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tv   Bloomberg Daybreak Australia  Bloomberg  November 14, 2021 5:00pm-6:00pm EST

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>> a very good morning and welcome to daybreak australia. >> i am in hong kong. >> i am shery ahn in singapore.
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for the forum kicking off later this week. stakes are high as residents biden and xi hold -- presidents biden and xi hold virtual talks. >> democrats look to break a logjam this week. >> cop26, negotiators looking for a deal. or as johnson calls it a game changer. -- boris johnson calls it a game changer. u.s. stocks losing climb. climbing led by technology. tech overcoming inflation wars. the dollar also fell but after it rallied to the strongest and more than a year after yields rose on inflation fears. it was all to do with u.s. cpi. consumer sentiment unexpectedly collapsed early in november given rising prices.
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trailing all projections. americans growing concerned about rising prices. oil posting its longest run of weekly losses since march. president biden keeping investors guessing about whether or not he will tap into the strategic rivers -- strategic reserves. the 10 year yield at about 1.56. market expectations for the pace of inflation climbing to a level unseen since 2006. we have seen the breakeven 10 year tips at 2.71 sparked by inflation concerns. last week, there was the fastest inflation rates since 1990 sending the to your yield -- sending the two year yield the most. we have seen the cracks when it
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comes to the u.s. treasury market. warning signs coming from all different places as volatility rises. remember, we saw the year auction doing poorly. the first time in about a decade. driving market liquidity to its most troubled since the covid meltdown but surprisingly, credit shrugging off the volatility and we do have investment-grade bond sales to look forward to this week. >> high-stakes this week when it comes to the geopolitical arena. we talk a lot about the virtual meeting between president biden and president xi coming at a time when this relationship has been fraught with tensions whether it is actions over taiwan or lack of actions over trade. we will be speaking to a lot of analysts about this but our guest this hour saying it is good that they are even talking to limit further political fallout. this comes on the back of cop26
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talks wrapping up over the weekend. china was one of the objectors wanting the language over coal to be watered down. think a lot of people were quite disappointed. more watered down commitments. >> climate will be a big topic here this week in singapore. it will be exciting. we have the bloomberg new economy forum. it is such a bummer that you are not here with me. last year, we had it virtually. we had a set together in beijing. we are going to be discussing finance, trade, climate, cities, health with world leaders that will finally be able to make face -- meet face-to-face. let's bring in our correspondent and our editor. give us a preview of what we are
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expecting from president biden and president xi meeting this week. >> it will be later monday evening in washington and tuesday morning in beijing. white house is downplaying expectations for any discernible deliverables. because, this is a push by joe biden to really escalate these talks to the presidential level. face to face between these leaders as past meetings between more junior officials have not progressed or moved the ball forward. remember the meeting in anchorage where they just traded barbs with each other and it was more like marriage counseling. now, the parents need to get together and decide whether there is going to be some sort of reconciliation or, god forbid , a divorce. i don't mean to make light of it
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but they are not saying we need to have a result from these talks to make it successful. they need to talk and there are big issues. taiwan has been a flashpoint. sides exchanging barbs on taiwan. and they would like to see greater access to u.s. high-tech exports. there are a lot of issues to get through after the four years of the trump administration which put china on its back heels and offensive. and shut off most conversations. >> there could be more tensions because we have chuck schumer looking at ways to push through his china bill. >> it is a legislative maneuver but there is a strategic intent and it is against china, even quite explicitly. it is a matter of freeing up
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$250 billion that has passed the u.s. senate already but is stuck in the house. i would make the u.s. more competitive with china and also address the global shortage of microchips which as we all know has been a huge problem and not just in u.s. and what chuck schumer, the democratic majority leader in the senate wants to do, is attach this bill to an annual defense spending bill which is a must pass bill because otherwise, the military runs out and the soldiers run out of money. and this would be a way to get those houses and to get both parties behind enough of this come behind the bill, enough of the parties behind the bill to pass it. and that would achieve a key
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objective of the biden administration possibly before the end of the year just as these efforts to engage but also compete with china ramp up. >> our washington editor and our chief northeast -- north asia reporter. we will have more on the relations and the chinese outlook ahead hearing from gorana grgic and andrew tilton will also be joining us. the glasgow climate pact agreed to at cop26 as a more ambitious agreement then some observers had expected. last-minute objections from china and india coming in. bloomberg's maria tadeo has the details. >> after two weeks and long nights and some long negotiations, the cop26 come of
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the biggest climate conference in the world has come to an end. and we have a deal. a number of things to point out. it does keep the 1.5 celsius degree temperature check alive. this was a top priority for the u.k. government. there is a watered down breakthrough on coal for the first time explicit language calling for the phase down of coal and other inefficient fossil fuels. i say watered down because an earlier version called for a phase out which would've been stronger language but a compromised version was phased down. the other thing to note was that the establishment for an internationally recognized carbon market. scientists have called on this for years in order to eliminate carbon. you have to be able to measure it and trade it properly particularly when you look at carbon credits in the overall market. this is on paper. the question is, how do you turn this into reality?
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there are questions around mo -- limitation. for a lot of the activists here, this is yet more blah blah blah. the real fight continues on the streets with real people and time is of the essence. >> let's see how we are going to see the market outlook and impact from the results of cop26. sophia's following best. >> following cop26, d carbonation pressure mounts. as you can see the breakdown for the asx 200 materials, the second heaviest weighted sector. australia is seeking to boost foreign investment to fund its clean energy plans. let's check in how we are shaping up for the monday session. little change in their futures. the aussie dollar is looking
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study after bonds are catching a bed early. the offshore yuan holding a two day game. -- two day gain. we also have japan gdp do later. it could show contraction for a fifth quarter in two years. this is in light of emergency curbs being extended through september which did put a dent in consumer consumption. in this comes ahead of a stimulus package which is expected to be announced either prime minister on november 19. and on the data docket, we do get gdp reports from thailand and hong kong as well as trade figures from india. foreign visitors this monday will be allowed to visit india. >> let's get over to su keenan. >> we start with morgan stanley, economists are sticking with
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their prediction that the fed will not raise rates until 2023. raking ranks with the ceo, james gorman. in an outlook released on sunday, they say they do expect the fed to end asset purchases by the middle of next year. that stance contradicts with the ceo who called for the fed to start moving next quarter. janet yellen says controlling covid-19 is the key to easing inflation. speaking on face the nation, janet yellen said it is important to understand that the current because of inflation in her view is the pandemic. she also said she expects inflation to decline by the second half of 2022 with prices returning to normal and labor supply and demand handers -- patterns normalized. china's covid czar has defended the strict containment policy.
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according to the local news, the official called it the most efficient way to protect chinese people saying the measures have not hindered the chinese economy. the latest outbreak is in a city where tens of thousands of university students are in lockdown on their campuses. and china gets a new bourse. it is intended as a platform for small and medium-sized companies who have trouble raising capital. about summit -- 70 companies will migrate and an additional 10 will be viewed for the first time. 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 su keenan and this is bloomberg. >> still ahead, we will discuss investment strategies with terri jacobsen.
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she says growth and inflation are likely to stay elevated. this is bloomberg. ♪omberg. ♪
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>> let's take a look at the week ahead. a lot of ego dated watch out for. monday, japan gd pete -- gdp. a slow down expected before the package. and activity readings out of china. on tuesday, the focus shifts to the u.s. where we get retail sales there. we will be watching out for the impact of the supply chain crunch. the u.k. also in the spotlight with important jobs data and inflation gauges the following day. that result will cement the bank of england's next move. on thursday, emerging -- emerging market central banks take stage. and on friday, india's largest ever ipo starts trading in
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mumbai. >> and the reason i am here in singapore is the fourth annual bloomberg new economy form. it is happening throughout the week and we will witness face to face discussions among world leaders on topics related to climate, cities, and health. a particular focus is the growing u.s.-china divide and how the dynamics between the countries will evolve. resident joe biden and president xi will hold a virtual summit later today giving more clues on which direction the relationship will go. >> we will also be watching china's tech sector as we get earnings from its mega caps. there will be back to back reports from philly billy, baidu and on wednesday, alibaba's results. thursday -- and packs the week with its report on friday. it is your week ahead. >> tech stocks have taken a hit
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recently on stretched valuation concerns with worries over prices still high. our next guest says any inflation will cause more volatility. let's discuss with ubs financial services managing director. will the volatility lead to the equity rally being overthrown? terri: we don't think so. the inflation numbers could stay elevated for some time. we are seeing inflation crest to a level we have not seen in decades. what we think as the global supply chain issues resolve themselves, corporate earnings continue to be strong. the federal reserve will be very patient and we think the rally can continue. but we think inflation is transitory as well. >> how long will consumers be healthy given that we have seen their sentiment plunging and
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prices rising? they are not really confident. it was surprising to see the numbers from the university of michigan last week. terri: as a global supply chain issues start to resolve themselves, i think prices will come down and that could certainly spur back the confidence that the consumer has. the consumer is still in relatively good shape and i think the confidence numbers could resume once the supply chain are resolved. >> which sectors do you think still have a pretty good run way to grow? terri: with the expectation that interest rates rise, we think financials will do well in mid-caps will do well but most importantly, we think companies that have pricing power will do very well and companies that will struggle will probably be in the consumer stable area because they do not have the
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pricing power issues that other companies have. but also, in areas that companies are exposed to the reopening trade we think will do quite well. but broadly, this is a good market for equities. >> when you take a look at earnings expectations, will they have to be more neutral go -- muted going forward? terri: earnings have exceeded expectations as we thought. certainly, the year over year growth for next year will probably not be as high but the growth will be there. we are looking for growth in the -- digits next year and we think earnings can continue to grow going forward. this is not a story that growth is over. it is not. we think the equity rally can continue although the growth expectations on a year-over-year basis will be slightly less.
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>> is there for the runway when it comes to tech though? terri: tech is 28% of the s&p 500. tech is not a story that is going away. the growth is still there. tech is what brought us out of the pandemic and tech is a strong part of a portfolio going forward. tech still has a lot of growth ahead of it. >> how do you balance that with reopening trades especially into financials and energy stocks? terri: we think the financials and the energy stocks, cyclicals will do well going forward but it is all about balancing risk in a portfolio going forward. and we want clients to be mindful of that risk especially in a growth that is muted perhaps going forward. but again, the story is strong
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corporate earnings, an accommodative fed and a consumer that is in good shape. >> always great to have you with us. ubs managing director, terri jacobsen. don't miss our interview on m&a going ahead. it has set ambitious targets for further growth as the ceo joins us later. this is bloomberg. ♪ this is bloomberg. ♪
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>> here's a quick check of the latest business flash headlines. airbus has received a mega order for 255 narrowbody jets that will be distributed to frontier and two other low-cost airlines.
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airbus is trying to persuade suppliers who prepare for higher demand for the aircraft beyond the pre-covid levels but orders have remained flat this year. emirates says it is carrying out a fleet reset as trouble recovers which could affect or during numbers. the carrier is said to hold stocks about the delays to a boeing jet and could try to accelerate airbus 350 hangovers instead. travel demand is rebounding steadily with premium demand especially robust according to clark. >> what has happened with the delay is that we have seen an uptick and demand by significant percentages. not as much as it was prior to the pandemic but we are now running at about 50% or a bit more then where we were and it is growing every day. and congo is very strong. yes, it is a good story at the
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moment and we are looking forward to the next four or five months of business. >> let's take a look at the day ahead for australia. we are tracking the vaccine rollout. children from the age of five could start to be inoculated from january onwards. on the corporate front, glencore and as partners is exploring options to expand agriculturally. in new zealand, we are looking at the kiwi dollar. the strength in the local currency is unlikely to be sustained. we also will get some analysis when it comes to the u.s.-china relationship as we count down to this key virtual talk between the leaders. so much on the line. >> and how that is going to affect markets. there is a geopolitical risk premium that could be discounted
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. you talk about the kiwi dollar and perhaps it's strength will not be sustained. -- its strength will not be sustained. we are saying back to back declines for the kiwi dollar and the aussie dollar. when it comes to kiwi stocks, they are rebounding from losses in the previous session and we are seeing 0.25 percent gain. sydney futures unchanged but we are watching what is happening in the bond space given the recent surge in treasury yields and the volatility overall in the bond space also in asia. when it comes to nikkei futures, we have seen a gain of 1% coming after it ended more than a percent down on friday. we are coming on the back of heavy losses lastk. and we are watching very closely what happens with the japan recorder, gdp numbers are coming up this morning. the expectation is for another contraction. >> coming out next, we do take a
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look at these expectations for the u.s. and china leadership meeting. we will be discussing all of this with gorana grgic from the university of sydney. she says the fact that >> presidt
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virtually with xi jinping on monday as the two sides look to dial back recent tensions. pressure has been building on selling u.s. technology to china. it is encouraging that the two leaders are talking. gorana grgic joins us now. we have had the managing down of expectations. all of the groundwork has been laid. what are we expecting to come
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out of these top-level conversations? >> this meeting did not come out of nowhere. it follows a path of previous meetings that actually, if we go back to the earlier this year, did not start all that well. we can think about it as a meeting between the immediate area of state and the secretary of in alaska. to get to this point. when the two leaders are at least making some progress on those areas that the biden administration has prioritized over finding a path to cooperate with china. this has to do with what we call the governance of the global commons.
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to think about climate change or potential laid down the line, issues like arms-control or global health when it comes to the pandemic. >> in terms of what is at stake, who has more on the line? china has its own economic issues at the moment, struggling to stick to its covid era policies. does one side come in with more strength than the other? >> if we look at the media, the short-term going back to the past week's if it's. both dutch events. -- the past week's events. we cannot underestimate the significance of the resolution that the ccp passed last week.
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pushing xi jinping to a level that was only seen by mao. the president managed to get to the point where he will be signing hours before the summit, the coveted infrastructure bill. both sides have something to be feeling happy and content about. certainly, it does give me the indication to biden's approach to managing relations with china which was predicated on the idea of caramelization -- compartmentalization. maintaining the strategic competition on matters that have to do with the security -- with security. >> the fact that lifting tariffs
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on china is not on the table, is that going to hinder any progress on that front? >> but is a great question and one that certainly shows that when it comes to u.s. trade policy, there is a lot more continuity despite what the biden administration would want to advertise between the top administration -- the trump administration. there have been various high officials in the united states saying that this approach and the commitment to phase one of the agreement that was signed last year, that it is something that is going to continue. if anything, the u.s. is intent to deliver on its promise to strengthen the economy and to focus on shoring up things like
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supply chains and not leaving itself vulnerable. the economic interdependence remains, but we heard some new announcements around potential restrictions on technology transfers and similar. we can expect this to be one of the more contentious issues on the agenda. >> another issue is taiwan. what is china's stance on taiwan in the sense, do they want some progress here in incorporating taiwan into china? do they want to maintain the status quo? >> the question of taiwan is obviously and probably for its technology. allow would say is that there is a kind of -- i would say that
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there is a kind of different face in terms of the u.s.-china relations. competition is the dominant paradigm away from the management that was -- was marked with more potential for engagement or even some sort of accommodation. we see on the question of taiwan, it is not just that the united states, we have heard president biden making certain declarations that had to be walked back. strategic ambiguity, being reiterated. partners and allies on the matter of taiwan, going as far as the point where even european union is exercising its normative power over taiwan. something that we would not have
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seen a couple of years ago. i think these are significant developments that point to a much more competitive approach and disagreements where the two sides are at. >> great having you. university of sydney lecturer on the u.s. and china relationship. beijing is stepping up engagement with the government in afghanistan. bloomberg spoke to an ambassador. >> the biggest problem at this point is the international community does not know how to deal with the taliban. there is a pledge, but they are trying to find another system. they could use the united nations system. at the end of the day, we have to realize this is the reality
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on the ground. the taliban are there. they have a piece of land were 35 million people are living. we have to find a way to reach the people. to get them out of this dire situation. people need assistance and they need it soon. it should not be only pleasure. >> what has china said it will do in terms of pledges? what is the reality underground regarding chinese contributions to the humanitarian crisis? >> they donated some. there was a meeting between a foreign minister. $1 million was donated. they also pledged some winter equipment like link its. -- blankets.
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china was a big part of the humanitarian assistance. >> i wanted to get to the pine nut corridor. that has been reopened recently. can you explain to those who may not be familiar with this? what is the pine nut corridor and how important is it as a channel of economic activity between china and afghanistan? >> this is what we expect from china. the humanitarian assistance is on one side, because china is a big market, it would be -- what we expect is trade. it is important because the pine nut has enough capacity to generate income for the people on the ground scale. the second is that before this corridor, we had to sail it to
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pakistan or india. now, it goes directly from afghanistan to china. the amount of money that was lost in between the trade will go directly to afghanistan. >> that would make a big difference? >> it is not a lot of money. where nobody has anything, it is. the potential to grow is a lot there. we cannot bring everything here. the corridor is not easy. if you can bring all, it could kill up to 2 billion or something -- it could go up to 2 billion or something. it could make a big difference. we discussed only saffron which is very near, almost a former signing -- formal signing. that will be coming. in pipeline, that is very quick.
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another is pomegranates. i do not think this year that will happen. >> can you tell us about how you see china's role in the international diplomatic efforts to address the afghanistan issue? >> china is playing a constructive role. by keeping engaged with the taliban. i think it is good. we have to see our conditions to the taliban. we cannot shut the door. one of the countries that have an end of the -- an embassy there. is regional but is also international. we need all of these big countries to be on the same page. and go forward. >> speaking exclusively with
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bloomberg. you are watching "daybreak australia", let us get to the first word headlines. >> chinese covid czar has defended the strict policy. the official called it the most efficient way to protect china's people. adding that the measures have not interfered with the economy. china's outbreak where tens of thousands of university students are under lockdown on their campuses. janet yellen has controlling covid in the west as the key to inflation. she said it is important to understand that the current because of inflation is the pandemic.
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she repeated that she expects inflation to decline by the second half of 2022. prices returning to normal when demand and supply pattern normalize. morgan stanley sticking with their prediction that the fed will not raise rates until 2023. in an outlook, the bank says they expect to have asset purchases next year. that contradicts the call for the fed to stop moving next quarter. global news 24 hours a day, on-air and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. >> coming up next -- a breakthrough deal when it comes
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to cop 26 talks. continued criticism for week performance in glasgow. this is bloomberg.
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>> the australian government says it has no plan to change its climate goals.
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the climate back requesting countries to revisit and strengthen their targets. australia has no intention to do that. >> it is a request, a requirement that those targets get revisited. we have had a number of government and ministers doing the round. their target is to reduce emissions on 2005 by 26-28% by 2030. the government is committed to meeting or beating that without raising money through taxes and for a commitment to new technology. you can see divisions emerging on this. there was a group of liberal mps pushing for tougher targets. the junior coalition partner is saying, the government should be promoting coal exports and the coal industry. as one senator who says the
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government is never going to win over the net zero zealots. wired up a policy that it does not believe in -- why adopt a policy that it does not believe in? it does have a part in the downfall of the past five prime minister's. -- prime ministers. >> what does this mean for australia? coal exports? >> australia is one of the largest coal producers. the future of this industry is being decided by policy made outside of the country. even the prime minister pointed out that 90% of australia's exports go to countries that have net zero targets. the plan to show that australia will be a major exporter of coal and gas into 2050.
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the value of those exports will be housing -- having -- halfing. the bhp chair saying last week that difficulties in securing funding for new oil and gas projects is the reason that the decision was made to sale part of his petroleum business. -- sell part of its petroleum business. >> the latest on cop 26 and the targets. >> more predictions onto the 22 coming over. -- more predictions on 2022 coming in. inflation risk in the latter part of this year, this is a
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monetary and policy tightening when it comes to fiscal policy. the bank expects investors will seek out into fragile assets. -- anti-fragile assets. over in jeffries, inflation pressures mounting, the fed is expected to accelerate tapering at the december meeting. that leaves room for two rate hikes year. haidi: the president has offered his view of if it is permanent or transitory. he reflected on passenger demand. >> what has happened with the 4-5 month delay? we are seeing an uptick in demand. not as much as it was prior to the pandemic.
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we are running at about 50%, maybe a bit more. it is growing every day. cargo is strong and has been strong. it is a good story at the moment. we are looking for the next 4-5 months of good business. >> what about business-class? where is the differentiation between that and leisure? >> it is a misnomer, it is a premium offering. our segmentation include the corporate business and a lot of high end leisure, visiting friends and relatives. that mix has returned with some degree of robustness. our business caps are pretty full including the 318. -- cabs are full, including the 318.
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on the contrary, it has gone the other way. as we thought it would. >> consumer prices, the data keeps coming in and we are moving at the fastest rate since 19 18 on an annualized basis. i am wondering how that is becoming an everyday occurrence. >> the global economy is facing spikes in the inflationary levels. labor markets, distortions, you see that in all parts of the world. this is a short-term thing for me. by the summer of next year, you will get an equilibrium. we have to deal with the problem. is not about the prices are going to be, -- it is not going to be about the prices. just to get the network restored and the aircraft flying. we will deal with it.
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as i said, i think it is a short-term thing. this has been a thunderbolt to the global economy. when you get things like that, it takes time to sort itself out as it will. >> the plane said to be 2.5 years late, you convinced it will come through? >> it is anybody's guess. it should have been delivered, it may be delivered to us in 2024. we are not sure that they are out of the woods yet. it will come in. when, i am not sure. >> have you received reassurance from boeing, you think it is the issue with certification or demand? >> it is the question of the external input. of the agencies that are involved around the build and the certification. boeing has got to make their peace with it.
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it has nothing to do with the airline community. it will be a good aircraft for the airlines who choose to use it. it is just getting it out into service. there are issues which boeing has got to resolve. >> tim clark speaking with bloomberg. this is bloomberg.
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>> a quick check of the headlines, american power in talks to buy a realty investment trust. the companies could announce an all-cash deal soon. the potential deal comes amidst conversations that data centers provide critical infrastructure for cloud computing. -- posted earnings but warned sales will be declining this quarter because of the chip shortages. that came in at $1.3 billion. the taiwanese company is the main iphone assembler. toshiba is aiming to split into three separate companies by the second half of 2023 as part of
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an effort to improve shareholder value. core operations will be separated into two publicly traded companies, and another for technology devices. the remaining business will hold its stakes in toshiba tech. we get more of the investors, plus the interview of the hour, the woman at the head of an asian property empire. that is it for daybreak australia, daybreak asia is next. this is bloomberg. ♪
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>> the power that small investors can have. i'm curious but how people can look at what you did and use that as a template or some sort of guide as how they can approach their relationship with other companies. >> we thudded the company on the idea that we take the data, not ratings and rankings. we take the environmental, climate, the worker data and we use it look at the evaluation of companies and look at it over a long period of time. you all these -- you own these companies. you own the company. you have a voice, you have a vote every year. you engage with the company's
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over time. >> that has always been the case. haidi: welcome to daybreak asia. where counting down to the market open. -- we are counting down to the market open. shery: our top stories this hour. the stakes are high as president biden and xi jinping old virtual talk -- hold virtual talks to


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