tv Bloomberg Markets Asia Bloomberg October 27, 2021 10:00pm-11:00pm EDT
estimates on higher chip prices, but are warns of headwinds to demand. tracking losses in the u.s., we talk about growth concerns. perhaps the bank will have to ease stimulus faster than expected. it is about inflation, the energy crunch and supply chain disruptions adding to all the headaches. losses in new zealand and japan. japan, of course, we are awaiting the boj decision.
traders pretty much taking money off the table after bitcoin reached the 57,000 label. david: i like how that was phrase, bliss evaporating for the crypto space. i guess take this into the bond markets on the rally we are seeing their, bliss taken away from the future growth story, 24 months ahead, but short and yields moving up, and if this is one of your top stories today, the rba, no indication they were going to step in. as you can see, it has certainly gone through the roof here. the 2024 bond picked up with core cpi beating and a broader conversation around this and flattening curves across the
board. the flattest level going back to 2021 markets. markets started crashing on the back of us moving into covid. haslinda: you talk about the bank of canada making a surprise, ending the bond-buying program. now we are expecting the boc will embark on those rate hikes sooner than expected. we are awaiting the boj, the decision expected momentarily, and of course, expectations that it will not move, but people wonder what it says about inflation because that could determine how it moves from here, they're bearing in mind as well, you mentioned not really a problem in japan. david: no, i mean, that is one place i guess where you could find some real yield if i'm not mistaken. let's discuss all of that with
mark kranz and. let's put all of that together. we talked about the bank of canada turning hawkish. what does this mean for equity markets when the long and keeps rallying like this? >> certainly that is a concern for equity markets, but it is really the short end of the curve, which is the fear factor for them. that's why they think about the possibility. this race higher for two and three-year yields the past few days in equities, and as you were showing that chart, they chose not to come in to buy that particular three-year bond, and there's already analysts saying that when they have their meeting next week, they will change their forecast for rates. they have been pretty steadfast
since the pandemic started that they will not be just steadfast until 2024, but the market is telling them inflation has already invaded and that they need to move faster. that is why they are getting such a shift in the short term. it could be the rba is about to tweak its policy statements because they did not come in to defend the yield and that april 2020 four bond yield has gone through the roof. we understand they are taking away qe. we have the fed meeting next week. the fed almost certainly is going to have to change its outlook for inflation. their idea that inflation is transitory seems a bit silly now. there are so many places in the world that price rises are happening. recently, mcdonald's raise prices. if that is not inflation, i think consumers will be asking the fed if they are watching the same world. clearly, the market is pushing
back aggressively, which means the central banks and we could see a few of them change their tone in the next few days. haslinda: i want to get back to china and the credit risk. usd 2024 bonds. give us a sense of what you are making about the credit rating in china. is that accelerating? are we getting a sense of that? mark: it is more a reckoning of something which has been going on in the background for a while. there was so much focus on evergrande and some of the other properties that were not getting as much attention, but we have seen in the past few days the messages coming from china that suggests first of all the government is not very keen on doing bailouts for anybody. they have told evergrande to get
their house and -- in order. we are starting to see some failures with the missed payments, so companies are struggling. some are being downgraded aggressively. the whole sector now is under stress, not just evergrande. people are having to reprice the whole market. it is at least positive in the sense that it is making people wake up to the reality that there are problems in the market, but in the short term, it brings problems for investors as they assess which places are the place to make payments and which are not. david: you can follow more on this story and everything we
talked about their from the arbery i all the way to flatter curves on our blog. we might get a sense of what is happening in the credit markets with evergrande. quick commentary and analysis from his team. vonnie quinn is in new york. she has your first word news. vonnie: u.s. house democrats have dropped the plan to tax billionaires. the ways and means committee chair said the billionaire taxa did not have the support to get through congress. he says the house is instead proposing a 3% surtax on top of the interest rate for those earning more than $10 million. brazil's bank listed its benchmark selling off.
it also says another hike of the same size would be appropriate. brazil is facing worsening inflation and difficult conditions. the taiwanese president has confirmed that u.s. troops are on the island. it is an admission that could escalate tensions with china. he also told cnn that he has faith the u.s. will defend taiwan and added she is open to talks with beijing. china earlier condemned the czech republic for welcoming the taiwanese foreign minister. the chairman of the joint chiefs of staff said china's recent test of a defensive hypersonic weapon is concerning. his comments are the most significant acknowledgment by a u.s. official of such tests.
>> what you saw -- and i don't want to get too much into the classification of what we saw, but what we saw is a very significant event of a test of a hypersonic weapons system, and it is very concerning. i think i saw in some of the newspapers, they used the term "sputnik moment." i don't know if it is a sputnik moment, but i think it is very close to that. vonnie: that was in an interview with david rubenstein. haslinda: still ahead, we discuss opportunities in renewables with the chinese business head of the world's largest wind turbine maker. thomas keller will be joining us
pretty much good and bad news at the same time. of course, that supply chain disruption continues and is set to meet impact demand going forward. david: this goes really into everything else, right? it fits right in the middle of the supply chain. i guess this will fit into the apple story later on because they are very dependent on apple for revenue. they might be able to find this on the bloomberg terminal today. haslinda: that's right. get commentary, analysis from samsung earnings, and you can also listen to the earnings call on my go. david: absolutely. i would even add tv as well. we are talking apple and amazon and you will not want to miss this conversation.
traders seeking some clarity on the impact of a lot of these issues as well as expectations for e-commerce for the holiday season. joining us from singapore is the research analyst at philips securities research. good morning. let's start with amazon because you have quite a bullish target for the stock. $4300. extremely bullish on this one. >> first of all, we see more room in the space, so currently, they have 10% market share.
they rely on things from amazon rather than data from elsewhere in the west. amazon is the leader in the cloud, so we are seeing strong growth. we expect amazon to see growth, and that is why we are bullish on amazon. david: any risks? i'm looking at three here in your report. >> the near term response will be higher costs. amazon has been hiring much more in advance of the holiday, hiring 150,000 additional
seasonal workers. more than 10% rise in wages as well, so we think this is a near-term risk for amazon, labor costs. haslinda: advertising is one of the fastest growing businesses for amazon. how much clarity do you have the quarters ahead? >> we think it will remain strong simply because amazon is handling the supply chain problems a bit better, so they just came out on monday to say that they have invested a lot to make sure everyone gets their packages on time. more advertising revenue is less worry on the platform.
haslinda: i want to talk to you about apple. you are less excited about apple than amazon. why is that? >> for apple, there's some risks. first of all, they have risk with lawsuits, and they were more affected by supply chain issues. we are still bullish on apple. we have been priced at $187. we are seeing the push to upgrade to 5g from 4g, and people are upgrading to 5g faster. the upgrade cycle has been
sharpening. david: given their dominant position, negotiating with their suppliers in the supply chain, do we expect any sort of hit from supply chain prices on apple? >> yes, they announced they are cutting their production targets , but we probably will not see it in these upcoming results because they just launch the iphone 13. haslinda: timothy ang, thank you. we have a headline from samsung saying the mismatch in supply and demand may he's starting in the second half of 2022.
-- may ease starting in the second half of 2022. samsung shares reversing their early loss. david: yes, back at 70 grand. let's stay on the earnings story because in china, it is an understatement to say it will be very busy. just a look at all of these companies reporting earnings, it is a partial list, just about a snapshot, a cross-section of industry groups, so state tuned for all these numbers over the next few hours. this is bloomberg. ♪
top stories today on the global supply chain crunch. samsung said the chip shortage will put pressure on the global market for the fourth quarter and blamed it for supply chain problems in the third quarter. they forecast the shortage lasting well into 2023. starting november 1, boxes waiting nine days or longer. david: we are off lows but still substantially lower. have a look at how this is going to be affecting this whole conversation around supply chains. you can get all the supply chain on your bloomberg terminal.
we also have a very good newsletter for you that pretty much sums up this global issue. haslinda: two the latest business flash headlines now. sources say advisors for the two sides signed nondisclosure agreements in preparation for the two talks. we are told advisors to bondholders grew by seeking information on the company including the status of various products. profit drop in the third quarter after slower economic growth sucked premium income. net income also down 21% in its first nine months, possibly due to to china france. its largest insurer faces investor concerns -- possibly
due to chinese brands. amazon reportedly set to create 200 more jobs in singapore by the end of next year. amazon will hire the employees as it moves into a new office, expected to open in 2022, adding to the company's 2000 full-time and part-time workers. regulatory filings show a bank vision fund arranged two margin loans last month. it will help fund distributions to investors, including a sovereign wealth front from softbank group. the fund deployed similar strategies in 2019. and government has blocked sida
posh italy has tightened its grip over strategic companies under mario draghi's leadership. david: let's really take a step back because something is happening with these markets in terms of the risk aversion that is increasingly coming through. cyclical's are taking a beating today. you will find out in a couple of seconds why. industrials, materials, which should not have been the out performers, so there is the incentive to take these profits going into today where the benchmark is point. you're looking at on yields long and continuing throughout credit markets on china. let me give you an update of what is happening. we are looking at 16% down, so
yet again, we were talking about this 15 minutes ago, just the latest in this event horizon -- i'm using a black hole analogy -- starting to engulf more and more of these weaker names. >> that risk in the credit space is persisting and we are seeing more and more of those, like you said, the weaker property developers in focus. there's a lot of question, given how the charge is making it very difficult for them to pay back payments. david: absolutely. just in case for some of our viewers who may have missed the specific evergrande update, we understand their advisors and the company's creditors or a group of the competitors have
signed these nondisclosure agreements which might indicate they are taking a step closer to at least starting to talk about how to restructure all of this debt amidst a world of rising moving is a handful. no kidding! fortunately, xfinity makes moving easy. easy? -easy? switch your xfinity services to your new address online in about a minute. that was easy. i know, right? and even save with special offers just for movers. really? yep! so while you handle that, you can keep your internet and all those shows you love, and save money while you're at it with special offers just for movers at xfinity.com/moving.
david: welcome back to the show. i'm looking at my clock. 10:29 here in hong kong. haslinda: for now, let's get to first word news with vonnie quinn in new york. funny: -- are vonnie: iran's a deputy foreign minister says negotiations to revise the nuclear deal will resume, but tehran still expects the u.s. to
release $10 million of its assets frozen overseas as a gesture of goodwill. iran said the date for the new meetings will be announced next week. russian president vladimir putin says russia plans to focus on european gas storage. european gas inventories are at their lowest seasonal leveled in all most a decade. the u.k. chancellor of the exchequer raised funding for every government department and offered fresh support for families. she unveiled more than $3 million in spending to carry them into a new age of optimism post-covid.
australia's biggest bank expects the rba to make its biggest hike next year, bringing its forecast forward six months. cba is forecasting growth of 3.5% this year, up from a previous estimate of 3%. the bank also boosted next year's forecast of 4.4%. global news 24 hours a day on air and bloomberg quicktake, powered by more than 2700 journalists and analysts in 120 countries. i'm vonnie quinn. this is bloomberg. david: iron ore, coal, natural gas, thermal coal -- here we go. 13% down. that's just today. we have seen price dislocations of this sort in recent days on the back of these efforts to
take some of the steam out of the coal market. haslinda: china capping prices, but expectations have stalled growth, also impacting the outlook for demand. our commodities reported joins us from shanghai. china planning to cap the key coal price, and we have to ask what this means. how will it do that? >> yes, another day of drama in the coal market. the latest thing is the plan to by the government, which we reported yesterday, according to people familiar, the government is planning to cap the price for cold that minors can sell at.
that's just an effort to try and reign in this big spike in coal prices that we have seen over the past two months that has caused power companies to start shutting off jobs. the government is going all out to try and produce more coal supplies, putting other fossil fuels ahead of winter. the coal shortage, they've been trying to alleviate that by producing more than one million tons this quarter. we will have to wait and see if that works out. haslinda: million dollar question -- will it work? >> yup, so, if it is a really
benign winter, it makes the government's task much easier because the bottom line for the government is protecting vital industries and making sure energy and fuel is available to residents. that's the bottom line. if it is a severe winter, there's going to be a problem, and it is not just cold but supplies of all other fuels that are going to have to come into the mix. you can see they are pulling out all the stops to try to secure supplies for all the winter. david: in about 90 minutes, we got a headline out of the end ert -- the ndrt that they were studying what excessive meant in
terms of coal companies. do we know anything about what they were trying to do here? >> that's very interesting. if you go back a few months ago, coal markets were relatively liberalized, but the power companies were quite constricted, but because of this crisis, there's moves toward liberalizing power costs, trying to take a bit of money away from the coal suppliers, so this feeds into this idea that they are just trying to redistribute some of their money around to stabilize the entire supply chain. it is a very complicated move they are doing here. i would love to see how permanent this is, liberalizing commodities prices was something done decades ago in china.
this is a fairly significant move back towards capping the price, fixing the price as a pig commodity. david: part and parcel, i would imagine broader reforms, you take two steps forward, one step back, really. martin ritchie there on the latest out of shanghai. chinese president xi jinping -- it is a global effort, but everyone is looking to see what china is looking to do amidst the short term challenges of looking to bolster growth and the energy mix, too, short-term. haslinda: you are right. do you recall last year when they talk about being carbon neutral by 2060, the world
cheered, but now there's no clarity on what china wants to do or will do to get there, and the construction industry is looking to have green building standards fully implemented in towns and cities by 2025. moves as well on behalf of new factories and other buildings to get 80% of energy from green materials. it does look like china is taking steps. the question is how fast it can get there, if it can fulfill the promises it has made. let's get to our next guest, from one of the world's largest wind turbine makers. the company recently merged. we just talked about how china unveiled its plan to get to
carbon neutral dust china was light on its plan to get to carbon neutral. what are you seeing? >> thank you so much for having me here. i have been really following this discussion. being in the middle of the transmission of leaving carbon fuels -- for this, we strive to be at the forefront of all these battlefields globally, but also certainly in markets, china being the biggest market for renewable energy, and it is natural for us to be here and take part of this challenge.
we feel that we are here to offer not just technology but also know how. we think that is very important as well. the follow-up will be a significant task. we will have a plan -- haslinda: giving the increasing demand, what kind of investments are you looking to put into china? >> china is our main supply hub. it is supplying global markets.
on january, they put the new products on shores. we are developing together our support -- with our supply chain all new technology, so we will keep investing in china together with our supply chain for china markets but also especially in asia, and we see huge growth potential. david: what are your specific targets in the chinese market, say, over the next year? >> we are relying a lot on market share. we formulate our strategy and it continues to be very real on the china market.
we want to have a market of 5% to 10%, that is what we are looking for, but we want to do it on the business proposal we are performing which is high ambition, high-performance, high safety, and not so much on volume alone. david: as someone who is, for one, very active in chinese markets, you guys have an in china for a long time. i remember reading about a business case specifically in china. what do you make of this plan? fairly ambitious in terms of getting to carbon neutral. what do you need to hear to be convinced they can meet those plans? >> i think conductivity in the
plan is very important. there's big efforts to drive costs down, which is linked to technology and innovation, but we need to make sure that this is not just for china, but also a global challenge. climate change is important and the politics is important, but there has to be a reward connected to the innovation. that is where i think china is struggling a bit. i'm actually kind of motivated that we have an issue in china. i do also feel tension from the local government.
i think that is a balancing act we need right now. this is a statement some looking forward to hear more about from the chinese local government. david: thank you so much for making time for us this morning. we need a lot more companies pushing the needle as far as climate change. quickly here in terms of what we see in australia, this is coming out of the blue, but if you had guest and if you were looking at these bonds right now, you would not imagine we would be at these levels in australia. the short and is just going absolutely crazy. 30 basis points on the two-year.
24 basis points on the three-year yield, so very substantial as far as what you are seeing in the bond markets. haslinda: we are also keeping an eye on kaiser. dollar bonds downgraded. it looks like there's a lot of pressure, not to mention that stocks are also under pressure, plunging to a record low, so adding to that credit, i guess, concern in china. still to come, the covid picture across south east asia is not looking great. we will tell you why next. this is bloomberg. ♪
david: welcome back to the show. you are watching "bloomberg markets asia." you guys are just in time, right as they boj announced their policy rate unchanged. haslinda: dire forecast for inflation also. i guess what we are trying to see is if the boj says anything about growth projections for the end of the year. that momentum will continue to
build in the coming quarters. also, the yen, right? that has been a focus, right? i talked about what all this would mean for the currency. david: they are cutting their growth forecast for the year from 3.8% to 3.4%. this is fiscal year 2021. core cpi, they are now expecting zero from .6%. they are looking at -- as far as downward pressure on consumption from covid, it will remain, so they have also lowered their growth -- i'm looking for a 2022 number. they have raised dire forecast for 2022, rather, largely in line with expectations. inflation expectations have picked up, but they have cut
projections for growth and inflation for fiscal 2021. haslinda: i guess weakness for the quarter as well as the restrictions coast-to-coast of the resurgence of covid cases add to that impressive consumption. bringing in our resident global market watcher. what do you make of all the news coming out of the boj at this point in time? kathleen: it is pretty much what was expected, but it certainly underscores what was expected. the difference in the growth ejection, the difference in the inflation projection -- let's throw up a terminal chart looking at the gdp tracker. unlike many other central banks in the world looking at inflation marching higher, you look at growth in japan, you had it down last year, a couple quarters of growth -- excuse me,
just one quarter, and then you have a question mark over the third quarter. there is definitely concern. they expressed optimism about what is coming, how things will look going ahead, but they are concerned about -- let's look at chip shortages. the latest trade reports were down 40%. that is another big issue in the economy. when it comes to inflation, the headline number is just barely above zero, and the core number that they watch is down 0.5%, so they have all those issues to contend with. they have an worried -- or investors worry about the yen because as the boj holds policy steady, the federal reserve is going to taper. we are going to get that announcement next week. i would bet you any amount of money on that. then everybody is gearing up for rate hikes this year.
look with the bank of canada did today. they surprisingly came out and said they are done with kiwi and are going to hike rates sooner. we are going to see what the ecb does tomorrow. the bank of england signaling rate hikes coming, too, so the boj has to stay where it is, and even with a new prime minister, they are not going to be looking to the boj to do anything more. they certainly do not want to pull away from aggressive monetary stimulus when they feel they want to promote new capitalism, get the wealth spread around, so nothing surprising, but i think it serves to highlight how japan among all the major countries, all the major central banks is really turning out to be -- maybe the acb as well -- but really, the big holdout because there's really no other choice right now. david: just to get viewers up to date, as you were just mission
-- mentioning, there's inflation expectations. they cut their core cpi forecast back to zero. they are talking about how there are inflation expectations pushing up a little bit, amendments to special rules and dollar funding. the risks are to the downside, although i would like to get your thoughts on this 1 -- it is a global phenomenon. you talked about how the central bank, this rise in shorts. is there any indication that the boj might be prepared to stay out of the way on this one? kathleen: that's a very good question. the first thing i think of is regional banks in japan. banks have been hurt so badly by having that 10-year yield anchored to zero, so any movement higher, would they fight it? i really don't know why, but i think the rate raising might
still face questions. it may lead them to move back along the curve, maybe the five-year note, so maybe that would be an interesting thing for us to ask our japan watchers as we continue to duck back into this because markets always move independently -- as independently of central banks as they can. that's why controls were instituted after the joint statement in 2016. that is why it was revolutionary. now we have a straley a having to fight so hard, raising questions about its policies that. i know you guys have been all over this, but the bond market is a powerful force and certainly one that central banks have to contend with. haslinda: the boj has talked about supply chain constraints
among the risks to the downside. how are you assessing that? kathleen: it is a bad problem and does not seem to get much better. it is going to take time. mary barra or ford motor, one of the big auto chains saying supply chain pressures will last well into 2024. but when you look at something like chips, which are injury to so many products produced around the world, and even something as basic as lumber, prices went way up. try to get a new deck built, try to pay not as much for a new house, prices started down, they surged again. this is a supply problem with commodities, a supply problem with blockages at ports, docs around the world. again, it complicates these decisions for policymakers because it can slow down growth,
but obviously, it is a big push up on prices, and inflation really hurts people at the lower rung of the income ladder at this point. they are the ones who do not have a lot to spend for things getting expensive. haslinda: thank you. let's get a check business headlines -- samsung third-quarter profit boost -- exceeded estimates. net income rose to $10.3 billion in the three months ending in september. the biggest maker of memory chips seeing strong demand and higher prices as the global economy recovers from the covid-19 pandemic. ford jumped after raising its full year forecast on restoring its dividend. the automaker showed strong sales but said the chip shortage could extend into 2023.
meanwhile, gm says the chip shortage could last into next year, implying weaker results into the fourth quarter. and a payment company seeking evaluation of a billion dollars in its ipo next month. sources say it could be india's biggest ever listing. the company hopes to raise as much as $200 billion, 10% more than its earlier target. shares are expected to start trading on or around november 18. david: there we go, about 20 days from now. let's get back to the here and now. in terms of the dollar, we are still higher. most coming off highs of the days on the dollar index. you can see just about a sea of red here on equity markets. the two big stories -- i will make it three now because the
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