the moment trading in Kiwi stocks. Also watching the Aussie dollar under 70 U.S. says and also watching dollar again as well given the big week ahead Cheri for the Fed. Yeah big Fed week not to mention tech earnings week here in the US. We're watching out for that as US futures. Rhonda a little bit of pressure right now up for the S & P 500 lost ground in the Friday session. Of course we had weak ego data really leading to that narrative of recession again. So the 10 year yield headed towards that two point seven percent level. We had a weekly loss for oil prices as well. A little bit of a rebound in the Asian session but still below that one hundred dollars a barrel level. And really it's that weak ego data that's been felt across the board. Right. I mean Heidi you mentioned what the greenback is doing but also the Treasury space. We're watching that closely. We have flash PMI numbers here showing the US business activity contracted for the first time in more than two years. And it's not just the U.S. We're also talking about Europe girls. We're talking about Japan about Australia with those weaker APM ISE this month Heidi. And it really is just about Fed expectations on whether or not we can see that soft landing still being maneuvered. And if you take a look at bond market measures they're suggesting that traders the outlook for inflation has been tempered. This suggests that perhaps they do actually believe the Fed will be successful in getting price pressures under control. Let's get more from across asset reporter Andrew her book. And the just suggestion really is that we're going to see more pain being inflicted to the US economy by the Fed as they try and get inflation under control. We know that a number of growth drivers are already slowing. What do we see when you look across the bond market. Hi. Hi. You look. That's right. I mean that's what the bond market is reflecting. It is reflecting these expectations of a recession of a slow. You we've seen the the expectations for inflation actually come down to around to levels not seen since February when when when Russia invaded Ukraine. So what those signals for from the bond market you know what got inflation perhaps is starting to be tempered. It's turning to be a bigger even weighing on the equity market where we have seen you know where are we're seeing U.S. futures lower. And in Asia will probably come on down under pressure. And look I mean the sort of early days. Now bear in mind you have had a pullback in commodity prices as well which which is positive for inflation. But the narrative at the moment for investors seems to be this focus on on the economy on a recession. We are getting us GDP numbers as well. Later this week they are unlikely to be negative but also they are probably going to be to be pretty moderate. Yeah we're watching those numbers. I mean if you get the National Bureau of Economic Research coming out and calling a recession that we might see of course a market impact. Already we have seen the dollar really seesawing. Right. I mean we had strength because of those weaker than expected equal numbers but then that didn't hold. What's going on. Yeah. Look. That's right. I mean the dollar has had an amazing run. The the the dollar gauge that you know is near a record high. But we have seen a pullback and again that focus on interest rates perhaps as much you know although they are going to keep going up. But is this focus on economic activity on slowing economic activity. As you mentioned we had a raft of weak numbers in the US. Your earnings are coming are coming under pressure and you are also seeing others sent out the central banks being quite aggressive with with their rate hikes. So yeah we have seen that that pullback in the dollar after that massive massive run. So you'll be interesting to see where where we go from here given that investors are really focusing on on the potential of a recession on its own a slowing economic activity. Confess Vonnie Quinn Andrea ISE Capital Fair with the latest on the markets. And also we're on alert for restructuring plans in China for embattled developer ever ground. Let's get more with Annabel Large Bell. I mean they said that they were going to come up with a plan by the end of the month. Not many days left. Now that's right Sherry. This is really the big deadline. We're watching this wait because a grand of course it is one of the biggest developers in China but it's also the most indebted. And we've been tracking those debt issues since they fled out back in 2020. But this week we are about this deadline whether ever Graham will manage to provide a preliminary plan to raise structure. Now back in March they did say that they were on track to deliver this. They said that they've been speaking in fact with as many as 90 offshore creditors to ensure that that could happen pleading with them not to take any more aggressive action. So we will see though of course whether we do get that plan. But at the same time so that's one big issue for the for the company. But the other one of course is this fallout that we're seeing from the mortgage boycott. And China's cabinet now is urging developers around the country to rush and then to speed up the delivery of their project. So when you take a look at the list of which developer has the most projects to deliver will ever Grant is right at the top of that. And that also also does compare to these is drop that we're seeing also in contracted sales. So a lot less sales coming through in the pipeline. And then the other issue of course is property loan growth Heidi. And that's gone down to a two decade low. We're seeing some changes when it comes to Evergreens leadership as well. Yeah lots of changes came through in the company late on Friday. So in a company filing we understood that the CEO Shanghai June and also the CFO as well. Another executive here they've all been forced to resign. What happened was that there was an investigation into as much as two billion dollars that was being used by other issues as a security really by other third parties to then obtain bank loans. And what's happened is that some of that has not been paid back to the company. So that's the preliminary results. We do understand that a full report will come through later. But who is taking over. Well this is the executive director. Someone quote Sue Shawn not a lot known about him but certainly the big focus for him moving forward is whether whether they can really stave off any sort of major default here because that would obviously have major implications not only for the domestic economy but also Heidi global financial markets. Marcus reporter Annabel Jewell is here with the latest on China Evergreen. Let's get you to Vonnie Quinn in New York now with the first what headlines. Funny. Heidi thank you. China has all its leaders have received locally made Covid-19 shots. It's a rare disclosure for Beijing which has previously refused to comment on president season things. Vaccination status vaccine mandates have also emerged as a surprise red line for the ruling Communist Party. Close to 90 percent of China's total population fully vaccinated by the age group above 80 has lagged. Travelers to Hong Kong will soon need to fill out an electronic health declaration before boarding their flights to speed up the arrival process. Starting Thursday passengers will need to provide standard details plus proof of vaccination under hotel quarantine looking to get a QR code before boarding. Visitors will not be able to fill out the paperwork after landing. The chief of the World Health Organization has declared monkeypox an international emergency. WTO director General Tadros O'Donovan Embryos was overruled a divided expert panel to issue the group's highest alert. The move paves the way for more international cooperation to stop the virus. The US is weighing whether to issue a similar declaration as it sees more than two thousand cases now nationwide. I do think monkeypox can be contained. Absolutely. The way we contain monkeypox is we have a very simple straightforward strategy on this. Right which is make testing widely available. We have done that and now testing is far more frequent and common. We're gonna be releasing hundreds of thousands of more vaccines in the next days and weeks. So there is a very substantial ramping up of response that is happening right now. Australian Prime Minister Anthony Albanese says China's sanctions on Australian goods should be lifted immediately. Albanese told Sky News. Lifting sanctions is in the interest of both countries. Bloomberg reported earlier this month that Chinese officials are proposing to end an almost two year ban on Australian coal amid supply concerns. Curbs have also been imposed on Australian wine lobster and beef. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in more than 120 countries. And Vonnie Quinn. This is Newbury Heidi. Still I had a conversation with the CEO of premium Japanese sarcoma maker SA. He shows Zo because a hero Sakura. I will join us and talks to us about tapping the overseas market and making soccer in New York that could rival its homegrown product. But up next markets are scaling down bets of a 4 percent hike ahead of this week's Fed decision. We'll discuss the outlook for the U.S. economy and help a position as well. This is Bloomberg. President Biden's top economic adviser says the White House will use every tool available to tame inflation. National Economic Council director Brian Deese told us more about the administration's game plan to ease price pressures. We do know that inflation is a global phenomenon right now. Countries around the world are dealing with it. So our approach is to approach this using the unique sources of economic strength that the United States has. And I think it is fair to say that the United States is better positioned than virtually any other country to go at this challenge because of the strength of our labor market recovered because household balance sheets remain historically in a strong position. So our strategy is to go everywhere and use every lever we can to bring prices down but to do so in a way that doesn't have to give up all of the economic gains that we've made. You know gas prices and energy we've been working that issue for some time. We're seeing some helpful moderation on that front. Gas prices down about 60 cents from their peak already here in the United States. But we need to do more and we need to take actions like the action that's in front of Congress right now to pass a historic innovation and semiconductor investment bill that would help make sure that we can increase the supply of semiconductors secure the supply chain of semiconductors. We know how critical that is both to the economy and our national security but also to easing price pressures across the economy in areas like the automotive sector. And we've been following that. Chip's act I guess is what they call it these days. It's had different names pretty carefully. It looks like that may will get done not done yet but looks like it may well get done at the same time. That raises a question about the time horizon for your game plan at the White House for the economy. If that kicks in it's not going to affect. I don't think Chip's right away. It takes a while to make all those fabs as they're called. What do you have in short medium and long term. How do you look at that question as you plan out what how you want to have economic policy work in this country. It's a great question. So we think about easing those price pressures. We do think about it in the short medium and long term. And there are actions we can take across that spectrum. I mentioned gas prices. That's a place where we're seeing real time actions have real time implications. And those gas prices that 60 cents is happening right now in the economy. Right right now. But we also want to put in place and lay the foundation for investments that will start to pay dividends and reduce price pressures across time as well. So something it actually a great example. People often say to me well once that passes it'll take six 12 months 18 months for investment to start. We should've taken this step a year ago and we should take it now. And the fact that it may take some time to is actually even further reason why we should take those steps now. National Economic Council director Brian Deese speaking with Bloomberg's David Westin. Let's take a look at the week ahead. The Fed rate decision expected to dominate global markets of course the central bank expected to raise rates by 75 basis points for a second straight meeting. That decision comes just a day before a second quarter U.S. GDP data is released and that's expected to show a second straight contraction. We'll also be getting growth figures out of South Korea this week. And meanwhile in Australia we could see inflation hitting a 21 year high. A range hotter industrial profits year to date. A lock on the show stalled growth in the first half of Coursera due to those Covid lockdowns. Our next guest Heidi says the future of the US economy is uncertain and prefers all weather additions to his portfolio. Let's bring in Barbara Shine Blanket Shine Wealth Management CIO. Robert good to have you with us. So you're talking about these recession resilient stocks. Where do you find them. So we're in the middle of the storm right now. You can see both globally and in the United States right now. It's it's a lot of uncertainty. And then especially the week ahead that we're going to see it's going to be a hurricane of data. You know obviously the dividend paying quality companies we like you know obviously health care is doing quite well relative to everything else. Now the S & P your dates down the Nasdaq's down even the Dow. We did see a reprieve last week. But we think even in the energy trade even though energy's off I think energy is a good story year to date. So you've got sectors like health care sectors like energy. Those are good. All weather approaches to sort of diversify your portfolio when things like technology. And again we've got a big check this week Major in earnings announcements when they may not be participating in the rally. Yeah. Tell us a little bit about big tech. There has been a lot of optimism about growth making a comeback. Where are you in this narrative. Well we already saw this last week with earnings announcement and some of the technology companies have already reported and they indicated that the and the advertising dollars in fact a lot of myths like SNAP was down 40 percent after they talked about their advertising revenues down. So if you look at the week ahead big tech earnings what we're going to be paying attention to and actually focusing in on is how that ad revenue is translating into earnings. Because if you look at the crypto market 3 trillion start of the year now it's only less than a trillion dollars. A lot of the crypto spending was ad revenue. So those ad dollars potentially are not there in the big tech names. So that's one component as to what we're gonna be paying attention to for the big tech but also how the consumer is holding up. The Federal Reserve saying that consumer strong Washington thinks the consumer is strong. I don't know about you but you know even though the gas is down this week you know it's all about kitchen table economics. And so inflation is everywhere. It's in art you know everything from our groceries to our gas. And so that you know whether they say it's a technical recession by later this week and the GDP report or not. You know I think the consumer is feeling it. And we're seeing the yield curve indicate that's a recession ahead one way or another. If you take a look at the correlation between the strength in the US dollar though we've had the best month for global stocks in about a month. We have seen really as this chart will show the dollar index seeing the worst week in seven weeks. How much does this potential outperformance continue to depend on the pullback of the greenback. Yeah. The dollar actually had a relief for everyone. It was strong year to date. And so to see the dollar pullback actually helps a lot of the global markets. Specifically the RTX trade. But I don't think that we've seen the end of the dollar run simply because we could have. Obviously the Federal Reserve supporting stronger interest rates a stronger dollar. That's going to be if the dollar is stronger it's going to be a wrecking ball to the multinationals here in the US and also saw the currency trading that we're seeing around the world. So even though the dollar is this sort of slowing and pullback recently in this last week I think we could see stronger dollar potentially which could be wreaking havoc moving forward for not only just here in the US but that around the world. And that's something to be concerned about because if you also look at outside the US you're looking you know we've paid attention to Italy and Italy and Germany in terms of you know the ECB just announced a new tool for the central banks to actually look at international exposure above it. What do you like. Given that we are seeing some pretty good outlooks for earnings revisions upwards in Asia. Yeah I wouldn't say we're work. We're concerned about Asia right now simply because of the evergreen story that's playing out. You know what we're seeing sort of potentially even though Asia has some opportunities there. I'd say right now if you look globally it's a risk off. Trade is the trend everywhere. So as of right now we're going to take a step back from Asia or the international markets and we're just going to hold tight and see how this plays out. Again like I said this week is going to be a huge week. We've got no economic data from the US but globally as well. And you have the earnings. So we could see lower lows later this week in the S & P 500 as a result of that. If I mean it's not priced to perfection. So I think I think we haven't seen the lows in the market yet. Rubber shine. Good to have your insides black shining wealth management CIO with his views of the markets you can get a roundup of all of the stories and you need to know to get your day going. In today's edition of DAYBREAK terminal subscribers go to Derby go what's available on mobile in the Bloomberg anti-war app. You can customize your settings so you only get the news on the industries and the assets that you care about. This is Bloomberg. This is DAYBREAK Asia. A quick check of latest business flash headlines. Pushing boss Oliver Bloom is set to become Volkswagen CEO after the carmaker ousted habit D. According to sources this is clashes with labor unions and missteps on key projects including delays at the software unit spurred the shakeup. We're told that VW board is betting that Bloom will be more collaborative and stable as a company pushes into Avis. Credit Suisse is reportedly weighing a fresh round of job cuts and other measures to reduce expenses. A Swiss paper says board discussions about a large cost savings package have reached an advanced stage last month. Switzerland's second largest bank warned that clients were pulling back particularly in Asia. India's number two software services exporter enforcers has raised its annual sales forecasts on upbeat demand for its digital services. The company says revenue will grow 14 to 16 percent through March next year. The new revenue projection alleviates concerns that a slowing global economy will stifle technology spending. India's second largest private sector lender ICICI Bank beats estimates with the second quarter on a robust loan demand and widening interest margins. Net income rose 49 percent to eight hundred sixty four million dollars in the quarter compared with a year ago. The Mumbai based bank has been growing rapidly as it ramps up lending in response to higher demand for consumer credit. And Heidi take a look at how futures are trading at the moment. We continue to see the downside pressure after we saw U.S. stocks losing ground on Friday. Of course we had disappointing results from social media companies including SNAP and Twitter and not to mention weak eco data adding to those recession fears. And this week of course and we have a huge tech earnings week. We're talking about the likes of Apple Microsoft Google and really the fact that snaps weak results have become the barometer for ad spending not boding well for these tech giants. Take a look at what the bond space are doing right now because those recession concerns. Remember I talked about eco data being weak. That was the PMI numbers with U.S. business activity contracting for the first time in more than two years. The led to the 10 year yield really pulling back below that 3 percent level which we were already at. And now we're falling towards that two point seven percent level. So we have seen the bond space across Asia. Sovereign debt markets follow U.S. Treasuries. We're talking about the 10 year yield right now in Australia. Also falling for a second session. The Kiwi 10 year you'll also falling for a third consecutive session all on the fact that we continue to fear recession. Of course I mentioned PMI numbers here in the US while the euro area hasn't done any better. We're talking about the worst reading since the pandemic lockdowns of 20 21. Figures from Japan Australia also deteriorating this month. They remained in expansionary territory but barely. So we continue to watch that. Take a look at the effects space right now because the dollar index is holding steady. But this of course after we saw that weakness in the past few days I mean weak USADA didn't help disappointing tech earnings. It didn't help. That actually helped boost the dollar but that was not really carried on throughout the session. So Heidi we continue to see a little bit of a mixed picture when it comes to the currency space trying to digest and what the dollar is doing. Some trepidation in terms of trading across New Zealand and Australia of course as well as looking ahead to the start of trading in Japan NIKKEI futures are up by about a quarter of one percent. We're seeing the New Zealand stocks pretty much erase all of the morning's gains so far. The MSCI Asia Pacific up by just about half a percent. This is Bloomberg. We think the dollar can still rise further. We think the D X Y will move up to around 1 12. The dollar has been coming down and I believe some of that and the fact that the ECB is potentially going to be increasing the interest rate and shoring up the euro in some way their expectation call for a leveling off of the dollar relative to other global currency. I don't think that there are expectations among Fed funds futures that that interest at the policy rate is going to rise by more than 75 basis points. And if that's the case I think the dollar strength could start to fade. The broader daughter may slowly be reaching its peak year instead of the dollar rally. There is scope for its rally further but there are some things on the horizon which could cause it to hold back. If the Fed doesn't back down at the September 22 meeting there is a possibility that the euro dollar could fall back towards record lows. What are some of our guests there responding to our M Life poll question of the week about the fate of the dollar now where we do go from here. For the dollar of course also depends on what happens with the FOMC this week as well. That was the other focus of the M Live Service. Let's just take a look at some of the more results that we got from this because they were more than thirteen hundred respondents coming in with this. And a lot of the focus is whether the Fed will hike by more than three quarters of basis point in one move. Of course that had been one of the things that really started to build in markets following that massive CPI print that we had earlier this month. We started to see that come off a little bit with some weaker economic readings coming through sound out. The vast majority respondents saying that no longer really on the cards but it's still low. When you take those two factors together we're still seeing around one in three people saying that actually it could still be possible. Let's move on now though to also about the size or where we go from here as well because we have also really been watching the moves that we've seen in Treasury markets. A really rapid repricing here over the past few months following these moves is where we see the Fed going from here. But let's also take a look at what comes ahead as well because we have seen that where the Fed will begin to cut rates as we see growth projections start to slow as well. And so we could actually start to see the next Fed hike as soon as 2023 Shery Ahn. By the next Fed rate cut right. I mean given that there are those recession figures right. Yeah I mean right now we're talking about inflation. Then we're talking about potential recession. Then we're talking about potential Fed rate cut. Well former US Treasury Secretary Larry Summers now saying that Washington is forgoing a key tool when it comes to helping the Fed quell inflation. Speaking to Bloomberg David West than Summers also proposed a lawmaker start looking at raising taxes. Look fiscal policy makes a big difference. This is not the time for stimulative fiscal policies like continuing moratoriums on student debt relief. This is not the time for anything that's going to be a big new spending program. In fact it's the time for short term deficit reduction. That's why I'm so disappointed that the IDF seems to be gaining currency that you shouldn't raise taxes when there's inflation. I actually think that just the right thing to do is to raise taxes right now to take some of the demand out of the economy. We can raise substantial revenue by cutting corporate tax loopholes. In fact if we don't do it we're likely to lose what I think was a huge accomplishment for the Biden administration. The global tax cooperation agreement that Secretary Yellen concluded we can generate significant revenues simply by enforcing the tax law and taking some of the spend taking some of the money out of high income tax evaders who then go and spend the money and that'll contribute to reduced inflation as well. So I sure wish we could get past this basically ludicrous economic idea that tax increases are inflationary. It's just not right. One quick one here at the end Larry we had a lot of earnings out of tech particularly SNAP and also Twitter. They didn't do so well this week. Is that tell us in telling us anything broader. Look I think what you're seeing in tech is what you kind of always see which is just when governments getting aroused that something is a source of monopoly power and earning excess profits. That tends to be when it peaks in the marketplace. That's how it was with IBM many years ago. That's how it was with Microsoft. I think we're seeing some elements of that with this advertising supported tech businesses right now. A former Treasury secretary Larry Summers now with Bloomberg's David Westin. Let's get you to Vonnie Quinn with the first word headlines. Heidi thank you. Let's toss and really soon I can both promise to toughen border controls as they battle to become the next leader of the Conservative Party. And UK Prime Minister Samak says he will tighten the definition of who qualifies for asylum and introduce a cap on numbers. Foreign Secretary Charles says she will extend the UK's Rwanda asylum policy and increase the border force by 20 percent. The committee investigating the January 6 U.S. Capitol riots says it will get to the bottom of missing Secret Service texts from the days around the attack. The panel is seeking messages from 24 Secret Service employees. There are reports the former president Donald Trump had to be blocked by agents from traveling with supporters to the Capitol. Republican vice chair of the panel Liz Cheney says she's deeply troubled by the missing messages. Google co-founder Sergei Brin reportedly ordered his advisers to sell his personal investments and Elon Musk's companies after learning must in a brief affair with his wife. This is according to The Wall Street Journal. The Journal says the size of Friends Holdings is unknown and it's unclear whether any sales were made when filed for divorce in January from his wife Nicole Shanahan. Australian Prime Minister Anthony Albanese says his government's introduced the toughest ever biosecurity measures to prevent an outbreak of foot and mouth disease. Concerns have been growing after traces of the disease were found on imported animal products. Nearby Indonesia is also dealing with an outbreak. The virus could devastate Australia's cattle industry. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 27 hundred journalists and analysts and more than 120 countries and Vonnie Quinn. This is Bloomberg Haiti. The World Health Organization has issued its highest alert for monkeypox on orders of its director general. The designation as a public health emergency of international concern paves the way for increased global cooperation. Let's bring in infectious diseases expert Paul Griffin associate professor at the University of Queensland. Professor great to have you with us. First of all what level of risk do you assign to monkeypox at the moment. I think this declaration is a really good move. I think it shows people that we do need to be on the lookout for this virus and we do need to have a response that is appropriate given the numbers that we're seeing at the moment. So I think in many countries the actual risk is relatively low. But we are seeing case numbers climb very significantly. And so that does definitely warrant a response. There's been a lot of criticism particularly in the US when it comes to how difficult it's been to get get a vaccine. There's there's talk about a lot of other testing going on as well. Is there a risk to this so far being characterized as being an infection that occurs between men who have sex with men. Look we have to be really careful to not be discriminatory or stigmatizing in our response here. And what's clear that you know anybody that comes in contact with infected fluid from those blisters that we see or other infected fluids like blood or respiratory secretions can be infected. So it's not solely a disease of of Africa as we're seeing it break out of course across the world. Nor is it solely a disease of men who have sex with men anyone who's not infected. It comes in contact with those fluids has the potential to be infected. And our response is to take that into account and make sure that everybody knows that this is out there and and the steps that they can take to reduce their prospect of getting infected. So what do you make of the WTO ruling. I mean the panel certainly was divided on how they would classify this disease. And then Dr. Tadros had to make the call. Yeah look I think it again tells us the significance of the event we're in now and there wasn't consensus this time but I think you know those that knew a lot about the potential risks here were some of those that were advocating for this move. And you know while it doesn't make a huge difference to our response hopefully this will be what we need for for all countries to be on the lookout for these fires and to start to cooperate both in terms of our response vaccinations supply etc. but also the public health messaging. And we also need a lot more research into exactly why we're seeing the number of cases we're seeing across the world at the moment. How much of a risk is there of public fatigue. We've already experienced that when it comes to Covid-19. Now we have another global public emergency. I think fatigue is playing into this. In a huge way. I mean a lot of people are just simply sick about talking about vaccines and viral infections etc. And an unfortunate lot of people have conflicting information about both of these viruses at the moment. I mean we need a basic level of awareness that means we don't miss cases in our population but we also need people to understand that this is not Covid-19. This is not something that's going to be the next pandemic of the same magnitude. And that's why we need a response that takes into account the specifics of this infection. And hopefully that declaration will help facilitate some of that information. You talk about fatigue and certainly that's a big element and what we're seeing in the public health response to the recent Covid wave here in Australia. Do you agree with the approaches being taken because it seems like the government's policy is not necessarily reflecting what the medical profession what public health experts are recommending. I agree broadly with our response. I what's really clear is we need to just get the basics right. Right now we need to get people boosted. We need to make sure we find cases by testing and people with symptoms are isolating. But we do definitely need to do more in terms of those simple things. Mask social distancing. Looking at ventilation etc.. And while I think a mandate is not necessarily the solution I think there's still certainly a lot more we can do to facilitate some of those simple behaviors. Not just behavior but what about the treatment and the vaccinations right now of course we have heard talk about potentially a vaccine that targets only Omicron that variant could we see something more advanced multiple variants as well. And how soon could we see that. It's great that there's been so much work still happening on on so-called second generation vaccines and I think we'll have it on the specific booster that will also compound the original vaccine probably by the end of the year. So by violent DAX thing and then from there I would expect next year we're likely to see a number of different vaccine options in tonight's or vaccines for example that might be better at blocking transmission vaccines that do combine multiple strains or variants that that might be better at getting broader cross protection again. So you know our tools are improving all the time. But you know at the moment we just need to focus on the basics. And while we're getting better vaccines in the not too distant future they're not available now. So we need as many people posted right now as possible. Oh it's depressing thinking about next year and the various vaccines and variants we could be faced with because a lot of the world is either going through or setting off of the third Covid winter. Is this just the new normal. At what point do you expect you know from an epidemiology perspective that this mutates into something that's so weak that we don't need to worry about. Vaccines are reading fiction given that there are lots of concerns about long Covid coming from multiple infections. Yeah look we shouldn't assume this is just going to fade away and something that's mild and of no significance because while that may be the end point at some point in time it's likely to be well off into the distant future. But it's not really as bleak a picture as it might sound right now. I mean what's clear is we had a very significant wave now that needs a response but we're going to get better tools moving forward both the better vaccines that aren't too far away. Improved access to existing antivirals and maybe even better antivirals as well. So our tools to combat this are going to improve so that we have a better chance of keeping the level of control that we need. But what we really don't want is people just to assume it's going to go away and to stop doing those simple things particularly right now in our country when we need as many strategies as possible to reduce the burden of infection in the community. One day at a time one winter at a time. Paul Griffin thank you so much for your insights. University of Queensland associate professor there on his take on what's happening with a cholera pandemic. The monkeypox disease as well. Despite a shrinking overall market Japan's Darci Saki has tripled the sales over the past decade. An exclusive interview with the CEO next on their global expansion plans. This is from Barak. Well it's time for Japan ahead on DAYBREAK Asia S.K. reporting. Now the Russian president Vladimir Putin may not be allowed to participate in a planned state funeral for the former Japanese prime minister Shinzo Abe. Should he decide that he wants to attend. The paper is reporting that Putin's entry to Japan has been effectively banned following Russia's invasion of Ukraine. The Japan Meteorological Agency has raised the alert level for key issues. Saku regime of volcano following its eruption on Sunday. Officials are urging people living within three kilometers of the volcano to evacuate. And several earnings are due out today including Canon Fujita and Insource. Japanese markets will of course be opening at the top of the next hour. Take a look at dollar yen pretty stable to force a big week of potential moves given we do have that Fed decision. But of course the weak is weak for the greenback. In about seven. And that's lending support to some of the impetus for upside in equities trading here in the Asia Pacific. Take a look at Singapore NIKKEI futures. We're seeing a little bit of downside. About a tenth of 1 percent lower there. And Cheri we'll be watching of course what happens when it comes to GDP and treasury markets given the focus on the Fed this week Heidi. Here in New York premium Japanese Tom Keene maker Asahi Schmoozer will open a brewery later this year as it looks to further expand into overseas markets. The CEO of the family run business Cousins who knows how could I told Bloomberg that overseas sales will eventually make up around 90 percent of overall revenue. That are overseas sales have overtaken Japanese sales over the past year under Covid restrictions. Restaurants in Japan had to close and we suffered massive declines in sales domestically. On the other hand sales of sockeye increased overseas as people sought out Japanese food and soccer locally. There's travelled to Japan was banned. You've been able to expand. Tell me how you plan to sustain the growth. Any new ideas going forward. So we say yes we'd like to add value to our products and make them even better. We should never stop pursuing levelling up our production techniques. We are building a soccer a brewery in New York. We'd like to further expand our overseas market and make soccer well well-received in Western cuisine. This is a family business. You're a fourth generation. Your father really relied on data and didn't go the route of traditional soccer growing. What prompted that move. Well my father first started using data hoping to make even better soccer. We have been relying on human sensors when making soccer. But we came to a point where we thought we should also use data to improve the taste. Ever since does become a style. Let's talk about the expansion. You're opening your first sock Avery outside of Japan. Why New York Follies. We're often asked why New York people say L.A. is much better if they have California race and no more Japanese restaurants. But New York is a very important market for us as it's the first place in the U.S. where we started. It's a powerful diverse culture where west and east come together. The city has the power to push Japanese culture into the world. That's why we think New York is the best place to build a soccer brewery. Soccer. You're brewing in New York is a new brand called the Sky Blue. What's different about it. The favorite DAX Blue comes from a Japanese proverb. Blue dye comes from the indigo plant and it's blue with an indigo meaning to child outshines the parent. Naturally the water is different in the US. Now we will bring some rice. Mainly we will use rice cultivated in the US. We can aim to making new delicious soaking in a completely new environment for us to say can be a rival to Japanese Darci and a battle can even improve both of our products. China unlike the US is a key market for you. Tell us about the growing demand of sockeye in China. Forty two. We have seen very steady growth in the Chinese market. The population is huge and their economy is growing. It's the same as the U.S. is the kind of market that obviously is good for us. We consider a powerful market with many young people like China very important. Your overseas sales make up about half right now. What percentage are you targeting. From different cases I think overseas sales will make up about 90 percent of our overall sales eventually but I don't think that's going to happen right away. In about 10 years time to overseas market will expand to about two and a half times or even three times bigger than the Japanese market. So when you're expanding overseas with more sales what countries are you targeting next. We don't intend to expand our reach beyond what we have at the moment. Rather we want to increase sales in existing markets such as the U.S. China Singapore Hong Kong Canada and Australia. We want to increase the number of people who understand our brand. That's how we like to create our markets overseas. I think sales in the US still have the potential to grow tenfold. Looking ahead what kind of company do you want. I say she's going to evolve into to become like us. What we want to achieve is to make our brand even more global unique. CLU and Toyota are well known but only a few luxury Japanese brands are well accepted globally. And we want to be the leader in this area. We shouldn't copy wine or over Western culture. We should represent Japanese brands with Japanese spirit. What do you think Japan needs most. You are funny what Japan needs most is courage. Japan is an island country so people tend to be comfortable among themselves. But I think we need courage to go out of the country. When you go out you need to change. And that's when you need courage. You'll probably make mistakes but you should have the courage to change. As I show her president has a hero soccer either. You can get more from that interview at TV so you can tune in for Japan ahead every week to hear from the leading names across Japanese business. Gerri and Heidi we have the leaders Covid numbers from Shanghai adding 13 high and mid risk areas subject to lockdown. This is after reporting 18 local COBRA cases for July 24th. Of course we know that there have been more than 800 cases nationally for Saturday. And China also coming out and saying that its leaders received locally made Covid-19 shots. The latest from Shanghai is that 13 high mid risk areas have been added to lockdown. Plenty more to come. This is Bloomberg. And we're tracking the fallout of the global supply chain crunch. These are the top stories today. Supply chain stability for big US names including Apple Alphabet Amazon Exxon Mobile as well as Procter and Gamble. We'll be in focus when they report earnings this week. The U.S. and Japan are reportedly planning to agree on strengthening their collaboration and procuring components for cutting edge semiconductor semiconductors when ministers meet in Washington on Friday. And Russia has attacked Odessa Sea Port with cruise missiles. Hours after signing a deal to unblock Ukrainian grain exports from three Black Sea ports. The pact has been hailed as a vital step for the living eating a global food crisis. And taking a look cherry at copper oil corn and wheat. We've got plunging copper prices and an aggressive Fed could portend more downside risks for crude for corn and in fact really across most of the commodities complex could see for the downside the highest U.S. inflation in four decades. And wheat has driven up the cost of bread this year pushing more premium options to an unheard of 10 dollars a loaf and beyond. Bloomberg Technology users can read more about those stories in our newsletter Supply Lines at the NIH Trade. And oh let's take a look at some of the stocks are watching when trade opens up in Korea and Japan over the next five minutes or so watching some of these pharmaceutical plays including Hong Kong you know encore. Thank you. Of course as you know after we had the World Health Organization declaring the monkeypox outbreak a global health emergency plus East Japan Railway is reportedly planning to reduce costs by around five hundred million dollars as part of an effort to restore profit wiped out by the pandemic. The market opens in Sydney. Seoul and Tokyo are next. This is Bloomberg. This is a brigade here we're counting down to Asia's major market opens. We have a big week here in the US of course Heidi with the Federal Reserve potentially hiking for another 75 basis points. This of course after another huge rate hike just last month at a time when we also are in the second week of second quarter earnings with big names like Apple Microsoft Alphabet. So it will make for an interesting week an interesting week indeed. And share we are seeing bond markets added to pare back some of these inflation expectations. That kind of raises the question as to whether we'll see this type of trading pattern post the Fed as well. Let's get you straight to the market open with Bell here in Sydney. It really seems like we're setting up for the moves that we'll see pre and post it a decision. But a lot of anticipation around this FOMC meeting later this week. So a few seconds away now from the opening of Japan Korea and Australia will be watching the open of cash treasuries as well because we did get the results of that M Life poll survey in the last 30 minutes. And the vast majority people saying that peaking just below three point seven percent. But in terms of the direction of markets on the side of the trade. Also keeping an eye on where we see the yen sitting this morning as well. Just a little bit of weakness coming into the currency but that could be limited as we do see strategists rezone as saying that it could hold around 135 57 over the coming few weeks. In terms of stocks though at the start of trade as well we're seeing declines start here. That was what we had been of course reflected in futures trading. Also what we're seeing in the US. More signs of economic slowdown coming through now. But let's move to what we're seeing in Korea as well the sort of trade here. It had been one of the biggest beneficiaries that we saw last week with this optimism around the peak dollar. We are seeing the dollar index just a little bit weaker this morning as well. In terms of the direction of stocks though we're continuing to see that outperformance so that the the cause DAX really lagging here. Those concerns around growth hitting tech stocks in particular the one as well just holding around that what. Thirteen hundred level. But analysts at Citigroup saying that it could actually hit one thirty one 1350 in Australia now. We can also talk about what we're expecting this week. It is a huge few weeks coming up for earnings as well. The resilience here of the resources sector is something that's been really keeping the ASX 200 buoyant. But we could see if you resist revisions coming through we have seen over the last few weeks. But in terms of the stock direction with flat here. And meanwhile we're just keeping an eye on the Aussie dollar. It is just fractionally weaker as well against the greenback Heidi. Yeah. Let's down that theme because IBEX guess that dollar strength has run its course. Joining us now is Adrian Zucker who's the CIO global asset allocation head at UBS Global Wealth Management. Adrian great to have you with us. And pretty I guess both to be able to call an end to dollar strike given just what a virtuous cycle that we've seen in trading in. Take a look at this chart though because it's probably no surprise. We see that correlation. The best week for global stocks in about a month amidst really the weakest weak for the dollar in about seven weeks. So does that mean you expect these recession fears to be subdued and that won't add to more demand for the dollar. Well no recession risk are definitely out. We actually do think that the Fed is probably tightening too quickly and too fast. And we also expect the 75 basis points hike for this week and this policy risk that actually the U.S. is doing too much while some other central banks are also catching up. And therefore the U.S. dollar is an expensive currency and now is growth probably a cheaper taste. And the Fed may have to slow down in the fourth quarter in some of these interest rate hikes while the others have to catch up. We actually do think there's a lot in the price already. I don't think that the US dollar will go to a very quick weakening but it's really petering out at the moment. And then over the next six or 12 months we actually see some weakness for the US dollar versus some other currencies like the Swiss franc. Adrian how are you positioning going into the Fed meeting and do you expect that trading pattern that we've seen across different asset classes to remain the same or to change after that next 75 basis point move. I think we are living in a dilemma because the Fed probably does a policy mistake on hiking so much. I think they should have viewed and stick with their view that the inflation is transitory because if you basically look at the future market and break evens it tells you that action inflation will come down very rapidly over the next twelve months. If you look at break even for one year for example. And so the Fed is really jeopardizing growth at the moment and that probably will mean more volatility for equity markets. We're currently neutral. We take a more defensive stance within equities but we actually start to see value in the bond market. We actually do think that yields are probably fairly priced and probably in the next six to 12 months to even come down. So we start to build more positions within the fixed income area. Yeah Adrian we are actually seeing traders now paring back expectations not only of Fed rate hikes but there's this Jet G TV chart on the Bloomberg just shows that they are actually seeing the Fed cutting rates next year of course positioning for recession. How do you position in this uncertainty given that as you say you're a little bit more defensive but are there some of those recession resilient calls. If in fact we do actually fall into an economic slowdown. Well I think we already in a technical recession most likely. The question is do we end up in a big slump or do we end up in just another slowdown which maybe has a red 0 eventually growth. And probably we still have a small probability for that. The slowdown will be there but it will be more a technical recession. And that doesn't have to be too bad for equities because it also means inflation will come off. And that's probably the biggest concern. Year to date for some of the equity markets. So there are opportunities and we see opportunities more in the value side where probably stocks can live with higher real interest rates which we probably will get out as a result of that. And therefore we are more concerned a growth stock. We also see that expectations are still extremely high for this earning season. And if you don't deliver. We have seen it over the last couple of days. These stocks will get punished. And I think that's what you have to look out for. The growth stocks even the Zack Hall also hold for investing in Asia as well. The go to places that have been cheaper. They have taken a bigger hit from the Covid pandemic but that now may look like attractive investments. Well absolutely. We have a bit of a barbell strategy in Asia. We actually do like to chain and we actually exactly like the new technology segments within China. Because we really think it's cheap. China probably will have to do more easing. So it's a market that is very domestically focused particular the e-commerce sector. And now we're actually getting probably lower interest rates. Inflation is extremely high. So real interest rates this this time is not a real challenge currently for for Chinese technology sector. Yes the regulatory headwinds. But they're fading. This downturn Jim Corbett which is marginally improving and therefore does actually opportunity to buy China at this point. And then we combine that with more cyclical markets like Indonesia and Thailand which are both actually created quite quite well to the commodity cycle. There's a property sector concern you in China. We are hearing about ever ground coming up with a restructuring plan is not going to work out well. But property always concern me in China because it's so vague it's so important for the economy. It's 30 per cent of GDP growth. It's 25 percent of the bank's balance sheet. Yes it's definitely a key concern but also a lot has been reflected and is probably forcing really the policymaker now to come out with a more visible measurements and really support the market. And I think that could bode well. But yes if you're a bond investor hold your breath. I think some of the spreads will will widen and there's probably still a risk that we'll see more defaults. Engines are good to have you back from UBS Global Wealth Management with his calls on the markets. A little bit of a mixed picture across Asia. Right now let's turn to Bell for a check of the move worth. Thanks Jerry. Jerry. Just taking a look at some of the farmers stocks particularly in Japan here at the start of trade because we did of course have the WTO sounding the alarm here over monkeypox and saying that it is a public health emergency of international concern that does really pave the way here for a stepped up coordination of testing and treatment and surveillance around the world. That's something that has really been missing so far. So we could start to see shares of antivirals vaccines protective equipment makers rising off that. But so far the sort of today just a little bit weak here. But does as you say Sherry really does track the broader picture we're seeing at the start of Japan as well. We're also tracking some crypto names in Korea. Yeah that's right Heidi. This is with a report that we're hearing that FTSE. This is the crypto trading platform that was founded by what could be a really a crypto Robin Hood bank when fraid so. Essentially that company is in advanced talks to buy south a bit. That is what we understand now. That exchange was founded in 2014. It's currently processing around half a billion dollars of payments per day. Its office is actually in South Korea were raided last week. That's in connection to the collapse of the terror USD stable coin. Now it does really follow what we have also been saying with Sam Bank when freed committing as much as one billion dollars so far to really try and shore up or provide some sort of base for the crypto sector in general which of course has seen a massive slump across the board Heidi. Let's get you the first with headlines now with Vonnie Quinn in New York money. Heidi thank you. China says all its leaders have received locally made Covid-19 shots. It's a rare disclosure for Beijing which has previously refused to comment on president seizing things. Vaccination status. Vaccine mandates have also emerged as a surprise red line for the ruling Communist Party. Close to 90 percent of China's total population fully vaccinated but the age group above 80 has lagged. Hong Kong reportedly plans to cut hotel quarantine for arrivals with the introduction of a two color health code system. The second town newspaper says the city's government is considering moving to five days of hotel quarantine followed by two days of a yellow health code that bars entry to high risk venues. The report says a decision could come within two weeks. Australian Prime Minister Anthony Albanese says China's sanctions on Australian goods should be lifted immediately. Albanese told Sky News lifting sanctions is in the interest of both countries. Bloomberg reported earlier this month that Chinese officials are proposing to end an almost two year ban on Australian coal of its supply concerns. Curbs have also been imposed on Australian wine lobster and beef. The chief of the World Health Organization has declared monkeypox an international emergency. WTO director general tendrils Sydenham Gary ISE was overruled a divided expert panel to issue the group's highest alert. Move paves the way for more international cooperation to stop the virus. The US is weighing whether to issue a similar executive declaration as it sees more than two thousand cases nationwide. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalism analysts and more than 120 countries. I'm Vonnie Quinn. This is Bloomberg Cherry right. Coming up we'll get a head start on this week's key data including China's industrial output and inflation numbers for Singapore. Australians for longer. More with Morgan Stanley Xie Tun. But up next the clock is ticking for the world's most indebted developer. After ever grants liquidity will spark a broader debt crises in China's property industry. This is boom guard. Take a look at how markets are trading across Asia. We are seeing the NIKKEI under pressure with materials and health care leading the declines. We do have the more defensive utilities and real estate sector is gaining ground at the moment. This of course as the Japanese yen saw some strength in the previous session right now under pressure at that 136 level. We are now seeing the first losses for Japanese equities in eight sessions. Take a look at the cost. Be up four tenths of 1 percent as a Korean. One is also recovering from that fall in the previous session. The ASX 200 up a tenth of 1 percent. But really Kiwi stocks Aussie stocks that really haven't done much in the last two sessions right now. We are seeing a clear lack of direction when it comes to those markets. Now the world's most indebted developer ever grand is due to unveil a preliminary restructuring plan by the end of the month. That's as a debt crisis in China's property sector spreads to more builders and may threaten its banks as get more from our chief North Asia correspondent Stephen Engle. Steve let's start with ever ground because we were expecting some sort of plan by the end of the month. Not many days left now. Yeah. There's so many questions surrounding epigram obviously and then they have this boardroom shakeup with the CEO among others being forced to step down. I'll get into that in just a minute. But really a lot of investors and of course the global economy those participate in the global economy are looking at this as whether this is going to be if it if it does indeed come down with China's largest ever debt restructuring will it be the roadmap for other troubled developers to follow. And how much of a haircut will creditors be forced to take. Really. The big question here for. Like for example overseas creditors on the dollar off offshore bonds. How much will they be able to recover. Because the information loop has been fairly opaque. So it leaves a lot of questions to be answered about what will be in how much of a haircut will be in this debt restructuring plan if it does indeed come out by this weekend. It's a lot to do. They've already done a lot in terms of the changes across the leadership front. Absolutely. I mean look we have the CEO being forced to step down and also the CFO Panda Fong Shanghai Jun is the CEO. He essentially being forced to resign amid a probe into how two billion dollars of deposits were used as security for third parties to obtain bank loans which some borrowers failed to pay back. And then we do have this new CEO. He's executive director Sue Shery Ahn. He's also known as Shell. He has been quoted by the 21st Century Business Herald as saying that they've reached a basic consensus on debt restructuring principles with multiple major global creditors. But again until we get the details until we get some sort of messaging on what type of restructuring we're going to get there there's going to be a lot of uncertainty here. A lot of uncertainty when it comes to building wealth in China as well given the property crisis. Right given the fact that we're seeing this growing mortgage boycott crisis as well. How does this change an ordinary Chinese person's perspective on how you accumulate wealth in this country. That's the age old question. You know who gets left holding the bag last. With the speculative property market that has only seen one direction and that is up. You know unlike other parts of the world much of China's property purchases are done. What's called off plan. They buy is a speculative bet right. They buy off plan which means the properties haven't even been built or haven't been completed yet. And once they give their initial deposit they have to start paying their mortgage off immediately. So if these construction projects are not finished and are not going to be completed in any foreseeable future and they're still having to pay the mortgage you're going to start seeing people and you're already starting to see many people hold off on buying a new property. And of course you know they're now starting to boycott paying their mortgages saying that they've been felt dealt an unfair hand by every grant and all the other developers who have halted all these projects across China. Chief North Asia correspondent Stephen Engle though with the latest as we look ahead to that restructuring plan let's take a look at how futures are opening up for the week when it comes to Europe. And of course it was a big week last week with something of a sigh of relief when it comes to the energy front. But some of those fundamental challenges remain. But big earnings week as well. When it comes to the earnings release we are expecting some of those early earnings to give some impetus to the upside for European stocks. We did see the earnings week last week generally pretty positive with European stocks posting their biggest weekly gain since late May. We're seeing a bit more of a tepid start to trading this week. Euro stocks 50 futures off by just about half a percent. Same kind of picture when it comes to the German DAX futures as well footsie. One hundred futures down by about four tenths of a percent following that first rate hike from the European Central Bank in eleven years and bigger than expected as well. Of course we'll get more on the U.K. leadership race. Investors and strategists agree that regardless of whether the winner is Foreign Secretary Liz Truss or the former chancellor she snuck the pound slide may prove beyond their powers to address this breach. Bloomberg senior ethics and rights reporter Ruth Carson. So Ruth this is kind of what we saw with the entire leadership crisis is that it's almost a sideshow when it comes to pound trading. Because the fundamentals are just so bad. Absolutely. It's not just about leadership is it. It's a cocktail of risks entirely for any power trader out there. Sorry. Let's take a look at what was some of the factors. You know inflation at the hottest level since the 1980s the Bank of England and not being as aggressive as the Fed for example in raising interest rates is still the hangover from Brexit as well as supply chains. So markets just don't like any of this let alone you know who gets into power. And the pound is one of the worst performing for 10 currencies this year. Let's see what people are talking about when it comes to pound trading. Standard Bank saying that the pound could sink to about 115 in the coming months. Bank of Montreal's these euro pound rising to zero point not nine 1 from around zero point eight five now. So it's all looking fairly negative for the pound. What about the dollar. I mean the almighty dollar seems to be faltering now. Yes. It seems like the dollar may finally maybe be at a turning point. The Bloomberg what index for example less than once again last week the first time it's fallen so much actually since late May. It fell after a report sharp U.S. business activity contracted. And that's really helping to ease fears that the Fed will keep hiking until a recession mark stable. A former Treasury official said that during that on the continued dollar rally for the rest of the year and as a result we have seen strength in other currencies. The yen rallying to new 136 dollar euro is about one point. Oh true. Right now. But there are strategists still who say you know practice some caution here at HSBC and every Credit Agricole saying don't write off the dollar's strength just yet with Carson Bloomberg senior ethics and rates reporter there you can get a roundup of all of the stories you need to know to get your day going in today's edition of DAYBREAK. Bloomberg subscribers go to. Go on your terminals. Also available on mobile in the Bloomberg Anywhere app. You can customize your settings so you only get the news on the industries and the assets that you care about. Up next a Bitcoin's recent rally has had investors starting to wonder whether the crypto crisis has found the bottom. A deeper look into that next. This is Bloomberg. Turning to crypto currencies an increasing signs of Bitcoin save lives above the twenty two thousand dollar level. While investors can see an end may be premature to declare the crypto winther over there's bugs that are bottom maybe forming. Su Keenan joins us with the latest. And as I speak we're seeing Bitcoin again fall about a tenth of 1 percent which is a much because we're still above twenty two thousand. But there's still a lot of volatility in a bit of red after a weekend of green. It is a tough call to make. Whether bitcoin is at a bottom and given the boom and bust cycles that Bitcoin really has become of many beleaguered investors let alone analysts are reluctant to give the all clear sign. As I said we're seeing a bit of red are bitcoin going all the way back to twenty three thousand for the first time since Friday before pulling back about a half percent. And now it is fluctuating but still well above twenty two thousand as Sherry said. And it's been ten days now that it's held above the 20000 level. It's a key support drop dropping in the Bloomberg. You can see there's been a lot of bottom fishing year and bitcoin. For that reason is up about 15 percent in the past month. We've got ether up by a greater percentage 1 Miller Tabak and less has. It's especially difficult to call the bottom at this particular time because the most recent rally involved a lot of young people who had never invested before. And crypto is really a liquidity asset right now. As long as the Fed is tightening it's going to be hard to see a sustained rally. In fact Bitcoin investors may be just as edgy as your traditional investors going into this week as the Fed makes its latest decision a Fed meeting that's likely to deliver another 75 basis point hike. Yeah. There's a Fed of course but what else is likely to kind of drop the big move. Well there's still a bit of lost confidence in both the defy and crypto space. There's that. But most important analysts say is the turnaround in risk appetite that really has to shift. And many investors are taking their cue from the equity markets as they see the equity markets shore up. Bitcoin is likely to show up as well. We've seen much greater linkage there. Secondarily it's important that institutional investors are much more interested at this point than they were in prior pullbacks. Su Keenan there with the latest in crypto. Let's get you a quick check of the latest business flash headlines. Porsche boss Oliver Bloom is set to become Volkswagen senior after the carmaker ousted Herbert D. According to sources Jason's clashes with labor unions and missteps on key projects including delays at the software unit spurred the shakeup. We're told that VW board is betting that Bloom will be more collaborative and stable as a company pushes into Avis. Credit Suisse is reportedly weighing a fresh round of job cuts and other measures to reduce expenses. The Swiss paper Sonntag Zeitung says the board discussions about a large cost savings package have reached an advanced stage. Last month Switzerland's second largest bank warned that clients were pulling back particularly in Asia. Conditions and salary expectations of young Chinese workers are diminishing in the wake of Covid and the tech crackdown. A look at the economic fallout next. In our big take this this Bloomberg. This is DAYBREAK Asia. I'm in a boat rules with a check on markets 30 minutes here into the trading session for Japan Australia and Korea. Well let's kick off here with some of the good news because of course there is a lot of bad news across the markets this morning. But we are seeing some positivity coming into utility stocks. They are of course a little bit more and more better. Better withstand the volatility in the markets are also some good dividend plays in there as well. Materials and real estate stocks also looking for actually higher as well. But the biggest losses we're seeing are across most of the index and we're really concerned here about recession. That is the major word that we are watching today. Also these fears around a global slowdown bringing this week's moves into even greater focus. We do have the Fed meeting of course more earnings coming through around the world and in China. What happens with the property market there particularly with this deadline now looming for ever grant to submit its preliminary for program to restructure. In terms of what we're seeing in the commodities market though as well we're keeping an eye on Brent crude. It is just moving a little bit high this morning. Traders really here assessing these recession fears versus that tightness that we do see across the broader market in terms of what we're seeing in the wheat and corn space as well. Both of those commodities are moving higher that its slump in the previous session there was an accord that was signed both Russia and Ukraine pledging the safe passage of millions of tons of exports of wheat out of the country there that had been stuck for really since the war began. But broadly Sherry it is pretty much a down day little bit risk averse in the Asian session. We'll watch what happens with commodities as we heard from the latest news on the Odessa bombing as well. I'll listen in to Vonnie Quinn with the first for the headlines. Bonnie Cherry thank you. Liz Charles and Rishi Sinek have both promised to toughen border controls as they battle to become the next leader of the Conservative Party. And UK Prime Minister Susan ISE says he will tighten the definition of who qualifies for asylum and introduce a cap on numbers. Foreign Secretary Truss says he will extend the UK's Rwanda asylum policy and increase the border force by 20 percent. The committee investigating the January 6th the US capital Wyatt says it will get to the bottom of missing Secret Service techs from the days around the attack. The panel is seeking messages from 24 Secret Service employees. There are reports the former president Donald Trump had to be blocked by agents from traveling with supporters to the capital. Republican vice chair of the panel is Cheney says she is deeply troubled by the missing messages. Australian Prime Minister Anthony Albanese says his government's introduced the toughest ever biosecurity measures to prevent an outbreak of foot and mouth disease. Concerns have been growing after traces of the disease were found on imported animal products. Nearby Indonesia is also dealing with an outbreak. The virus could devastate Australia's cattle industry. Google co-founder Sergei Brin reportedly ordered his advisers to sell his personal investments and in all mosques companies after learning mosque had a brief affair with Ron's wife. This is all according to The Wall Street Journal. The Journal says the size of Brown's holdings is unknown and it's unclear whether any sales were made. Ren filed for divorce in January from his wife Nicole Shanahan. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in more than 120 countries. And Vonnie Quinn. This is Bloomberg Haiti. Well the most educated generation in China's history was supposed to blazed a trail towards a more innovative and technologically advanced economy. Instead a record 15 million young people were estimated to be jobless and many are lowering their ambitions. Let's get more from Bloomberg's Tom Hancock in album. Big big taken Tom. As we understand it there's obviously the Covid hit to the labor market. There's obviously the the regulatory crackdown over the private sector. But how much of this is also I guess a cultural movement or a cultural shift. Yes there are certainly short term factors behind the spike in youth unemployment which is unprecedented in time recent history. As far as we know so obviously the impact of lockdowns has been huge because service sectors which are more labor intensive have been shuttered and felt more effect. But there's also a long term structural forces that let the youth unemployment rate to to start rising even before the pandemic. And one of them being the fact that there's been a huge expansion in higher education and really an enormous increase in the number of graduates. And that's probably creating a mismatch in the labor market. What about the cultural factor of the Heidi just mentioned. We have heard that phrase tongue ping line flat spreading through China's Internet last year doing the bare minimum. Yeah. So you know we had we had Hang Seng last year and this year there's been an even more extreme slogan buy land which just means sort of give up basically. And it's a way for young people to express their frustrations and to talk to each other about how then maybe lowering their expectations. And that's obviously a really useful psychological coping mechanism for people. But in the long term of course people there are no expectations and they're not expecting their incomes to increase. Then that sort of implies quite a negative outlook for China's overall economic growth. So that's something that the leadership in Beijing is not very keen on. It's pretty disastrous in the long term structurally right. Particularly as China is facing the same kind of demographic challenges that we see across some other Asian economies. You look at the situation when it comes to South Korea when it comes to Japan. Well I wouldn't describe necessarily Chinese democracy as a disaster because even though obviously we've got a rapidly aging population as I mentioned we've had this really fast expansion of higher education. So you kind of got a tsunami of educated young people joining the workforce. And in theory that should be a lot more productive than a less educated predecessors. But the problem is that they are out of work really at unprecedented rates at the moment. So it's really imperative on China to get the private sector hiring again. Looks like young people are preferring jobs in the state sector for the state. So just isn't big enough to provide the jobs that need it. So it's really important to get the private company hiring young people again. Tom Hancock there with the latest on the youth employment situation in China. Let's stay with the country's economy. Beijing due to report on industrial profits in July PMI and that's likely to show profit growth has sold and industrial companies and that comes as a property crisis continues to unfold with homeowners withholding mortgage payments on unfinished homes. Let's bring in Dean Ton Asia economist Morgan Stanley. Dean good to have you with us. Let me start with the econ numbers out of China this week. Where are we going to see the biggest hit from virus restrictions. I think that because of virus restrictions it's still going to come on a domestic demand. So things we need to consumer spending things we need at the services. I think that's where things could actually be seeing the biggest hit by think where we could possibly see support to the economy will very likely be coming from the fiscal policy side I guess on the fiscal policy side. We're really seeing policymakers really and bring it up whether it's in the form of fiscal or cause fiscal a funding boost it seems like the fiscal boost for this year could be something like seven trillion R and B which is three times what we see last year. How are you factoring in the potential risks coming from the property sector. Of course we continue to see the mortgage boycott. We continue to see developers trying to make payments. Right. So I think that's something that we watch out for very close yeah. I think we are closely monitoring for non linearity risk whether this could spread from just the home buyers boycotting loans. And now we're also seeing signs of this spreading to suppliers. The real estate developers I think that there will be a downward drag with especially when it comes to the center of this front especially when it comes to the housing market side. And what has to bear in mind that housing market is a significant part of the Chinese economy. But that being said I think in the very near term we watch out for policymakers to engage in a project by project case by case basis when it comes to deciding where to provide the support and if not the narrative risk do rise. We were then ruled out then as shit and engaging in policy bazooka providing funding and being a rescuer of last resort. I think these are the quality developers they use to their use of public funding or the truly use of a TARP like program to mitigate some of the negative risk that could be coming from the recent developments that we have seen. How resilient is a Chinese consumer given as we've been talking about just the huge amount of household wealth that is taken up by property accumulation. That is that is how you build wealth typically in China. Right. So I guess from what we know how housing assets is about 40 percent of household balance sheet. So it's an important part. But let's just say I think you know income. So what we are seeing if the USDA development so far is not ready because of the fact that the home buyers have stopped paying loans because they are negative on equity or you know income is income growth is negative. But it's really more of a push to get developers to jump start on the projects which has been halted so far and to hopefully get policymakers to spring into action. So I guess we'll continue to keep an eye on that. But for the time being I think policy support is where we would expect there to be support for the call for the Chinese economy and for growth going forward. For the region at large another 75 basis points expected from the Fed. We are seeing some pullback when it comes to that dollar strength. Now who do you see being impacted this week or following on from this week. I should say across the region. Right. I guess like a lot of talks about the fat continue to a 75 basis points high end effect. We look for the fat to take policy weight to three point sixty five percent by the end of this year. And just now you also mentioned in dollar strained by the overall the way I I'm kind of thinking we are thinking about it right now is that investors are concerned about global recession risk global stagflation risk and generally in that kind of environment. I think economies which are more export oriented it would be more exposed to any global demand uncertainty. So economies like the likes of Singapore Thailand Korea Taiwan and to some extent Malaysia those would be the economies which will be more exposed to any global demand volatility. And then on the flip side we think that economies which are more which offers a more domestic demand buffer which also offers a stagflation hedge by being by virtue of being a net company exporter these economies will be better position. And these economies were included like say India Indonesia Philippines and to some extent Malaysia as well. They will get a few data points in terms of inflation pressures across Asia this week. Coming from Australia coming from Tokyo. What are you seeing in terms of regional inflation expectations and where we're headed and how fast central banks to counteract this. Right. So I think generally fourth quarter it's very likely that we could see hit lie and call efficient continue to ratchet up. In fact we think that top quarter in Asia we could see a peak in efficient levels anywhere between 3 percent to high 7 percent territory. Yo yo across the board. And I think what this means is that in the very near term upside risks to inflation was to be the more dominant concern for central banks more so than downside risk to growth. So in that regard we do expect Asia central banks to continue to normalize policy rate overall for Asia. We are expecting Asia central banks to be normalizing rates cumulatively by between eighty seven point five basis points to 225 basis points. Overall this would still be less than the 350 basis points high that we expect for the Fed. And we still tend to see these as policy rate normalization rather than disruptive rate high because generally Asia sees less of overheating challenge versus what we see in the US they tied in Asia. Economist some Morgan Stanley good to have your insights this week. Of course a very heavy week when it comes to eco data out of Asia. And of course we continue to watch those inflationary pressures and a lot to do with those supply chain disruptions that we've seen since the start of Covid. Of course Heidi when it comes to the workers that are engaged in those supply chain sectors railway workers truck drivers port workers as well. Interesting though a lot of the burden has fallen on them to keep these supply chains going. But when it comes to those inflation concerns central bank saying that we could fall into this wage price spiral like the one that we saw back in the 1970s the wage gains haven't been really that great for this sector. They've lagged behind the price concerns price surges. No wonder we're seeing more strikes and labor protests. Yeah it's interesting read for all the fears about that wage price bar. We actually haven't seen these wage gains particularly for these workers. Keep up with the president inflation. So it's perhaps no wonder that we're starting to see a bit of an awakening when it comes to unionize and industrial action for example you're seeing that passing through to inflationary pressures too in terms of specific choke points and labor unrest in these kind of key industries having a wider ripple effect on prices. We saw just a threatened strike by Norway's energy workers setting these fresh kind of fears throughout the European nat gas markets earlier this month. We're also seeing in the US this kind of low and declining labor movement starting to show signs of being revived. Unions are starting to establish more footholds at companies including the likes of Starbucks and Amazon. Right. Some of the biggest disputes are happening in the transport industry. So we're going to continue to watch that when it comes to the impact on inflation the impact on prices and perhaps just more power given to these workers given as you say Shery Ahn the global pandemic has hit these companies and supply chains very hard. And there's a lot of criticism that they've just essentially pushed that crosses back onto the backs of their workers. Lots more to come here on DAYBREAK. This is Bloomberg. Former U.S. Treasury Secretary Larry Summers says Washington is forgoing a key tool in helping the Fed quelling inflation. Speaking to Bloomberg's David Westin Summers proposed that lawmakers start looking at raising taxes. Look fiscal policy makes a big difference. This is not the time for stimulative fiscal policies like continuing moratoriums on student debt relief. This is not the time for anything that's going to be a big new spending program. In fact it's the time for short term deficit reduction. That's why I'm so disappointed that the IDF seems to be gaining currency that you shouldn't raise taxes when there's inflation. I actually think that just the right thing to do is to raise taxes right now to take some of the demand out of the economy. We can raise substantial revenue by cutting corporate tax loopholes. In fact if we don't do it we're likely to lose what I think was a huge accomplishment for the Biden administration. The global tax cooperation agreement that Secretary Yellen concluded we can generate significant revenues simply by enforcing the tax law and taking some of the spend taking some of the money out of high income tax evaders who then go and spend the money and that'll contribute to reduced inflation as well. So I sure wish we could get past this basically ludicrous economic idea that tax increases are inflationary. It's just not right. One quick one here at the end Larry we had a lot of earnings out of tech particularly SNAP and also Twitter. They didn't do so well this week. Is that tell us in telling us anything broader. Look I think what you're seeing in tech is what you kind of always see which is just when governments getting aroused that something is a source of monopoly power and earning excess profits. That tends to be when it peaks in the marketplace. That's how it was with IBM many years ago. That's how it was with Microsoft. I think we're seeing some elements of that with this advertising supported tech businesses right now. Former Treasury Secretary Larry Summers there speaking with Bloomberg's David Westin. Will Chinese stocks may have become somewhat of a pariah for global investors this year. But some are starting to turn ghoulish. Take a look at why next. This is Bloomberg. Here's a quick check of the latest business flash headlines. India's number two software services export or influences has raised its annual sales forecast. I'll not be demand for its digital services. The company says revenue will grow 14 to 16 percent through a March next year. The new revenue projection alleviates concerns that a slowing global economy will stifle technology spending. India second largest private sector lender ICICI Bank beats US beat estimates for the second quarter on a robust loan demand. The widening interest margins. Net income rose forty nine percent to eight hundred and sixty four million dollars in the quarter compared with a year ago. The Mumbai based bank has been growing rapidly as it ramps up lending in response to higher demand for consumer credit. We're sharing some money. Managers betting on Chinese stocks are taking July's sell off in their stride saying Beijing will pull out all the stops to boost the economy. Let's bring our Asian stocks managing editor lending to. So of course July hasn't been a good month for Chinese stocks whether you're talking about mainland stocks or Hong Kong. But those bulls say that it is just a blip and they're expecting that policy divergence to stop playing out. Yeah. Morning Heidi. So the CSI 300 was down about 5 percent 5 to 6 percent so far this month. But as you said some of the biggest money managers in the world that are either turning bullish or sticking to their bullish calls on Chinese equities expecting that they will beat the global equities in the second half. So those bulls include Fidelity Aberdeen and GAM and also Citi. Wells has also issued a bullish call saying that Chinese economy bottomed in May. And right now is on a recovering path. Their main reasons I think conclude that their main reasons include three reasons as far as I can see. One is a continued liquidity boost from the PPC and the stimulus from the the Chinese government. The second is the wrapping up of D.D. probe the regulatory probe into DTA which bodes well for the tech sector. And the third one is the hopes that more market friendly measures will come out ahead of the National Party's Congress later this year. Yeah. Those are some positive developments. But there's always some uncertainty when it comes to those U.S. listed companies and perhaps delist things because of Washington and geopolitical tensions. Do we have anything on that front. Yes. Over the weekend. FTSE reported a significant sort of adjustment or a plant adjustment. Adjust to the the sort of categorization of Chinese companies listed in in China by the Chinese listed in the US sorry by the Chinese government. So the report says China is looking to set Chinese listed companies into three groups. One. The first group is not data sensitive companies. That would include perhaps the restaurant operators and the retailers. And the second one would be data sensitive. And the third group would be secretive. So that means you know the group that has secretive data would probably be delisted. And I would think a DDA would probably belong to that group. And it has been delisted. And that is the second sort of major step that the Chinese government has taken in recent months to address this issue. We don't need to in Singapore. Our Asia stocks managing editor of course we continue to watch the open in Hong Kong in the mainland in about half an hour. Pharmaceuticals biotech companies in focus after the World Health Organization declared monkeypox a global health emergency. Also shares connected to gaming in China may also see active trading after report that NASDAQ has warned Chinese regulatory approval to release its blockbuster title The Absolutely Immortal following of course a controversial social media post that hold on its rollout. Keep an eye on China construction stocks as well. Chinese officials calling for more construction of invested projects as soon as the third quarter according to state media Heidi. Yeah lots to watch out for. Also coming up in the next hour squared Global's a William Warner discussing how their hedge fund managed to get over 18 percent in returns in the last 12 months amid market volatility. Alitalia Capital's Vincent Tan also joins us with his outlook for China's economy given the Covid era strategy and the ongoing mortgage crisis. This is Bloomberg.

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'Bloomberg Daybreak: Asia' Full Show (07/25/2022)

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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