tv Bloomberg Daybreak Asia Bloomberg April 11, 2022 7:00pm-9:00pm EDT
shery: good morning. i am paul allen in sydney. we are counting down to asia's major market opens. shery: i am shery ahn in new york. welcome to "daybreak asia." a sliding -- tighter monetary policy and china's covid lockdowns ripple across markets. china approves its new videogame licenses since july and tencent is absent from a list of new
titles. the u.s. because on all nations to condemn russia's invasion of ukraine after president biden discusses the war with india's narendra modi. we are seeing u.s. futures holding onto some gains after the s&p 500 lost ground today. the nasdaq 100 news in more than 2% to the 10 year yield continuing to rise above the to 75 level for the first time since 2019. and the dollar index continuing to strengthen for an eighth consecutive session after prizing that wait on oil prices. we heard from the opec secretary general that it would be impossible to fully replace russian barrels a pop. paul: let's have a look at aussie -- the aussie. futures off by .25%. nikkei futures suggesting a flat open as well. new zealand has been trading for
about one hour now. off by .1% so modest declines but take a look at the yen continuing to weaken. 125.46. the yen near two decade lows at the moment. aussie yields continuing to rise. shery: we are seeing the worst selloff in 20 years. they brace for the latest inflation reading. that's bring in mark cranfield and we are seeing also the implications for asian bond yields that are surging at the moment. tell us what to expect in the next when he for hours. flex nervous period for bond traders. they are hearing consistently hawkish messages from federal reserve speakers. even some such as chris going as far as to say rate hikes are a
blun tool and could cause collateral damage and we are seeing asset classes, everything, equities, commodities, everything is being caught up in this vortex which is being created by rising treasury yields. it's also a huge week for supply and there's a lot of bonds to be sold. $100 billion worth of new bonds to be sold including 10 years or 30 years. it is a holiday on friday across the world. difficult time to sell. obviously affecting monetary policy across the world. singapore is likely to tighten policy as well. they are in track with whatever is happening in the united states and this week, we could see another tightening of policy plus a more aggressive one then we used to in singapore so we are seeing long end yields going higher everywhere and australia, australia reached 3% in the sector and we may see something like that in singapore as well in other parts of asia.
so wherever you look, it's an extremely tough time to be a fixed income investor. paul: in terms of singapore, there is an interesting correlation going on with the yen. the singapore dollar yen heading in the direction of 100. the yen is 125 now against the greenback. what is the trend here? mark: some people are talking about dollar-yen going back to levels we have not seen for more than 20 years which would take you towards 150 against the u.s. dollar. at the time, we saw russia defaulted in the late 1990's, dollar-yen was well above 100 40, not far from 150. in the russian debt crisis helped to bring dollar-yen down a long way. in those days, the yen was the most significant haven currency in the world. it seems to have lost that status and nowadays, the yen is losing ground against everything
partly because the bank of japan is really keeping to this low rate policy. they have been defending their yield targets so the bank of japan clearly is going to be one of the last central banks in the world to even think about tightening. the united states in particular is moving rates higher. even asian nations, korea, malaysia, singapore, indonesia, most parts of asia have already done some tightening and there may be more to come so for that reason, the yen is really being used as a ending current, a place to short the yen against practically everything, so really, the pace of decline for the yen, there is no reason for it to slow down in the near term until you see a change of policy in japan and that is not likely just yet. paul: all right. mliv strategist mark cranfield it. thank you for joining us. chinese shooter game stocks surged in new york despite a broader pullback in tech as
china ended a 10 month freeze on a new game approvals. let's bring in stephen engle. obviously welcome news for investors in the chinese game space, but tell us about the headwinds that remain. stephen: well, they are not out of the woods yet. the gaming players, that's very good news, but a company like tencent still has of course -- is under pressure from other fronts. tencent just recently had to pull the plug on its penguin e-sports venture that was going to combine to create a big amazon like twitch service, a chinese version of the twitch service of e-sports livestreaming, but beijing abolished -- kaboshed
they all eeked out gains as well. the administration of china published a list of 45 game titles that received approval. there had been a hiatus since july of last year as authorities really attack to gaming industry including the state media once used a term that video gaming for young people was like spiritual opium. that was a characterization that was later scrubbed from the internet but tell, you can get an idea of how the government viewed gaming's influence on young people and the addictive nature of it allegedly and how it contributed to the generation. going forward, now that the hiatus or the freeze has been lifted, we will have to watch if this is an ongoing thing or a one-off. shery: stephen engle there. we continue to watch geopolitical uncertainty as well. austria chancellor has become the first european leader to meet vladimir putin in person on
the war in ukraine. he came away pessimistic on hopes for peace. >> i have no optimistic impression that i can bring your from this conversation from president putin. the offensive is obviously being massively prepared but there for also the clear -- therefore also the clear commitment of the international red cross. shery: for more, let's bring in windy benjamin. -- wendy benjamin. what is the latest? wendy: the latest is what you heard the austrian prime minister say, that european union nations are urgently calling for more weapons to be sent to ukraine. russia has diverted its plan of attacks from the capital. they have given up. they are putting their attention on the eastern region which is far less populated in terms of density of population.
that's where everyone is predicting the battle is going to get much tougher and the russians are planning to be much more brutal to civilians because there are also in the east russian sympathetic ukrainians and this is not going to be a good phase of the war. paul: bloomberg politics editor wendy benjaminson there. let's get to vonnie quinn for the first word headlines. vonnie: staying with ukraine, volodymyr zelenskyy has urged south korea to supply weapons to the war against russia in a video addressed to parliament, he called the korean war -- cited the korean war as he called on lawmakers to approve the sale of military hardware. earlier, seoul rejected kyiv's request for antiaircraft weaponry because of expressible stance on not providing the hardware. >> we need air systems, aircraft, tanks, and other
armored vehicles. and ammunition. it can be indispensable for us. you have antitank, antiship weapons. when it comes to survival in a war and at the complete -- of the people, it is necessary. action must be taken quickly. it is necessary. vonnie: pakistan's new prime minister laid out his vision for the country in his first policy speech. he said he wants to turn the country into a paradise for investments to shore up the economy. he also unveiled a range of populist measures including raising the minimum wage. he was elected prime minister by over half the countries through had a 42 lawmakers, ending weeks of political turmoil. shanghai is set to maintain a strict covid lockdown with daily cases rising to records. in a statement on the city's official wechat account, the communist party pledged to keep harsh restrictions in place to cut off any community
transmission parts of the city have been knocked down for several weeks and frustration among residents has been building. shanghai reported a record of 26,000 cases on sunday. thousands of students joined protests across indonesia over rumors the government is considering delaying the 2024 presidential election. the president denies his administration is trying to push back the vote to allow him to stay in office beyond the two-term legal limit. indonesian police fired tear gas and deployed water cannons to disperse the protesters. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery. shery: still ahead, we will discuss opportunities in energy tourism and trade as economies emerge from the pandemic. western australia's deputy premier joins us later this hour. first, a recession may be looming. not all downturns are equal and there could be opportunities ahead. this is bloomberg.
>> we do not have a policy rule for everything. we don't have one for every industry. it's a very brute force hammer that we use on the economy. when you have to use a brute force tool, sometimes there is some collateral damage that happens. we are trying to do this in a way that there is not much of it. you cannot taylor policy. shery: christopher -- tailor policy. shery: christopher waller. we continue to see the bond space really reacting with that rout continuing. the australian 10 year yield topping 3% for the first time since 2015. we are seeing the kiwi 10 year yield continuing to rise to that teen high end of hours, the 10
year yield here in the u.s., treasuries above to 75 for the first time since march of 2019. in various parts of the yield curve also starting to invert which really is signaling a potential recession to come. our next guest says not all recessions are made equal. let's discuss these market implications with the ceo of wealth wise financial. it is good to have you with us. are you pricing in a recession at this point? what would that mean for the equities space? >> while we do not see a recession in 2022, we have to look forward and say eventually, we will go into the next recession. as you were mentioning, not all recessions are alike. they don't have to be like 2008 which was somewhat catastrophic when it comes to equity prices. if we look back at the 1980's recession, a year later after
that recession, the market s&p 500 was up 25%. if we look at the 1990's year later, the equity markets, s&p 500, up 5%. often times, while we may see declines, we then see a quick rebound. the other thing to note is from the time the yield curve inverts to the time a recession starts, the s&p 500 tends to go up on average 12.4% so investors may not want to miss out on that potential rally. shery: i think the fear right now is that if we continue to see yields rising, we may investors flock to the bond space. the gtv chart on the bloomberg showing how yields have risen and the real rate also could turn positive anytime now. so what would that mean for the equities space, especially if you are trying to find some value? loreen: the good thing about that is a balanced portfolio
will have more yields than it has had. when it comes to the fixed income portion and you don't want to give up all of your fixed income. the other point to note is that spread between the s&p 500 dividend yield and the 10 year treasury is the widest spread we have seen since 2018, so quite a big spread. yes indeed, once again, it is time to look at fixed income and see a place for it. it does have a place for investors. to your point again, investors will continue to look at fixed income but if you are looking at a balanced portfolio. also to remember, if you look your today, large-cap value is in the positive so there are areas in the equity markets to look at as well. paul: just a minute ago, we were hearing from lucifer wallace -- christopher wallace saying that the fed is using a hammer in terms of rates and that brute force does cause some collateral
damage. if you are looking around the market at collateral damage, are there any areas that have a void written all over it for you? loreen: i think that is what we have seen today. we have seen pricing adjustments with expectation of 50 basis points coming up. it might not just be one 50 basis point rate hike. it might be another one after that so the markets have to reprice. we are looking at positions like health care as a sector that looks very attractive right now as far as valuations in areas of the market like large pharma that we think can get through some of these more difficult times. paul: we have earnings season kicking off this week. jp morgan, goldman city, among those, the first to report. what are you anticipating in this environment of hot inflation? loreen: inflation is going to be the key in talking about companies who are price setters. where are the companies that are
able to go ahead and set the isis and what are the companies that just have to take the decrease in profit margin? i say that rockets -- i think that markets are going to react strongly in a positive way that can set prices like in the area of food. if you look at companies like chipotle in the areas of food where they have been able to raise prices versus other areas of the market where they had to take the profit margin cut. paul: loreen gilbert, ceo of wealth wise financial, thank you so much for joining us. you can get a roundup of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb . this is bloomberg. ♪
>> global competition could increases. it has -- the fuel for delivery through february 2023. the bank of japan is now cutting its growth forecast on the largest number of regional economies since the start of the recovery in a move that is likely to support perhaps continued stimulus coming from the central bank. in south korea, we are watching finance minister -- planning a meeting later today. we will be watching what he says on inflation not to mention of course the upcoming administration and where those
prices in housing prices are going. president moon jae-in's cabinet set to meet at 10:00 a.m. local time and the bank of korea is expected to release its monthly on a supply data at noon local time. this comes after it announced the sale of one trillion won in your bonds, paul. paul: let's get a -- two year bonds. paul. paul: amazon selling $13 billion in bonds in a year. the retail giant plans to use proceeds from the seven part deal for general corporate purposes is -- purchases. that may include share buybacks. sources say amazon's 40 year bond yields are 1.3% points over treasuries. the surprise reversal has sent off speculation about his intentions for taking a 9% stake in the company. by not joining the board, musk is no longer subject to an agreement to keep the share below 14 point 9,000,000,000%. it opens the door for him to
press toward her a deal. or even take a more hostile stance against the company. canada's shopper -- shopify wants to bring in more retail investors. the proposal to implement a split is awaiting shareholder approval in june. shopify will offer the ceo a special founders share. a coffee company has completed the restructuring of its financial debt emerging from chapter 15 bankruptcy proceedings and that means it is no longer subject to bankruptcy or insolvency proceedings in any jurisdiction. the ceo says he is confident that luckin coffee is positive for growth in the long-term. shery: take a look at stocks trading at the moment. kiwi stocks gaining ground. this will be the longest losing streak since january and of course, this comes as we are
headed towards the rbnz rate decision. they are expected to raise rates by 25 basis points. they have already raised by more than 75 basis points in october 2021. we might see more tightening to come. australian futures pointing to the downside. .3%. but this of course after two sessions of gains and as we continue to see that 10 year yield continuing to rally to the highest level since 2015. we are also watching japanese stocks which are pointing lower at the moment. this after losing ground in the previous session. we have had significant weakness on the japanese yen but of course we will be watching that 10 year yield as well because it rose to the highest point -- .24%, close to the upper limit for the boj so if we get past that 25 basis points, we could see some more boj operations. we are expecting ppi numbers out
of japan so take a look at that. and this as the japanese yen flipped the board. you can see the currency space is now at the 125 level. very close to the weakest levels in 2015 against the u.s. dollar. this as we continue to see strength in the greenback, the highest level since july of 2020. we are headed towards the u.s. inflation numbers tomorrow which are expected to come as another high. the aussie not doing much. the key be holding steady, perhaps a little bit of weakness after falling the previous week, paul. paul: still to come, the deputy premier of western australia, roger cook, joins us on his first official visit to singapore. he will share his feuds on australia's upcoming -- views on australia's upcoming election as well, set for may 21, and is outlook for the state's economy. that conversation in a moment.
>> as borders reopen, talks around trade and tourism forced to be more active. roger cook joins us. he is making his first overseas trip to singapore since borders reopened in march. deputy premier, thank you for joining us. western australia's borders have opened, as well. what opportunities are you discussing their -- there?
>> obviously singapore is an important part for western australia. it is our fourth largest trading partner and it is important to get there and speak with partners in the aviation industry and other trade related companies so we can talk about all western australia has to offer. paul: recently the story of the gic taking big stakes in green the hydrogen and other renewable developments in western australia. how significant will these projects be going into the future? can you compare them to iron ore that generates such huge revenue? >> certainly energy transition is an important part of our diversification strategy. we believe western australia having abundant wind and solar energy resources and all of the
components of the lithium ion battery and other elements associated with energy storage, we believe we can play a leading role in renewable energy and we want to be a green hydrogen hub for the southeast asian community. this is important for decarbonizing our own iron ore industry that plays an important role in our national economy. >> how important will these issues be in the federal election and what is important in western australia as you head to the polls? >> i think it is important that everyone understand that climate change is a priority for younger people but also for the australian community. people will be looking for national leadership on where the country is headed relating to how we confront many challenges associated with our future.
we are looking forward to seeing both political parties at the federal level making significant and courageous announcements in relation to decarbonizing our economy. this is important for western australia. we are energy intensive but also the engine room of the national economy in terms of resources. last year, $230 billion of goods were sold in relation to our resource sector. over half the national goods export. so how we transition to a new energy future and how western australia diversifies economies are important questions we will look to see addressed in the upcoming campaign. shery: is enough being done? what more do you want to see from the federal government? >> i think we need leadership and we need to make sure
australia chart support -- charts of course for a new energy future and western australia wants to see economy diversify into the future and see a commonwealth of federal government partner with us to make sure those things happen. i support a labor victory at the election obviously but we are intent on working with whoever is in government to make sure western australia's getting the well-paid jobs that come with a diversified economy and making sure we can work with partners in southeast asia and beyond to ensure we can continue diversifying our economy through energy transition, tourism, international education and other sectors we think will make an important contribution to our economy. i want paul: -- i want to explore the balance more. the labour party, federal
government, the liberal party your opponents. you just received a larger proportion of the goods and services site. does that look like an election bribed to shore up support for the government in your state, and should the government change, do you think you would get a greater share of tax suits? -- receipts? >> we believe the portion we receive is fair and equitable -- we are already giving the 30% of our gst shares, the largest considered -- the largest contributed by any state which underlines how important western australia is for the national economy. so we are looking for political parties in this upcoming federal election to really spell out how they will continue working with
western australia to make sure we can continue to be the engine room for the national economy and continue to take the nation forward, confronting all the challenges associated with the energy transition. we believe labor would have a better policy but as any state government will tell you, we are happy to work with whoever is in power in camera at any particular point in time -- canberra at any particular point in time. paul: you have very strict covid restrictions that are being eased. what is the shortage -- what is the status of labor shortage now? >> a very low unemployment rate at this point, 4.1%. this has been a business community challenge but now that the borders are opening we are looking to attract skilled
workers to western australia to really be part of our great economic story, that is all about resources and energy agenda and making sure people have the opportunity to come here and enjoy our great economic future. we want to make sure western australia can go forward but we understand that workforce constraints are an impediment to many at this point. the open borders are a great opportunity to welcome tourists and also skilled workers who can contribute to our mining sector, oil and gas and petroleum sector and also be part of the economic story western australia is, the diversified economy taking all the opportunity we can from the great story that western australia is.
shery: deputy premier, thank you so much for joining us during your visit to singapore. media reports that michael barr has emerged as bidens front runner for vice chair of supervision. a former treasury department official and currently the dean -- 18 in michigan and he has emerged as a top pick. this will be a toss job, overseeing banks at the federal reserve and bidens last pick faced opposition in the senate and was dropped but now we are hearing michael barr has emerged as the top pick for fed vice chair for supervision, according to politico. paul: morrison is looking to get reelected in may and we will get
details from ben wescott. how does pulling looking -- how does pulling look -- polling look? >> tighter and tighter every day. this was slightly longer than we would expect for an australian election but numbers are starting to come in now in the latest news poll it was 53, labor, 47, coalition. not a great result for the government. but tighter than it was before and neither side is confident of victory and are seeing a struggle for power on may 21. shery: what will be the major issues for whoever wins the election? >> they will fight a tough
battle afterwards. there will be champagne on the party and right after they will have to get into cost-of-living issues, which are still a major problem thanks to the war in ukraine. prices are rising and australia was a massive standard during the pandemic so now we are headed toward $1 trillion of debt in what -- in australian dollars as a result of spending. it had great results but now has to be paid down. and wage growth has been lackluster for a long time. both sides of government are promising they can bring it up but neither side has laid down how their plans would move up wages for australian workers. shery: let's get to vonnie quinn with the headlines. >> rather pessimistic about the
prospect of peace in pain, and -- in ukraine, and the first leader in the eu who visited putin. he said sanctions will stay in place as long as people are dying in ukraine. the u.s. is calling on all nations to condemn the war in ukraine. biden says the u.s. is ready to help india diversify energy imports to help make them less reliant on russia but modi has declined to impose any sanctions and continues importing russian oil. china is ending their videogame freeze. the biggest mobile gaming arena has been on edge.
45 titles were approved. new zealand's central bank looks to raise interest rates in a fourth straight meeting. risks amount of economic downturn. [indiscernible] 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. shery: next, crude prices level off and asia after a slump. we will have more on that and the other big commodity move next. this is bloomberg. ♪
prices in the u.s. and lumbar is a big part of that. orange juice is rallying. 2017 highs. concerns in florida and brazil's supply. concerns about colder weather in the u.s. and shortages of supply. the dirtiest fossil fuel, coal, demand is soaring after phasing out imports in russia. this will have an improvement -- this will have a profound impact on the thermal coal markets. futures pricing across major coal prices have risen, reflecting an increasingly tight market for thermal coal and limited reduction capacity. the real victim of a ban on
russian coal is emerging asia. allie, good to have you here the asia-pacific region largely relies on coal. how do sanctions on russia impact them? >> there is direct and indirect impact on the sanctions on russia. increasing restrictions are placed on russian banks so traders globally are trying to look for alternative sources of coal. it's becoming an issue because russia is the third largest exporter of thermal coal, 18% of thermal coal capacity. because of russia's position in this space, thermal coal prices have gone through the roof and what is happening in the trade
space is a zero-sum game. the eu, japan, and the u.k. have announced they will phase out thermal coal which means if they get their hand on supplies, a means it will be priced out. paul: how quickly can europe, japan, south korea replace the coal and where would it come from? >> thermal coal supplies have already tightened before the russian invasion of ukraine and because of the invasion and people trying to get hands-on supplies, it has become difficult for them to secure stasis. -- secure space.
there is not a lot of cargo for them to purchase. long-term if they can get some thermal coal would probably come from the u.s., columbia, and south africa. for asian buyers it would probably come from australia, indonesia, the u.s., and canada. paul: crude oil is trading near february levels as concern grows over china's demand outlook, covid cases, lockdowns prompting refiners to trim oil processing. su keenan has more. >> almost all price gains we have seen since the russian invasion have been given up and if we drop at the latest trading
in asia, we see a rebound. back above 95 but in the new york session it dropped to below 94 at the close. a 4% drop on the day. that's because of the uptick in the shanghai covid cases we saw over the weekend. the reason we see a rebound is because a reassessment as some shanghai restrictions have been lifted so we will see how it works out. looking at brent, it has -- it is now below $100 a barrel and that is because the uptick in cases has already disrupted port operations and prompted refiners to trade -- to trim crude processing rates. looking at the bloomberg you get a bigger picture on brent crude. you can see the downward trend after the peak in march has been
significant. that is the bloomberg chart on brent. the lockdown is changing the calculus the market has according to an industry veteran i talked to. he said combined with strategic reserves, it is taking a lot of suppliers out of the market. a few weeks ago there was a question of if there would be enough will in the market because of the russian disruption. prices were above $100 and then some after the invasion but now with the return of lockdowns and china, demand is in question. opec's top diplomat told eu officials the current crisis in global oil markets caused by the russian invasion is something that is not fundamental and they have no control over. opec-plus is distancing themselves from the situation. they have not done much
recently. secretary-general says these crisis combined to create a highly volatile situation. shery: su keenan there. and we are getting the latest shanghai case numbers coming. over 23,000 local covid cases for today. not as high as the past few days when they topped 26,000 but still a very elevated level, 23,342 on april 11. and breaking news out of japan. the latest ppi numbers. inflation another key issue we are watching. year on year growth of 9.5% for march. this above estimates. seeing the acceleration of purdue for prices -- producer prices beating expectation.
paul: let's get a quick check of the headlines. rising labor costs have weighed on profits at -- in the fourth quarter in indian consulting services. a crunch is making it harder for companies to attract and retain workers. increasing costs are weighing on margins. the makers of fortnite has a $2 billion investment from sony. the deal pushes the valuation to 31 point $5 million, a 10% increase from a year ago. one of the most valuable start ups in the u.s. and currently in a legal battle with apple over app store fees. shery: ruth carson joins us and
we continue to see the yen past the level against the dollar but despite the weakness, will the boj come in again? >> the boj is definitely under scrutiny today and a key factor is watching treasure -- treasury yield levels. it is pushing up equivalents. if it goes up to 0.24 percent, you would expect to see some action. the last time it happened, the boj went all out. paul: ruth carson, senior
beijing approves the first videogame licenses since july. shery: japanese stocks under pressure at the open, extending to sessions of losses already despite the wake japanese -- the week japanese yen. this as we continue watching jgb 10 year yield. will the central bank come in and carry out purchasing operations? would it weaken the yen further? we have seen ppi coming in earlier today, up much higher than expected for march. look at the kospi. significant pressure around korean markets as well. stocks, bonds, and the korean won are seeing pressure.
losing ground for the past four sessions of the korean won and we continue seeing weakness around the 12 point 35 level. if we see a less hawkish central bank we could see more pressure on the korean won, perhaps headed toward the two-year low against the u.s. dollar. paul: cindy just opened for trade and we have a staggered opening in australia. off to a slow start but seeing some selling currently up 1/10 of 1%. new zealand has been trading for a few hours, grinding low. we are watching the aussie 10 year. that yield keeps on creeping higher. now just a shade below 307.
tenure yields close to levels we haven't seen in 10 years. the story of the bond a selloff continues. we are expecting a raising of rates. looking at what else is happening, the u.s. ten-year trading in japan. the yield continuing to creep up. oil 95 .034 a barrel of crude as concerns continue in china. let's bring in jim mcafee. asian shares are at their lowest since mid-march.
msci china is slashing expectations. the environment of this lockdown in shanghai, the ongoing dynamic clearing policy. how is the domestic outlook looking when it comes to china? >> we had a call with the local head of research in shanghai yesterday and he says he knows what is going on but in shanghai, what is going on is having a contagion impact. we see this lockdown being implemented in other cities and that could have a much more serious impact.
the data that came through yesterday was quite positive. this could get china in trouble in the second half of the year. paul: do you look at this as a buying opportunity when it comes to chinese stocks? >> there is a toxic combination of things going on. we have covid in europe, a hawkish fed, earnings in asia that are disappointing. but the issue is if you are an investor group and you see inflation at the highest, how do you insulate the portfolio from that? if you have a pension fund, you
cannot use cash because it is increasing in value so from an asian perspective one thing we have seen is in the last week's we have had a revisiting in japan because it is opening up and we are seeing a lot of interest in japanese equities. shery: the boj is not moving in terms of letting up on their easing policy. what do you like in japan? >> there was machinery data that showed demand for basic
machinery was up 20% year on year. not just across japan. so that is an area that will be insulated from what is going on. shery: we are hearing that building in currencies is important but the government will monitor the impact with vigilance. let's see what the japanese is doing. not much. government officials trying to stave off the weakness we have seen. how connected is the japanese
currency to japanese equity markets right now? >> very important. more than 30% of japanese equities are held by foreign investors and those currencies are usually u.s. dollars or sterling and if we see the value of japanese shares deteriorate it will have a big impact on the portfolio. the boj has a central bank and a mandate to keep inflation low and how to stabilize currency so that will be and other policy requirement from the boj and i would expect action soon. paul: the oil price is easing down $95.95.
are we in a downward trend? >> you would have to speak with the, -- commodities experts. it is so volatile. but commodities in asia the natural market tends to be in southeast asia so some of the smaller markets but if crude falls think about the next importers of it, korea, japan, would be beneficiaries. shery: always good to talk to you. let's get to vonnie quinn for the headlines. >> the austrian chancellor says he is pessimistic about the possibility of peace in ukraine. he became the first eu leader to visit moscow since the beginning of the war. he said he confronted the russian leader on war crimes and
said sanctions will stay in place as long as people are dying in ukraine. the u.s. has called on all nations to condemn the war in ukraine. biden said the u.s. is ready to help india diversify energy imports to become less reliant on russia. modi has so far declined to impose any sanctions on russia and has continued importing their oil. volodymyr zelenskyy is urging south korea to supply weapons against russians in the war. he called on lawmakers to approve the sale of military hardware. earlier, they rejected the plea for the hardware. >> we need tanks and aircraft and ammunition.
you have arnold -- armored vehicles. when it comes [indiscernible] action must be taken quickly. >> 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. shery: looking at the bond space, led higher by treasury yield. the 10 year yield surpassing for the first time since 2018 on the back of the fed last week signaling a sharp rate hike. and long-term debt weighing down , usually -- this move has been
going on for quite a while. the pace of acceleration is incredible. aussie 10-year yield at the highest since 2015. not a lot of movement when it comes to the 10 year jgb yield. we are watching this closely because if it gets to the 2.5% level, the optimal level of tolerance, we might see the boj moving. paul: still to come, a conversation with an advisor handpicked by the store lincoln government. we will speak with him later. but up next, shanghai authorities and the covid zero policies as they struggle to supply their citizens with food and other supplies. this is bloomberg. ♪
other video game makers and livestreaming platforms that rallied today. china approving the return of videogame licenses since july, leading to optimism felt across other asian video game makers. take a look at these other names across asia that we will be watching after china approved. the resumption of game approvals is said to be a positive development for the industry and we continue to watch the broader space. nintendo seems to be down about 1%. paul: let's bring in stephen engle. is this a one-off approval, or the end of the moratorium? >> a good question. we will not know until more gaming titles are approved but it's good news for the investors that have been hit hard. one company is down 73% in the
last year. it has been 10 months since china last approved video games and essentially they vilified a lot of games for what state media called spiritual opium. you can gather their sentiment toward the sector. the government said it encourages addiction and unfavorable behavior. they raise the age for those who can't download games and have had a moratorium on the approval of new titles. late monday we got a published list of 45 new game titles but absent from it were titles from
tencent and other industry leaders. but companies rose so there was some bright news for the tech space that has been taking it on the chin with the crackdown on livestreaming services and algorithms. so the golden dragon index losing but gaining a bright spot. shery: there are still regulatory threats facing the games industry. >> absolutely. livestreaming e-sports is caught up in the crackdown. livestreaming when you have celebrities endorsing products with alleged tax evasion, they are cracking down. a big portion of tencent business is in gaming but they
already -- but they also livestream sports and we heard beijing did not approve the merger to create china's version of twitch with a merger that would have created a huge platform. they scrapped the plants so the industry is still under threat, as is the crackdown on the various use of algorithms in the tech space and that will impact companies. alibaba overnight dipped below $100 per adr. so that tech space is obviously still under threat. shery: while the move on video games has shown some optimism, concerns over covid cases in
beijing looms over investors. let's bring in john you. shanghai cases leveled off a bit but still very elevated today. what is the latest on the lockdown? >> there were signs yesterday the lockdown was easing, some apartment complexes in the city but overnight we got more information that potentially it's not as rosy as we thought. many places that have had restrictions ease like hotels and retail and government buildings so the vast majority of those living in shanghai are still under a great number of restrictions. paul: plenty more to come on daybreak asia. this is bloomberg. ♪
he is no longer subject to an agreement to keep his share below and rising labor costs rise on profits in an indian i.t. firm. net income rose to $1.3 billion, missing estimates. a talent crunch is making it harder for companies to attract and retain workers. the maker of fortnite has a $2 billion investment from sony and owner of lego. the deal pushes valuation to $31.5 billion, a 10% increase from 10 years ago. they are in a battle with
alphabet and apple over app store fees. shery: two sessions of losses but big gains for nexen and game makers rallying across asia given the recent approval by china of gaming licenses for the first time since july. takashi maia gaining more than 4.5%. the full year estimate now rising more than 4%. the broader japanese market is still under pressure being led lower by terry nichols, industrials and health care. -- by materials, industrials, and health care.
a lot of red for markets across asia, including the cost be down for the second consecutive session. asx 200 unchanged but kiwi stocks losing ground for a fifth consecutive session, the laura -- the longest losing streak since january and headed toward the rate decision which would lead to another rate rise according to economists around 25 basis points. we have already seen a 75 basis point hike since october of 2021. paul: let's look at the kiwi dollar. 68.2 against the greenback. one of the worst-performing
currencies in the g10 at the moment and the rbnz decision wednesday in sharp focus, expected to lift rates for the fourth time in a row and take the cash rate in new zealand to 1.25%. the weaker yen continuing to be a theme. near a two decade low. it has only touched this level a couple times in the past 20 years. the korean won continuing to appreciate. aussie dollar appreciating against the greenback dollar. shery: the u.s. is ordering government employees to leave shanghai, this comes from the state department announcing the departure of non-emergency u.s. government employees and all family members from the consulate general in the city. we saw tension between washington and beijing with the
>> shanghai set to maintain the strict covid lockdown as cases near a record high. sunrise communist party pledges to keep harsh restrictions in place to cut off any transmission. frustration among residents is building. 23 thousand cases in shanghai monday were reported. regulators reproved -- 23,000
new cases of covid in shanghai on monday. 45 titles of video games have now been approved in china. tencent was noticeably absent. [indiscernible] wants to turn the country into a paradise for investors to shore up the economy. truth is the elected prime minister. thousands of students joint protests in indonesia over a delay in the 2024 elections. police fired tear gas and deployed water.
new zealand central bank looks to raise interest rates to rein in the inflation. economists surveyed see it being raised to 1.25%. 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. shery: investors are looking at the u.s. pi support -- report to fight inflation at 40 year highs. kathleen hays is here. we heard from the hawk and dove today. who is more worried about the economy chipping toward a recession? >> i will let you be the judge but they are aware it is a risk.
the cleveland fed says they don't think it will happen but they know it is a risk as they move forward. chris waller is the hawk. a member of the board of governors. he spoke at an event today and was asked about the risk fed is taking on in this aggressive path and they talked about the fed funds rate being a blunt tool and the potential of collateral damage. >> we do not have a policy rule for every segment of the population. we do not have one for every industry. we have one. it is called the interest rate. that's it. it is a brute force hammer that we use on the economy and when you use a brute force tool, sometimes there is collateral damage that happens. but we are trying to do this in a way where there is not much of it. but we cannot tailor policy.
>> he was beside rafael from the atlantic said. now let's listen to the dove. evans said -- charles evans said the neutral rate is 2.4% to 2.5%. he says this could happen by march but the neutral rate could be hit by december so he looks that moving quickly and you would have to do a 50 basis point rate hawk -- rate hike. he said he is wary of recession risk, including the possibility the fed raises rates to quickly. so this is it. they know there is risk. they will go as carefully as they can. but they have to move quickly and aggressively.
that is clearly what is on the table, whether you are a hawk or dove. paul: economists seem to be hoping the sign of inflation picking starting to come down. will this impact fed plants? >> i think it will not come down quickly enough for that to have the fed stop hiking rates. the cpi is expected to be up 8.4% year-over-year in march when the number comes out hours from now, well above the previous number of 7.9. already higher than the target. energy and food prices are a problem. services and rents are not coming down. that is keeping the core high as well. the cpi is expected to fall to
5.7% year-over-year by the fourth quarter. still well above that to percent target. not low enough for the fed to think they've done enough. the new york fed had a survey in-flight -- inflation expectations that came in as a record high, 6.6% for the one year expected inflation rate. the new york fed line is turquoise. the white line is from the university of michigan. when your rate, 5.4%. the yellow mark, one year break even 5.6%. another reason the fed has to keep going. they were worried about expectation. look how high they are. it is something the fed has to deal with. paul: president biden's top economic advisor is warning
about challenges caused by covid lockdown and the were in ukraine. brian deese said the world's top economy is uniquely positioned to navigate the disruption. >> we expect an elevated cpi print tomorrow that will reflect march where we have seen the impact of putin invading ukraine on energy prices on other account -- other commodities. we have already seen what happened to gas prices in the u.s. and that will be reflected and likely a big divergence between the headline and core. the real focus in terms of looking forward is what we can do to try to mitigate the run-up in prices. the president has taken some significant action like releasing oil from the petroleum reserve and how to provide relief to consumers feeling the brunt of increases.
we hope if we can move forward on efforts we can stay focused we will see pressures moderate and they will be lower at the end of the year than they are today and lower in the coming year. that is our focus and hope. shery: brian deese speaking with david westin. up next, the latest on sri lanka's economic and political crisis with a number of the newly formed group. this is bloomberg. ♪
beyond the business side of things, he promises to raise the minimum wage. it was a mixture of a populist approach but one. shery: will it help top with the imf? >> there was no mention of accessing financing from the imf which is critical to pakistan accessing hard currency. there was a positive market
reaction. he said it was a sign of stability but it's only one part of the story. central bank had to take a very aggressive step last week. i think the initial is probably phase one and imf will be looking for detail on how he plans on restructuring the country's debt [indiscernible] shery: we continue to see the crisis in sri lanka economical and political. an advisory panel is going to help resolve the growing debt crisis and engage with lenders.
a professor at georgetown university joins us from washington. great to have you with us. in your view, what are the most urgent steps sri lanka needs to step to avoid a hard default? >> there are three urgent steps sri lanka needs to take. the first is to initiate a debt restructuring so that over time they can actually meet with creditors and agree on a reduction because they cannot sustain the current level of debt. while the debt restructuring is going on, sri lanka needs a foreign exchange because there are shortages of food and fuel and pharmaceuticals. so they need to be able to
obtain rich financing from friendly nations to get foreign exchange reserves with which to buy imports. third, they need to work out a program, a fiscal adjustment of increases in taxes and reduction in public expenditures so the fiscal deficit will narrow so that sri lanka is able to repay the new debt after the restructuring that is negotiated. this is what we normally would call an imf program, that level of physical adjustments that need to take place in order for the imf to actually verify the new debt is sustainable, that sri lanka can pay it back but also that having an imf program brings in some fresh resources
and releases the possibility of budget support from the world bank and possibly bilateral loners. shery: how would sri lanka use the fresh resources? >> it would be used for much-needed imports. the other point is the fiscal adjustment is a burden on people and we have seen elsewhere as well. if we cut up, the price of fuel and electricity goes up so some will be used to cushion the blow , the impact of the price increases on the poor. we know most subsidies are actually ignored by the rich because they drive the gas guzzling cars but this price
increase will affect the poor so sri lanka has to make sure the poor and vulnerable are protected from the adjustment program going forward. paul: there is a $1 million bond due in july. >> that could be part of the initialing -- initiating that debt restructuring package. you appoint a legal advisor and financial advisor and once that is done they can actually discuss a postponement of impending debt service payments. it does not mean they will immediately reduce debt, they just push it back maybe a year so that sri lanka can get through this difficult time and pay the debt payment in july and then there will be a full scare
negotiation with all of the creditors about a debt restructuring that would involve the restructuring of the debt for a haircut, as it is called. paul: the imf has concerns about three lincoln debt sustainability. what assurances can be given to them about this? >> that is the fiscal adjustment. the imf has it right that it would not generate enough fiscal state -- space in order to pay back the debt. we need to increase revenue and that is one of the assurances given to that imf and the other would be expenditures. and the state owns enterprises
that are bleeding the treasury and running huge losses. there has to be a restructuring of those enterprises in order to prevent the bleeding out of that treasury and that would generate resources with which to impact debt. shery: you mentioned financing from friendly nations. do you expect china to come through? >> it would be nice. i am not privy to the negotiations that happen at a very high level. all he know is we have done to make the case in financing. i think this is a critical component of sri lanka trying to get out of the current debt crisis. people were marching in the streets because they were angry that they were not getting food and pharmaceuticals and fuels. there were shortages of gas and
things. in order to alleviate that suffering, we are going to need some bridge financing while negotiation and debt restructuring. shery: how fast would it filter through to the broader public? even with the means, how fast could it be distributed? >> as fast as you can get oil into the country, you can get milk powder into the stores. i think it can be done. there are ships carrying fuel coming into sri lanka. but some have not come into sri lanka in waters because they
have not been paid. i understand fuel power cuts have been reduced. that is a sign of alleviation but there are still power cut so i think we need to move to the point where electricity is flowing 24 hours a day. paul: professor, thank you so much for joining us. still to come, china's lockdown concerns continue and shanghai ends there videogame freeze. this is bloomberg. ♪
paul: lots of news for traders to digest today as the markets open in china and hong kong. a lift on the freeze of videogame approvals. let's get to sophia. i want to start on the lockdowns. the u.s. talking about nonessential embassy staff leaving shanghai. what is the latest and how is this impacting markets? >> good morning.
the lockdown is still uncertain if restrictions will be eased. cases are dropping in shanghai but it has been more than two weeks for some part of the city and any easing of restrictions might be localized rather than for the whole city. we are yet to see the economic impact on -- what will the lifting of restrictions look like and when will shanghai be open and free with movement? shery: and the concerns have led the stock market to lower in china. >> the securities regulator
yesterday asked some mutual funds to not that sell stocks. that is a common procedure they have used previously. they used it in may of last year when stocks were plunging. the pboc is making sure there is enough liquidity in the financial system. there is expectation of a rate cut as soon as friday and more liquidity could be unleashed by the central bank but the problem is if that will be transmitted to the real economy and is it going where it is needed. shery: how much support will
authorities approve the new gaming licenses provide for some companies? >> 45 new games is a positive surprise. tencent was not on the list and that is not unexpected. a positive development because it sends the signal the industry is still allowed to exist and that is the read this morning from the trading desk that it will be a positive development for the sector. paul: coming up on bloomberg tv, the former u.s. ambassador to china weighs in on the covid zero policy and the state department orders governments to -- orders government workers to leave shanghai. we have the china open at the top of the hour. shery: market coverage continues. we will see if we have a rebound given the positive development
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