tv Bloomberg Daybreak Asia Bloomberg January 19, 2022 6:00pm-8:00pm EST
conference. haidi: let's get straight to the open in australia. sidney stocks looking to back off that pressure. staying afloat when it comes to the first few seconds of trading . we have consumer inflation expectations today as well as crucial december jobs numbers given pressure on the market at the moment. the borders having been closed for two years exacerbating that. we saw sidney stocks with a big drop yesterday. kiwi stocks suffering its worst day in the year. nikkei futures looking pretty flat at the moment.
more reports about a potential increase when it comes to the covid-19 alert level. as well as watching some of these testing manufacturers given that we have the government calling on faster manufacturing of the testing kits. shery: we are coming off of the press conference by president biden marking his one year in office. he talked about everything from inflation saying the fed's job is to rein in price pressures not to mention questions about ukraine and russia saying he is considering a summit with vladimir putin. we know that russia has an estimated 100,000 russian troops on the border. he also talked about china and u.s. relations saying he is not yet ready to tariffs on the country. let's bring in jodi schneider for more on all of these issues. he seemed intent to make it clear that he understands the american public's frustration when it comes to not only prices
continuing to rise, but also covid-19. >> that's right. a 90 minute long news conference. he kept saying do you want me to answer more questions? he made clear from the very beginning that covid remains the challenge. it has been the challenge in his first year where he basically brought up the vaccines, but that wasn't enough. it's getting people to take them then economy, supply chain disruptions, inflation highest in a long time. he said these are things the government is working on. he also said it's the fed that needs to deal with inflation. he agrees with the path the fed is on and that there will be entries -- interest rate increases soon but it's the fed that has to do this and things are working, they are working on this, but it will take some time. he didn't promise any quick fixes. haidi: he also touched on
geopolitics asked about russia and ukraine. he believes vladimir putin will move in. >> that was one of the red headlines that came out on the bloomberg terminal during this news conference. he says he believes that vladimir putin probably will move. that he and u.s. allies are trying to do what they can to stop that but it will be vladimir putin's decision and he said he is ready for that. he perhaps wants a summit, but he basically gave that very sober answer to the question of whether he thinks vladimir putin will move in the ukraine. shery: he also talked about his legislative agenda. a lot of the setbacks that he has faced perhaps alluding that he isn't really -- has not done that well on many fronts. we do have the senate votes today on voting rights as well which has been another setback for him. what was his take away with
everything that is happening on the domestic front? >> he is the chief spokesman for the government as well. he was tried to put a good face on it saying no one has done is much as he has done in his first year, particularly with regard to getting the vaccines out and getting the relief in the hands of families and businesses. at the same time, he acknowledged that it has been difficult to pass the build back better plan and says they may have to split off parts of it. it was another red headlines from the terminal. in terms of the legislative agenda, he said he is trying, but it's hard with a split congress. he said there's still a lot of divisions in government. he did say that he thought he could get some of these things done and was confident he could, although he acknowledged the voting rights is likely and almost certainly going to fail.
haidi: he was also asked about the potential easing of tariffs on china and those commitments. what was his response? >> he was pretty straightforward saying he doesn't see the tariffs coming off anytime soon. these are the tariffs that his predecessor donald trump had put in place. he said china has not lived up to its commitments for this tariffs to be able to come off. he said a new china policy would be announced, that his trade advisor is working on that however he did not give any indication there would be a change in the policy to china regarding those tariffs anytime soon. shery: jodi schneider here with the latest on president biden's comments marking his first year in office. we have seen some choppy trading
in the new york session. our next guest says the current reporting season will likely be full of upside surprises. it's good to have you with us. you are positive about earnings. i wonder what happens to those positive valuation numbers if we continue to see rates rising? >> we believe and thank you so much for having me, we believe that stocks can continue to go higher easing -- even as the fed changes policy. rate hikes have not dampened over the next 12 months. if you look at the earnings season where going through right now, it has been a little rocky. it's not like what we have seen in the past several quarters.
the numbers are probably going to come in higher than what is expected. what's more important is the commentary which is up from other of price pressures and wage pressures and the tone that that sets as we head into the new year where we see q1, q2, q3 earnings probably in single digits. that's where it's going to get tricky around selection. shery: how are you factoring in the fiscal stimulus measures we have seen? we have seen president biden talk about his legislative agenda and the spending bill filtering through the economy the structure plans take place. at the same time, monetary tightening on the other hand. >> if the build back better legislation gets passed, it will likely be smaller and it's important to understand that
that money would be spent over years. to your point, we would see inflation still moving higher and interest rates going up. i think it would be a little bit of a headwind and that's why we expect there will be volatility this year. we continue to take advantage of growth excelling. we have software, but we have also added back cyclicality. we have become shorter wait to energy because we see oil prices remaining high for the foreseeable future. we also have exposure in conglomerates, logistics, machinery, and we have added back to financial. we are doing the barbell of growth as well as cyclicality. haidi: when it comes to international exposure, you say that china is one of the biggest risks. it is also seen as one of the
biggest opportunities. does the easing by the pboc, the efforts to shore up the economy alleviate the risk somewhat customer? >> it alleviate some of the risk in terms of allowing for more growth. we are also concerned about the government overreach. we have seen tighter regulatory requirements. we think the risks outweigh the benefit and that's where we are staying underweight emerging markets. >> what opportunities do you like in -- at the moment? >> we are underweight because if you look at the egg this year, it is down not as much is that -- people are not happy that
their bond portfolios are down. we're underweight using it as a buffer against downside volatility inequities. we have added back some high-yield willing to take the credit risk. we think the credit risk is low and that's how we are generating income in our balance portfolios right now. >> always great to have you with us. let's get you to vonnie quinn in new york. >> good morning. chinese lenders are expected to lower borrowing costs for a second month. we are told both rates are likely to be cut. these usually move in lockstep with the rate that the pboc cut on monday. china says it has detected a cluster of covid cases linked to a facility in beijing.
five workers have tested positive of which three have the more severe delta variant. authorities are still investigating the source of the infection. the facility deals with frozen goods. new research shows booster shots with mrna vaccines failed to block omicron. it focused on a group of german visitors to south africa. all had booster doses but experienced mild or moderate symptoms. that highlights the need to fight the pandemic in ways other than vaccination. one of boris johnson mp's has defected to the neighbor party. a former colleague told parliament boris johnson should resign. backers say boris johnson still retains overwhelming support in
the ruling conservative party. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: coming up next, more big bank earnings. the wage wars are heating up. we break down the results. plus, one of hong kong's few esg focused family offices tells us how they are building long-term wealth through sustainable investment. this is bloomberg. ♪
raise rates. >> it's going to be a constant trade-off between whether the market believes that the fed and other central banks have really got this gumption to raise rates aggressively enough. >> the u.s. china situation does create real challenges for any country to find a pathway. >> we see ups and downs because of temporary micro issues. long-term, we will be fine. >> this year should be better than 2021 and 2020. >> industry leaders discussing their outlook for 2022. let's turn to u.s. bank earnings with morgan stanley and of america rounding out what has been a mixed season. morgan stanley is raising its profitability targets for the longer-term while stock trading revenues surprised with 13% jump. long growth returning as consumers and businesses start returning again.
average loan balances rose 1%. let's delve into the latest bank results with our next guest. it's good to have you with us. what stands out to you in this earnings season? >> you have to break it into three categories. what a traditional bank does which is making loans and hoping to get higher prices to get better margins. that business looks pretty good. basically, the strength of lending in the banking industry has turned around completely from where was a year ago. the second segment would be the capital markets which would be investment banking, trading etc.. i don't think that looks particularly good for 2022. the fed is good to have to take for dramatic steps to correct the problems in its own balance sheet and in so doing, is going to slow down money supply growth and therefore, i don't think the
companies that are associated with those businesses are going to do well. the third segment is accounting. couple of years ago, the accountants made the banks increase their reserves dramatically. and that happens, bank earnings went way down. last year, it was determined those were too high and therefore earnings went way up. in 2022, they can't play around with bank accounting and therefore, it's going to be a negative drag on earnings. companies names to each one of the concepts if you're looking for lending banks which you should be looking for, you will look at keycorp, if you're looking at the capital markets banks you stay away from goldman sachs, morgan stanley, j.p. morgan. >> what do you make of the rising expenses especially when it comes to compensation whether it's junior bankers or the top elites of these firms?
>> i don't think it will exert any pressure after this quarter. if you take a look at goldman sachs, keep talking about the fact that they have to pay higher and higher wages to get more talent. where is this talent going to go? if you look at goldman sachs closely, you recognize this company is a partnership from their perspective. it's not a public company. they made a lot of money and they're going to put a bunch of it in their pockets. i think that's all were looking at. if business is weaker in 2022 which i fully and strongly believe it will be, those bonuses will go away. this whole talk about finding talent by increasing prices will evaporate. haidi: it's not just about the
wages, working egg over they are paid as much. not many places, but they might have a better worklife balance and better culture. that has been one of the bigger themes for banks. >> i worry about these guys making tender $12 million per year. it's a joke. these poor guys are not getting paid enough because they are making a few million dollars because they have to work a long time. what if you are a fireman or a policeman? are those guys getting paid a few million dollars for the work they do? no. they aren't even getting paid attentive that. this whole thing about -- they aren't getting paid 1/10 of that. this whole thing about where is the money going, we want to take the money for ourselves, we don't think the stockholders should get it and therefore, we are going to pay ourselves a lot of money and give the market
these excuses as to why we should take that money for ourselves. i don't buy it. haidi: when it comes to the split in performance, talk about the banks that are more exposed to capital markets, investment, commercial and retail, who is going to come out better particularly if you think that maybe a higher rate expectation is already ached stock prices? -- baked into stock prices? >> i would prefer to see the fed come out with a 50 basis point hike in march, but i don't know if they have the guts to do that. i think morgan stanley is likely to do better than goldman sachs or jp morgan basically because morgan stanley rents money. it doesn't sell money. it has a big wealth management division and the bank makes
loans. it's not at risk of loss is going to be a big factor in 2022. it's still not going to do terribly well because remember, in the last almost two years, the fed created $6 billion. that's something like 40% decrease in the money supply. it took eight years before that to create $6 billion. these guys are in the money business. if you create $6 billion, if you give it to them and you say go out and make more money, they're going to make a lot of money on it which is what happened in 2020 and 2021. in 2022, there's going to be a fight for money which is going to drive up interest rates from market standpoint and it's going
to cause real problems with non-bank financial companies and getting money into high-yield markets because we have to get more money in order to put more money up. these guys didn't pay anything for that money. this money is costing 15 basis? it's a joke. this is going to change and is not going to be a pleasant change. shery: let me show this chart to our viewers. the expectation was that banks and treasury yields would mo together. we did see a strong correlation in the past, but that suddenly turned negative. even rising rates are not good enough for bank stocks to continue to rise. is this all about the flattening yield curve that is also hurting the group? i know that you are continuing a buy rating for jp morgan despite the warnings on that stock. explain to us why. >> if you're going into a time
that will be as contentious as i think it will be this year, do you want to be -- you want to be with the best companies. the best management, companies that are overloaded with hundreds of billions of dollars of cash. jp morgan has a wonderful management team. it has a well distributed product line. it has hundreds of billions of dollars in cash. morgan stanley has huge amounts of cash. vanke of america -- bank of america -- >> you can get a roundup of the stories note your day going on
shery: take a look at markets trading across asia. energy is down. wti is losing ground after rallying to the seven-year high in the new york session. kiwi stocks are down. nikkei futures are also under pressure. we have the trade numbers this hour. in that market, we will be watching one big company as we have a big interview coming up.
meetings with the country's leaders in key have. the biden administration says invasion of ukraine could happen at any moment. antony blinken will meet russia's foreign leader but says some of moscow's demands are non-'s. u.s. aviation regulators say 60% of aircraft are approved for a low visibility landing. new frequency bands that verizon and at&t use are close to what is needed for aircraft radar. but this also means more airpods -- airports were flights can safely operate. turkey has reopened a pipeline that was locked out -- knocked out on tuesday by an explosion. national energy company is carrying out repairs to the damaged infrastructure.
it is said to have happened after a pylon fell on a pipeline sparking a fire. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. bloomberg global economics reporter kathleen hays here with the preview. these lower quotes for the rates, is this a done deal? >> it certainly looks like it, but let's see this week started off on monday with the pboc cutting its medium-term lending facility by more than expected. 10 basis points. then, we get the deputy governor of the pboc giving an extensive
briefing to reporters where he says that the central bank has to act forcefully. they have to act quickly and frantically -- preemptively to avoid a credit collapse. it is pretty much a done deal because markets are expecting more action. the chinese security journal says it is highly likely they will cut the right -- prime rates today. it they will take the steps necessary, the banks will follow through to get this rates lower. what you are seeing here is the medium-term lending facility in green. sorry, it's in blue. it is standing right now at 3.8. it was cut by 10 basis points. now, the blue line the one year lpr is going to be cut and the five-year both by 10 basis points or possibly 10 and five regardless, this has been well queued up. it is also being plotted by a
former pboc official come at the former director of statistics saying right now the pboc has a small window of three or four months to ease policy. he is looking at the fed is starting to hike rates perhaps more aggressively. he says that could lead to capital outflows. the pboc has to move rapidly. he also warns to avoid flood like stimulus in the property market. he says the government has realized they cannot depend on the sector to support growth and he is warning against doing too much there. bloomberg economics saying in the first quarter they also expect to see the pboc cut its rrr rate as it did in december. the stimulus is queued up, the urgency is there. i think it was dusk it would be a big shock if they didn't move
at all. the lpr is this something that the bank set among themselves is the best rate they give their customers. they know they have to go in lost -- lockstep with the mlf that has already been cut. it looks like a done deal. haidi: chinese developers shares and bonds all showed record rallies amid reports that beijing is considering a package of easing measures including allowing property firms access to much-needed cash from pre-sales of homes. stephen engle joins us out of hong kong. is this a significant alleviation of the pressure that is built up on these developers? >> absolutely. if this does come to fruition, it would be a major removal of a
stumbling block for these developers and their equity crunch. keep in mind the cash horde of presales generally speaking accounts for nearly half of these developers inflows. when you cut that off as many municipalities and governments in china did to the developers late last year, it was like taking oxygen away from a dying patient. they didn't have the means to find other areas of liquidity. for funds to remain viable. that is why we have had this cash crunch sitting on top of a mountain of indebtedness in the sector. an analyst with credit suisse says relaxation of presales restrictions would be or could be the biggest and arguably the most important easing measure toward the property sector so far.
that is why yesterday in hong kong, this property developed shares so embattled over the last year rallied considerably. stocks soared as well. you had a company like agile group that has been a favorite of short-sellers soared 13% the most since 2015. sources are telling bloomberg that there is potentially a package of easing coming from the housing ministry and other authorities including the banking regulator on alleviating the cash crunch by allowing these companies to act with presale funds. shery: we've been talking about a change in tone from beijing. could this finally be at? -- be it? >> is this the turning point?
the industry has been waiting for. that's why we have seen so much volatility and the bonds have been zigzagging up and down. you get a bit of good news and they get up -- go up then they go down the next day. tenterhooks says as far as what the market going to show today, yesterday you had the big rally. if there's anything that yesterday's rally tells us, it's that there's huge sums of money waiting to come into this embattled sector. this perhaps is one of the more pivotal pieces of news. not news yet, it's reports, but it clearly shows that there is money huge vast swaths of money to come in if these easing measures come to fruition. shery: we are counting down to the start of trading. here are some of the stories we
are watching today. trade data to this hour expecting to show a wider deficit. we will bring you those numbers when they break. tokyo's government reportedly planning to raise its alert to the highest level. we continue to see case records -- case levels hit a record across the country. and the hitachi ceo has told bloomberg that the company is ready to sell its 40% stake in hitachi transport system but wants to find the right industry partner. in south korea, the finance minister is holding a weekly economic meeting. this is the government works to finalize a budget proposal before submitting it to parliament next week. we will be watching korean bonds because we continue to see the selloff on that space given reports of this extra budget. we are also watching north korean state media reporting that kim jong-un has presided
over a party meeting to discuss the nation's policy toward the u.s.. a few hours ago, data showing that producer prices rose 10% on the year in november. those inflationary pressures worldwide. coming up, one of hong kong's a few esg focused family offices tells us how they are building long-term wealth through sustainable investments. this is bloomberg. ♪
haidi: we're looking at avenues of building and preserving long-term wealth. we are talking to a banking focused in hong kong. district capital. great to have you with us. impact investment is something that a lot of funds are prioritizing now. is that the major driver in terms of the investing that you do and how do you balance that with the need for these longer-term stability and returns? >> >> good morning and thank you for having us back.
the emetics of impact makes a lot of sense for family offices anywhere in the world in terms of being able to preserve and protect our assets over the long-term. it is not something that has just come to mind recently. being more present and being more visible in the market is a function of many things especially policy and the trends. we have been focused on the strategy for at least a decade already. we look forward to doing more in the field. haidi: when it comes to the demographics of the wealth in the families that you manage, are you finding there is a demographic shift in terms of a generational shift for what
types of investors are willing or interested in impact investing? >> there is definitely been an increased amount of discussion amongst the next generation. the millennials and the younger generation is just coming to transition to wealth management at this point into the asset ownership. they're asking a lot of questions. they have been using their money and using their dollars to vote for companies and they consume in a way that aligns their values. now that they have come to control more and more of the wealth of their families, they're trying to use their investment dollars to be in line with what they think. shery: what are your top investment themes for 2022 and how have they performed over the
past year? >> it is been quite consistent with cop26, we were seeing strong national commitments hence clean energy needs to be front and center. asia where we are is the home of the world's fastest-growing economies and these rising incomes in families, they have a rising energy demand. it's a strong market opportunity and we will continue to invest in that. the esg data and ratings integrity is something that we have foreseen a few years ago looking at the taxonomies, all of the mumbo-jumbo. all of these regulations coming online for fund management and
asset managers to be esg in line, we are heavily invested in companies that will service that need. in terms of the carbon markets, i think we have seen some extremely strong performance. the huge elephant in the room is will nations and governments come into play in the markets in the carbon markets? with china coming online last year, a huge boost in our investments. shery: tell us more about that, about china's boost into your investments given the change you have seen in the past year. >> at first, we were hesitant about pricing carbon will actually do environmental good. we have looked at markets in
california, europe, north america in general. with china coming on, it's very clear that carbon markets are here at the main state. it's clear can we ensure the clarity and channels into high-impact sustainable initiatives that will be essential for nations to deliver under net zero goals? shery: thank you so much for your time. watch us live and see our past interviews on our interactive tv function tv . there you can delve into all the functions that we talk about also become part of the conversation by send us -- sending us instant messages. this is bloomberg. ♪
downsizing its investment arm. tiktok's owner is dissolving the internal investing team and overhauling a separate team. reuters has reported that beijing is drafting new rules for tech firms around raising and deploying funds. the administration has denied the report. one fund is expected to double assets to $108 billion in three years. the firm wants to buy rivals as regulation scrutiny forces smaller funds to exit and is talking to like-minded firms to help that happen. shery: breaking news out of japan, we are getting the trade numbers with exports coming in at an increase of 17.5% year on year for the month of december which is a bigger gain them was
expected. it is a slight easing from the previous month, but it is still beating estimates. import numbers, an increase of 41.1% which is a small gain than expected. also and easing from the previous month. we have seen the weaker yen also domestic consumption, commodities pricing rep -- prices rising. that's why you have 41.1% growth. exports have also beat estimates which is why we are getting the trade deficit at a much smaller than expected for and ¥35.3 billion for those adjusted numbers. haidi: we are speaking to ceos and business leaders about the impact of inflation. ab inbev expecting supply chain disruptions will continue this year. the ceo discussed the market outlook with esg strategy.
>> we are definitely moving into a better time after all this disruption in covid. i think that unfortunately, we are not there yet 100%. you know that some countries are getting omicron and as you get the wave of omicron, more disruptions in supply chain will happen. this will continue to be a topic this year. more so in the first half of the year. in the second half of the year, things will be better. it's not going to be fixed at all this year. supply chain disruptions continue to be part of our conversation. going to be more in the first happen in the second. the second big issue is inflation. i think that inflation is an issue globally. it's not going to be away very quick. we are still in the middle of the wave and that has an impact
in consumer purchase power and this is everywhere. of course, the more consumers -- pressure in developing and emerging countries, the more this will be a disruption. i think the third point for second semester is once everything settles, we will see the difference between people and emerging developed countries and developing emerging countries will be different. post-covid. we need to benefit from productivity, the technology step up that we had during covid so we can close the gap. it feels like a tale of two different stories after covid. the elephant type where the developed mature countries will accelerate further while the developing countries will need
first to correct the trajectory then later re-accelerate. the supply chain disruptions is inflation then the two stories of the mature and developing countries that we will need to have different actions after covid. >> you guys have had such success, what would be your advice to leaders out there who are saying we get it, we know were at a tipping point when it comes to climate change, here's a company ab inbev that has sent -- set goals years ago and they are hitting them ahead of schedule. where is your advice to them on how to do it? >> i don't think i have advice to give to all of these clever people. we have a little bit of our own experience. what is the right side that you want to be in history?
we all know what the right side is. second is the confidence that you can find truth within your business -- tools within your business to improve your efficiency to better connect your ecosystem around targets that are shared and make everything more efficient and that consumers are an invariable important part of this equation. -- a very important part of this equation. we think that consumers want to support and close the loop in how sustainability comes the part of your strategy and not a distraction. for us, it's part of what you do . it's our business, we are in the sustainability business because we are natural and local parted when you think this way, you're getting -- they need to do what is right in terms of sustainability. shery: as we had to the opens, hitachi's ceo says it's ready to
territory. a chinese property hopes a lighter touch from beijing. plus the standard chartered of technology posting a post-pandemic rebound. shery: energy leading those losses. we are seeing wti right now reversing that gain that we saw with the crude prices at that seven-year high in the new york session. financials also loosen. the japanese yen holding at the 114 level. we saw it at the highest in about a week in the u.s. dollar given the risk off sentiment we have seen broadly. we did get those trade numbers out of japan. export numbers beating expectations, coming in at a agin of 17.5% -- at a gain of 17.5% year on year. import prices gaining 40%
given weaker commodities prices. kospi unchanged at the open. the longest losing streak since november. five sessions of losses already for the kospi. we see the korean won gaining against the u.s. dollar at the moment, this after we saw it rally in the previous session. sort of a proxy with the yuan as well. you see a bit of strength in the yuan and the korean won tends to move together. sovereign bond yields fell from the highest level since 2018. we have this economic meeting happening in south korea discussing the extra budget. when that happened last week, we saw the selloff in the bond space. haidi: we are seeing a pretty lackluster performance in australia as well. the asx extending those losses. now trading at the lowest in over a month. we are seeing downside about 3/10 of 1%.
we are seeing gains when it comes to materials, utilities, health care also seeing modest gains. we see oil prices press higher. crude continuing that assent to the highest level since october 2014. that is not even helping those energy stocks trading in sydney. new zealand also seeing a little bit of further downside after suffering its worst session in almost a year in this mid week of trading. we are seeing the aussie dollar a bit stronger, over 72 u.s. cents. new york crude giving back some of those gains. this after we did hear from the iea saying the market looks tighter than previously expected, demand proven to be resilient in the face of omicron. and the supply disruptions in addiction to a plug -- in addition to opec-plus driving the outlook for prices higher. shery: let's bring in our next guest, who says the real excitement in 2022 could come
from chinese equities. joining us is head of aipac -- apac equity strategy at hsbc. do you buy into the strategy that we will see monetary easing or the regulatory side of things? this chart on bloomberg show you how those easing speculation rumors actually led to property stocks rally in. -- stocks rallying. >> we bought into that narrative october last year, when sentiment on china was really bad. some said it was not an investable market anymore. we said we think that some stimulus will come through probably by the end of that year, 2021 and into 2022. we moved overweight china at that point in time. we see that now.
some stimulus is coming through on the monetary side. we see a rate cut. we see stimulus on the fiscal side. valuations are still up. we you also see is the mutual funds that were significantly underweight on chinese equities in october, this year starting to refill positions there. not as much underweight anymore. i think they can by more. shery: will chinese policymaker's actions shield the markets given the u.s. will be under direction? >> not completely. the correlation, the sensitivity of -- in particular the mainland chinese markets, if the u.s. market goes down, chinese markets could go well up. they ignore that the largest stockmarket in the world is having a bit of a tough start of
your, other markets will drive into that. on the near term basis, there will be a bit of an overhang for emerging markets. eventually i think we have already seen a large selloff in particularly chinese equities last year, valuation the story is much lower. the interest rate stories different. china is going down. the rest of asia for the moment, leader in the year these rates need to go up as well. in the near term, if the u.s. struggles overnight, asian stocks struggle as well, but as we go deeper into 2022 we will see a different change. chinese equities could turn out to be the exciting stuff of this year. haidi: the year of the tiger. [laughter] what happens to the rotation flows from chinese equities? last year they headed straight for india.
is this another start to the year where we see more optimistic outlooks when it comes to em's in southeast asia? herald: yeah, you are absolutely right. we saw last year people want to get out of china. the property sector was really poor. they moved into india, for good reasons. india is largely liquid. the correlation with china is very low. at the beginning of the year, or late last year, money started to flow back to china. some actually went to aussie on as well. normally in these kind of periods, when the u.s. is expected to raise interest rates, the dollar is strong, certain currencies like the indonesian rupiah would be week. in the past, the central bank
would have to raise interest weights -- raise interest rates. that was sometimes unnecessary for domestic demand. domestic demand was already big and they had to deal with high interest rates as well, so the indonesian economy would struggle. now it is the reverse. there is money going into indonesia for a simple reason. nickel, people need it. battery makers need to be there. supports, investments to the currency. inflation is low. the growth picture is better. indonesia is the second or third fastest growing market this year in terms of earnings growth. you have a very different story unfolding. i think people need to be very cognizant of that. i think indonesia is one of the markets we are most excited about, together with china this year. haidi: what about the pressure coming from a more aggressive fed? the bank of indonesia said they
don't feel like they need to move in lockstep when you look at some of the bond spread buffers. it perhaps paints a different picture of how much pressure there might be. herald: there is a couple risks to asian equities that we should not ignore. one is that we see a more aggressive fed than what is currently being priced in. we will see about three rate hikes this year, probably another one next year. if we see the inflation picture remains very stubborn or does not really come down, we might have to say they will do much more. that will be a negative. on the other hand, you could say what could possibly go right for emerging markets this year? it might also be that as we go deeper into the year, say by july we see supply chains have eased. the inflationary pressure is still there, but not as much. then we go to the opposite side, maybe we don't need three rate hikes anymore.
maybe we are happy with two. then suddenly you have the reverse emerging. that could be quite positive for emerging markets. an aggressive fed, but maybe will could go right, not aggressive. maybe these bond yields, which you guys were talking about this morning, stubbornly begin over 120% on the 10 -- 1.8% on the 10 year in the u.s., we have seen this happening a year ago as well. that could be a positive risk for emerging markets or asian equities. haidi: herald, always great to have you with us. we will get to vonnie quinn in new york with our first word headlines. vonnie: president biden says it is the federal reserve's job to rein in inflation and he
supports the decision to scale back stimulus. marking his first year in office in a news conference, biden says his economic plan will broke up so -- will be broken up. the position also issued a new warning to president putin over ukraine. >> if they do what they are capable of doing with force on the border, it will be a disaster for russians if they further invade ukraine and our allies and partners are ready to impose severe costs and significant harm on russia and the russian economy. vonnie: china's private watchdog denied reports it will put restrictions on tech deals. reuters said the government agency would require tech giants to seek approval before raising funds. the new rules would reportedly apply to come in his with over 100 million users or revenue north of $600 billion. china says it has never issued
such a document. china says it has detected a cluster of covid cases linked to a cold chain facility in beijing. five workers at the center tested positive, of which three have the more severe delta variant. authorities are investor getting the source. the cold chain facility deals with imported frozen goods. u.k. prime minster boris johnson has rebuffed an official to resign over covid rules. a former cabinet colleague and brexit ally told parliament johnson should resign. however, backers say johnson still retains overwhelming support in the ruling conservative party. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: we have an alert on the bloomberg chinese developer saying they have an overwhelming
majority of holders supporting their exchange offer, 477.2 million dollars. they plan to relaunch the exchange offer on january 26, this coming at a time when we have seen chinese developers under pressure and yuzhou proposed to swap millions of dollars of bonds maturing this month for new debt, seeking to repay holders but anticipating that they will not have sufficient funds they are seeking to amend government bonds maturing later. take a look at sony as well in japan, because we are seeing a bit of a rebound, up more than 3%. this after plunging about 13% on wednesday. they lost about $20 billion in market value after that microsoft deal was announced to by activision for 69 -- buy activision for $69 million --
billion. we are seeing sony on the upside in today's session. haidi: we are watching qantas. they are saying there is a plan to terminate the long haul cap in crude agreement amid a challenge, saying at this point there are no job losses associated with the proposed termination. we are seeing qantas trading softer at the moment. they are seeking pay and conditions -- pact pay and conditions with cabin members. the airline has gone back to the fair work commission to determinate that current enterprise -- to terminate that current enterprise deal with the cohort and push them onto a modern award until a new deal would be reached. that means 97% of cabin crew after they voted against the new deal before christmas. qantas wanting to simplify some of those settings and cut down
on costs. also watching bhp, trading at pretty healthy gains of 2.5%, saying it is planning to simplify its dualistic structure and having its primary listing based in sydney. the world's biggest miner saying that is part of their annual earnings overhaul. just confirming a report we had earlier that, dual listing begin in 2001, but the single listing change is set to begin in the first half of this year. still ahead, how blockchain can bring about new efficiencies to air travel. we discussed that, the -- discu ss that, the impact of 5g technology on flying. that coming up next. it's loan prime rate day in china. all signs are pointing to more support for the economy. we will get more on that decision next. this is bloomberg. ♪
pres. biden: my trade rep is working on that right now. it is uncertain. we are not there yet. haidi: president biden speaking earlier on the trade situation with china. chinese banks are expected to lower borrowing costs after the people's bank of china cut policy loan rates and signaled more easing to boost the economy. kathleen hays is here with a preview. more key lending rates are expected to be lowered over an hour from now. how aggressive is this move? kathleen: this move will be aggressive enough to follow all the things that have already been put on the table by the people's bank of china to make sure they put a four under the -- floor under the deterioration
in credit and the property market, that they avoid financial contagion. the cut on monday sent a signal. when the deputy governor of the pboc spoke and said they have to avoid credit collapse, it really cements that the next thing in line is the loan prime rate. as you said, loan prime rate day, like fed day, something we will watch more. the china securities journal saying it is highly likely that banks will cut the loan prime rate today. when you are looking at this chart, you are seeing the medium-term lending facility rate, 2.85, that is the blue line. it was cut on monday. we are looking at the green line, the one year loan prime rate at 3.8. the red is the five-year own prime rate at 4.65. the one you're expected to be cut by 10 -- one year expected to be cut by 10 basis points, or
lowered should say. the lpr is a defect of benchmark lending rate. thanks get together, 18 -- banks get together, 18 to submit to the pboc for the best rate for customers. if all are in lockstep with the mlf, you know the lpr is coming down too. it's something they have put in chain. they are acting quickly. they are acting definitely. they already had an impact on the credit market to a certain extent. they want to see people having confidence that they will do what it takes to make sure the funding is there, they stabilize the economy, and don't let this turn into something worse. shery: we heard from an ex-pboc official talking about the pace of easing. what did he say? kathleen: in a way you would think, wow, what is he talking about? the fed will start raising rates. then they will start balance
sheet runoff. bond yields might raise more. this was the ex-director of statistics of the pboc telling bloomberg that it needs to have about three or four months to ease policy. he warns against flood like stimulus flowing into the property market. he does not want to see over stimulus and speculation again, but he does think that she talked a lot about higher inflation in the u.s. -- he talked a lot about higher inflation in the u.s., weaker yuan. he is given that warning. for now, the chinese securities journal, bloomberg economics saying the rrr that was cut, the reserve requirement ratio for banks, look for another cut in the first quarter. we don't know how far they will go. there still being a bit prudent, but the message is so clear, we don't want to let this get any
worse and we are taking steps by making sure these lending rates come down. shery: they are using all those tools available to them. kathleen hays there. given those easing hopes, chinese developers shares in bonds sold record rallies on wednesday. for the latest, let's bring in our chief north asia correspondent stephen engle in hong kong. how significant would this be for those builders? stephen: it is a shift in sentiment. i have been reporting on this almost every day. the nativist -- the latest news is there will be potential of a package of different easing measures in the property sector, which has been absolutely hammered by regulation over the past year or so, combined with weak consumer confidence as far as buying flats. we had at least seven developers default since october. this latest surge in bonds as
well as shares yesterday came on reports that perhaps part of the easing measures would be allowing developers access to their presale funds. this is important if it does come to fruition. generally speaking, developers, about half of their inflows come from these presales. many minas abilities and the governments -- many municipalities and governments restricted them from tapping into -- restricted developers from tapping into those funds. the central government wants them to pay deferred wages, they want them to pay their contractors. they want to get them to complete their buildings and units and deliver them to those who paid downpayments. instead, perhaps lower down on the priorities, paying off some of their bond liabilities and short-term liabilities. if this comes to fruition, this
is what a couple who talk to bloomberg had to say. the relaxation of presale positions could be the biggest and arguably most important easing measures towards the property sector so far. we are getting another comment, an asia-pacific cio saying this is exactly what we were hoping for. haidi: can we say this is a potential turning point in the regulatory crackdown? stephen: well, it's a point where some money managers are saying, okay, this is a big enough move that we might want to get in. that is why you so record inflows on a number of record bonds -- of different bonds. one company's bonds have been oversee the -- been over siege the last few weeks.
its bond in the weeks prior would may be move one sent on the dollar. -- one cent on the dollar. in recent days it has been seeing lots of volatility. country gardens saw a record gains yesterday. this could have a reversal as well. there is money, international money and local money, waiting to flood into the sectors should beijing in fact make significant moves on the regulatory front. it is a guessing game. there could be significant easing. haidi: our chief north asia correspondent. you can get more on that story and other stories that you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminal. this is bloomberg. ♪
haidi: we do have the australian jobs numbers coming through. employment change for december coming in at a slight base of jobs. we are seeing expectations for 50,000. that is after the huge number of 366,000 being added in the previous month of november, but the unemployment change, we are waiting on that. expecting that on employment rate to tick lower. the jobless rate coming in at 4.2%.
that is close to a low we last saw in 2008 of 4.1%. a huge move down when it comes to the unemployment rate from 4.6% to 4.2%, less than expectations of 4.5%. jobs added, 41,000 full-time. part-time, 23,000 jobs being added. there are huge dislocations when it comes to the labor market in australia due to the order be enclosed and no foreign talent being allowed to be brought in, and omicron having huge impacts on the supply chain and taking large parts of the workforce out due to quarantine. the aussie dollar strengthening, this after the jobless rate falling much more than estimated, close to a 2008 low of 4.2%. let's get you to vonnie quinn with the first word headlines. vonnie: chinese lenders are
expected to lower borrowing costs on thursday for a second month. sulfur economist tell us the one year and five year loan prime rates are likely to be cut. the pboc cut the lending facility rate. the chinese central bank pledged further easing to stabilize the economy. new research shows booster shots with mrna vaccines failed to block omicron. scientists focused on a group of german visitors to south africa who experienced covid infections. all had booster doses, but experienced mild or moderate symptoms. researchers say that highlights the need to fight the pandemic with mothers -- with measures other than vaccination. turkey opened a key crude oil pipeline. officials say flows through the conduit are back to normal, 450,000 barrels a day. a national air and energy -- a natioanl energy company -- a
national energy company is focusing on rebuilding after a fire. qatar opened ticket sales for the fifa world cup in november. special discounts for locals. prime seats for the final will set you back right now at least $1600. this year's world cup may prove the first major sporting event open to global fans since the start of the pandemic, or not. qatar hopes to attract more than one million visitors to the tournament. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: the covid cluster has been found among cold chain workers in beijing, adding to concerns about contaminated goods spreading the virus. our bloomberg managing editor
has the details. what do we know about this cluster and some of the theories being discussed? emma: five people working in a cold chain storage facility in a district of beijing have tested positive for covid. this is part of a relatively small by global standards flareup in the capital that is nonetheless causing a lot of consternation given we are weeks away from the start of the winter olympics. officials are saying the facility these people worked in deals with imports as well as other cold chain products centered around china, and that these workers who tested positive had not left beijing in the last two weeks. the implication being potentially they might have contracted the virus from products. shery: what is next for china in trying to contain the virus?
emma: they haven't been able to get back to this much vaunted zero cases for many months, basically since delta, much more transmissible, got into the country. and now we do have omicron in china as well with a couple epicenters, the main being in shenzhen. at this stage, they are still prosecuting the virus very stringently. they are trying to find every c ase to snuff them out through mass testing. it is causing a fair bit of disruption. the outlook for that is it will continue for some time to come, at least through the winter olympics and through the communist party congress this year, which we don't have an exact date on. shery: the managing editor for asia global business, emma o'brien with the latest on virus
headlines. looking at the commodities space, given we are headed toward the loan prime rate decision across banks across china. we have seen base metals, nickel and copper leading. china vowing more tools to support the economy. not surprising we have seen such big gains. brent crude finished the session above $88 a barrel. wti also rose to that seven-year high. we are seeing a bit of downside pressure in the asian session, which is why we are seeing energy stocks losing ground in trading today. take a look at crypto assets. bitcoin rebounding slightly. we saw bitcoin fall below that $42,000 level in the new york session. really tight monetary policy has been seen as a catalyst behind this continued slump in crypto athletic -- in crypto assets. ether, we saw losses in the
previous session, but we are above the $3100 level. we have seen a massive rally for ether as well, 4.1% last year or so, but given the big losses we have seen in 2022, interesting that one of the biggest casualties of the some of has been grayscale coin trust, -- bitcoin trust, the biggest bitcoin fun. next, u.s. aviation officials and wireless companies agreed to avoid major flight disruptions. we will have the details on that next. this is bloomberg. ♪
>> monetary policy is not the only game in town, no longer. that is very important. you can raise rates more aggressively, but that is not going to ease supply constraints that are the underlying cause of this higher inflation. >> i think that inflation is an issue globally. it is not going to be away very quick. we are seeing the needle of the wave. that has an impact on consumer purchase power. this is everywhere. but of course the more consumers under pressure in developing and emerging countries, the more this will be a disruption. haidi: executives weighing in on
the supply chain issues. we are tracking the fallout of the global supply chain crunch. these are the top stories today. the port of long beach moved record cargo volumes last year amid an import surge brought on by the pandemic. the west coast port saw an almost 16% jump compared to the previous year. logistics giants in the u.s. are returning to remote operated forklifts. two of the biggest logistics companies in the u.s. are deploying thousands of software run equipment. cathay pacific is offering bonuses of up to $3700 to pilots willing to endure hong kong's strict quarantine regime in a bid to get more planes in the air. this coming as virus suppressions suppressed the city's inbound air cargo shipments. haidi: we will stay with aviation.
for the third time in less than two months, the u.s. aviation system on tuesday faced the threat of widespread flight disruptions over potential 5g interference, only to get a temporary reprieve. a last-minute accord between wireless telephone companies and the faa averted disruptions. a long-term solution is still to be worked out. our bloomberg terminal users can read those stories. airlines around the world are adjusting aircraft appointments over fears that a 5g rollout could interfere with key safety systems. let's discuss more with technologies on the sector. sumesh patel is the asia-pacific president at sita, which provides it and munication services to the airline transport industry. we appreciate your time. have the issues surrounding 5g in the u.s. surprised you? could there have been a better semblance of planning or
communication? could we face those similar issues when it comes to asian carriers as well? sumesh: thanks for having me. the operations for services i would say is not impacted by the current debate around c-band frequencies. basically for 5g. they are close to the airports. at sita, we are aware of the potential issue of 5g bands being closer to radio frequencies or certain airplane models. of course we look at for an agreement to be found around airports to remove the risk of interference. clearly the arrival of 5g presents a huge benefit to the air to ground aircraft
communication, including the ability to support safer in-flight decision-making, helping to optimize operation and enhance the passenger experience. clearly we are hopeful that an agreement is found for the specific bands around the airport to remove the risk. haidi: in what ways more broadly has the pandemic changed the use of technology around passenger travel? sumesh: based on our 2021 air transport it in science, which represents the view of more than 80 it and airport vision makers across 45 countries, basically what it says very clear is the pandemic has driven the digital transformation to tackle immediate challenges.
i would say there are three main challenges our industry faces today. one is around health. the second is passenger journey. and third, sustainability. if i grow a little bit more, if you look at most of the airlines and airports are expected to spend the same or more in 2022 compared to 2021 to address three key challenges. the first one as i said, due to covid, health remains a top priority, just as security was after 9/11. while most of the airlines and airports are struggling to work within the documents, at the same time the industry is embracing change. fraud is an issue with paper documentation. one recent article says the fa ke covid certificate market is growing worldwide, helping to
have fake documentation. many government and commercial health teams are currently being deployed to tackle this broad -- this fraud and deal with paper documentation. at sita, we are working on building a health hub which allows the interoperability of different skills working together. working at the crossroad of airlines, airports in the government, we are able to streamline the process around health documentation. haidi: how much does blockchain play into the digital transformation drive that you have ongoing in the industry? sumesh: blockchain certainly plays a key role. there are certain areas, sharing the information is key now with health and the passenger processing requirement. the blockchain is one area where
multiple stakeholders can share important information clearly and securely among themselves. certainly in two key areas, one is healtha nd passenger -- is health and passenger safety. haidi: we have variant after variant spreading around the world. what do you expect to be the key challenge in 2022? sumesh: now, one good thing is our industry has really learned how to deal with -- how to live with the virus. the way we were impacted 18 months back is not the same. our feeling is that with the new technologies in place and additional transformation, it will be much faster. the area of focus will be mobile and biometrics. a lot of what you can do at the airport now, using your own
mobile device and mobile as a remote, passengers will be able to do a lot before even they arrive at the airport. haidi: sumesh patel, it was good having you with us. sita apac president. it is not just the airline industry that suffered during the pandemic, we have seen some conductor shortages -- seen semi conductor shortages in that industry. the intel ceo is optimistic the u.s. will pass the chips act to support domestic semi conductor manufacturing. he says intel remains committed to china. gelsinger spoke to bloomberg. >> we think this is a great start. maybe the second half of the decade there will be a chips act two, but this created a lot of energy. we believe that we, u.s. companies, also asian companies, should be participants in accelerating this capacity on american soil.
i personally have been very involved in lobbying for getting the bill done. we are hopeful that before the continuing resolution ends in february that that timing is one that all the legislators are lining to get across the line. there is similar timing in europe. we think it is a great start. if we can go from 37 to 12 and i set a moonshot objective where the u.s. gets back to 30% over the next decade and europe gets back to 20%. i think that is an incredibly positive way to leave this decade, one we are optimistic we will be able to achieve. >> to push you on that, you make noise about this. most of the other people who make noise in terms of standing up to china tends to be people like facebook and google who don't have the same amount of sales. i checked, china is your biggest customer.
it is bigger than the united states. do you worry that they might take retribution on you, or do they have no real choice in terms of chips at the moment? patrick: we believe every country would want local suppliers wherever possible going forward. our objective is build the best chips and deliver them to our customers on a global basis. about 25% of my revenue is in china. we have deep customer relationships there, ones where of course we want more supply chains there. our customers there want to build the best cloud platforms, the best commerce platforms. if our products enable them to be markedly ahead of competitors, we will continue to satisfy that business. we have seen continued growth in china and are very committed to that market for the long-term. but the u.s. china situation
does create challenges for any company to find pathway -- find a pathway through that tenuous relationship. >> do you think we are heading toward a world where there are effectively two intranets, a west -- two internets, a west and one in asia? is that the reality of technology going forward that people should prepare for? patrick: if you think about chinese policies like dual circulation, the great firewall, there is a level of disengagement of that market from the rest of the world. at the same time, we think of technology as neutral. it is neither good nor bad, neither u.s. nor asian. >> i don't think the chinese or the government -- or the american government thinks it is neutral. they make such a fuss about it. isn't that a political reality of the world you are in? patrick: certainly.
part of the chips act, it is good economics, but it's also national security as well. when we have 80 plus percent of the world's supply in asia, that is not very comfortable for national security as well. that is why i said a geographically balanced resilient supply chain for the most important resource of the future, and one that -- hey, we are committed to that market, but very much a u.s. company. we have substantial presence and manufacturing in the u.s. european markets, we hope to announce major expansions in the u.s. and europe, and hope to rebuild the supply chains on their soils as well. haidi: the intel ceo speaking at the bloomberg year ahead conference. one ceo tells us how he is dealing with the chip. we -- the chip squeeze.
haidi: we are also watching some of those korean defense stocks, this as we heard from north korean leader kim jong-un signaling he may lift the self-imposed moratorium on major nuclear weapons and intercontinental listed missile tests. we are seeing gains of more than 7% and 5% for a couple of those stocks. daybreak: asia, we have more coming on. this is bloomberg. ♪
shery: more investor pressure for china's tech giants after regulators denied that reuters report on new curbs tied to tech deal making. china alley on says it will not make payments on several bonds, signaling a default is imminent. let's bring in david ingles. without the credit easing measures that we were expecting, lots to keep an eye on. david: absolutely. let's start things off with a look at the property markets, because it is more nuanced given the extreme moves up we have seen across a lot of these dollar bonds, and also some of the listings on the chinese mainland. a good example of that would be the shanghai property index. it should be up more than 20% from that low.
we are flirting with that high we hit a couple weeks back. a couple levels to watch. i alluded to the fact that we are looking at some of these high-yield dollar bonds, which have been on a bit of a rally on the back of some of these policy u-turns as some analysts call it. i am also what is happening with government bond yields in china. let me phrase it this way, the emergence of the convergence because of the divergence in policy. when you look at the chinese three year bond yield, for example, that is back to the lowest levels since the middle of 2020. and treasuries are back to the highest level since even the start of 2020. that is the key theme to watch as we make our way into the open of the markets in hong kong and chinese mainland. haidi: the very eloquent david ingles as always. take a look at how property
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>> good morning from hong kong. it is not :00 a.m. in the city, also -- it is 9:00 a.m. in the city, also beijing. this is bloomberg markets. we are counting down to the open of trade on the chinese mainland and hong kong. >> chinese lenders look set to cut borrowing costs, backing the pboc pledge of further easing to stabilize the economy. hopes of easier money and a lighter touch