tv Bloomberg Daybreak Asia Bloomberg December 20, 2021 6:00pm-8:00pm EST
that three shots may be necessary to neutralize the fast spreading covid variant. valley -- upbeat forecast. we are seeing a slower start to trading in asia. as we saw overnight u.s. stocks seeing that big slight. investors continuing to digest the impact of the omicron virus variance. the outlook for president biden's citing the-- signing the economic agenda. we are seeing a flat start to the trading in sydney. new zealand will off -- are off another session,, 03.% we are back to losses today. chicago indicate futures we look ahead to the start of trading in hong kong, we're seeing a little bit of cautious optimism. going into the start of the trading day. david: certainly not unbridled
optimism. but then again to your point, stability is the name of the game today, as you can see futures coming online as we speak. directionwise it is towards that. we did come off lows the last part of the u.s. session, looking at futures pointing up. vix futures are on the way down. aussie, yen a decent risk of -- of risk appetite. it liquidities are quite thin. the spreads on a wider site. near crude is up a little bit. i especially guess the context of what is happening in bitcoin, 55 a week moving average, back to the levels and why not? we are looking at the lira. we have not had coffee just yet. this might wake you up. boom. 30% drop at one point. we're study at 1360 ln the back of some of these measures that have been billed to stabilize a currency and we will see whether
or not it works when turkey and the rest of london wakes up, we will see what happens and what they make a bowl of this news. haidi: it looks like our january is freed up, you can put away your calendar -- you will not be heading to davos. the world economic forum being postponed for a second year. the traditional meeting was set to kick off our january 17th, but the forum saying they would be really forced to rethink, planning to host the meeting early summer instead. a fresh wave of the coronavirus around the globe but in particular seeing high cases when it comes to switzerland as well. current pandemic conditions make it difficult to deliver a global in person meeting. david: yeah. if only i was going, i would be more disappointed i guess. on the virus story -- this one obviously in new york and bank of america, the point you are making haidi, to the
point, lockdowns and restrictions. the bank telling us new york staff they can actually work from home over the holiday weeks. i am not sure, this is all -- is that them making sure they also work when this, they are at home. then again, there you go. new york staff can work from home during this holiday season. haidi: and another indication of this feeling a lot like 2020, never mind 2021 a new beginning, it feels like we're going backwards. school closers surging in the u .s. as we see these omicron cases. the majority of the cases now and the u.s. are the new variant. u.s. school officials are really struggling to -- this sharp rise in cases. 650 covid related school closing this week, up from 356 the week before. it's really across a number of states from michigan to pennsylvania.
all shifting to online learning and a lot of schools already just saying january will be virtual learning. not anticipating that the spread of omicron is going to get much better. david: according to ap a few minutes ago that omicron is the most common variance in the u.s. we talked about the new record number of cases in new south wales. it is a part of the conversation right now. let's talk about that in the market context. let's bring in our analyst and strategist and our government congressional reporter emily wilkinson to talk the virus and the economic agenda. big drop overnight in the u.s. you have been calling for a bear market next year and certainly this underscores that point, sir. >> yeah. i mean, people are blaming the year end low volumes for the big price action in u.s. markets, but but that is not the evidence of the futures market. yesterday the s&p 500 futures,
the volume was about two million contracts. that is a decent day's trading for any time of year, let alone the summer. the contracts fell pretty heavily. we saw several days last week when the contract was 2 million volume as well. in addition to that, one of the issues obviously is that we had that dip earlier in december which reversed back to the highs at the end of last week. in that dip, there was a lot of fresh money that went into the u.s. contracts. s.
the downside is being made worse because you got a lot of short-term traders who thought this was going to be one of the typical buys, and it turned out to be something completely different. it is effectively panic selling. i can set myself up for early 2022 and now it is all going wrong partly because joe manchin has reversed his position with joe biden, and also because of getting more lockdown effective measures because of omicron. it's all turning sour. as you saw the s&p 500 will start the year with a bang next year and they are having to try to do it before their books close for the end of the year. it is really nasty. on top of all of that for people to follow the charts, there is -- on the s&p 500 as well. if you want to be bearish other u.s. stocks, there are plenty of reasons to be bearish. [laughter] haidi: thank you. bearish the bearish reasons we are seeing as president buying being blindsided by the delays to the spending bill. we are hearing that these talks are happening. what is joe manchin's wish list for christmas? >> when you talk about his christmas wish list, i'm not sure. probably something for his yacht. he actually -- what he ashley
want to happen is for it -- he actually wanted to happen to not be up into -- be taken up until 2022. we have known that from the start. he really laid it out that he wants a much slammer package. for example, talk about the child tax credit. that is a huge provision. it is very popular among a number of americans. they are getting checks every months for their kids and that is a huge help. but what we know is that for right now under how the bill is structured that program would only last for you. manchin says we cannot do budget gimmicks. we know this program is going to get suspended. let'so for 10 years. the child tax credit is part of a broader bill that includes climate, it health care. it includes childcare. it includes taxes. what manchin is saying is that we need to slim the bill down further. of course, that is seeing
pushback from progressives and his party you say we control the house, the senate and the white house. at this point, it is a huge question mark for what we are going to see happen next. but we would if we do not see much more momentum, the chuck schumer top democrat in the senate has said he will bring the social policy and spending bill to the senate floor early next year, and actually force senators to vote. so, if joe manchin was to vote against it, it will be on the record. it will also allow democrats supportive of the measure to be on the record that they supported. david: mark, two part question since we talked about the impact in washington. is there enough at this point to, to at least make markets rethink the outlook for u.s. growth? that is one part. and not related to that, the drop in bitcoin. what is that telling us? mark: on the growth outlook, you have already seen goldman sachs,
one of the big firms come has already advised lower its growth forecast. they are unlikely to be the last ones. there will be more people doing so. they did not revise it by huge amount but certainly will people will stick -- see that failure to get a package passed quickly will be a drag on the u.s. economy. and when you look at what is happening with bitcoin, there is an interesting juncture, because we have seen coin fall towards 46,000 level. open interest has been rising in the futures market, which suggest there are quite a few short positions that have been building up against bitcoin, expecting a deeper selloff. but think -- the thing about this is you need to that to happen relatively quickly. otherwise, people will, because it cost money to finance the short positions. so, people need to see a result happen and fairly quickly. if we do not see bitcoin drop substantially before year end, you could be in for quite a nasty short squeeze to the
upside, which we have seen a couple of signs this year -- times this year, where the futures market got itself short of bitcoin and suddenly the price jumped higher. so, it really need something to come up quickly. for people who are bearish, the encouragement will be the fact that bitcoin has been trading like a risk on risk off currency in recent days. if the stock market continues to fall, that will help bitcoin on the downside but if it is not go quickly, you may see a squeeze in early january. haidi: the congressional government congressional report, emily wilkins. and mark cranfield. you can find more on the markets blog on the bloomberg. you can get a market run down in one click. you can also find out what's affecting your investments. let's go to vonnie quinn with the first word headlines. vonnie: president-elect gabriel
boric says is government will maintain a commitment to fiscal discipline when he takes office and marched her he says there will be continuity of international relations and pandemic policies. boric is seeking to reassure investors after assets tumbled after his win. the main stock gauge falling 6% monday. g-7 nations have expressed concern over hong kong's elections. the form as to electoral changes imposed by china's central government last year, saying they eroded the cities autonomy. hong kong reported its lowest ever turn out in the election sunday with 30% of registered voters posting ballots. china's -- an unprecedented $210 million fine on a top streamer. popularly known as -- was ordered to pay off the charges in back taxes late fees and fine.
beijing is turning its focus to online streaming which has thrived. the latest high-profile crackdown may -- who rely on the format to drive sales. former u.s. president donald trump has filed a federal lawsuit against attorney general letitia james who began a civil investigation into the financial practices of his real estate company. the probe is baseless according to the lawsuit and violates his constitutional rights. the attorney general says the suit is a delaying tactic and investigation of the trump organization will continue. global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in 120 countries. i am vonnie quinn. this is bloomberg. david: just ahead of the show, chip maker -- up in after hours trade reporting earnings and analysts are very optimistic over the costs. we discuss its performance and we discuss about the supply chain crunch as far as chips go.
david: good morning. treasuries and futures, 60 minutes in. 45 minutes, the treasuries a little bit lower. the markets pushing higher slightly. vix shooters -- vix futures are down. the euro. let's have a look for what bond currencies and bond markets expect. vishnu varathan is with us ahead of strategy at missoula bank.
we look at the majors p the dollar has been six or seven weeks of gains in the last seven or eight. does that continue in your view? >> we think by and large it is going to continue. of course, -- it goes in a straight line. we think all a sequel, the dollar is poised for a strong and boy in early 2022. this derives from the fed's hawkish stance which is beginning to contrast even more, not just against the ecb but the pboc as well. there was a risk aversion also that makes, that's not distracting too much from a strong dollar. against em currencies. david: let's hit the nuance there. within em, who is most vulnerable? vishnu: against this current
backdrop we can add three dimensions the first dimension will be the new focus on omicron variant making a comeback. despite being -- down on the tests, so on and so forth. the low vaccination rate in the booster take-up could become a big issue as we go into the first quarter of next year. equally, they will be a lot of focus on the tragic irony of the omicron and high inflation. the high inflation economies could also be undermined. in to 2022 the fiscal -- is going to be a big issue. the willingness to spend from to the ability to spend. there is a fiscal strain that could also be another soft spot.' haidi: when it comes to the pboc's fed diversion that we have been talking about, has it been -- when it comes to a reaction in the chinese currencies? vishnu: yes.
it is certainly an understatement. it has been a dance. to be fair, the fixing of the dollar and the renminbi have been softer. if you were to watch only one currency, where the renminbi is trading against the dollar, it does make sense that the margin -- at the margins because renminbi is softer, but if you take a broader view and look at the renminbi's relative, it is holding up very well for something that is -- of policy guyers at this moment. - buyers at this moment. it comes down to the inflation differentials. the overall inflation in china is far lower than the u.s.. that's driving, that's supporting the renminbi on a ppp basis. of course ppp is a very positive concept and is really only back to because china's currency -- also really dig their heels into
shore up the renminbi. the most important thing for china is the ability to -- and certainly will be reflected in the renminbi. haidi: when you take a look at omicron and the fact that we are ending this it was so much uncertainty in these markets, where do you see the biggest risk particular pertaining to the potential for policy mistake? vishnu: i think there would probably two layers o f policy mistakes that could come about. one is the, so the fed and the boe and to some extent you could even put -- we don't know what to extent -- these central banks have been laser focused on inflation risk. and so, whilst the bigger game plan may be to take it slow. [indiscernible] just the effort getting it passed in their economies because they were caught on the
wrong foot, that is one layer of a policy mistake. for the em's, because the fed is moving that way, the broader context, the premise for this because the fed is starting to move hawkish. em's hold back because they are afraid of the omicron infection grows and that could be -- because it also undermines maxtor stability in currency stability for the em's. we have two versions of policy risk depending on which part of the world you are looking at. haidi: vishnu farah thing. always great to have you with us, -- vishnu vararthan. be sure to tune into bloomberg radio to get indepth knowledge we are broadcasting live from her studio in hong kong you can list in via the app or bloomberg radio.com. this is bloomberg. ♪
>> you have to decide whether the rule -- is a place you are comfortable with. they will set the rules and you go in and you decide if you will be part of them as a good citizen or you are not. then, but you don't jump in and out. china is a strategic play. you are not going to jump in and out. and the amount that you are in should be that that you are comfortable with. it is the same as an investor. it is not smart to sell on the break. david: that was ray dalio of bridgewater saying that china is a long-term strategic play. he is one of the many western financial players looking to expand into the world second largest economy and sources say the bridgewater managers $5 billion of chinese state moneymaking china one of its biggest clients. by essence. that takes us into the crocks of the issue recently which is property under pressure -- in the crux of this issue.
five-year lows. regulators have signaled they are ready to support what they describe as quality developers looking to buy assets from rivals. stephen engle, are cheap north asia correspondent -- our chief north asia correspondent is here to talk us through development spared they need to sell assets. what is the downside? stephen: these are so-called stale. they will be sold at a discount. and what we are seeing is some forced sales at a discount. for example suneck -- agreed to sell its 22.5% assets evergrande for tori at a loss to three developers who are considered more viable -- the grand victoria. excuse me, hunac selling -- sunac selling three projects. i can keep all of these developers together. ryan -- is a developer that is
heavily indebted. it is considering a sale to its unit that makes ev batteries. they are selling these things. if they're going to be selling at a discount, and they are equity companies, the, the conventional wisdom is that the equity investors are going to be, getting the short end of the stick. sunac's saw a record one-day decline of 18% on monday. kisa down 14% -- kaisa down 14%. evergrande could not go any lower was down 10% and shimao was down 9%. the route means that the richest bosses of all of these developers have lost 46 billion u.s. dollars combined this year. david: oh, no. stephen: yeah. haidi: genuine heartbreak and david ingram's voice. what do we know about the regulatory support for these quality developers, when you
take a look at what we are seeing a state media the moment? stephen: it is adjusted because a decade or so ago, chinese developer told me, he says this is the game. when developers get into stress, and often times are highly overleveraged because of the nature of the industry, the more viable once buy up -- ones buy up the project and a cherry pic best projects. a note from the pboc, regulators is encouraging banks to provide property project m&a loans in an appropriate and orderly manner and supports quality developers to fund project acquisitions. and the pboc and the state asset regulator matt risley with large private and state own developers -- met recently with large private and state own developers. they want to support quality developers.
haidi: stephen engle there. coming up, the capital markets expecting prices to rebound later next year. this is bloomberg. ♪ this is elodia. she's a recording artist. 1 of 10 million people that comcast has connected to affordable internet in the last 10 years. and this is emmanuel, a future recording artist, and one of the millions of students we're connecting throughout the next 10. through projectup, comcast is committing $1 billion so millions more students, past... and present, can continue to get the tools they need to build a future of unlimited possibilities.
haidi: we are tracking the fallout of the global supply chain crunch today in our top stories. -- beat analyst estimates overcoming supply chain issues to enter the holiday season with strong inventory spared their confident that production in vietnam will normalize after facing disruptions from covid-19 outbreaks. meanwhile, toyota will temporarily suspend some output of plans and japan next month due to supply issues but will keep the target of producing 800,000 units.
the temper held is due to a shortage of semi conductors and-- the temporary halt is due to a shortage of semi conductors in japan. global merchandise trade dipped 0.8% due to rising covid-19 cases according to a report from the wto.. the wto said north american and european imports were weaker th an expected and omicron has tipped the risk towards the downside. david: in fact, have a look at this chart. it shows, i mean, no matter really where you are in the world, you're celebrating the holidays, the food is ending up in your dinner table. as a side note, you cannot afford food. it is really getting more expensive than before. prices of every major food group are surging. global supply change buckle under labor shortages. continuing to strain -- all the way to sugar.
bloomberg clients can read more about these stores on our newsletter, supply lines. an n.i. space trade nl go on your terminal. haidi: micron jumping in the late trade after giving out a forecast for the current quarter. helped by demand for semi doctors and networking data centers and vehicles. -- and semi conductors and networking data centers and vehicles. the director and senior analyst at daiwa capital markets. a very buoyant outlook from the big semi conductor major in the u.s. were you optimistic about these earnings, and how does that play into durability to meet demand, given all of the supply chain issues that have really dominated this year? sk: yes, micron just announced a first quarter for the first quarter of 2022, and also -- it's guidance for next quarter were higher than market
estimates. you mentions about the global supply chain issue, but -- we see a gradual recovery. micron also highlighted that point today. and we believe that the next year, the key, the key word is a data center and the metaverse. it will drive the additional opportunity for semi conductor industry. haidi: when you take a look at competitors like samsung, what stands out to you? is it the fact that micron has a diversification across the wide range of industries? sk: yeah, basically, in terms of market share, micron is number one play. but if you -- as you can see,
samsung electronics is more than a -- player. now the boundary is kind of the key -- for the stock. also, the mobile, there is debate about the production, because of the supply chain issue with component shortages. but in the case of micron, they are a pure memory maker, and also the company has some, you know, they have some progress in the technology migration to 160 layer, which has been -- bottlenecked over sometime. also, they introduced one -- d.rom. we will see the progress -- because the, the next-generation product is also expected to be live from the first half of next year. so, you know, the supply demand
-- looks very healthy. the muted supply growth from this technology migration and also we expect a very strong demand for data center in the metaverse next year. david: sk, i wanted to pickup on that. i'm glad you brought it up. on the metaverse, do we have enough information to attach a number for the industry in terms of what growth might look like simply from the metaverse? can you put it in simple english in terms of the hardware needs, that need to be met along those line. sk: yeah. in terms of hardware and semi conductors, metaverse is fairly, there is some additional demand. you know, the data center demand has been read by hyper scaler.
with google and microsoft. and now the content, meta platform, facebook previously, they announced it very aggressive plan to invest on this metaverse related investment. it is a related data center demand. we expect some additional, -- in terms of data center bids. it will use more content. the semi conductor content. and also, the other angle is that hardware is new applications. so, they are preparing the new devices. it will use high quality displays. [indiscernible] and the module. there are some additional demands --
[indiscernible] david: just so our viewers can latch onto it in case they want to listen to your recommendations, you have a price target for micron at 100 bucks. i see the date stamp. the price, the stock was trading at the low 70's when you had the price target. are you looking to upgrade that at any point? also talk about your other price targets in south korea and in samsung. sk: yeah, actually, recently i -- raised our target price for -- reflecting the more visibility. and also i plan to raise target price for micron. reflecting the strong first start, q1 first quarter. on the company's guidance for the next quarter. i'm bullish on this stock at this juncture.
david: ok. sk kim, the executive director and senior analyst. bullish onm icron. do the math. you will easily get some forecasts that look up to the mid 100s. centrix is something we want to tell you about on the back of -- citrix systems up 7.5%. we are also looking at dollar-lira, a massive move down overnight in case you are surprised by your trading at 1350 right now and not 17. bitcoin, flat 55 moving average and australia trading up and running for 30 minutes. 20 minutes to the open of cash treasuries and the japanese market. and here is the approach as we
make our way into tuesday, things are looking a bit more stable. ok, vonnie quinn is in new york. she has yourt word headlines. vonnie: david, thank you. the what health organization has recommended canceling events during the holiday period warning the end of your festivities will provide the perfect platform for omicron to spread. meanwhile the world economic forum has postponed its annual meeting in davos saying current pandemic conditions make it difficult to deliver a global in person meeting. the forum will host the event in the summer. moderna says a third dose of its vaccine can boost antibody levels against the omicron variant. but it works on the vaccine specifically tailored to fight the new strain. moderna announcement as to a growing body of evidence that three shots will be needed to neutralize omicron, after pfizer made a similar finding earlier this month. turkey has announced extraordinary measures to bolster the lira, including a
program to protect savings. president erdogan says the government will make up for losses should the currency declines exceed bankrate's. authorities will also offer non- -- to help exporters mitigate fore. x. the lira bounce back from record lows on the new measures. officials are assessing the damage after severe weather left a trail of destruction in the philippines and malaysia. the death toll after the strongest typhoon to hit the philippines this year has topped 200 with nearly half a million people displaced. in malaysia, weekend of torrential rains displaced 61,000 residents and disrupted operations in southeast asia second-biggest port. global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in 120 countries. i am vonnie quinn. this is bloomberg. david: just ahead, the cop 26 summit identified all sorts of
haidi: we're checking in on shares of renewable forms and the u.s. after joe manchin surprise rejection of president binds roughly $2 trillion economic package. he had promised that $550 billion of that funding would go towards attacking climate change. we see the selloff in green energy firms. ev makers also fell in u.s. trading, including tesla and lucid. it comes as we saw a chinese ev maker unveiling a second to ran, direct competitor to tesla's model 3. -- a boost in order from the u.s. market for its electric vehicle charges. the ceo spoke to us earlier about navigating the supply crunch and the company's expansion plans. >> with the chip -- and in fact for almost all of the oem's that are building charging infrastructure we are finding that demand is outstripping supply. across and stood because the
parts shortages due to covid. but no cancellations and very strong demand, the strong as we've seen in the company's history. >> supply chain issues. availability of raw materials and resources still so keep her tickly when it comes to infrastructure and battery making. is that is something that is affecting your business, and what are the individual problems you see going into the new year? jane: yeah, absolutely like everybody there is a mixture of the component parts shortages, which you see globally as well as price. because we manufacture in australia, we've had significant issues with freight. initially was impacted but sea freight hat was also impact and that brought forward our plans to open a u.s.-based factory which we plan to do in q3 next year. there been a shortage of industries that relate to the components of the charges. the cables that are used for charging, there has been some unusual raw material shortages and special film that is used in
ev charges and semi conductors, although we were lucky we did have a long-term supply. we ordered a year's worth of semi conductors. david: i'm looking long-term and i cannot help notice your forecast for growth. $84, that is dollars. -- $84 million. it goes up to $1.5 billion. what needs to alliant policy and supply chain wise -- what needs to align, for you to achieve 18x growth? jane: absolutely. we need to maintain our current market share. the north american market for ev charges. we have 20% of europe and 75% of australia and new zealand. if we just maintained and did not grow that market share and -- what bloomberg is forecasting then we would hit those numbers. david: jane, final question on china.
you are offered and 41 countries. your presence there in the outlook for the markets. jane; in terms of china, that is a market that absolutely is dominated by chinese manufacturers and understandably. it is a different market to where we are operating. we have a charger that is at the top end of the market that sells well in europe and in north america in the high cost asian countries. we've got good penetration into thailand, working in singapore now with boots on the ground in singapore and we expect to sell in japan and south korea and australia and new zealand. for india and china, those are the less targets for us. there we hope to operate in hotels, high end developments and potentially in car showrooms. david: that was our conversation earlier on, in case you did not notice, the ceo jane hunter. let's talk about this. the international energies agency latest report shows that global coal power and generation
is headed towards a record year this year yet again potentially get an all-time high. in fact, next year, that as despite the agreement to start phasing out the fuel at least last -- at last month's cop26 that took place in glasgow. our head of research is here joining us now for more on this. so, i mean, it's going to take time obviously but why is the world's reliance on coal still on the way up? >> the first thing to notice that most of the growth we are seeing is coming from existing coal power generators. one thing to recognize that. in 2021, because of lockdown measures around the world, electricity decline substantially. in 2021, as many countries relaxed some of their lockdown measures we are seeing growth in electricity demand. for example, in china, through november, electricity demand in 2021 has been 9% higher than
2020. that rapid growth in electricity demand given opportunity for coal. if you look at other potential sources of energy supply, particular gas and renewables, renewables growth has continued but the growth rates have notbeen increasing at the rate that would be required to meet that rapid growth that we saw in demand. on the gas side, unfortunately, this year has been a tough market particularly in europe and north america. gas prices have been, set historical highs, and supply has been constrained. as a result, we saw growth in coal generation happening in north america. so, when you combine all of this, yes we have seen a rise in coal generation, but it is not like the poast -- the past as much. it is not a great result from an emissions perspective but it does show we are having
opportunity to reach coal regeneration within the next few years. haidi: is there a bigger role to play for financial institutions and investors in terms of encouraging-- in terms of the financing provided for coal purchase? ali: very good question. over the last decade we have seen financial institutions gradually make commitments to not fund new coal power generators. for example, if you look at southeast asia, out of the 47 institution that previously have funded coal plants, 30 ones have direct or indirect commitments not to -- to fund coal power plants. as more nations make this commitment, that is available to - -which increasing the financing costs which makes them less economically attractive. that compounds of this growth and terms of the move away from building new coal power plants. haidi: bloomberg head of impact
elliott already has a 10% stake in citrix, considering using the portfolio company -- as part of the transaction. citrix is valued at $10.4 billion on has been a slowing options including a potential sale. insurer swd has officially scrapped plans for an ipo. the ceo asked for consent to withdraws filing considering other alternatives. swd has switched his focus toward the potential hong kong listing after its u.s. plants were held up by intense wrigley tory scrutiny. -- intense regulatory scrutiny. in a deal valued at $3.6 billion, the private equity giant will buy a reet for $24.25 per share, a premium of 124% over its closing price. blackstone is extending its push
into u.s. rental housing with the deal, which gives them 30 multifamily properties. in a victory for organized labor, -- has agreed to negotiate with this u.s. union. at a store in buffalo, new york, they certify the union selection on friday. it sets up negotiations between the workers and the company that could last for several months. david: yeah, just coming down before the opening trade put a lot of those stories including what we are seeing with micron, including everything overnight. let me start things off. a quick look at the korea. 9.6%. that is kind of wild. that is the highest level -- going back to 2008. we should be getting the trade numbers for the first 20 days of the month very soon. we saw exports gaining 20% year on year in the first 10 days of
december. fx markets coming next year, including this electronic platform that will give access to real-time fx data and trading. right now traders are using old school methods like telephones to place fx orders. now, over and japan, the theme. the u.s. military base in okinawa is fueling concern about the spread of omicron. we're also looking at toyota as you can see, suspending output at five plants in japan next month due to supply issues including the shortages of chips. and the industrial medical company nikkiso cut its operating forecast by 56%. $35 million. haidi: we are just minutes away from the start of trading in tokyo. at the open, japanese defense
stocks and focus after japan and the u.s. agreed to a $1.06 trillion hosting budget. -- engineering, and nupon avionics as one that could move on that -- and nippon avionics. micron very bullish forecast for next year. samsung to be competitors to's micron when it comes to memory chips. some of micron's suppliers can see a boost in the session. coming up next and the next hour, not just the market open will we will talk to a former economists of the pboc and imf. and talk to china's macro outlook, how that downturn could affect policy moves in the new year. we'll also be hearing from a portfolio manager who says that chinese stocks are undervalued by as much as 40%. we'll speak to our guest, a portfolio advisor getting his gauge of opportunities in this very -- property sector that continues to see consolidation. we are just a few minutes away
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♪ david: welcome to daybreak asia from bloomberg's asian headquarters in hong kong. i'm david ingles. haidi: asia's markets have just open for trade. our top stories this hour. the global stocks slide could be set to ease in asia after the impacts of omicron and the impasse over president biden's economic agenda.
more cancellations around the world as covid's new variant continues to spread but there is one good news from one good vaccine -- new vaccine maker. a $200 million fine shining a spotlight for outside earnings for retail sales. david: yep. certainly that 5% decline overnight from the nasdaq golden dragon index. china's market watch. more than i guess your usual data. here is the open in japan following the falling out of monday we are seeing some gains at the open. not quite reversing everything we saw. this will take some time. we are looking at toyota, for example. we talked about that, they are looking to shut five locations on the backs of just the supply chain shortages. 10 year yield. look at south korea, hardly really -- a reflation we are on the way up. we are getting 20 day exports and imports out.
exports are up 20%. imports up 40% for the first 20 days of december. the bottom of your screen, an improvement from what we saw for the first 10 days. up 0.7%. dollar-korea is flat. this is been on the upside of late. been a little bit under pressure at 19 -- against the u.s. dollar. haidi: very very tepid gains. pressure is coming on when it comes to tech stocks part of the index but we are seeing fairly strong gains when it comes to energy stocks and some of the miners. and we are also seeing oil edging a little bit higher after that today drop, just reassessing whether we will enter another world of lockdowns. the aussie dollar on the back foot. we are seeing broad pressure when it comes to these commodity linked currencies, overall trading loader with a concern -- trading lower with a concern
over commodities. the kiwi also seeing weakness. industrially we also have the omicron concerns weighing in new south wales we had a significant new high when it comes to new cases. over 3000 new cases. hospitalizations also doubled. so lots of concerns. there is more worry going into the trading day. david: absolutely. we still don't know whether it will affect the fed. we had a look at pricing an i glanced a that a couple seconds ago and given the omicron spread and also throwing in, the impacts in washington over the spending bill, it does not seem like markets are budging on the timing of that rate hike. cap treasuries are just coming online, lower in the short and higher in the longer end. we are slightly steeper on the curve. up 3. twos and tens are 142 and 60
basis points. our next guest sees this as a conviction trade. . a steeper yield curve. the global cio -- isaak, good morning. as always a pleasure to have you. how steep and what part of the curve do you think is mispriced, short or long end? >> right now i think it is the lock end, which is really struggling -- the long end, which is really struggling with the uncertainty and the virus. what we have is is the situation, the short end is pricing three rate hikes next year. --that is challenging for the fed to deliver. without -- the dot plots and markets pricing in three rate hi kes. take a look at their history as a forecaster, they have been abysmal, both of them. what we are like to see is the short end having to tread water
for a bit and come to grips with the fewer hikes. but the more gradual hiking process, which will allow the long end to drift higher, and that will result and the steeper yield curve, which has struggled this year. and, ultimately, the fed has no interest in the flat yield curve or an inverted yield curve. so i think that price action will be very welcomed from the fed in 2022. david: well, the premise there is that they know where inflation is going, and you look at, i guess, the projections for economist into next year, they continue to bump up inflation forecast, not just for next year but after that, too. indirectly what you're seeing is the forecast is -- inflation. isaac: i think inflation where it is now, 6%, the headline, that is not hanging around. it is going to come down and will come down in 2022 and i think it will trend lower in 2023. the real question i think the fed in the market is grappling
with is is this inflation that is at or a bit below the fed's target or add or a bit above the -- the expectations for very high inflation. that is not happening. the expectation is for inflation going back to the decade average of 1 to 1.5%. i do not think that is happening. it is at the margin, we are a bit below. we think it will be a bit above. and that means that the appropriate interest rates from the fed is a low, slow gradual increase that allows inflation to be a little bit above. that's appropriate given where we have been in the last decade. and i think that is something that fed will be hoping for and working towards, but if we see three hikes next year i think we will have inflation well below fed targets in a couple of years time. it will be too much for the market and the economy to digest. haidi: the messaging from the pboc has become clear, but of
course with them as well, it is a balancing act. do you see any compelling opportunities as you take a look at the diversions between fed and pboc? isaac: yeah, i think we have seen rate action from the pboc at the margins looking to be neutral with a tilt towards easing. and the last thing they want to do is -- out again, but they also have no interest in seeing the economy continue to slow in the way it has. so, this is a diversion -- diverging path. and that does present opportunities. when we look at china, what we look at is the pricing in equity markets in particular is extremely pessimistic and really bearish on the chinese economy. that is way out of whack with what the pboc wants to see and what it is going to make sure that it sees. in that case, there is a really significant mispricing going on in the diversions between
chinese equities and global equities this year. we see a 20% upside in the markets over the coming 18 months or so. haidi: i want to get to you to the question of the day which is how do we see more omicron or virus curbs affecting assets? i suppose it is interesting the way you're looking at this from your -- in tasmania. how does the world deal with this? do we return to some level of lockdowns? is this a repeat of 2020 when we had opening up formally again and staying home? how does this next round of the pandemic play out? isaac: it is such a challenge, because we are seeing each way, each new variant having less of an impact on markets and economics and of course we are to stage now where people have -- are broadly vaccinated and we have had restrictions removed. and the fiscal support that the company lockdowns early on has been withdrawn, and so there is
a relativity there that matters. if lockdowns were reintroduced now there's real potential that the relative impact on the economy is much worse than what we saw early on in the phase. i think this is an ongoing fear -- clear and present risk to the economic outlook in the near term, and a reintroduction of lockdowns, if that happened, could have more of an impact on consumer spending and consumer actions than what we saw in the early phase. so, this, for us is one of the key risks in the near term. i don't have any real insights as to whether there will be lockdowns but i think there will be resistance early on from governments to reintroduce plank it lockdowns, but i wouldn't r ule out restrictions of some sort coming back and we are seeing that at least in australia where i am ,where we are back to having masks inside. david: in fact, to your point,
we will check the stock in the stock in japan. -- is trading, the vaccine maker. as a final point, something where you have more conviction. we talked curb steepening -- curve steepening. asian credit. is it something that is priced for disaster? it is that group. where do you think spreads are going to go next year? isaac: they are really blown out to ultimately they are at the stress -- distrust level. widespread defaults and widespread downgrades. not quite cataclysmic but very bad outcomes. that is not in line with our view of asia. there are clear issues in asia high-yield markets. and that is emanating out of china. but the world is naïve to say that we will not spread a little bit. we do not see that is being a widespread contagion effect. so, if the global economy
continues to come along, if vaccines get rolled out in asian, if reopening takes place, then this is in a market that really stands out for outside e -- relative to history and we think there is a lot of scope for positive returns over the next 12 months but even going out to 18 and 24 months. haidi: always great to have you where this. the cio at oreana portfolio advisory services. you can follow the story and all the day's trading action on the bloomberg. you can get that market rundown. and commentary and analysis from our expert editors. so you can find out exactly what -- is affecting your investments at any given point. david: at this point, we are looking a vaccine makers in japan -- what we see for vaccine makers across the region. you're going to see bottom of
your screen, there we go. full frame in your face. 6% vaccine maker in japan. still up 5.7% on the back of this data out of moderna and thier covid-19 booster -- their covid-19 booster helping things along. vonnie quinn is in new york and she has the first word news. vonnie: thank you. turkey has now taken extraordinary measures to bolster the lira, including a program to protect savings. president erdogan said the president will make up for losses in lira deposit should the currency decline exceed bank rates. they will help exporters mitigate risks. the lira bounced back from record lows on new measures. chile's leftist president elect boric, says his that-- his government will continue -- maintain fiscal discipline when it takes office in march. boric is seeking to read sure
investors -- to reassure investors after the peso was closing at a record low and the main stock gauge falling 6% monday. g-7 nations this press over hong kong's legislative elections. the g-7 foreign ministers criticized electoral changes imposed by china's central government last year. saying they eroded the cities democratic elements and undermined its autonomy. hong kong reported its lowest ever turn out in global election sunday with 30% of registered voters posting ballots. china has slept an unprecedented $210 million fine on a top e-commerce streamer -- for tax evasion. it avoided taxes totaling $100 million by concealing her personal income and making false declarations. viya is china's most popular e-commerce like streamers and one of the biggest stars in alibaba's marketplace.
global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in 120 countries. i am vonnie quinn. this is bloomberg. haidi: still ahead, the former pboc economists will be joining us to give us his china forecast for 2022 and the monetary policy for the pboc. coming up next, we get the latest from china's travel copy developers.t heir stockings -- their stocks are near a five-year low. this is bloomberg. ♪
and out. china's a strategic like. you're not going to jump in and out. and the amount that you are in should be that with which you are comfortable. it is is same as an investor. it is not smart to sell on the break. david: ray dalio saying that china is a long-term strategic play. of course, one of many western financial players looking to expand in the world's second biggest economy. bridgewater actually manages about $5 billion of chinese -- making china one of its biggest clients by assets. it takes us to the crux of the recent market issue or one of the centers of gravity of property stocks. five year lows on the bloomberg age. asset sales. a lot of these worries hounding the industry underscoring concerns that equity investors -- as developers offload projects. debt.
scrambling to raise money. let's bring in our analyst in our studios. to get us warm up for today. where do we start? new day, but what is the news today? >> we are seeing more asset sales. looking to sell its ev unit. it has a very low credit rating already. looking to exchange these $2.00 bonds, on in january and one in april. not unusual. they are joining the throngs. shimao also sold as hong kong projects at a loss. sunac also looking to offload assets and raise cash. it's joining the throngs of the distressed property developer struggling to raise cash. for as long as the offshore market is shut, this is one of the only ways they will be able to -- rolling over some of that debt. so, they are really in a bind here. haidi: rebecca, we are also hearing, i guess you have to --
read between the line and state media that they are some strong encouragement in terms of supporting financing for the so-called quality developer projects. rebecca: absolutely. that is the underside of the coin. who exactly is going to buy all of these assets and these projects? state firms have been encouraged in the past to potentially step in and take on some of that risk. and something that we are looking to and 2022 is potentially seeing not just more state developer stepping into that, but perhaps also more lgse's. they have also taken a slightly ambiguous role in the china's economy supporting local governments, but we could see more stepping into buy assets particular when it comes to property. almost as an intern of. what we use-- as an alternative. what we have seen is a crackdown on private firms when it comes to developers and that does leave an opportunity. there are some investors looking perhaps that there is a local government finance vehicle,
opportunities go into next year. lgse's and for property developers do not offer -- yi elds and the upside that many private developers do. that could be the longer-term future of the sector, particular when you see the sales for many property developers are still under so much pressure. we see another market of weak sales. property developers in the long-term will be able to shore up their finances. on the one hand we need to see sales improving and number two we need to see the offshore market once again reopen to developers. as long as those two things do not happen, firms like lgse and high point and state run developers, they will be likely to step in and fill that gap. haidi: our china credit editor there with the latest. turning to the other big story, of course we continue to monitor the omicron variant has become the dominant covid strian in t
h-- strain in the u.s. and accounts for 70% of all new infections. we could see more variants emerge over the coming months. we spoke to johns hopkins and began by discussing the effectiveness of vaccines against the omicron strain. >> for people who are vaccinated, for people who are boosted, it looks, we are hopeful that this is going to be a pretty mild thing, but we can't say that for everyone and we cannot say that for sure for the unvaccinated. so, i think the transmission is really high, but we are risking our health care system being overwhelmed even more than it already is. that's the biggest concern right now. >> when we speak about what -- the lethality is like for unvaccinated individuals. there could be a greater threat to them but will that also lead people who are immunized via vaccines and naturally immunized
because they have been exposed to the bearings, -- to the v ariant that we reach some kind of herd immunity? >> i hope so, but i think it might be a little bit too much to ask. herd immunity was always kind of an elusive goal that was going to leave a lot of people very sick or worse. so, i think, all pandemics end at some point. this one will, too, but i think we have many more months to go with this. and potentially new variants down the way. we need to do what we can to shore up our health care system. >> the health care system -- where are the weaknesses most profound, where do you see hospitalizations escalate the fastest? where are we seeing the greatest crunch with respect to this particular virus strain? >> geographically right now it is in the big cities. several that -- i've been seeing reports that suburban hospitals
in houston are also seeing surges. but in the larger scale we are seeing a critical shortage of nursing care. and that is going to continue. we can only, we have been in this for many months now. and short term surges are very possible philosophy people but we are really into a long-term situation where we need to think more long-term about what we want out of our health care systems. >> in terms of preventative measures, new york, talking a lot about the lack of at home testing kits and the lines to get boosters, the appointment sort of construct becoming more and more difficult. the strains are becoming more evident. are you seeing something like that in the other parts of the u.s.? >> right. the crunch on testing is really unfortunate. we, because a lot of the stocks
were opens up so that we could have more test available, but the demand is exceeding that. so we do need more testing. we need to make sure we have that available for long-term future. another thing that we are hopefully -- hoping for is a five-year -- the pfizer drug that will hopefully be more available in the coming months that reduces the risk of hospitalizations of covid. that could really do such a great job of restoring people's ability to go to the emergency room for other things besides covid and being to have a health care system therefore you. >> on that subject, good morning. that pfizer drug. some people in the pharma industry have been disappointed at the amount of the drug that is going to be produce. and, therefore, the ability will have to really make a sizable difference for the omicron wave. is this something for omicron, or is this something for i do not want to say it, but for a
wave that lies ahead? >> right. we don't know how long omicron is going to be with us, transmitting very fast. in south africa, we are seeing the peak is over. so, it could be that this drug may be more relevant for sigma or other letters in the future. david: gigi gronvall, senior scholar at the johns hopkins center for health security. it's supported by michael bloomberg, the founder of bloomberg. by the way, you can get more of the top stories you need to know as you get your day started on your terminal. daybreak. dayb go. check that out. get read up. really. on everything that is happening today. check that out.
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trading across the market on tuesday. aussie dollar is on the back foot. trading expects softness to continue. the reserve bank of australia has the december 7 meeting and rba saying they committed -- they remain committed despite uncertainties from omicron. highlighting jobs numbers. an overall resilient scene. the rba says the omicron very hot as uncertainty. the yield curve steepened this morning before the release of the minutes with the aussie trading in a narrow range. previously, phil lowe said he was putting a split between easing being separate from the timing of the next rate hike in the country. the rba says the board is prepared to be patient and this comes as new south wales sees record highs of new case numbers
and hospitalizations are starting to rise. the government has been against the idea of returning to a lockdown or mask mandates as many medical professionals called for. so omicron is still top of mind. david: it is also top of the table as far as virus concerns in tokyo. top 10 movers. three markets up and running in the asia-pacific. tokyo is 30 minutes into the session. gap higher, not enough to
reverse yesterday, 9/10 of 1%. similar picture in south korea. the kospi index opened higher. there we go. lower for the day on the kospi index. first 20 days of december, we had these numbers out. three day look at the turkish lira, we went from 13 to 17 and now we are about down to 12. and we are about to find out why. haidi: the turkish president, it usually has to do with him when it comes to big moves in the lira. lira on a roller coaster ride after extraordinary measures to support the currency.
the lira just saw 25%, the biggest one-day gain since 2010 at least. what drove this? is this a turning point in terms of bottoms we are seeing for the currency? >> it is very much about earlier. he helped set off the extreme drop and that's because he said he was committed to lower interest rates because that is what the economy needed and he said he did not mind if it led to a weaker currency. so he turned it and said, actually we are concerned that it gets so weak that it will hurt turkish households. so he instituted measures to help address that. the measures came out after turkish markets had closed. so foreign investors who had been strongly betting on lira
declined to drive it so low. so it sets up and interesting open. david: garfield, it begs the question, does this get us a step closer to where markets need as far as where that paradigm is concerned? and aligning markets and where the government wants it to be? >> i think there is the potential that it does that. as i said, we have finn liquidity, running into christmas, japanese retail
investors are staying away from the lira. they had been very interested for a while, which helped boost volatility. so having have this blow off the top and then collapse back down, there is at least the potential you will get a little space for other issues to play a role and for instability to come along. a lot of it depends on president erdogan and how stable his attitude is, and how clear he makes it about what he wants to see go on with the lira. haidi: garfield reynolds with the latest on the lira. you can follow on our blog and get a market rundown on just one click with ongoing commentary and fresh analysis from our
expert analysts. china is ramping up a support for the real estate sector as there is the threat of an economic slowdown. chinese banks are lowering bond cost for the first time in months. let's bring in our next guest. in terms of perspective of someone who was an economist at the pboc, what do you think this is signaling and the message we are getting from state media? >> i would say there is a clear signal that china's policy is
turning. that's the clear message from the central economic world conference earlier this month. they identified three major challenges facing china's economy. supply shortage, weakening expectations and -- the conference is the first to step in that direction by saying growth stability [indiscernible] i would expect the government to set a minimum gross target of about 5% for 2022 and urge
officials to shoulder the responsibility to stabilize growth and then adopt the macro policy to achieve the target. we are already seeing fine tuning in pace and intensity of policy, including in the property sector and for the macro policy and monetary policy already taking steps but i would say fiscal policy is likely to do the heavy lifting and we should expect a bigger budget deficit then -- than in 2021. haidi: this feels like a familiar refrain. we have seen this playbook
before. does this mean deleveraging all structural reforms are on the back burner if what we are going for is a year of stabilization and probe growth -- and pro growth? >> i would say boost the economy to a potential level. [indiscernible] to prevent the road from falling below 5% in a very important political year. another bottom line is to reduce the contingent risk. so i would say policy easing would not be excessive, it would just be to extend the bottom line and i think the central
governments emphasize it is not for speculation and i would say the tightening is not only intended to deleverage, but also related to china's long-term objectives about common prosperity. the government will continue to want to divest. the property sector tends to be carbon heavy and so for example introducing a property tax to address income disparity. david: another part of the equation is consumption. it can be managed through investments. consumption has been missing. your outlook on consumption recovery next year? >> i do not expect a quick
change to stringent covid measures, not even for the winter olympics. but i think the priority for the government is to create sufficient stops in infrastructure investment and the budget is likely to emphasize fiscal spending by stabilizing property investment to create a labor market with wage increase and i think that would be a help for consumptions. david: let's talk about capital stock.
where does china need to put that money to use? >> i think there are still a lot of areas for china to invest. there is a lot of product in place in the pipeline, including traditional infrastructure products like roads and airports but also fiscal policy infrastructure to promote 5g, biotech, and aerospace industries, and semi conductor. so that is still a lot of areas to invest. david: let's go over to new york
with vonnie quinn. >> world health organization recommends canceling events during the holiday, warning and of your festivities provides the perfect platform for omicron spread. the annual meeting in davos has been postponed next month because of covid conditions. the forum will host next summer. moderna says there third dose -- the third dose is reassuring to fight the new strain of covid. there is a growing body of evidence that three shots will be needed to neutralize omicron. joe manchin outlines changes that might stall his support for bidens bill. he said he would only support a
slimmer bill that over holds the tax code to make it more fair and lowers the cost of prescription drugs. he also criticized other democrats for trying to badger him into passing legislation. officials are assessing damage after destruction from severe weather in the philippines and malaysia. nearly half a million people are displaced in the philippines. malaysia has displaced 61,000 residents because of torrential rains. 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. this is bloomberg. haidi: next, the u.s. state department adds five people to a list of those considered to be undermining hong kong's autonomy.
fined for tax evasion. let's get the story from our consumer reporter. what does this show regarding china's regulation and the attention on the livestreaming industry? >> in the past few years, the industry has grown to a really big size with little regulation. the government bureau has started to issue notices they will look at the industries tax behavior. in the past several months they have caught several people evading tax. this is significant in terms of the scale they are looking for. the case now will spook other
celebrities to pay their taxes and comply with the law and we will see others come into the industry to standardize it. david: there is another name that comes to mind. what does this mean in terms of who we should look at in terms of potential companies that might next be under scrutiny? >> in terms of leah herself, when we interviewed her last year she said she wanted to go to ipo so now that company will be in trouble when the top livestream is hit. and it will have implications on the livestreaming platforms they operate on. so other than retail, there are
a lot of brands that rely on these people including tesla and l'oreal. so they are heavily relying on back streaming and their is a change in the industry in china that is going to mean a lot to them, as well. david: our consumer reporter with the latest as we look at a fairly long list of potential stocks we are tracking. the u.s. state department has added five chinese officials, people as seen under -- undermining hong kong's autonomy. katie lamb is now touting possible new laws. the timing is interesting. why now? >> carrie lam finally has a
government where she can get legislation through. so before there was a lot of opposition from the democrats and giant protests going back to 2003 that put policy to a standstill. now protests have been curtailed by coronavirus and the security law so carrie lam has the perfect opportunity to get legislation through, which would be a big win for her government. haidi: let's get a look at how markets are trading in asia. the selloff was accelerating into the u.s. selling and is now abating. some senses of stability with the asian sessions. asian shares are being driven by
reevaluation of the impact of potential curves, even as we see the surge of omicron. asian shares are seeing modest gains. strong gains with nikkei 225. omicron focused trade. vaccine makers and pharmaceutical companies leading. kospi looking flat. another record day of cases of omicron in new south wales. new zealand has a flat session. haidi: to add to that long list, chip makers in the region. on the back of earnings and analysts comparing it to word of street analysts on that one.
>> we believe in the next year, the keywords are data center that will drive additional opportunity for the semiconductor industry. haidi: let's look at how age and -- how asian chipmakers are reacting. bullish. another good you're going forward as well as potential resolving of the supply chain issue. samsung electronics getting a boost. in japan, some names trading in the green. plenty more to come on daybreak asia.
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