Transcripts For BLOOMBERG Bloomberg 20240703

Paul good morning and welcome to daybreak australia. i am paul allen in sydney. Annabelle i am Annabelle Droulers in hong kong and we are counting down to asias major market opens. Shery good evening from bloombergs World Headquarters in new york, i am shery ahn. The top stories this hour. More humanitarian aid trickles into gaza as the death toll rises. Israel back to diplomatic efforts to get thomas to release hostages. Paul apple supplier hon hai says it is working with china following reports that authorities are conducting text audits and reviewing land use by its parent foxconn. Shery the yen is keeping traders on guard for possible intervention. Paul we are live in buenos aires as votecounting is underway in pivotal election, the countrys choosing any president as economic challengesmonth period take a look at how futures are coming online, we are seeing an upside after stocks fell in the new york session, extending the global selloff. We had the s p 500 seeing its worst week in a month, but we are still in the thick of earnings season and that might potentially help bolster sentiment. We had more than 80 plus s p 500 Companies Reporting results, 70 beat estimates. Have been following the treasury market closely because we had haven seaking happening on friday with yields falling and airing back some of that weekly increase that took the 10year yield their patch that 5 level at one point. It is really about the volatility given the middle east conflict. Grand is trading at the 92 a barrel level. We had two weeks of gains for oil prices. It is really a story of the underlying supply and demand story versus a crisis in the middle east, and of course, volatility is very high as we continue to watch the timing of a Ground Invasion into gazas remaining uncertain as israel support for diplomatic efforts to release hostages is said to altered plants. Lets bring in ian fisher. Is this just a delay, are we talking about total cancellation . Ian bottom line is israel is going to destroy her mass. What has happened is because over the last week or so, at least two times when the Israeli Military said it was ready to go. First time last week, joe biden went inside, hold off for a minute, there are civilians to worry about and there is lasta night, they said they were ready to goid to the next stage. They were worried about airstrikes. Now it appears that 110 hostages are in play and is really supporting diplomatic efforts, mostly through the qataris to try to get them out. Paul so its not off, it just seems to be postponed. When do we can Ground Invasion might occur and how likely go on for . Ian the israelis have warned that he could take several months. And again, in previous times, they had referred to it as this is awful to say, but mowing the lawn. A haircut. Every now and again you have to go in and get things back into order. This time around, it is full destruction. It could come at any time. There would be this pause if they thought motion was possible on possibly getting some of the hostages out, two of them, and American Mother and daughter got out on friday and they are hoping for more before they go in fullon, which is, of course, very dangerous for the hostages. Shery and the rafah Border Crossing family seems to be in play, we have seen some paid trickle into gaza. What is a situation like now. Ian all the agencies including the usa, 34 trucks, 2. 5 million, everything khalaf, this is a drop in the ocean. It had been two weeks now that electricity, water, food coming in, how much longer can they hold out . Bidart and netanyahu, israels Prime Minister, just look at biden and netanyahu, israels Prime Minister, just spoke and they talked about more. Getting in. We will see how much. But it is a huge demand for very little we have seen on the ground so far. Paul bloomberg editor ian fisher. Lets bring in dave sharma, former australian ambassador to israel. Thank you so much for joining us. We have australian Prime Minister Anthony Albanese on his way to defeat at the moment for a meeting with President Biden and he faced a few questions before he left to stop off in israel on the way. This is something issued have done, in your view, and what are the pros and cons of doing it . Dave he should certainly look at it. We have seen in the past week, the u. K. Prime minister, german chancellor, you Commission President , governors of california and new york all visited israel and we have more leaders visiting this week. I think it is important, firstly, a show of solidarity and show support to israel and its right to defend itself. The second signal to the region of western deterrence to other actors that might seek to exploit the situation and try another front, whether it is hezbollah in lebanon, whether it is the houthis in yemen, i think it is an important signal of western resolve to support israel. Paul you mentioned hezbollah. We have seen israel evacuate about 60,000 people from some of those northern towns on the border with lebanon. How likely do you think it is that this conflict escalates, that a second front is open. Iran is drawn into this conflict . Dave it is a very real risk. Especially once israels ground offensive starts properly. We have seen iran pass messages through intermediaries to israel and the United States morning israel about against going in through the ground. Hezbollah is more closely affiliated with iran than a mass. They rely only run for training and material and financing and everything there is any doubt that hezbollah would behave and act as a proxy of iran if iran instructed them to initiate hostility. I think it is a very real risk. Hezbollah or iran view the destruction of hamas as an existential threat to themselves, they are liable to get involved here. Paul to that point, we heard from our editor ian fisher saying that the goal of this Ground Invasion appears to be the total destruction of hamas. Is there a risk of israel perhaps overplaying its hand here . Dave it will be a risky operation, i think your correspondent said earlier, israel up until now has had a containment strategy of thomas, they have periodically conducted military operations to wide berth their capabilities and they expected that the deterrence worked and thomas would never undertake this sort of attack that they took on october 7. That strategy failed. I think across the political spectrum israel and also israels military and security establishment, there is a recognition that the only way this ends is with the complete destruction of hamas. Of course that will not be easy, hamas is deeply divided in civilian infrastructure in particularly the northern half of gaza, they have a large amount of hostages, they will use civilians as human shields and they have had 15 years to basically establish towers and fortifications and chapels and everything else. It will not be an easy military operation. Israel is liable to do what it thinks is necessary. Paul what is the support leg from some of the other regional governments . Dave well, its an interesting picture really. Arab governments around the world basically do not like thomas. Egypt says thomas is an offshoot of the muslim brotherhood, which is a powerful organization in egypt. Jordan says hamas and the sort of militancy and terrorism it inspires is a threat to the king of jordan, the ruling monarchy there, as do other countries like the saudis and the emiratis, for instance. They are in the position that they have to support the Palestinian National cause publicly, which means refraining from criticism of thomas. I think they would welcome hamas being. Crippled or destroyed. But publicly, you will find that they still, for their own Public Opinion, they need to sound critical of israel. That is a fine line we will continue to walk. Paul in terms of Public Opinion , how challenging is the information war as well . Because were seeing a huge amount of claims, for example about the destruction of the hospital in gaza, who was responsible, and whether it was a hospital and not a car park. How challenging is this conflict of narratives . Dave its very challenging. It is an important part of the conflict as well, particularly in todays Information Age when battlefields are effectively accessible to viewers around the world. Hamas uses this as part of their leverage. They want to win the war of Public Opinion. They know they cant win conflict military with israel, but they believe if they can win the war of Public Opinion and. To themselves as victims in israel as the aggressor, they will have more diplomatic leverage. This is very much in hamass modus operandi, if you like, is to sometimes exaggerate the scale of civilian casualties to highlight them as much as possible, of 10 leave civilians in harms way, saying that authorities are preventing or discouraging civilians from fleeing. Sometimes conducting blatant misinformation campaigns, which is what was the case here with this alleged israeli airstrike of a hospital which turned out almost certainly to be caused by a rocket fired from a militant group inside gaza. Paul what is your sense of how this and, because this conflict has been going on for a very, long time running hot and called for decades or centuries, depending on how you count it. Does it get there, how does it get resolved . Dave i can see it getting worse in the humanitarian sense, before it gets better. I would say the one glimmer of hope here is that,s stranglehold hamass stranglehold on gaza, it has been an obstacle to negotiations towards a twostate solution. It has been an obstacle towards the diplomatic talks. With hamass removal and supposing and this is not an easy thing, but supposing some sort of authority can be put in place in gaza which is willing to work with the Palestinian Authority in the west bank, or even represent the Palestinian Authority in the west bank, you could have a unified political state, or coexistence with israel, and committed to a negotiation path. If that is the case, we could see some of the obstacles to a negotiated outcome be removed. But i think there will be a lot of turmoil on the way to getting to the point, and its not going to be an easy thing to do, to find a new Political Authority which has the monopoly on force, if you like, to control gaza, provided thomas is destroyed. Paul dave sharma, former australian ambassador to israel, thank you for joining us lets get to annabelle for a check of the markets. Are you watching . Annabelle thanks, paul. We continue to watch haven assets in general. This morning, the story in fx market is very much on the japanese yen, because you can see in this chart, we just broke above the 150 level in the early hours of trading monday. We have moved back below that at 149. 85, still within the whisker. That raises the risk of intervention from the japanese government, the boj. We heard from the finance minister on friday saying that stability in fx markets is a priority. That is certainly a watch for us this morning, when we see any talk of intervention or a reaction or response, through. What is driving it . It comes down to the yield gap between the fed and the boj. That is the focus. The 10 year view, they are getting very close to the 5 mark. Importantly, when you look at the 10year yield versus equivalent in japan, there is a difference of around 6x. No surprise that you continue to see the yen weakness coming through. You put that against the tensions in the middle east, we have riskoff trading. Futures for japan and austria also pointing to the downside. New zealand is shut, so we are not any indicators we are not getting any indicators of that this morning. Shery this company has said it will work with chinese authorities on unspecified probes, after reports that local officials are looking into foxconns subsidiaries in the country. We will have more details, next. This is bloomberg. Shery the worlds biggest maker of apple iphones is under investigation in china. Taiwans hon hai precision, also known as foxconn, says it will collaborate with chinese authorities on the unspecified probes. For the test, lets bring in chief north asia correspondent Stephen Engle in hong kong. We know what is behind these investigations . Stephen its interesting because theres lots of speculation that perhaps it is tied to the founder, terry guos run for president. What we do know at least is from unidentified sources being reported by state media, global times. They say that essentially, foxconn, which has the big iphone city. John cho, in hunan province, they are being investigated by tax authorities for subsidiaries in guangdong, plus being investigated by Natural Resources officials in hunan as well as hube provinces. We dont know the nature of the investigation and what is the nature other than hon hai, they say they will collaborate with authorities, as he rightfully said, on unspecified probes. But it is something to watch, especially if it all. Fx production and capacity Going Forward for all those iphones and other apple products, if those investigations lead to some sort of disciplinary action. Do your other point about whether this could be some point of retaliation for anything that terry gou has said on the campaign trail, we will probably never know that, but it will become an already has become a political hot potato. Essentially, terry gou is known as being probusiness and through doing business in china, to the point where some people have said he is a china appeaser. But to assuage the concerns on the campaign that he is only one sided and he wants more engagement with china, he did say in august, i will not bow to chinas threads. Already i will not bow to chinas threats. One comment china should enforce tier 1 companies to declare their position whenever an election is taking place. China should acknowledge that these companies contribute to the chinese economy greatly. To see how they investigations, rural, go forward. Shery our chief north asia correspondent statement angle joining us from hong kong. Chief executive john lee will give his policy address on friday. There have been growing doubt about his administrations ability to navigate extremely challenging business and macroeconomic environment in the city. On the central bank front, Bloomberg Economics is expecting the ecb to keep Interest Rates on hold. We will also get rate decisions this week from turkey and canada. We will be getting inflation readings throughout asia. Bloomberg expects price gains to slow him singapore and australia. Rising rents, insurance and household utility bills continue to be pressure points in australias inflation basket that will keep the rba on edge. Other Economic Data, gdp figures from south korea and the u. S. , japans pmi data, dpi numbers from south korea, and industrial profits from china. And of course a career in the thick of earnings season. We have major tech results coming from the u. S. Investors could hear more about the cost of ai when alphabet and microsoft report earnings on tuesday. That is your week ahead. Paul lets get a preview now of the trading week ahead. Our chief rates correspondent for asia and mliv contributor Garfield Reynolds joins us. Bones are traditionally safe, but we have seen them swinging through the u. S. 10year, 40basispoint in the last month. How long do we expect this to carry on for . Garfield probably for much of this year the way things stand, unless you get a stunning downturn in the Economic Data which would say, ok, good fed is definitely done and now it will have to start thinking about when it code3 because a recession is coming into view. Unless you get that, its hard to see how the volatility calmed down especially towards the longer end. At the shorter end, things are less volatile because we do know the fed, if it isnt finished raising rates, it is almost finished. So for the twoyear bond, that doesnt mean much volatility. Further 10 year and 30 year, they will go on being volatile because we dont know if and when the feds five Percentage Points plus of hikes are going to break the u. S. Economy. Are we going to get no landing, a soft landing, hard landing . There is all of that going on. Then there is also at the same time, concerns about oil prices in the middle east, and in particular, concerns about the supply side of things. We had increases in the supply of u. S. Treasuries in the last quarterly ending announcement funding announcement. There are concerns there will be another increase now. How sustainable is this . The u. S. Is running large deficits at the time when the economy is expanding. That shouldnt normally happen. That is adding to investors concerns that they need high yields to justify them taking on the risk of holding these longterm bonds. Its kind of a vicious spiral when it comes to volatility. Shery either way, yields are much higher than where the boj has them and they have more operations to keep them down apparently this week. Are we going to continue to test that 150 level . Garfield undoubtedly. Part of that is what i was just talking about with treasury and stand with yields going up there. So the dollaryen rate reacts to the wide divergence between japanese yields. Even if they have picked up, they are still restrained, versus treasuries, which dont have any such restraint. Add in that the boj has its own particular pickle in what does it do to adjust to a world where everybody else is convinced that they need to stop this easy policy that theyve got. But the boj is not. Ueda was out last week saying they need to stay patient with easing policies until they are sure that inflation has sustainably reached their 2 target. It is currently running at 3 plus or Something Like that. They dont trust that there is going to stay there. As long as the boj is going to stick with that, that you are going to have a week in a weak yen. The difficulty is how you go from the current policy set up to a less easy one without running the risk that you get a bond selloff or you get a sudden surge in an which would also cause problems a sudden surge in the yen which would cause problems. The boj would really like it if the u. S. Economy could stop being so strong so that u. S. Yields become down, because thats their only easy way out of this difficulty. Paul our chief rates correspondent and mliv contributor gah food mile is there. You can find more on this story and all the days story on the markets like log, on bloomberg, it is mliv. Then you can get a market roundup in one click. There is also commentary and expert analysis from bloombergs and find out what is affecting your investments right now. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh shery youre watching daybreak australia. The donor Holding Steady after the donor Holding Steady after its first weekly decline in its an amazing thing when you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. The idea that we have saved five million peoples lives, its overwhelming. Its everything. Paul former u. S. Treasury secretary Lawrence Summers says the fed will at some point start to an on the growing mountain of dead, that is because of its implication of Interest Rates. Concerns about the u. S. Fiscal situation have contributed to a runup in treasury bond yields. You have a supplydemand imbalance. That is something that makes markets move. I think it is something that has to be watched very closely. I think the fed has an obligation to be ready to assure the liquidity and the functioning of the treasury market. But as is always true, david, there is a difference between a volatile market in response to new information when there is a lot of new information coming, and some of it may not be good. That is one thing. Its a quite different thing when you have a nonvolatile when you have an a an illiquid and not functioning market. Havent seen evidence yet that is where the treasury market is but it is something that the fed, particularly outpost in new york, needs to be watching closely. Shery former u. S. Treasury secretary Lawrence Summers speaking with david westin. Our next guest says the 10year yield fitting at around 5 shows more problems ahead. Lets discuss with the director of strategy at optimal capital advisors, Frances Newton stacy. How long will this higherforlonger narrative hurt the economy . Are you talking about structural credit events that could be potential in the near future . Frances it could be. What happens is you get easy money, you taken a bunch of leverage during times of easy money. And we had a record of that during the pandemic. You get inflation than Monetary Policy tightening. It removes increasing liquidity from circulation. It becomes more and more difficult with lower liquidity to continue to service and paper over that debt. You hit a threshold like a game of Musical Chairs were somebody ends up without a chair and you have a default of some kind whether it be systemic or not systemic. Then the fed reacts accordingly and they start easing. That is historically what the cycle looks like. Jay powell was speaking on bloomberg last week to the anomalies of this cycle and even he is surprised we havent seen more disruption in the economy and the rate at which we having straits and to the level we having straits. Shery even mentioned that these higher levels could mean less need for the Federal Reserve to tighten even more. With that help, do you buy into that narrative . Frances the thing about it is they have been balancing the tightening the balance sheet. You go, ok, they are tightening the balance sheet. Furthermore, lending has been tighter. Then you go, what is the city produced think that is keeping economy hot . Youve had a lot of competition from fiscal spending as far as keeping the money supply robust, you have had a lot of compensation in private credit for the lack of lending that the banks are doing. Shery shery it has been interesting to see that Earnings Results recently because we are starting to see signs of that. Amex caught my eye, because the volumes on their cards went faster than expected in the Third Quarter we are talking Small Businesses and corporations really pulling back from your spending. How programmatic is that smaller names when it comes to investing in these sectors . Frances yes, exactly correct. The big thing is service not how much debt you have, but if you can service it. Is true for countries and households and businesses. The thing about it is bank of americas Brian Moynihan came out and said credit card delinquencies yearoveryear are up 50 . So we are starting to see infections in delinquencies, bankruptcies, foreclosures, is that. 50 of the population has an enormous amount of debt that means increasingly onerous debt service payments. That will hit a threshold. Then the question becomes to what percentage do people feel to pay their credit cardsthat is what jay powell has to be watching carefully. He will not say this publicly, but i have to imagine he thinks about the things i am thinking about, which is if we see another shoe drop maybe it is commercial real estate, maybe corporate debt hitting a wall, maybe it is credit cards and the consumer, whatever it is, to whatever degree it becomes systemic where there is a risk of it becoming systemic, already has a pivot in mind, for sure. Shery it is still early in the earnings season, but what are you watching . Frances earnings have had a massive deceleration. Really what is happening is the markets, i think the markets are still expensive given the fact that the credit risk increases daybyday by date. We are higherforlonger for is levered as we are. Earnings have been decelerating for many months, many quarters. Really what is keeping us there is the fact that the bond market is not a bear market. The best place to get returned right now is cash. Stocks have sort of been skipping along. I think right now there is a lot of risk in the stock market. We have some technical breakdowns on lower highs. What is keeping the stock market where it is right now is the fact that we are waiting to see how the earnings season actually plays out. But i do believe we will continue to see a deceleration in earnings, given the fact that even jay powell admitted that we see some constraints on demand Going Forward even though we are surprised with the resiliency so far. Shery is that why you like gold, especially given the political tensions in europe and the middle east . Frances yeah, its really interesting because real rates have grown up. Gold sold off as real rates with higher. Now you have seen this massive reversal in gold and the bond market continues to tank. You have negative correlations. Then of course, you have the dollar that is kind of going sideways, it is consolidating sideways. What is happening is that people know this credit thing is coming , but they have been so burned by bonds, myself included, that they arent reticent to get back into the bond market even though that reversal will come back because that Asset Classes not going to go away. People are starting to price in the credit risk that gold and silver anything that has had a meeting reversal. I suspect that as highyield has started to crawl back up again, as that continues to move higher and you get more risk and spreads, you will see more light for safety in gold. And i think real rates will start to back down to that 1. 5 range on the 10 year. Shery to your appointment being burned on bonds, i remember last week we heard from an analyst talk about 5 being intraplate. Good entry point. What do you think . Its funny, when you look at real rates heading towards 5 , you are looking at here deceleration in relation 3. 5 , the 10 year trading at around 5 . That makes sense. Its just how long it can stay there. I didnt know if it will go that much meaningfully about five unless we see a catalyst for that, but i think the fed will remain on hold this next meeting. I am not even sure they will hike after that because they are starting to see some things breakdown in the background. Although powell is just taking a victory lap, and good for him because we are 11 rate hikes in and we havent had a major credit situation, and we havent yet seen a recession. I say, after transitory, that take his victory lap. [laughter] shery francis tacy, good to have you back, director of strategy at optimal capital advisors. Lets stay with the u. S. Stocks. Investment bank Piper Sandler is saying that the stage is set for a big bounce in the s p 500. Annabelle joins us now from hong kong with the latest. What is the firm seeing that is telling it that we might see an imminent rally . Annabelle i think its about levels, that is what theyre looking at in particular. I merging you earlier saying that the s p 500 broke below its 200day moving average on friday, but it has holding about another level, the line of support, 4200. It has managed to stay about that even with the concerns around geopolitics, higher treasury yields, that narrative of red rates staying higherforlonger really continuing to set in. This is something that technical analysts at that firm we are looking at in particular, Piper Sandler, they are saying that it will take a lot for the s p 500 to break that. They are also saying that this sets the stage for a rally into the endoftheyear. They are seeing a bounce of 14 for the s p 500. What is driving that, again, is the amount of stocks in oversold conditions. Around 30 of the stocks in the s p 500 at this point. They say that when you have conditions like that, it typically precedes returns that are quite constructive and positive. Certainly something that is very optimistic heading into the endoftheyear. Paul yeah, that optimism, is a transiting across the ipo market . Annabelle not really, paul. Because we have seen issuance largely grinding to a halt in the u. S. You have what is going on and then released, you have all of these surging treasury yields, and you also have performance. Some of the ipos over the past few months, their returns have been pretty lackluster as well. And then there is the amount of issuance, that has ground to a halt and it has really dried up. At the end of last year, it has only been around 47, 40 8 billion raised in ipos on u. S. Exchanges since the start of last year. That is less than the final two months of 2021 unknown. So really not much issuance coming into the market t. Rowe price as well saying they dont expect any change in ipo activity between now and the endoftheyear. You have so many headwinds in focus. Companies need to be sure of their economic fundamentals, the earnings capacity for at least a year out, and that is what is keeping them on the sidelines from now until the endoftheyear. Paul alright, thanks, belle. Be sure to tune in to Bloomberg Radio to hear more from the deans big newsmakers from that days big newsmakers broadcasting from our severely hokum. You can listen via that, at, or bloomberg. Com. Plenty more to come. You can listen via the app, radio , or bloomberg. Com. Plenty more to come. This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Shery votecounting is underway in argentinas president ial elections of the nation confronts mounting economic challenges. Our Bernard Sanders your chief budget lets be joins us our Bernard Sanders bureau chief Patrick Gillespie this. We are talking about being on the brink of economic disaster, with triple digit inflation, not to mention a melting currency, what are the top issues at play here . Inflation is the number one challenge in argentina, with 130 annually and that is affecting relations. 40 of argentines living in poverty. The economy is nearing discussion. Its a difficult situation politically, socially and economically. We are expecting early results to show up in the next hour or two here in buenos aires. Paul there are a number of possible outcomes. One of them being a runoff vote. How do you expect markets to react on monday if this should happen . Patrick we expect all the campaigns are saying that the most likely scenario at this point is a runoff vote that would happen on november 19. None of the candidates appear to have reached the two thresholds you need to win outright which would be 45 of total votes for 40 with a 10 difference between first and second place finishers. So the most likely scenario is a runoff. The key thing for market on mondays who are the two candidates. There is an expectation of a potential runoff between outsider candidate javier milei, and the incumbent candidate sergio nasa, that would be the most polarizing scenario. Another scenario between massa and the other premarket candidate is another possibility that markets would probably be more favorable to because both are known commodities, longstanding politicians and both their economic plans are well known. Shery tell us a bit about this economic plans and some of the most extreme solutions that have been talked about, especially by the libertarian, javier milei. Patrick what is interesting, despite a polarizing election in argentina, the main candidate have committed to an amount of austerity if they were to be elected president. But when it comes to how the administer the currency, proposals are all over the place. The most radical is Javier Mileis plan to replace the argentine peso with the u. S. Dollar as the currency. The mechanics behind this are complicated and he has not explained the fineprint details, about how exactly complete dollarization and shift the economy from paces into the dollar. But this Campaign Proposal is the most radical and it is getting momentum among argentine voters who are sick of inflation being so high. But its not clear how he could do this as president because the central bank is out of dollars. It has no money. The clear question is how will he dollarize, and how fast. But both candidates have committed to austerity if they were to be elected. Shery bloombergs alexie in brightness Patrick Gillespie in buenos aires. Paul paul kicking off a month of diplomatic engagement is australias Prime Minister. He will then go to the Pacific Islands forum,. Ben westcott joins us from canberra. A packed schedule for him been easy. Lets start with d. C. What outcomes do we expect from there . Than it will be a pouch trip for the Prime Minister. The focus this week is good in addition to facing a lot. Trying to get critical minerals, joining with believers in terms of getting supply chains for things like lithium and other critical elements between austria and the u. S. At the same time, albanese will also be the guest at a state dinner by u. S. President joe biden, the fourth time an australian leader heard been given a state leader by the u. S. President. Interestingly, it is the second time in four years, which shows that maybe western is becoming more important to the u. S. s indopacific strategy. Shery we know the Prime Minister is headed to beijing in november. Already australia is making moves to ease tensions even more especially when it comes to disputes of the wto. What is at stake . Ben this will be a seminal test for albanese. He will be treading a thin line between those who want more warming with china, which includes china itself. The ambassador said recently that he wants to see australia and china move beyond stabilization into a warmer ughness. Then there are others who would like to see australia keep china at arms length. They will be looking for albanese to press australias case, to stand up for who is still in china despite the release of the hostage last week. And all those wine tariffs are under investigation by the chinese government. A fivemonth review. So there is a lot at stake for albaneses visit, other people will be watching exactly how he handles that. Shery Bloomberg Government reporter ben westcott the reporting from camera. Other political stories we are tracking around the world, japans Ruling Liberal Democratic Party has suffered a setback after a pair of special elections on sunday. The party lost an upper house visit on the island of shikoku but held onto its position in a negative sake. The end result should support for for mr. Kishida cabinet slumping to its lowest level in two years. Switzerlands Rightwing Party scored one of its best election results, winning almost 29 of the votes an increase from four years ago. The party focuses on domestic issues like economy and immigration. It also wants to limit switzerlands population and enshrine the countrys traditional neutrality. House republicans have set up a nine man contest for the speakers post. It includes representative tom emmer, an ally of ousted former speaker kevin mccarthy. Lawmakers are expected to start the election process on tuesday. Mccarthys oscar has hamstrung congress and halted physical priorities. The u. S. Faces its next spinning deadline next month. You can turn to bloomberg for more on other top stories, including argentinas elections. Go to tliv to get the latest news, commentary, and analysis from bloombergs expert editors. This is bloomberg. Welcome to ameriprise. Im sam morrison. My brother max recommended you. So my best friend sophie says youve been a huge help. At ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. Our neighbors, the garcias, love working with you. Because the advice we give is personalized, hey, john reese, jr. Hows your father doing . To help reach your goals with confidence. My sister has told me so much about you. Thats why its more than advice worth listening to. Its advice worth talking about. Ameriprise financial. Shery towatching daybreak australia. This year despite in the frequency of flash floods, fires and storms is causing a growing number of as it manages to arrest the risk of investing in bonds tied to real estate. Bloombergs su keenan joins us live. There is at least one Agency Setting the alarm. Su this risk in extreme climate and weather is not being priced in, and that could lead both credit issuers and investors to facing far bigger losses down the road. When you look at the extreme weather in the past year, those fires tearing apart throughout greece, the devastating fires in maui that took out the part of hawaii. Flooding and typhoons, extreme heat snowstorms, it makes sense why there is such concern because there is starting to be a growing realization that the Real Estate Market is directly affected by this. At the extreme weather is not being reflected in the bond ratings. This is one reason the head of sustainable next income at federated homes, for instance, is underweight realistic credit. Neuberger berman, they are increasingly looking at whether issues, whether they have an ethical to deal with the fallout of climate change. Barclays says the risk of being mispriced across sovereign bond market and that will ultimately trigger downgrades. There are a lot of concerns here. Bottom line, managers are saying if you have two similarlooking investment opportunities, abound issuer that has been better possible to protect itself from climate risk is likely to be the much better investment over time. Paul so what sorts of solutions are being proposed . Su the problem is the problem is that Credit Rating history does not yet really have a way to delete this risk, and investors have a way to calculate this risk, and investors are aware. The Energy Economics and financial analyst industry, they say that Bond Investors have to rely on the assessment. It cannot turn to Credit Ratings for useful valuation of this stuff good and Industry Groups say that inside the biggest ratings firms, alarm bells have been something from months but these warnings have gone unheeded. The concern is that the failure to factor in the risks of extreme fires, roads, droughts and storms could dent portfolios, and in the case of sovereign bonds, really hurt economies. Paul bloombergs su keenan there. Dont miss coverage of the Singapore International energy we. We will be speaking with the vice chairman of u. S. Energy company delorean in the next hour. That is it for daybreak australia. Daybreak asia is up next. This is bloomberg. Avalarahhh ahhh nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. When people come, they say theyve tried lots of diets, nothings worked or theyve lost the same 10, 20, 50 pounds over and over again. They need a real solution. Ive always fought with 510 pounds all the time. Eating all these Different Things and nothings ever working. Ive done the diets, all the diets. Before golo, i was barely eating but the weight wasnt going anywhere. The secret to losing weight and keeping it off is managing insulin and glucose. Golo takes a systematic approach to eating that focuses on optimizing insulin levels. We tackle the cause of weight gain, not just the symptom. When you have good metabolic health, weight loss is easy. I always thought it would be so difficult to lose weight, but with golo, it wasnt. The weight just fell off. I have people come up to me all the time and ask me, does it really work . And all i have to say is, here i am. It works. My advice for everyone is to go with golo. It will release your fat and it will release you