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tv   Bloomberg Daybreak Australia  Bloomberg  May 16, 2022 6:00pm-7:00pm EDT

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>> good morning. i am haidi stroud-watts in
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sydney. >> i am kathleen hays in new york. u.s. stocks failed to sustain a late session rebound as investors waited new signs of economic weakness from the united states and importantly, from china. >> among the losers, elon musk may seek a lower price for twitter after questioning the platform posits a status on fake accounts. >> it is time for a quick check on wall street with a very interesting trading day. they managed to rally on friday. that is the asian markets with a little boost overnight. today, that could not be sustained and it had a lot to do with the very weak economic numbers out of china. retail sales down. industrial production in may, down nearly 3% year-over-year. empire state -- that is a look
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at the new york manufacturing region. the s&p 500 tried to rally but could not. it ended up down about .4%. it had been a little bit stronger than that earlier. the drop in bond yields, the 10 year was down about -- down to about 2.85. the problem for the s&p 500 is the mega caps. it was apple. it was amazon, tesla is now down about 30% this year and still looking pretty shaky as elon musk continues to talk about this twitter take over. it is kind of an iffy proposition. you can see the nasdaq losing 1.2 percent. if you look at that 4000 on the s&p 500, gina martin adams from our bloomberg ecologist a stock market team says 37.60 is
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pricing in a full-blown recession. you can see how close the markets are to that. that is the big worry. i just want to say also another problem is worrying about oil. about 114 dollars per barrel. what i want to show you is this. you can see how expectations for gdp growth is continuing to fall. in the middle of last year, august, the estimate for gdp for this year was over 4%. now it is down to 2.7. worries are growing that this is going to turn into a full-blown recession. a lot of people say it is not going to happen and that power will get that soft dish landing but that is what is weighing on stocks. >> that risk is why we continue to see the fragility of sentiment. we did have some pretty decent sessions for asia on the back of
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these tailwinds from the u.s. but look how this is wrapping up in the tuesday session. we did see chinese stocks giving back a lot of those rebound gains. even with that jp morgan upgrade. take a look at sydney futures. look at the open. very modest gains being signaled at the start of cash trading there. we did see further downside when it came to the kiwi and aussie dollar on the back of that terrible domestic activity. all of this is sitting firmly under 70 u.s. cents. they are expecting an increased rate by have a percentage point at each of the policy meetings getting on top of surging inflation. that will take the cash rate to 2% at the meeting on may 25 with two more in july and august. they are seeing a little bit more of a move to just under
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129, trading at the moment. so much of this -- we have not been here before in terms of trying to see what the next part of this trajectory is for equity or bond markets. >> it has a lot to do with the fact that the federal reserve is something this aggressive rate hike. we have to get inflation down and the only way it can be done is by causing recession. there interesting. they are saying that the markets -- the stock markets may be overpricing the recession. a survey of stock market participants shows -- if you look at the u.s. stock market chances for this procession, it is 70% of stock investors are really worried. if you look at debt market participants, it looks like a 50% chance is priced in.
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a very different view of how likely this is to happen but obviously stocks are showing what is reflected in these equities. >> as to the question of don't fight the fed, it is pretty common with how much risk you are taking on with these beds but if you look at history, over the past seven or eight, we have seen the fed tightening cycle. what you tendency is. fighting the fed at your peril. -- fighting -- what you are seeing is fighting the fed at your peril. we have seen a mixed message as to when yields went lower and what the average drawdown was. you see the bottoms of these
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various cycles. there is nothing universal about the trends we are seeing. that makes things more complicated. >> i think you had it right the first time. it is unprecedented. it is hard to find anything to compare it to. >> if you look at the volatility in markets with investors weighing fresh growth, let's get more on that with our asian editor. what was driving the action and the u.s. session today in your mind? there seems to be a lot of crosscurrents back and forth. >> that is right, equity markets with risk assets in general -- this one's of what we saw in asia yesterday with that china's economic numbers. this is the world's second-biggest economy.
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that filtered through to that u.s. session. there is also talk about some of this being treated. anything like that is still unnerving. and just quickly touching on what heidi mentioned. they looked at monetary policy going back to this around market lows. it is complicated. interest rates are going up. bond yields going up. it is great difficult at the moment. dennis quaid difficult at the moment -- >> it is quiet difficult at the
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moment. >> are we see more volatility in the space? >> bitcoin is trading like any other asset. for a while this was an asset class that had the potential to diversify in the portfolio. that is not proven to be true. as you are in very dear embraced by more institutions of investors, the same challenges at every other risk asset out there, rising interest rates, tighter liquidity. there are implications here of stocks and other asset classes as well. even with the recent selloff. if anything goes wrong, there
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could be widespread implications. >> the latest on the ongoing drama from the elon musk takeover of twitter, must is saying that he might want to deal at a lower price. let's bring in trade. the roller coaster continues when it comes to this saga. what is the latest in terms of what we are looking at. that elon musk feels like he should be getting a better deal. >> he does and he said as much today by saying he would entertain the idea of trying to renegotiate and get a lower price. we kind of speculated that might be something he would want to do. where he said the deal was on pause, where he was trying to figure out what percentage of twitter's database was represented by bots.
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he said i am going to do my own analysis of this. twitter he claimed was reaching out and saying he violated the nda by exposing their methodology. in miami he said he would be open to this and given the broader decline in the stock market, twitter would be a much cheaper company today than it was a month ago when he made his bid. >> elon musk claiming to 90% of these on twitter could be bought. investors are paying close attention to china after saying there might be a light at the end of the tunnel at the end of the covid friends. this will be the jp morgan summit throughout the day. so much to talk about. what do you think will be the key themes? >> we will be talking to a number of different guests from
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different parts of the challenging economy including in shanghai. we will be talking about the american chamber of commerce shanghai chapter. we will be talking about the covid situation and the lockdown . shanghai is raising three consecutive days of the transmission. this is relaxing, a lot of the lockdown and restrictions that so many people are still under the strictest form of lockdowns. that is key. the lockdowns are absolutely taken an economic toll on china's retail sales. we were expecting a slight gain. obviously we need to dissect from the jp morgan guest we were
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speaking to -- we are going to speak to. >> stephen engle in hong kong and another change of heart from jp morgan ahead of that summit. turning positive on the chinese stocks including the likes of tencent and alibaba. this coming after that on investable call sent shivers alongside the investment community. we will be getting there update on the ground. let's get you over to vonnie quinn with the first word headlines. >> new york city says it could mandate masks in public places if the covid alert was raised to high. health officials suggested medical grade masks and publics -- in public as there are rising
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cases. let me put in has issued a warning to finland and sweden over there planted joined nato. ukraine's foreign minister has ruled out potential concessions to russia. he says the eu faces a moral failure if it does not approve the country for candidate ship. >> this is the time for europe to go to the next level and legally enter ukraine and the eu integration project. >> the you plans to protect national security. there is more recognition of wrongdoing. export controls are playing a
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big role in u.s. policy following the invasion of ukraine. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> still ahead, we will be speaking to the business association of australia to talk about how they will think employers -- how the economy will affect employers. this is bloomberg. ♪
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>> we are seeing a lot of headwinds. >> notably lower growth. frustratingly high inflation. >> stagflation is toxic for traditional assets. >> is it a soft landing?
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is it stagflation. >> it became a growth scare is where -- as well. >> whether we get something worth depends on the soft landing debate. >> the fed is trying to spread a myth blindfolded. >> there are so many headwinds. >> most investors are anxious about a potential recession. our next guest says maybe the u.s. can avoid one. let's bring andy chief investment officer -- kim, as an expert, it is so easy to sit and opine. we will probably have it because nobody knows and the fed does not know. what would you have to see happening now that we are in the future to make your may bet on
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nova session -- nova session -- no recession happening? >> i am looking to have things going right. prices are one thing. i do the weekly grocery shopping for our household. believe it or not, i am seeing some prices fall. not as far and fast as i would like but i am saying that, i am saying more of the cars people wanted to buy. you know because there are new body styles. i know the consumer is buying things they wanted to buy for the last two years but could not. i think that is good. i am seeing a little pressure come off. that is what you have to keep your eye on. all of this before this about
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stagflation, when people are in bad times, they make this assumption that it will always be bad times. i think that is a bad assumption. tomorrow will be different. we just don't know how. >> in terms of capitulation, it is suddenly a very popular word. it has the market down so far so fast. where do you think we are now in the dow before we go up? >> i think we are going to tread water here a little bit more. i hate to say this. this is a crazy idea. the last couple of days of last week, i don't believe it was real capitulation. whenever people were buying or selling apple for 138, to me, that was people selling to cover their margin calls for the
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crypto they had bought. it was really crazy. i am sure it was happening. that was a clear event that i saw. what i want to see is some other reasonable stocks get sold where people say i can't take it anymore. if i see companies like exxon mobile or coca-cola being sold off, that is when i know we are having capitulation. that is capitulation to me. >> we hear a lot from investors who use domestic stocks against some of the stuff going on elsewhere. particularly lockdowns in china. you are watching the supply chain issues be exacerbated. what do you like within the u.s. that is going to benefit or avoid that? >> sure.
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i think nobody is going to be able to avoid it. but what you have to do is not try to get short-term gains. by that i mean something less than a year and look at 3-5 years. i would look at stuff i think is going to be winners for three to five years. you guys know that i love a special class of technology and that is productive technology. there are a lot of semiconductors. i like software and anything that makes the company more productive. >> you like traditional energy? >> idea. -- i do. we have a lot of applications that will not easily go over to ev. i also worry about the strength
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of our powerlines and how they are connected. i will not get into really nerdy stuff. i did a lot of work on the u.s. powerlines. it is not comforting. i think that will be a lot more focus on the future spending. that needs to be a strong thing before we can rule out in a meaningful way and replace everything that we have earned. >> great to have you with us. you can get around of of the stories to get your day going. we can customize those settings for you. this is bloomberg. ♪
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>> now let's take a quick look at the latest business flash headlines. microsoft plan to nearly double his budget for employee salaries and first stock compensation against workers by at least 25%. the move would help the software giant retain staff and help people cope with inflation. microsoft said in a statement that the land will mainly affect early to mid career employees. u.s. stocks slumped this year. this hedge fund sold out a struggling tech firm. also exiting airbnb and starbucks. the duquesne family office sold ethel, airbnb and starbucks and added to as early large position and chevron -- and chevron -- in
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chevron. the private equity firm said it will lodge a formal offer for now. the rise of the company share price and overall market have made it harder for them to seal a deal with an attractive price. >> let's look at the day ahead. frustration in new zealand. they are talking about the company's higher share price. the reserve bank of australia will release its may policy meeting. they said they will increase interest rates by half a percentage point at each of the next three policy meetings to fight inflation. coming up next we will discuss how the upcoming election in australia will affect employers in the economy and the small business association of australia joins us for that. >> we will look at that aussie dollar that heidi was talking about. still below $.70.
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still up a bit from yesterday. we will be speaking about small business and those rba minutes. we can't wait to see how hawkish they will get in the next meeting. the euro-dollar rate is not as close as the one yesterday. this is something we are watching very closely. we have the japanese and u.s. dollar yen showing a little bit of strength in the yen while the yuan is unchanged. another crazy day? of course—you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business, with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want—your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company.
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>> this is daybreak australia. i am vonnie quinn with your first word headlines. putin has issued a message to
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finland and sweden. putin says the decision will produce a response from moscow. ukraine's foreign minister has ruled out potential concessions to russia. he says the eu faces a moral failure if it does not approve the candidates for membership. this is the latest failure of an algorithmic stable going after terry usd. the consumer financial protector bureau shows they are ready to use this for payment. >> stable coins are something all the regulators are looking at. most people can use right now is for speculative trading to go in and out of cryptocurrencies. people wonder if it will be one day use for consumer payments and many are thinking it is not ready yet. >> india may get a reprieve from a sweltering heat wave with temperatures falling as much as three degrees celsius.
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the weather office has heat waves could ease further before mercury starts rising again next week. temperatures rose as high as 49 degrees celsius last weekend. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> australia's small business is facing challenges from red tape. also, inflationary pressures are around 60,000 of these smaller australian companies. now there is the founder and ceo of the small business association of australia. we come into this selection as we see the economic rebound quiet strong in australia. how many of the businesses that you represent are feeling the effects of the past couple of
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years? >> the latest research shows that about three quarters -- in australia, i am talking about 2.4 million actively trading small businesses. that is what we are talking about. out of those actively trading small businesses, around three quarters believe they will recover by next year. they are currently in recovery mode. small businesses did face a small pounding and as we normally say, they did the heavy lifting during the pandemic. >> it is clear at the moment that there are two things. one is rising costs, the other is a skill shortage.
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what are the policy priorities that the business is that you represent would like to see? >> they have two major issues because what happened during the pandemic that created a shortage in certain areas, the government closed down our borders as far as international not only in australia but from outside of australia. australians could not either depart or leave australia during the close down. we have people who go working on farms to pick fruit. all of that created a problem. the skills shortage in certain areas is very real for various sized businesses. this is all prohibiting businesses to grow and get out of the situation.
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a colleague of mine has restaurants. he cannot trade at nighttime because he has insufficient staff. eventually, that type of thing will impact on a business and may eventually close down. the other thing that is only coming to light now and i don't think anyone has thought very much about it but the freight cost -- australia as you know is an island. we have long distances. one of the things starting to circulate are the costs of bringing these by in australia. these are very expensive now. what costed $500 is now costing
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$45,000 -- four thousand or $5,000. you make up 1/5 of australia's gdp. you are very important. as the back of australia does this, does the next government need to do something about that? >> our lending situation has been a problem because a lot of businesses do not fit into the traditional big banking lending criteria. we are doing something about this and this is longer-term and it needs serious addressing. a lack of finance is the single biggest cause of business failure in this country. we really need to do something about it.
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it is not a policy document but the framework for policy makers in government. one of the pillars is about finances so we are working on that. >> how big of a problem is inflation? australia's has gone up but it does not seem anywhere near the problem that it is here. what are your small business members saying about it? >> inflation is a problem and we are not quit as high in the u.s. and the u.k.. we don't know where inflation will go. we are trying to ensure that it does not create further inflationary pressures. with inflation, the price of everything is going up and i am
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finding that i can go into a service station one week to pick up something very quickly and it has gone up the next week. it is a very serious issue. we may even overtake your -- wage inflation. -- we may even overtake your inflation, we don't know. >> i know that the overall sentiment seems to be about the fact that many of them feel like they can't afford it but we have household costs rising and then the issue of growing wages becomes necessary. >> this is a tricky one. we can create employment and so forth. what we need to do is put the
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whole thing into perspective because the wage rise that is being supported -- it is 5.1%. it sounds very high but we are talking about the lowest in the australian economy and it is around $200,000. that would raise the wages by just around over one dollar. most small business owners already paid more. the question should be what is affordable to them and each one those what they can do. there are things that i think we can do is a pressure off of small businesses. that is another story. will that wage increase if it is
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5.1%? will that translate to other areas with the working people? >> thank you so much for joining us. fascinating conversation. the founder and ceo of australia. listen to bloomberg's podcast, australia decides, hosted by our own paul allen with georgina mccabe. it is available wherever you can get your podcast. morehead. -- more ahead. this is bloomberg. ♪
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>> we are seeing repricing on this stable coin. after we saw the implosion of tara, we saw bitcoin investors adding almost $300 million to products focused on bitcoin. we saw almost 14% tumbled. there was a sense of some bubble fishing and bargain-hunting as we saw those numbers really fall in such an alarming way.
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bitcoin also shaping up to be a relative haven within this very volatile space. they are also trading to the upside. there is the biggest question about the idea of whether some of these cryptocurrencies could be considered uncorrelated assets as they are all wrapped up in the broader market turmoil. there has been a comment here. high profile. there has also been another stable point here. su keenan joins us with more. this is conspicuously quiet. >> there is a lot going on in the crypto space. this man is viewed as the king of both and has been very quiet. he has not tweeted anything
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since may 8. he recently got a wolf howling at the moon tattoo with the word luna. a nod to the sister coin luna for all of this algorithmic stuff. a bit of a black eye there. many of the reasons he may not be speaking out as we look at the crypto index, the galaxy digital holdings are bracing for 300 million hits this quarter -- that would bring total equity down to 2.2 billion. galaxy said its treasury does not hold any algorithmic stable
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coin so there is no loss attributable to luna and tara. you're looking at the bloomberg. anyone who has bought bitcoin are having a bit of a loss. they come back rather quickly. assigned that institutional investors were not there a couple of years ago. >> this is actually down today, the bloomberg crypto index. >> this other stable coin is a smaller lesser-known coin. we are talking about dues finances. it has been pronounced both ways. it is very different from terra.
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when it lost its peg, it was a spectacular collapse. this is why tera had such a big impact. -- terra had such a big impact. terra was backed by a lot of bitcoin that was apparently sold into it. it is viewed as an innovation experiment that went terribly arry. -- awry. >> time for morning cause ahead of the asian trading day. stock investors may be pessimistic when it comes to recession risks.
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there is a chance of recession in the near term. that is not being reflected in other parts of the market. that could actually give the stocks the boost they need to recover. most of them are pricing in the macro growth. they prefer developed market ks, especially in the u.s. and japan. let's look at this. they made some big asset shifts as u.s. stocks slumped. among the move, do you want saw a lot of struggling tech firms. was among his biggest holdings. let's bring in our guest. tiger global was in focus. what insight have we learned?
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i see what they did throughout the first quarter. >> it has been crazy volatile. tiger global was one of the hardest hit funds of april and then we got a glance into what they did in that first quarter. they sold a lot. they decreased 46 positions. one of those two companies has fallen 75% so far this year. it looks like a portfolio to deal with the volatility. adobe and paypal cut their stakes in, meta-, amazon. there are big names that we saw. >> are some of them still in favor? >> the pandemic darlings, a lot of them started during the pandemic. there is a bit of a pullback.
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it cut its stake in doordash and shall provide. -- shop if i -- shopify. you are seeing some rotation in these stocks that were held during the pandemic. >> important for investors to know this. roman capital had a rough year. can you tell us what they ditched? >> they struggled last year and this year. they got out at 16 positions. they bought spotify, visa, mgm. they increase to their amazon positioning. >> they walk away from the bed. we take a look at the latest on
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this deal and what it could mean. this is bloomberg. ♪
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>> cbc capital was planning on walking away from the potential bid for bram.
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harry joins us here in sydney for more. why the change of heart? could we see talks continue later on? >> yes. i think it is a real symptom of what we are seeing across the board in terms of volatility. it has been a roller coaster for markets as we have seen since the start of the year and that is just starting to hit a sector that would not normally get wet as much -- quite as much. the high yield spread to markets at the moment is as high as it has been since the pandemic. the highest in the year. we are seeing a bit of a relief. that will not help until we see more of a concerted change. >> there is nothing stopping cbc if conditions improve. they have the expertise in terms of large-scale global takeovers.
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companies only said yesterday they were just beginning to consider this and they had not said much about that beyond going about basic fiduciary duties. that is code for playing tough. >> does this say something broadly about the landscape in the region? is it something particular for this deal? >> it might have a big impact because there are other takeovers and there is also ramsey health care that is one of the greatest private hospital things. until now, until this week, australia was seen as somewhat of a haven. mna for the region is the highest it has been, higher than
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even 2007 and the highest on record. another 30 billion here. we were looking at a knockout year following last year's record. that is in stark contrast to the rest of the world. maybe we are just reverting to the global mean here. these events are starting to add to local events. >> there is harry bunton. now, a quick check of the latest business flash headlines. a viable deal at a lower price would not be out of the question. speaking at a tech conference, must continue to question the number of fake accounts on the platform, estimating it could make up to 20% of all profiles. twitter shares closed more than 8% lower in new york. bloomberg has learned talks will
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fit here. sources say the total value of a deal could be about $2 million. the online education started at as are being into a company's financials and could make an officer in the coming -- make an offer in the coming weeks. boeing 737 messages have been pulled because of delivery uncertainties. there will be kept at a flea deliveries until 2024. china was the first around it after fatal crashes in indonesia and ethiopia. quest coming up in the next hour, emerging market bonds are filling the brunt of the living cost issues. we will be discussing the latest here. as the world continues to experience a series of energy shortages, we speak to robert about how his company and technology is using gravity to
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store large amounts of power. and we talked to a number of big guests including the president of shanghai as he gets sent to ease some covid curves. philip also joins us in just a few hours time. that is all coming up next. that is it for daybreak asia. daybreak australia is just about done. daybreak asia is next. this is bloomberg. ♪
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