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tv   Bloomberg Daybreak Australia  Bloomberg  August 25, 2021 6:00pm-7:00pm EDT

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haidi: welcome to "daybreak australia." i am haidi stroud-watts in sydney. sophie: i am sophie kamaruddin in hong kong. shery: and good evening from new york. i'm shery ahn. the top stories, u.s. stocks extended gains. the s&p 500 and nasdaq hitting record highs as investors await the fed's jackson hole symposium. haidi: the bank of korea also invoked today, as economists are
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split on the chances of a hike as the central bank weighs debt versus delta. shery: qantas losses -- we will break earnings this hour. this is the picture across ross street. u.s. futures muted after the record high on the s&p 500. the caveat it was lighter volume is the normal given we are headed towards jackson hole. financials and energy led the gains, not surprising we saw the 10 year yield rising to that two week high. not to mention the wti rose given stronger equities. u.s. crude stockpiles dropping to the lowest since january 2020, although in the asian session we are seeing pressure. chinese adr's also gained ground for the fourth consecutive session. it was in the negative for most of the session but it did manage to gain ground. of course the tea topic today was another record high for the s&p 500. we are talking about the 50th record close this year, the most
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new highs that we have in the past was since 2017. take a look at the risks ahead. we saw in july the first decline in borrowing to buy u.s. stocks since the boom market began last year. this dropped and margin debt. america said it is potentially bearish to share price. this beautiful chart illustrating how the s&p 500 performance closely mirrors peak margin debt. and of course another risk when it comes to the markets could be that potentially investors are annoying the seller forecasts if margins are disappointing. nordstrom today saw double-digit losses. in the past we had clorox and caterpillar talking about margin pressures. given inflation costs rising, it is really not surprising margins are becoming a new earnings metric that moves stocks. haidi: meme stocks were really the hot thing. we're really seeing an
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interesting term when it comes to this section of the market. we are seeing that volatility now driven by wall street, institutional investors, rather than retail traders, that are now showing signs of volatility. take a look at this chart. the meme stock jumps we have seen have been led by the likes of gamestop and amc. but they say weak demand when it comes to some of the retail reddit traders, if you will, they are showing signs of pulling back. shery: the market is also watching closely what happens with the pandemic and vaccinations, as j&j says the covid-19 booster they developed triggered an antibody surge. but this comes at a time when we continue to see more and more companies telling their employees to get the vaccines. the vaccine mandates are spreading across the u.s. cvs health telling employees to get vaccinated. goldman sachs also asking for proof of vaccinations.
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delta, really interesting what they are doing. they're going to charge unvaccinated employees $200 monthly. haidi: and of course we're also wondering how did this all began? what really sparked off this pandemic that has changed everyone's lives around the world? the latest intelligent report going to president biden reportedly remains inconclusive on the source, the origin of the covid spread. we still do not really know whether it is a lab like, whether it comes from animals and jumped to humans. we had another warning from beijing that while they will continue to work with international organizations in the search for the origins of the virus, when it comes to, quote, baseless allegations, they will retaliate if any country hailed those against china. shery: the countdown clock is on for the fed chair jay powell's big jackson hole speech on friday.
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kathleen hays is here with us. what is in focus now? kathleen: one of the most read stories today on the bloomberg terminal was talking about how it is not so much now what powell's signals about when the taper will start, it is as much or more about when it will end. that this chart -- look at this chart. the great financial crisis started in 2014 after the last taper tantrum and lasted two years. but that was a different recovery, long and slow. we're having a post-pandemic rapid recovery so far. but the risk is you move too quickly or too slowly. what does jay powell say about that? today we are going to take a close look at the bank of korea decision. it is all about that versus debt -- about debt versus delta. shery: very catchy. haidi: kathleen hays there. we continue to watch from any
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kind of tapering signal, the rhetoric from jay powell going into jackson hole. how are markets setting up for this? shery: want to focus on emerging markets because e.m. currencies found support on wednesday as strategists and hsbc have been pointing out e.m. markets appear more resilient to the risks of a taper tantrum than in 2013. on wednesday we had the thai baht leading the event amid optimism daily covid cases and thailand stabilize. yet officials in the country have flagged attractive recoveries looking likely enda curran gap -- and the current gap looks to weigh on currency. flipping the board, a boj official warned of a longer than expected delay in japan due to the delta spread, which is more than 70% of the population under a state of emergency. the boj is maintaining stimulus it optimism over the pace of vaccinations.
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trading at around 110 pro this morning. -- early this morning. financials weighed the most in asia. tech bounced. shares sinking on the back of reporting its annual net income fell by 79%. flipping the board, australia earnings, some names, including qantas, which joined the rally we saw on wednesday on the back of the pfizer biontech vaccine getting the nod from u.s. regulators. shery: soph, u.s. companies following through on president biden's push for vaccine mandates. some of the biggest institutions have already announced tougher rules within the day of the fda's approval. let's bring in carol wes are -- could these be the game changer
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in bringing all these unvaccinated people in the u.s. to get a shot? carol: well, that is the hope of the biden administration for sure. i'm not sure it's quite the game changer. there are certainly several people who said approval get some off the fence, but there are still people who are simply just refusing to get the vaccine for other reasons. they don't feel the need or they still do not trust it. hopefully you will see some ground swells for more vaccinations but it might require tougher stances to move the needle more. haidi: when it comes to the booster, do we have any more clarity as to when the rollout might happen, which demographics we are talking about? kara: the booster is still being debated by the fda. it is the biden administration's plan. it's something they are talking
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about eight months. it could be from the date of your last vaccination. we had news out today that johnson & johnson, which has a single shot vaccine, said a booster of its shot provided a rapid and strong increase in antibodies, so that supports the people who got that one should get a second shot. that is something else i think that the fda will look at. shery: what we know about vaccine passports, and will there be a unified way that we can prove we are vaccinated? kara: no. i think there still remains a lot of political debate about that. here in the u.s. you have certain governors who have completely banned the idea of requiring proof of vaccination to go places. in the u.s. alone, it's a very tough sell. trying to enact globally would be even harder. haidi: san francisco bureau chief kara wetzel with the latest. meanwhile, qantas has demanded
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all of its staff be vaccinated or risk being fired. i will be speaking with the ceo in a few hours after their latest results at 2:15 p.m. here in sydney. vonnie: good morning. japanese prime minister yoshihide suga has expanded a state of emergency to cover more than 70% of the population. the delta variant surge lead to a record number of cases, and is straining the medical system. the curbs include the tokyo and osaka metro regions, and will now run until september 12. the move comes as japan host of the paralympics and as suga's support drops to record lows. the european union may reimpose travel curbs on travelers from america as u.s. cases soar. the change was recommended by slovenia, which is charged with assessing which countries are allowed to visit the eu for
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non-essential travel. a move to bar visitors to the world's largest economy would deliver a blow to the recovery effort. president biden has urged business executives to help improve cybersecurity across critical infrastructure and the economy. meeting with ceo's from companies including apple, alphabet, and jp morgan, the president said the cybersecurity workforce was not growing quickly enough. recent cyberattacks have hit infrastructure, including colonial pipeline and jbs, as well as microsoft and solarwinds. >> the reality is most of our critical infrastructure is owned and operated by the private sector and the federal government cannot meet this challenge alone. vonnie: u.s. secretary of state antony blinken says about 1500 americans are still in afghanistan. he says the u.s. is relentlessly trying to reach them but does not believe all of them wish to leave. evacuations must end within the next few days to allow enough
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time for remaining troops to pull out by president biden's deadline of august 31. blinken emphasizes the mission urgency. >> it is hard to overstate the complexity and the danger of this effort. we're operating in a hostile environment in a city and country now controlled by the taliban, with the very real possibility is an isis-k attack. vonnie: global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, western digital said to be in talks to merge with japan's key osha holdings in a deal that could be worth more than $20 billion. we will get more details later. first, we talk investment strategy with carol schleif of bmo. find out where she sees buy the dip opportunities, next. this is bloomberg. ♪ his is bloomberg. ♪
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>> there appears to be this sort of war of worry. >> the delta variant. >> more signals from the fed. >> i think we still have very healthy and accommodative backdrop. >> equities continue to perform very well. >> corporate profits have exceeded analyst expectations. >> there is so much liquidity. >> equities can continue to move higher. >> it is dangerous to be a bear. >> most of them have capitulated. >> we are making brand-new record highs. >> there is this by on diff mentality. >> equities is the place you want to take place. >> they cannot get bullish enough. >> it is going to be very hard to tell a story that is particularly negative as far as u.s. equities are concerned. shery: some guests on bloomberg earlier speaking about the markets. our next guest says the path of least resistance remains up with a buy the dip mentality still
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driving markets. bmo family office deputy cio carol schleif joins us from minneapolis. always great having you with us. it is not surprising to see investors jump back into the markets. if you look at this gtv chart on the bloomberg showing how we have not seen the 5% corrections in about 10 months or so. no 5% pullback. so what are the risks now that we are going to jackson hole, not to mention payroll numbers next week? carol: i am not sure the risks short-term our jackson hole because the fed be hard-pressed want to do anything in advance of seeing how labor markets and employment turns out in august and september as we get kids back into school and hopefully staying in school. so, but it's interesting, because that grudging wall of worry that markets have been climbing for a very long time remains pretty intact. it's leveled off a bit as we have started to see the increase in the delta variant, but now we
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have gotten clarity on a few issues in the last few days. not absolute clarity, but a step closer towards clarity, especially as it relates to the dual spending bills, the infrastructure bill, and the variant and the delta virus itself. shery: so if you do want to dive back into the markets, where are the best places to find that value and opportunity? carol: hopefully you are not all the way out, because we never advocate market timing all the way over, all the way in. hopefully you have just trimmed some of your outperformers all the way up and looking for opportunities. but we have probably moved down the capitalization scaled to the mid-cap and small-cap, because the delta variant pause, if you will, in volatility crept into the markets over the last few months. you really saw those kind of names give up a lot of the games, because there was a fear of what happens when we went into lockdown and things like that. a lot of those names pulled back pretty disproportionately.
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so we would be overweight in general u.s. equities, but they would be moving down the capitalization scale. haidi: outside of equities, you talk about the piles of cash both on the consumer side and the corporate side. where are the opportunities for that being seen? carol: i think the opportunities there lie in trying to look at there is a lot of m&a teeing up, especially as it relates to the potential spending bills. we have to figure out how to pay for them, and one of the ways we might pay for them is increase the capital gains rate. so, looking at potential m&a targets, led us to different ways in the markets. you had an earlier story about margin debt coming down, but consumers do not need to borrow when they have a lot in their bank account. so i just think investing broadly across the board makes some sense, too. haidi: carol, speaking of
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consumers and what kind of spending we are likely to see, we are getting qantas earnings coming through at the moment. let me bring those numbers. qantas saying they are seeing full-year underlying pretax loss of 1.83 billion aussie. that is slightly better than the 1.92 billion that was expected. they are expecting to restart international services at the end of 2021. that keeps getting pushed out, given australia's borders remain closed and will remain closed until we get a level of vaccination and covid gets under control. the impact of a $1.4 billion number when it comes to the group, underlying the first half 2022 as well. qantas saying they will not make his tribute shins until they see a balance sheet recovery. no dividend being issued on account of the net loss, saying pretax loss coming in at 1.3 billion.
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when it comes to qantas we have seen that stage a bit of a recovery. along with regional airlines. this has really been on account of activism as we get that final approval from the fda for the pfizer shot, as we will predictably get that for the other vaccines as well. not just from the fda, but from regulators around the world. that will get rid of some vaccine hesitancy. is that going to be key for the recovery story in the recovery trait? the likes of airlines, cruises, services and the like? carol: i think more so than trying to encourage those who have not get vaccinated yet, is the fact that he gives clarity to companies. you have already seen companies come out and other mandate the vaccine, or mandate if you are not going to get the vaccine, your personal costs are going to go up because somehow we are going to spread around the expense of this virus. giving clarity, it is one of the
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things that reinforcing a grudge towards new highs yet again. that was one of the issues too you had clarity on, is getting an approved vaccine is companies or schools have more shelter to the extent they now want to mandate. i think most consumers, i think companies want from a situation -- went from a situation that they were worried about losing employees if they would be harsh, to worrying if they are going to lose employees if they do not set a tone. collectively, i think people want to get jan with the last 18 months have wrought and figure out what new normal looks like and get into some semblance of what does that mean for, do i carry a vaccination card around, do have to get vaccinated, do i have clarity from my employer. haidi: the definition and the goalposts of the new normal just keep shifting. carol schleif, deputy cio joining us from minneapolis.
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let's get you more details around the qantas numbers. we're hearing the company saying covid is likely to cost the carrier over $20 billion aussie in revenue. they say the impact figure assumes the border between victoria and new south wales reopens by december. of course we are in week nine of a hard lockdown when it comes to travel. the recovery in the domestic is this had very much been on that border being reopened. they see domestic capacity for the broader group at 53% of pre-covid in the second quarter. net debt expected to be in the target range by the end of full-year 2022. qantas also saying no job losses are expected from the border closures. we know that there furloughed more of their airport and flight staff as well, given the extended lockdown and closure of those borders. the pre-start of the international services slated for the end of 2022.
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but of course a lot of caveats in terms of international borders still remaining closed. just that latest line, 9400 people have now left the company. we will be getting a lot more details and of course taking a look at the path ahead. the qantas ceo will be joining me in a few hours at 2:15 in the afternoon, you're watching out of sydney. let's look at another airline. air new zealand at the moment, this is what we are looking at when it comes to trading's in new zealand. they posted their second straight annual loss along with other regional airlines that have been grounded as a result of closed borders. suspended earnings guidance as well, as new zealand continues to grapple with the coronavirus outbreak that has prompted that strict lockdown and the pause of the travel bubble with australia. we're seeing downside of about 1% there. new zealand flagship carrier announcing a loss of about $307
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million u.s. lots more to come. this is bloomberg. ♪ is bloomberg. ♪
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shery: western digital is reportedly in talks to merge with japan's xioca holdings in a deal that could be worth more than $20 billion. joining us now is ian king. does this combination makes sense? ian: it makes sense for anyone in the chip industry that is not samsung. that company has way more sales than any of the other companies combined. therefore, getting together, pooling resources, getting the r&d, getting the economies of
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scale when you are competing with samsung, absolutely makes sense. haidi: what are the barriers to getting this done? ian: a&e transact -- any transaction across borders these days with heightened tensions going on between china and the u.s. faces a rocky road when it comes to regulatory approval. very difficult to predict how these things are going to go. we have seen a lot of time being spent on these things and some of these transactions just not coming to fruition. haidi: never a guarantee. bloomberg technology reporter ian king there. coming up, economists are split down the middle as to whether the b.o.k. will be the first to hike rates across asia and a couple hours. we preview this key decision, particularly in light of what we saw from the rba and z holding as a result. worries about the on the meant -- of the economic fundamentals of that lockdown.
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we take a look at what the delta variant versus a huge debt load the the korean economy is taking at the moment, how policymakers will play that one out. this is bloomberg. ♪ oomberg. ♪ it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today.
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shery: the bank of korea could become the first major central bank in asia to pull back on aggressive pandemic driven policy. kathleen hays is here with a preview. i cannot really remember the last time i was this excited about a bok meeting. it is a tossup. kathleen: and besides that, if they move today, they will be the first asian central bank major economy to start hiking rates and i think it will be heard around the world because all central banks are wondering when do we need to start inducing stimulus? and now we are having missed
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delta waves. that is the for the bank of korea today. they have huge household debt, record numbers in the second quarter. let's look at this. the gain was 10.3 percent year-over-year in the second quarter, the biggest increase since 2003 and we are going to look at the virus cases first because you can see you've got the slow vaccine rollout, the big jump in virus cases and this is happening around the world. it is particularly important to them as we look at their debt. they have that weight on one side of the economy if you are uncertain. 10 of the 19 economists don't think we will be quite ready to do it until next meeting but here's the household that chart. 10 point 3% year-over-year, the most since 2003. on employment down to 3.3%. inflation rising and going even higher. 2.6% over the top of the target. nearly 6% annualized.
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these are strong numbers. and of course, the question now is the virus. does this tell governor lee and his colleagues at the bank of korea it is time to wait? in july, he said they would consider it for sure and that is one reason why everybody is talking about it. because the rv and said -- the rbnz, they have a lockdown at the same day. they said they could not explain everything at once but still, you are kind of wondering if the bank of korea is saying we will wait until the next meeting. we will know just a couple of hours from now. haidi: in terms of the won, it has been one of the worst performers in this region. it is primed for a rebound if we see a hike. kathleen: absolutely. if you are the bank of korea, you might not mind seeing that because you don't want your currency to get into the kind of pressure with capital outflows, etc., but if you look at the chart, it is an interesting one. it shows the fed funds rate, the
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fed key rate down around zero. it's a nice margin there. when the fed starts tapering, that will send signals that it will be hiking rates. i want to show you this chart again because they were among the first in asia to tighten in 2017. another very important thing. bloomberg intelligence has done really interesting work. first of all, they say the best thing for them to do if they want to support the won is currency intervention, not hiking rates unless they really need to do that. they have very high foreign exchange reserves. they can easily afford and it's very effective and they have a very interesting way of looking at currency resilience ping an their metric, they found that the one -- they have a very interesting way of looking at currency resilience. tapering in the background. haidi: kathleen hays ahead of that decision. you can turn to your bloomberg for more on the bok decision later. tliv to get commentary and
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analysis from bloomberg's expert editors as we count down to that decision. of course, from one central bank to other central bankers, investors are waiting for hints of tapering from the jackson hole symposium. the governor told us why he is not expecting to see any big forecast changes from chair powell. >> they think this is transitory. if you look back a year ago, but tragedy was just unfolding. the lockdowns were just occurring so the economy was contracting at rates that had never been seen even faster than during the great depression. we are now unlocking and hopefully as you were describing, the booster shot will keep everyone healthy when you continue on this path to recovery. if that is the case, we are going to see the economy recover. we are going to see the inflation pressure that has come. as a restoration, kind of
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getting back to where we were. the question is what is going to happen going forward. is this a one-time adjustment that we made up for lost time, output, and demand? prices have moved to a new level. really going to stay along there or are they going to continue to rise? that is the challenge that the fed has in the -- and that is all about managing expectations of what comes next. >> how difficult is this people to be threaded? making sure we keep inflation under control, maybe above 2%, but not getting out of control on the one hand, and not, by tapering too quickly, have the taper tantrum? is there a danger of that at this point? randall: that is always the danger the fed faces. it is always on a knife edge in a situation like this. is there a chance that expectations could change? people say we have not had inflation in a long time. maybe it's going to get higher
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and higher and higher. we have seen very high prints over the next few months. alternatively, it could be a one-time adjustment. people are going to change your expectations and the fed will be -- their forecast will get borne out. we will get back to a normal situation. you don't want to pull the punch pull away too quickly. obviously, you're talking about the booster shot. the delta variant that is moving quickly in a lot of parts of the world. there could be some downside risks. very difficult risk management issue and that is exactly why there is such a debate around the table. some people want to move quickly. some people don't want to move so fast. >> since you are on the fed, the spotlight has very much been on monetary policy and the federal reserve. is it time for the spotlight to shift to the fiscal side? have a lot of fiscal support. is it time for the fed to say we did our job. let's hand off the ball to the fiscal side. randall: they have done their
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job and they continue to do their job. they continue to buy a lot of assets and that is one of the big questions. should they be doing so given the economy seems to be recovering robustly? also have this big news coming from the fiscal side. just an astonishing amount of spending that in close to the order of 40 or even more -- more than 40% of gdp in about 1.5 years. that is absolutely unprecedented even during more times, governments do not spend that much money so the question is, could you have this boost from monetary policy, boost from fiscal policy that makes it focal to reign inflation in? that is the debate. jay powell has made it pretty clear that he things all of this is temporary. that was useful in getting things going forward, getting the economy moving forward, but other people say that this is too much and we better pull back sooner rather than later. shery: speaking with david westin earlier. let's get to the first word news with vonnie quinn.
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vonnie: thank you. yoshihide suga moved closer to being reelected the ruling party leader and remaining prime minister after winning support from a powerful faction. a back room powerbroker says his move will support suga, good news for the prime minister whose approval rating has fallen below 30%. also as japan's covid cases surge. the who is backing a proposal to set up a $10 billion fund to plug the financial gap in the global health care system exposed by the pandemic. the global health threat fund is part of efforts by g20 finance ministers to double spending on health care and boost financial capacity to respond to future pandemics. singapore's senior official told the organization that global health security is dangerously underfunded. pfizer and covid-19 partner
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biontech seeking full approval from u.s. regulators for a booster shot for those 16 and older. the company announced they have started an application with the fda for a third dose. pfizer and biontech say they plan to complete submission of the application by the end of the week, bringing them one step closer. bloomberg has learned the latest soon-to-be released u.s. intelligence report on the origins of covid-19 is inconclusive. meanwhile, beijing warns as retaliation against those questioning whether the virus leaked from its labs. china's foreign ministry director general made the comments ahead of the report's release. he says while beijing will cooperate against the w.h.o., detractors should be prepared to accept the counter attack. israel's new prime minister will oppose u.s. led efforts to revive the iran nuclear deal during his meeting with president biden at the white house.
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in a new york times interview, he says he will assert his country's intentions to continue attacks on tehran's atomic program and says his coalition government will not reach agreement. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi. haidi: we have numbers crossing the bloomberg. full-year net income coming in at just over 2 billion aussie dollars after posting the biggest fall since 1997 in june. we saw that be impacted by the rollback of discounting pauses they made during the pandemic and we have seen sales slip slightly after that period due to the post-covid price declines. with the country back in lockdown, a lot of online orders and stockpiling taking place. we have seen the share price stage something of a recovery.
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it is just over 21%. we also saw a final dividend per share being declared 55 aussie cents as well as net income coming in at $2.07 billion. sales from continuing operations are just shy 56 billion aussie dollars. the adrs of chinese smartphone maker xiaomi rose in new york after the company solidified its spot as the number two phone maker. it surprised apple for the first time and it comes as the beijing company posted profit that beat estimates for more, let's cross over to stephen engle in hong kong. xiaomi is doing something right to realize their ambitions at a time of high regulatory scrutiny. >> absolutely. that is the key take away here. on that apple story, we heard this a little while ago, a few weeks ago, that they would rise to number two from the latest data. idc saying that xiaomi is the
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world number two with 15% of the global smartphone market. samsung is the leader but within a shot of xiaomi and that is the stated goal of the chairman of xiaomi to be the world's biggest smartphone maker, surpassing samsung at some point. apple has fallen to number three with 14%. xiaomi benefiting from a 64% gain in sales. they are going higher end. they launched two flagship models in the first four months of this year and they got a big sale boost in the recovery going on in india. xiaomi doing well on the sales front. let's income up 80%. they are purchasing a self-driving autonomous driving company and that is part of the initial $10 billion investment and foray into electric vehicles to diversify away from the smartphone market, and again, this is all against the backdrop of increased regulatory scrutiny, it increased scrutiny from state media, and he has
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pledged about $2.2 billion worth of shares towards more socially conscious efforts that are in favor by the government as part of xi jinping's common prosperity goal so xiaomi trying to balance all these balls in the air at once. shery: what about quite show -- that company? stephen: state media has called them out and others in the video streaming space for alleged folder content so they are under pressure. stock has lost 180 billion dollars of value since february's peak because of this scrutiny but the results are not bad. sales beat estimates. revenue up 49%. add sales more than doubled so that is good paid online marketing revenue was up 156% there is the ski slope really under pressure. the stock is below its ipo listing price. losses widened. we are expecting that. they are spending to fend off
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other services from tencent so they have to spend a lot. revenue from livestreaming shrinking 14% under that regulatory and also competitive environment. they have to spend a lot to fend them off and they also have to balance the regulatory pressure and the pressure from society and state media. shery: steve engle with the latest earnings out of china. you can get more context and analysis on china's crackdown, particularly on its tech giants on red lines china and big tech, available online at the bloomberg technology channel on youtube. of course, as we continue to watch these tensions not only coming from the crackdown within china on its tech sector but also between -- because of the rivalry between the u.s. and china, we are finally seeing the private sector trying to revive some of those talks that have been halted during the pandemic.
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we are talking about the roundtable given that we have seen recently more pressure coming not only from the sec on chinese ipo's in the u.s., chinese companies trading in the u.s., with tensions pretty high, emissaries are planning to meet again. haidi: it is really quite interesting given we have seen the u.s. and china grappling with these protracted standouts, whether you're talking about trade, market access, data security, u.s. listings that you talk about. the most recent crackdown domestically and china has burned international investors and created quite a bit of the wildermuth in the u.s. business community so it looks like this next round of talks -- we are hearing that potentially they will happen before the end of the year, but it could create hopefully, get a little more clarity for international investors, despite being fraught with volatility, what realistically is such a hugely lucrative market for them.
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coming up next, we will be breaking down the latest numbers when it comes to qantas in terms of that domestic recovery prospects. he sees a strong earnings season overall so far. this is bloomberg. ♪
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vonnie: you are watching
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"daybreak australia." time for the morning calls. at credit suisse, strategists see rewards outweighing risks like fears over the tapir potential as well as delta woes because they see the msci world index at 820 by the end of next year, supported by looser monetary conditions as well as upside risks to eps growth. pulling up the terminal to turn to aviation, checking on the gauge of airlines, it is up 4% month to date, led by the gains for chinese carriers. the domestic market in china has been a boon which has been picking up to pre-virus levels before the virus spread and we are seeing a pickup in india which does see traffic for local flights back to 75% of pre-virus levels that has resulted in a junk for jet fuel sales in india but pulling up the board, the latest inventory report report showing bearish travel
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revival in the united states and as bloomberg points out, the glut in the jet fuel market is set to intensify which will continue to take a toll on margins for refiners given that we have jet fuel well below pre-virus levels in the u.s. as well as in asia, haiti. haidi: we are going to stick with aviation between -- because they are posting their worst ever underlying loss for the full year. let's get some analysis of those results. he joins us from adelaide today. always great to have you with us. we were expecting a pretty ugly number but we also know how quickly that domestic market recovers as soon as lockdown ends and alan joyce is a real master when it comes to cost control so is this still an appealing company? >> your last comment is the big takeaway pit all the headline numbers will grab the initial
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reactions but at the same time, reading through what he has done, i know you said he is a cost to master. it feels a bit like what he did when he took over in 2007 and 2008. his major movement was to absolutely try and burn those. he got rid of contracts with the unions and pilots. he got rid of an aging fleet. when he could actually move, when domestic travel jumped up between november and march, when there was some movement, 95% jump back in domestic travel. he paid down debt. debt has fallen away strongly. he is including operations in billion and mean scenario and continues to believe that will be the case but there is no escaping. the big take-out of this is that qantas is struggling from australia's response to covid. it is not just international travel but domestic travel and
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he points very clearly that if the current lockdown in new south wales and victoria continues, they expect the first half of fy 22 to see a loss. it will depend on when that opens. they believe borders will open in december this year and that is the big takeaway. it is very heavily gauged on how australia continues to respond to the covid quarantine issues. haidi: in 2021, from my perspective, it sounds like a big if that international services could resume given the rate of vaccination and given how it has been pushed out so much so far, but if you are a midterm or longer-term investor, if you could look into the end of next year, is this a stock you would hang onto given that when it comes to the domestic market, there is not much competition? evan: correct. you have a look at the fairly large swings in the share prices leading into this result, that
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is the conclusion the market is also having so it has gone from about six dollars.80 before covid hit. it is back -- $6.80 before covid hit. we saw that consumption, that confidence spending, and tourism movement really did take off when november last year, victoria came out of its lockdown. able to move around itself quite quickly. alan joyce alludes to that in terms of what he said and the numbers and in 2022, there is a growing belief in australia that in the calendar year next year that the 80% vaccination rates will be reached. domestic travel will pick back up. families will be reunited. qantas is pushing that not just from their business perspective but also in the community. shery: we have seen lots of asian carriers actually offset some of that travel pressure by focusing on cargo given that
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trade has been really robust. what is the positioning here for qantas? evan: that is the big take-out. that is part of the reason there international business probably was not as bad as it could have been. 150 $7 million would have been significantly worse if it was not for their business. they are taking full effect of that. they are pretty much the only provider airfreight wise into australia. the other one alluding to that is their loyalty program. the loyalty program is generating $1 billion in growth cash. they continue even though basically nobody in australia is flying, using their loyalty program as money, using that to offset aviation by using loyalty points to trade for goods. that has offset it as well.
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it has been coming anyway. covid accelerated that and that is the other thing they will highlight is the loyalty program is almost becoming a form of cash society in terms of how they are using it to make their members to some form of transaction through the qantas website. haidi: evan lucas. we will be speaking with alan joyce about those latest results and guidance in a few months time at 2:15 p.m. in sydney. this is bloomberg. ♪
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haidi: here is a quick check of the latest business flash headlines. rocket lab tumbled 9% in its first day of trade. the company raised $750 million through its spac listing which it plans to use to build its largest rocket today. it landed work with nasa and the u.s. space force and describes itself as spacex's only direct competitor. china evergrande is expecting first-half profit to drop 29% to 39% from a year earlier as it fixes it debt problems. the company decided to have increasing expenses. the stock market rally boosted returns.
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it climbed to $6.3 billion but the largest insurer says slow pandemic recovery was putting pressure on growth with sluggish demand for long-term policies. "daybreak asia" is next. this is bloomberg. ♪
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haidi: welcome to "daybreak asia ." i am haidi stroud-watts in sydney. sophie: i'm sophie kamaruddin in hong kong. shery: good evening from bloomberg's world headquarters in new york. i'm shery ahn. our top stories this hour. asian stocks set to open off the back of new wall street highs. trading was thin head of jackson hole. where u.s. employers say get shots or get out.

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