tv Bloomberg Daybreak Asia Bloomberg July 13, 2022 7:00pm-9:00pm EDT
haidi: you're watching daybreak: asia coming to you live. shery: the cleveland fed president says inflation risks are rising after sizzling u.s. inflation print. loretta mester tells us exclusively the central bank should not go below another 75 basis point hike. >> we are going to have to meeting and we are going to talk about what the opry a path of policy is. and again, we don't have to make a decision today. you're going to take into account all the data. shery: markets are rattled by the hottest u.s. inflation in over four decades. the curve inversion deepening as bets increase on a full percentage point fed hike. president biden calls the cpi
number out of date as he visits the middle east on the quest for more oil to help rein in price pressures. annabelle: in asia we are all about the u.s. cpi print and the odds we could see a 100 basis point move from the fed. more fed officials voicing their views for an outsized rate hike. and loretta mester telling us exclusively as we heard, inflation pressures have not peaked. and also there is no reason that the next rate hike should be no smaller than 75 basis points. we are keeping a close watch on sovereign debt space. the aussie three year and the kiwi to year yield. really moving on signs of the fed aggression. also in the longer duration 10 year yields as well. a sign of fears of recession that the downturn could be longer and steeper than projected. the equity space looking a
little mixed. kiwi stocks already trading like this. also keeping a continued watch on the aussie dollar trading a little weaker against the greenback. we have the key jobs data coming in the next couple of hours. we are expecting it to slow in may .our markets live team saying a miss or beat puts further pressure into the aussie dollar following the release. shery: u.s. futures at the moment, we continue to see a sea of red. we have seen u.s. stock markets today in the u.s. session rattled by that very hot u.s. inflation print. s&p 500 turned positive at one point, but that faded. we also saw a deeper inversion, the deepest sense 2000, in 22 years or so. the 10 year yield still below
the 3% level. we continue to see pressure on oil prices. this of course as we have president biden now in the middle east. we continue to watch where prices go for oil in this very volatile session, because this of course has big implications for what happens with inflation. as we just heard from cleveland fed president loretta mester, firmly committed to that 75 basis point rate hike at the july 27 meeting. after the june u.s. inflation report came in much, much stronger than expected. kathleen hays is here with more on this. we tried to ask loretta mester if she could commit to that 100 basis point hike the markets are thinking of. we did not get that. kathleen: we tried very hard to get president mester, and we have to thank her again for spending a great deal of time with us and going into such detail. is it on the table?
can you look at it? well, she said the meeting is still a couple weeks away, there is more data coming in. she mentioned retail sales, obviously this is not just about inflation, it is about spending, about how much or how little the rate hike so far and the ford are -- and the forward guidance has affected the consumer. she also talked about the university of michigan's consumer sentiment survey. because the inflation expectations, which look to stronger in that report, seemed to be one of the reasons why the fed opted for 75 basis point hikes, why they shifted to that. so, what she said today is, when it comes to -- we got to watch, but when it comes to a 75 basis point rate hike, don't worry about it. it sounds like she is firmly on board. let's listen to what she said. >> it was uniformly bad.
there was no good news and that report at all. inflation remains at an on acceptably high level. we at the fed have to be very deliberate and intentional on continuing on this path of raising our interest rate until we get and see convincing evidence that inflation has turned a corner and is on a downward path, and is sustainably on a downward path, and that we just have more work to do. kathleen: 100 basis point, if we had asked you that a few months ago i don't think we would have even thought to ask you. but is that something you could see being discussed, would you discuss it? is it something that is on the table, that has to be under consideration because the fed has to figure out how aggressive you have to be? loretta: we are going to have the meeting and we will talk about what the appropriate path of policy is. and again, we don't have to make
a decision today. we are going to take into account all the data. but we are having this conversation, the markets are having a conversation and putting their money where their mouth is in terms of where market expectations are. so we are going to be talking about the appropriate path of policy. and i have not seen any convincing evidence that inflation has turned a corner. kathleen: so i think what we conclude is i think it is fair to say loretta mester did not rule 100 basis point hike being discussed at next meeting. she made it clear they are watching many indicators, but one thing she can say for sure, she said it several times, is inflation is way too high and a half to bring a down. she also said they would be no reason not to do the same size hike at this meeting that they did in june, and that was 75. a couple weeks ago we would have said, wow, she committed to 75.
today we are saying, why wouldn't she commit to 100? that is just the inflation -- that is just the world we are in. haidi: 100 is the new 75. that is where we are at now. kathleen hays there, after that great conversation with loretta mester. that super hot u.s. inflation print rattling global financial markets as well. let's get the latest on what to expect from today and all the action we had overnight. andrea pop look joins us now. the yield curve inversion continues to signal the level of inflation risks we are seeing. andreea: hi, yeah. look, that's right. as we just heard it was a pretty horrible report. it whipsawed the u.s. markets. and what was interesting i think
is you saw u.s. stocks but then -- stocks bounce but then pullback. at the end of the day it was a modest drop in the u.s. but i think it was a lot of wishful thinking on the part of the market that perhaps we have seen the peak. of course we can pretty much put that to rest after hearing that great interview with loretta mester, who said there are no clear signs that inflation has turned a corner, and as a result you are seeing those u.s. futures under pressure. so look, that is the big question, that remains the big question for the markets, whether we have seen the peak. but we can certainly say is we have not seen the peak. 75 basis point is probably what we are looking at from the fed, and 100 is in play. all of that, a lot of volatility from the markets, and as they are looking at a bigger rate hike, of course now the focus
again shifts to what does that mean for the economy. how deep a being whipsawed, not only treasury markets, not only because of inflation print but because of what we saw with the bank of canada, with that much bigger than expected rate hike. what are we seeing in terms of currency markets when it comes to all these huge rate hikes we are getting, and the expectation that there is more to come, as opposed to those who are really falling behind in this tightening cycle? andreea: yeah, look, you are certainly seeing central banks around the world frontloading, i guess, their rate hikes with bank of korea, new zealand, and the 100 basis point hike from bank of canada. longer-term, if we're starting to look at a recession, the dollar is probably going to
remain strong. and if we're going to see the fed on this aggressive rate path, which by all accounts we are, we're going to continue to see the dollar supported. you are right, it was whipsawed last night, but it has also been going up a lot. shery: we will see what happens. the euro also touching parity, and the japanese yen, a decades low against the greenback. let's now get to vonnie quinn with the first word headlines. vonnie: the bank of canada surprised with a 100 basis point rate hike, the most since 1998. it pushes the central bank's policy rate to 2.5%. economists were expecting a 75 basis point increase. the canadian dollar rallied on the move. the governor warned that more hikes are on the way. >> by frontloading interest rate increases now we are trying to avoid the need for even higher
interest rates down the road. frontloading tightening cycles tend to be followed by softer landings. this argues for getting our policy rate quickly to the top end or slightly above the neutral range. vonnie: president biden says the u.s. would use force as a last resort to prevent iran from developing nuclear weapons. during his visit to israel and the middle east, he sought to calm fears over a potential revival of the nuclear deal with tehran. his tour also takes him to saudi arabia and is focused on improving ties and securing cheaper oil supplies. sri lankan protesters have stormed the prime minister's office after the president fled to the maldives, leaving authorities to impose emergency rule. he defended the decision on security grounds. he has taken on the role of acting president, angering protesters who also want him to resign. he restated the parliament will choose and -- a new president
july 27. 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: still ahead, the latest from the commodity markets. oil moving on president biden's trip to saudi arabia as well as lingering fears of more lockdowns in china. we will be getting the views later this hour. coming up first, tpw w advisor gives us the latest. this is bloomberg. ♪
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>> this inflation print is a problem. >> this is a very hot report. >> domestic price pressures are still quite strong. >> this is going to amp up pressure on policymakers. >> this keeps pressure on the fed keep going. >> we still think they go 75 in july. >> is going to be very difficult to get off 75 basis point hikes. >> this morning's report seems to solidify that 75 basis point. >> they should be careful here because this is actually turning. >> these rate rises are coming as growth is slowing. >> they cannot respond to slowing growth. we know growth is slowing but they will keep going. >> that is a real concern. >> tightening policy into slowing growth is not a good combo for risk assets. >> they can slow the pace but i don't think they are anywhere close to stopping. shery: bloomberg tv guests reacted to hot inflation data in the u.s.
our next guest says peak inflation has been priced in across asset. let's discuss more with jay pelosky. jay, what a day to have you on the show. we really have not seen stock gains build recently. we turned a positive slightly today but that did not hold. so what will it take? jay: well, it's great to be with you again. and yes, quite an interesting day. look, all the talk in the run-up was about how horrible the cpi print was, and it was a very bad print. yet, let's let the market tell us. and the market is telling us this is pretty much priced in. if you look at the dollar, if you look at rates, if you look at stocks, everything responded way better than one would have thought if someone said a week ago that the print was going to come in at 9% year-over-year.
i think everyone would be surprised at how relaxed the process, that reaction was. and that was telling us, in my view, that the inflation numbers are in the price of stocks and bonds and commodities, and the fed's likely moves are also now pretty well priced in. and that is one reason why you have hans rallying -- bonds rallying on a 9% inflation print, the worst in 40 years. that is telling us something. shery: the market reaction, or lack of a huge reaction we were expecting. what are you hoping to see during this earnings season that could actually help us to go higher? jay: well, i do think that the market is believing that the fed will have success. if you look at the futures curve , if you look at breakevens having come in dramatically, if you look at pricing rate cuts a
year from now, we wrote a recent piece called market speed, and the rate cycle and the fed cycle that is anticipated reflects market speed. things are moving much, much faster than they have in the past, and i expect that to continue. and right now the battle is between inflation rolling over and what is going to happen with earnings. when inflation peaks, stocks do well. and in fact when inflation rolls over from the 8% range lower, that is when stocks do the best. and we believe that that period of time is coming in the coming months and quarters, and we feel relatively confident that earnings expectations will be met. the bar is quite low, especially when given that both the u.s. and european economies are growing at a nominal rate of around 6% to 8%.
markets are not used to nominal growth being that high. haidi: how confident are you in the strength of the consumer? jay: quite confident. look, that is one of the things that makes this different, makes it so tricky to forecast. because if we had a recession it is most likely going to be shallow. we have a consumer that is very well cashed up in the u.s. and europe, basically around the world. we have companies that have tons of cash on their balance sheets, trillions of dollars. we have record low unemployment in the u.s. and in europe. none of these things are consistent with recession, or certainly not with a deep recession. and so our expectation is that the economy is slowing. we think it is important that we have a decent car nice to global economy, because while the u.s. and europe are slowing, china is
picking up post lockdowns, and that is very constructive for the global economy. haidi: the you think the market is pricing in 100 basis points? do you think that will also not have a pretty big impact? jay: um, i think the market has barely -- has clearly priced in 75 basis point. maybe we get to 100. i think the real-time indicators, there's some credibility to the idea that things are moving so fast that this inflation print is dated. if you look at where gas prices are in the u.s., they are down 26, 27 days in a row. housing prices are rolling over rapidly. rental costs are rolling over. food costs are rolling over considerably. so who is to say that in the next couple of weeks the conviction that inflation is
coming down does not strengthen as opposed to weaken. so 75 is in the price for two weeks from now. what happens in september, as people have said, and i think is actually correct, that between now and september there is a lot that can happen. i do not think we should spend much time worrying about whether it should be 50 or 75 or 25. we will find out as we move closer. haidi: jay, always great speaking to you. you can of course get a roundup of the stories you need to know to get your day going in today's edition of daybreak. you can get that at dayb . you can customize your settings for the news on the industries and assets that matter to you. this is bloomberg. ♪
shery: bank earnings season is about to begin with jp morgan and morgan stanley set to report before thursday's opening bell new york. analysts say the recent market turmoil likely boosted trading revenue in a big way. su joins us with the latest. volatility in the fed may have been good for banks. su: the turmoil is expected to bring a huge windfall for these biggest banks, at least for the trading desks. the five biggest banks it is estimated by analysts are set for a combined $27.8 billion. and a lot of that money is driven by these fixed income desks. they are expected to combined to bring in $16.4 billion. volatility clearly a friend to the bank. but the turmoil is expected to put a dent in the investment banking fees and offset that. and of all the different issues that investors and analysts will
be focused on, the outlook on recession, what is ahead, will clearly be key. four jp morgan specifically, analysts say they'll be looking on the reserve bill, their potential write-down, and mortgage details, among other changes. jp morgan is up first, right before the thursday u.s. opening bell. haidi: that market volatility is going to be key when it comes to morgan stanley. what are the expectations? su: again, it is how has this turmoil impacted the trading desks. expected to be year-over-year a big increase first morgan stanley. focus will also be on inflows into the wealth management unit. and it is involved in the funding of musk's twitter takeover deal that is now in question and on its way to a delaware court. they will be a big focus to see if there are comments there. morgan shares down 20% for the year.
if you look at the different banks reporting, they are all in the red for the year so far. so, this could be a bump up if they have positive earnings, far exceed expectations. we have citigroup and wells fargo reporting later in the week. haidi: su keenan with a preview of the big bank earnings we are watching. let's get you a quick check of the latest headlines. china securities regulator suspended betting an --v global banks rushed into mainland expansions but regulatory hurdles are slowing them down. credit suisse had a similar application put on hold. it is not clear if they can renew their applications in the future. electric carmaker li auto is a mentorship two million cars by 2025. their president told bloomberg supply chains are one of its biggest challenges, but that the company is laker -- laser
focused on its target. >> in terms of our market share, our target, we cannot guarantee that we will definitely get that 20%, but our target is 20%. and we're very serious about this 20%. haidi: next, cleveland fed president loretta metzger backing a rate hike this month of at least 75 basis points. she says inflation has not yet picked. our exclusive interviews next. this is bloomberg. ♪
shery: u.s. futures under pressure extending the losses we saw on the new york session. 10 year yield trading below the 3% level, really trying to digest what that hot u.s. inflation print means. cleveland's fled president loretta saying the report for june 8 -- as a rate hike of at least 75 basis points is needed later this month. speaking exclusively to bloomberg television, crimes pressures have not yet peaked, but declined to back the full percentage point hike that many market players are now expecting. loretta: it was universe -- uniformly bad. inflation remains at an unacceptably high level. we at the fed have to be -- have to be very deliberate and intangible -- until we get and
see convincing evidence that inflation has turned a corner and is on a downward path, sustainably on a downward path, and that we just have more work to do. >> if we asked you about 100 basis points couple weeks ago, two or three months ago, i don't take would ask you. is that something that you could see being discussed? would you discuss it? is it something we see in inflation now that is "on the table" that may be has to be under consideration because the fed has to figure out how aggressive you have to be? loretta: we will have a meeting and we will talk about with the appropriate path the policy is. again, we don't have to make a decision today, we are going to take into account all the data. we are having this conversation, markets are having the conversation and putting their money where their mouth is in terms of where market expectations are. so, we are going to be talking about the appropriate path of policy. and i have not seen any
convincing evidence that inflation has turned a corner. we have not seen anything in that new cpi report that suggests inflation is turning that. we do know that energy prices have fallen compared to the prior month. so there is some expectation that the next report on inflation, we might see that going down. on the other hand we have shelter prices going up. so again, i think the focus is on the fact that we are going to have to keep moving interest rates up, being very deliberate and intentional about it. if we are moving towards a 2.5%, with the long run neutral rate is, my own belief is we are going to after go beyond that because inflation and inflation expectations are higher than 2% now. so we are going to have to keep moving. and the pace at which we do that is really going to be driven by,
are we seeing demand get into better balance with constrained supply, which remains constrained, in order to see that reflation get on a sustainable downward trajectory. and we have not seen that. kathleen: so given what you have seen, given today's report, will you consider, are you in a position to -- again, you have a couple weeks or so to figure it out, but 75 basis points for example, is that something that you are leaning more now towards saying yes, that is something i may be supporting at the july meeting? loretta: well, certainly the inflation report suggests that there is no reason to say a smaller rate increase than we did last time, because nothing moved in that direction. there are very early signs in some of the reports of an easing of demand. but again, not enough that you actually saw price pressures being alleviated.
we have our board of directors meeting tomorrow. i am particularly interested in what they are seeing in the economy. i have those data reports you mentioned, they are going to be significant. but right now, job one for us is to get inflation under control. and i say that knowing that the risk of recession has gone up. but that's part of what we're trying to do is normalize, or moderate demand. because if we don't do this, we're going to have many more problems in the economy going forward. shery: cleveland fed president loretta mester speaking exclusively to us earlier, and we are also hearing from the federal reserve san francisco president mary daly saying a one percentage point hike is in the range of possibilities as she was speaking to the new york times. in a tweet by reporter citing
these reviews with the fed saying her most likely posture is still 75 basis point hikes coming up in this july meeting. again, mary daly saying that one full percentage point hike is in the range of possibilities. what are you seeing in the markets. ? >> just picking up on what you are seeing, what we are hearing from fed officials is perhaps the signals have not peaked in we just had that interview there saying that certainly not the case, in terms of -- in terms of what we hear from market participants, analysts are looking more at what we are seeing in terms of commodity prices. particularly the pricing commodity prices, metals, oils, gasoline since that inflation report even as cpi hats continue to rise. there is some expectation perhaps at the inflation reading from the latest read could be a little bit outdated. of course president biden saying
that as well. still, bloomberg intelligence saying any optimism around that could be a little bit misplaced in what they are looking at particularly are the private pmi readings. looking at the manufacturing gauge, that is the line here in orange, that is where they are saying you could see improvement picking up as import costs drop. what is really worrying for bloomberg intelligence is this line and white. that is the services sector, and what that is showing us is that more than 80% in the latest pmi read has a report of higher import price for june, it still around those levels that we had in 2020 when inflation was rising fast. turning now to asia, any sort of adjustment upward that we do see in inflation, expectations could mean for bonds, and essentially we are looking at negative returns. their current view of the asia investment-grade bond, around 4.57 percent. difficult to see any sort of fixed income investor willing to
lose out on their assets here, so we could see the yield here hitting 6%. heidi: let's talk about the euro, it is now leaning across the major threshold for the first time in more than two decades. talking about parity with the dollar. bloomberg seeing effects and rates reporter ruth, the drivers that cause the downward pressure of the euro because the radical fallen none of them have really change, what is that tell us about further pressure? >> it just means more pressure to come. there pressures haven't really change, euros citing more than 10% against the dollar this year, it comes down to the intense cocktail of headwinds in the region from growing risks suffering from a recession, it's a proximity to ukraine in the war that's happening over there, and it comes down to the policy diversion story as well as the
federal reserve really ramping up interest rates at the same time the ecb is being pressured to do so, so what does that mean? we will see the euro below parity at some point. i don't blame the markets. >> what is that mean in terms of technicals? has that been based into the pricer how much further could it fall? >> according to different people you talk to in the market a lot further from here, it is a worst-case scenario of 97 u.s. cents with the euro to the dollar, but the same time they say 95 is possible. their groups as it goes below that. in just a sort of wrap it up, they are saying that the euro remains expectedly unviable this summer. the euro bears are definitely ruling this line. shery: bloomberg seeing fx rates
reporter with the ruling in the euro. vonnie: pakistan has reached an agreement with the imf to resume its loan program. nearly 1.2 billion dollars disbursement will be available once the imf executive warns that the deal would release to pakistan the foreign exchange reserves like a cover less than two months of imports. inflation is that a 13 year high. the resignation helped her get the downfall of boris johnson is taking an early lead in the race to succeed johnson is britain's prime minister. the former chancellor one ada votes in the first ballot of conservative mps, beating the trade minister and foreign secretary. the contest a remains wide open with the next round of ballot starting on thursday. >> abiding a ministration is making a latch -- last ditch effort targeting china. the secretary says this is the only way to reduce reliance on
foreign made semiconductors. the bill has bipartisan support, but mitch mcconnell is blocking it while democrats negotiate a spending package. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. on vonnie quinn, this is bloomberg. haidi: supply chain pain, rising inflation, we will hear from the senior commodity strategist next. this is bloomberg. ♪
shery: joe biden opened his first visit to the middle east as president on wednesday by declaring a deep bond between the united states and israel. bloomberg's annmarie hordern reports from jerusalem. anne-marie: president biden wrapped up his first day on his middle east tour as president of the united states. he was in tel aviv in the holy city of jerusalem. today he will have a joint press conference to make statements next to the caretaker prime minister. he's a caretaker prime minister because right now israel does not have a government. they are looking ahead to elections in november. the main moment of this triple come friday evening where we now know that president biden will sit down with saudi arabia's crown prince, mohammed bin salman for a bilateral meeting. the president will be traveling,
the first president to travel from israel to saudi arabia, and this will be a difficult one for the president to draw the line at home. at one hand, he needs the kingdoms help to put more barrels on the market to bring gasoline prices down. at the same time, he has vowed but he was campaigning for the job to make saudi arabia a pariah. i'm annmarie hordern, bloomberg news and jerusalem. haidi: president joe biden is expected to return with an agreement on energy output that could put relief on energy gas prices. that's a hope in the political narrative that the president is hinging on going into midterms. how likely is more output from the middle east -- middle east going to translate to rises at the pump? the president made the point that we have seen gasoline prices come down. >> i think it's a tough ask.
the opec in the broader alliance is obviously concerned about the pickup and demand. that showed in the monthly report this week. they have seen increasing demands for their oil and say, dipping further into that spare capacity that they have at the moment, just exposes them to potentially, further issues down the track, the ability to just react to any sort of disruption. and we haven't actually seen the full effect of sanctions on russian oil to date. so i think it certainly going to be a tough ask, but it's a narrative that we are seeing at the moment, and i do suspect there are more concerns about reducing consumers expectation of rising gasoline prices, which is in part, already played out with what has been at the pump
the last couple of weeks. haidi: how could -- >> how concerned are you about this because there is a revival of covid zero potentially forcing more lockdowns weighing on the demand side of the story. >> it's a concern in china. in other regions where the stock starts, there is an application of restrictions that really has a lot of caution amongst travelers. here in china, you would certainly think about whether the cities got caught up in that. i think the chinese outlook is rather mixed at the moment. but ultimately, the market needs demand restructuring. the levels we are expecting over the last -- over the next six to 12 months are quite significant. this is what young markets do, push prices higher ticket either
supply and demand to react. we need to see demand ultimately lower to rebalance the market. shery: even in the metals market, how much pressure are we seeing in the supply side of things, especially given the focus on the environmental policies, not to mention trying to raise output in places like australia and brazil? >> i think it's lost at the moment where all the prizes have been on the europe and the russian-ukraine war and on output and exports and trade. we have a suppression of investment as a variety of factors for the issues, but also in mining countries like south america. it's becoming quite significant. so it's an issue at the medium term, which will continue to play out, i think, in terms of pricing. shery: what about the broader
global macroeconomic dynamics? stronger dollar or rate hikes to save precious metals as well. >> investors are certainly in a risk off tone, and the high inflation rate last night did kick that pressure out. i think the environments, all the focus is on that potential economic slowdown in developed markets. but i am hopeful that we will start to see some of that offset by china, the strong growth and copper imports for june does raise some hikes that we are starting to see consumers gain some confidence that they can restock and that may partially offset the way in these developed markets, but for the moment, there's probably more downside to come considering that the bearish mood of investors. >> senior commodity strategist. of course we are discussing the potential demand disruption
24% of the world's ev market by 2025. the cofounder and president told us exclusively how the seven-year-old company plans to hit that ambitious target. >> in terms of our market share, our target, we cannot guarantee that we will definitely get that 20%, but our target is 20%, and we are very serious about this 20%. therefore, in terms of the portfolio, in terms of the price that we need to cover, in terms of the manufacturing capacity and also our supplier, the capacity. we are very serious about this 20%, and we are building everything around this 20% target. >> so, to get the 2 million cars a year it's more than tenfold what you are making now and you are going to do that in two to three years? that's a huge expansion, how do
you plan on executing that? >> we want to replicate the success and to replicate the success story and to achieve higher volume. >> as you are building new production centers in beijing, do you need to raise additional capital to fund that? >> whenever the market is in good shape, we will frisk money continuously because this is short-term competition with our competitors, this is long-term. in the economy is scared. it is very important in this industry, so therefore we have to be prepared with the ammunition for the future. cracks in you would prefer to
raise that money through equity? >> right now we utilize both. and right now, here locally in china, we start to use that, and also, we are kind of leveraging financial solutions. >> what about in terms of chips, the supply of chips. is that shorter than resolve and what do prices look like at the moment? >> overall, it is still a big headache for the whole industry now. and right now, we are still struggling with several key ics. but overall, the situation, as we estimate it before, the
overall situation is better than the end of last year. >> how well do think the legacy brands will do? bmws, mercedes, how well do think they will do in the new environment? >> they will also try to figure out a way to catch up with the trend. we are not leading the trend anymore, chinese customers right now are spoiled. there demand is the most difficult to meets. so therefore, if you don't come here, understand the customer. i cannot imagine you could just replicate something in a relatively slower market here. >> how is exporting cars to the other market? >> we have to figure out how to win before we enter the war.
rather than we enter the war then tried to figure out how to survive. >> cofounder and president speaking to bloomberg news senior executive editor john knew in beijing. we are counting down to the start of trade in tokyo and seoul, some of the things we are watching a japan, the results later today with expectations that operating margins will increase. use of steady sales outside china. they are considering a bid for indonesia. they push for its presence in southeast asia that it's its biggest economy. and they are tests running its nuclear reactor on friday ahead of an august restart. over and south korea, the finance minister says the government will strengthen the monetary markets and is ready to
take steps on excessive moves if needed. the finance minister also reliefs his monthly fiscal reported 10:00 a.m. and he said he will reveal this at the international motor show. >> coming up in the next hour, witnessing a dramatic slowdown this year following what was really a bumper year in 2021, we get more on that. plus, jp morgan discussing rising inflation and china's domestic growth challenges will keep things driving for the emerging market. the market open in sydney, seoul and tokyo. of course, as markets are scrambling to potentially reconsider the idea of 100 basis points from the feds post, with that overheated cpi for some very hawkish comments for a number of fed speakers. lots more to come, including the start of trade here in asia. this is bloomberg. ♪
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shery: we are counting down asia's major market opens as investors wake up to a series of rate hikes much bigger than expected. whether it's canada or now markets pricing and from much bigger rate hikes coming from the fed given the hottest inflation print and 41 years. >> and you heard it right here on bloomberg, saying that she is considering 75 basis points is really the base case scenario, and we are looking at 100, potentially 100 basis points not being taken off the table. all of these against the backdrop against rise and recession risk fears on the slowdown in china. let's get you to annabelle for a look at the market open. annabelle: we are also just about to get the singapore gdp figures as well, coming online
with the open of japan, south korea, just starting what we see in the gdp figures on a year on year basis coming in at 4.8%, that is weaker than what was expected in the survey reading a 5.4%. on a quarterly basis, zero growth year. the prior reading had been .7% growth. this and singapore we did see relaxation of restrictions, that could have helped on the consumer side. but in terms of external demand, looking weekend we are seeing that reflected in the gdp data out now. turning to the market open that we had for japan as well, also what we are seeing in the treasury space as well, but the end is holding pretty steady against the greenback, just a little bit of weakness here this morning, and we are hearing that perhaps this moderate moving forward saying that is because this momentum to unilaterally drive the dollar higher, that could be easing a little bit. in terms of what we are seeing in stocks, tracking what we saw the u.s. sessions. the nikkei 225 coming down to
the downside. this turn to korea because we are all about the reaction to u.s. cpi data today. we did have the finance ministry in korea meeting up that inflation read, and they said that they would take any steps necessary to strengthen financial markets and also to curb this incessant one-sided move. in terms of what we see in the stock space, weakness at the side of trade. the cause daca's moderating some of those losses. meanwhile, the korean won is just looking a little bit flat against the greenback, but ocbc is saying it could struggle ahead, it is very risk sensitive and recession sensitive as well, returning to australia in the open of brent crude as well because we are keeping an eye on it where it is trading, we are continuing to monitor that weakness that we do see in commodities markets across the board here. we are now also seeing a particular way could be on the asx 200 moving into the day, also that aussie 10-year just following what we are seeing in the treasury space.
let's get you -- haidi: let's get you more details from singapore. second-quarter gdp data coming unchanged. it was for a gain of 1%. the second-quarter gdp on a year on year basis seeing a gain of 4.8 percent, missing expectations for 5.4%. we are hearing from the monetary authority of singapore talking about they will re-center the midpoint of the dollar near policy ban there. there re-centering of that midpoint up to a prevailing level, there is no change to the slope as the week of the ban, which is interesting we had expectations from a number, including city that we could potentially see an off-site of tightening later this month from the tight monetary policy to potentially 50 basis points, but you're not seeing moves. the moves that they are making will help slow the momentum of inflation and to assure medium-term price stability as well. commenting on the 2022 gdp
growth seen at the lowest path of three to 5%. core inflation projected at 3% to 4% this year. we did expect that growth level to be held pretty steady. we had the relaxation of covid restrictions. a bit more consumer spending. but there has been weakness when it comes to the external demand environment investment as well. so core inflation now expected to come in at 3% to 4% this year. all items inflation cpi expected at 5% to 6%. shery: the monetary authority of singapore has surprises several times in the past, this you're already tightening the policy ban, coming out again as we say with the re-centering of the midpoint. in this inflationary environment that we continue to see around the world, really being felt across central banks around the world, and now as the monetary authority of singapore being the latest to move and say that this
move is to help slow momentum of inflation. discussing these latest moves with alexander, head of emerging markets and apac investment specialist. a j.p. morgan asset management, it's great to have you with us. tell us a little bit of your reaction to what we are seeing from the monetary authority of singapore re-centering their midpoint of their policy ban to what they say is a prevailing level, just another example of central banks moving because of surging inflation. >> as you said, this is another example of central banks generally reacting to more inflation in the economy, but there is one incredibly notable exception, and this is in china. there we've got the central bank of the government using monetary policy, they are easing and simulating fiscal policy and stepping back on the regulatory agenda we saw last year. that's profoundly important because china has the biggest economy in the region. got the largest stock or get in the region.
his very positive even while central banks are moving in one direction. here in asia we have a very large player doing something very different. shery: can that upset recessionary concerns we are seeing, given the aggressive tightening move, not only from potentially the fed in singapore, but central banks around the world? >> absolutely, that will act as an offset in china is a very serious part of the global economy and i think we need to watch the growth that we are going to see there. they government has quite ambitious growth targets. it might be that they don't meet them, but they will try very hard to stimulate in that direction, that will have a profound impact in this part of the world. >> what is a bigger anchor from a currency perspective? is it justice overwhelming virtuous side of strength that we see from the dollar putting on that pressure, or is it still the yuan? >> the dollar will have a larger impact in this part of the world
and a stronger dollar is a headwind for sure. but then of course we come back to how we construct our portfolios and the source of stock we want to buy. and the key there is to buy corporate for companies that will provide irrespective of the level of currency rather than getting too fixated on the variable, which is quite hard to forecast. taker longer view on corporate earnings and spend less time worried about short effects movements. haidi: you take a look at the dislocations we may start to see when it comes to energy. who are the winners and losers who could seek out of asia. -- asia? >> the first stages was what you saw with the reaction which -- with much deeper energy prices and the pendulum swung in another direction that the demand and the prospect of demand destruction was higher interest rates has now been pushing energy prices back down a little bit. so that is quite a complicated picture to look through. but of course, markets which are
beneficiary of high commodity prices would include indonesia, which is a market where we find plenty of stock level opportunity. on the converse we have geographies like india, which plays a much tougher time in any rising commodity prices. a net importer of energy needs. let's say -- it just depends country by country. haidi: from j.p. morgan asset management talking about the outlook when it comes to em. take a look at the dollar. this is what we have seen given that we have a lot with that gdp number for the second quarter just barely avoiding a slump there. you see that trading the move when it comes to dollar seeing at the moment, with the economy essentially flatlining in the second quarter for growing inflation. particularly even with the lifting of restrictions, but also, perhaps more significantly, singapore really unexpectedly tightening monetary policy and another shock move
this year, it's looking to call inflation much higher. it is the same kind of refrain that we see elsewhere around the world as well as the impact of the supply chain disruptions as well. but of course, looking at that re-centering up the midpoint of its currency policies from the prevailing level to let the seeing dollar appreciate further against her peers, and you are seeing that being played out with dollar sing. let's look at the early movers in this thursday session. sophia: taking a look at the sector across asia. it's declining across the board. rising rates can be a net positive for the lenders. you get into aggressive moves, that does bring concerns. weakness in the property sector, what that means for the mortgage books that make up the bulk of their assets, the recession risks of course become a credit impairment issue. we are seeing that reflected today. this turn to what we see in the tech space, nasdaq declining over the past few sessions, you're not seeing the same few
moves as the start up in asia. most tech stocks are higher. turning to a quick check on commodities in terms of what we see in the brent crude space, we are continuing to monitor there, still seeing a decline, we are seeing copper holding around that key 75 or below that key 75 dollar level. let's get to vonnie quinn. vonnie: president biden said the u.s. would use force as a last resort to prevent them from developing nuclear weapons. during his visit to israel in the middle east, the president wants to calm fearless -- fears over the nuclear revival. it is focused on improving ties and also securing cheaper oil supplies. sri lankan protesters have stormed the prime minister's office after the president fled, believing in authorities to impose emergency rules. the prime minister defended the decision on security grounds. he has taken the role of the acting president, angering
protesters who want him to resign. in a tv address, they restated that parliament will choose a new president on july 20. pakistan has reached an agreement with the imf to resume its loan program. nearly $1.2 billion disbursement will be available once the imf executive board approves a deal that will release the stand for foreign exchange reserves covering less then two months of imports. inflation is at a 13 year high. the resignation triggered the downfall of boris johnson has taken an early lead in the race and could succeed him as britain's prime minister. the former chancellor 188 votes, beating the trade minister. the contest remains wide open with the next round of ballots starting on thursday. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. shery: still ahead, the debut in
a hong kong cast a shadow over the pipeline of large offerings from the city. we will discuss the outlook for the global ico market leader at this hour. >> coming up next, our exclusive interview with the cleveland fed president within increase on a four percentage point rate hike from the fed to curb the hottest price pressures in the u.s. in 40 years. this is bloomberg. ♪
shery: -- haidi: cleveland's fed president said it suggest a rate hike of at least 75 basis points is needed later this month. speaking exclusively to us on bloomberg television earlier, they said price pressures have not yet heats. the declines of four percentage point higher in many market players are now expecting it. >> it was uniformly bad, there was no good news and that reported all. was that inflation remains unacceptably high levels. we at the fed have to be very deliberate and intentional about continuing on this path of raising our interest rate until we get nce convincing evidence that inflation is turning the quarter at -- corner and is sustainably on a downward path and that we just have more work to do. kathleen: if we asked you about a 100 basis points a couple of
weeks ago, two or three month ago, i don't think we would have thought to ask you, but is that something that you could see being discussed? would you discuss it? is it something we see with inflation now that is on the table that may be has to be under consideration because the fed has to figure out just how aggressive you have to be? loretta: we will have a meeting and we will talk about what the appropriate path of policy is. again, we don't have to make a decision today, we are going to take into account all the data. but we are having this conversation, the markets are having a conversation and putting their money where their mouth is in terms of where market expectations are. so, we are going to be talking about the appropriate path for policy, and i have not seen any convincing evidence that inflation is turning the corner. we haven't seen anything in that new cpi report that suggests inflation is turning. now we do know that energy prices are -- have fallen
compared to the prior month, so there is some expectation that the next report on inflation, we might see that part going down, but on the other hand we have prices going up. again, i think it's much more -- the focus i think is on the fact that we are going to have to keep tubing interest rates up, being very deliberate and intentional. if we are moving towards a 2.5% with what the long run neutral rate is, my own belief is that we will need to go beyond that and well beyond that because at inflation expectation is higher than 2% now. so we are going to have to keep moving. in the pace at which we do that at an any particular meeting will really be driven by are we seeing demand get into better balance with constraint and supply, which remains constrained, in order to see that inflation get on that sustainable downward trajectory
question mark we have not seen that. kathleen: given what you've seen, given today's report, will you consider -- are you in a position to -- again, you've got a couple weeks, to half weeks basically or so to figure it out, but 75 basis points, for example, is that something you are leaning towards more now to say, yes, that's something i may be supporting at the july meeting? loretta: certainly the reflation report suggests that there is no reason to say that a smaller rate increase -- rate increase the last time because nothing moved in that direction. there are very, very early signs and some of the reports of the easing of demand. but again, not enough that you actually saw price pressures being alleviated. we have our board of directors meeting tomorrow. i'm particularly interested in what they are seeing in the economy. we have the data reports i mentioned, they will be significant. right now, job one for us is to
get inflation under control. and i say that knowing that the risk of recession has gone up. but that is part of what we are trying to do is normalize were moderate demands because if we don't do this, we are going to have many more problems with the economy going forward. shery: cleveland's fed president talked exclusively earlier today to kathleen hays who will fill us in on the exclusive conversation. what was really interesting was the fact that she was not just not committing as of yesterday 100 basis point hike, but we kept asking her, are you at all concerned about the economy in recession and she did not seem concerned. she pointed to the strength of the economy. kathleen: she did, and she also did acknowledge that the recession risks are there. you asked about the strong labor market and how important that
is. that was one of the things that opened the door to her saying it was strong, they are watching a very closely. to a certain extent, i think we could say that, even though she did not want to commit to a bigger move now, she wants more data. before we asked her about the base book, which showed lots of concern about inflation pressures across all 12 districts, we are hearing more about concerns and weaker demand, she brought it to the table. it seems there is a concern about growth, there is a concern about how badly things have affected them so far, but there's not a position yet of -- this is really her style, i was not surprised she wouldn't commit to 100 basis points, or to a certain extent, is she saying that she could be swayed if she sees signs that this is taking a stronger toll, or that, on the other hand, inflation isn't going away?
we were working on the cpi report before that. so she will have to look into that and we will see what happens. >> does it make sense? for investors, economists, we are talking about a 100 basis point rate hike, particularly from the credibility and a signaling point of view? kathleen: that was a great question asked. to me, earlier i saw the cpi report and i saw the hundred basis point rate hike talk and i said that's one out of three that the odds are higher. and i thought, that's traders, they swing in so many russian so quickly, you've had -- you've heard a couple of big ceos in the past week say, do 100, and i think it keeps it do a certain extent, but it's hard, if you are aggressive now, that you can break this inflation expectation cycle, you will change people's views and you can stop the inflation rise. so, i guess to that extent, it
does make sense. particularly after the candidate of 250 basis point hikes in surprise the world with a 100 basis point rate hike. rafael bostic, what he said was this, when he was asked about the possibility of even looking at 100 basis points and he basically said that everything is in play, right? he has to understand the outlook and said, i was going to observe and adapt, and now that he's seen the cpi report, he goes on to say that he's going to see if there has to be any kind of change. mary daly, new york times spoke to her and apparently she said, san francisco fed president, 100 basis points in the realm of possibilities. to me this is a big shift in it has a lot to do with what was said, how this was a pretty bad report, no sign of good news in it, this is something that's really to be thinking.
>> nothing good in that inflation report. our global economics reporter kathleen hays. take a look at what we are tracking when it comes to the latest developments in crypto. celsius is what we are watching at the moment, the crypto lender filing for bankruptcy in the latest sign of a cash process. filing for bankruptcy in the southern district of new york. this was about one month after they had withdraws joining a lot of other casualties for the pandemic assets. take a look at bitcoin, they're just sitting above 20,000 by just about 2.7% at the moment. broadly a bit of stability at this part of the session. shery: interesting that we are now starting to hear again that narrative of crypto acting as inflation had. so we have seen bitcoin in the likes rise for two consecutive sessions. with that inflation print here
in the u.s. is really battered markets across the world. we are talking about european futures coming online to the downside after stocks slumped in the regular session. of course they closed after the u.s. inflation print, and really, europe has priced a rebound this month after the worst first half since the global financial crisis. but, to no avail as of yet. this is bloomberg. ♪
>> oil prices are moving on the latest u.s. inflation report that shows a record high prices are now starting to hit fuel demands. this as president biden visit saudi arabia, asia oil trading reporter elizabeth joins us now. elizabeth, we continue to see the downside pressure on the oil prices, which i find interesting because everyone we talked to
continues to say that supply is really, really tight at the moment. >> that's right, we are seeing another moment below $100 a barrel, which is a relief. i think this morning we are looking at hiking u.s. inflation data and falling demand for gasoline in the world's biggest consumer for the u.s. so, just more indicators with the mood in the market right now, and the diminishing oils run as recessionary tables turnover. for the markets, also still watching the viral situation in china, and shanghai where some movement restrictions remain. so there are still concerns about lockdown. overall, we are looking -- demand is really taking center stage right now despite a tight oil supply, and that's which driving the market. haidi: president biden is hoping to get more deals when it comes to increase output. is this likely going to
translate to meaningful downside and practice? >> honestly, it's pretty hard to see -- pretty hard to say at the moment. yesterday, one thing is for certain, he has a pretty big task ahead of him lobbying saudi arabia and the uae to raise oil production and these prices. already opec has the things pumped and under its target. so he's got some skeptics, but essentially it will be a big task and they probably won't see any major changes to oil supply. forecasts are still pretty high at the moment. haidi: bloomberg's elizabeth low. still ahead, signaling the furthest rate cut unlikely due to more than reasonably ample liquidity in the market. this is xfinity rewards. our way of showing our appreciation.
annabelle: this is daybreak asia. a check on markets 30 minutes into the trading session for japan, korea and australia. looking at the crypto link stocked industry. exchanging operators, or they have stakes and they are moving this morning after we got the report that celsius, the crypto lender, has filed for chapter 11 bankruptcy. the story sparked some of the market contagion that we have seen in cryptocurrencies when it forced withdrawals for members last month. only last week by the law firm, kirkland and ellis to handle its restructuring. we are seeing the biggest moves here in the japanese. let's move to what we are seeing broadly across markets. we are risk off across the board. particularly following that hot u.s. inflation print. fears that the fed could be forced to hike by 100 basis points also sparking fears of
recession alongside that. the biggest moves are in the sectors that are most sensitive to the fears. the financial, real estate and consumer staples. a sickly we are down here are across the board. then trading volumes, particularly in korea and australia. let's look at what we are seeing and effects, still seeing weakness in the yen at the september 1998 low against the greenback. the aussie dollar and focus what we do have that jobs data due out later this morning and just an hour from now. we are expecting growth to moderate in the latest readings, that does not give the rba a lot to continue with its rate hike. meanwhile, the euro sides below, only just coming back about that. we did see the ecb acknowledging the impacts of exchange rates fluctuations having on this, keeping an eye on the moves in the singapore dollars, of course we did get that surprise decision from the mas. >> we had them re-centering the midpoint of the policy band. another surprise move from the
central bank to try to stay ahead of rising inflation. that's get more details on this now. in terms of what we could expect given that we do have another october meeting to look forward to, we already had really expectations of potentially more surprise moves, given the moves we saw back in january and october and april as well. let's get the details now with our chief asia economic correspondent in their current. another economic move, but what is their thinking in terms of this policy? enda: it's all about inflation trying to get ahead of the curve. they say price pressures are quite broad-based now, food and an unexpected way. it does increase the inflation forecast. what they did was that they adjusted their policy settings, basically singapore uses the foreign exchange rate in the current will get stronger to try to bring down inflation. it was a surprise move, and it just adds to the global narrative that central banks are
racing to catch up to get ahead of price pressures. canada moved by 100 basis points overnight. there was even some chatter now with the skyhigh u.s. inflation data we had overnight that the fed may even have to think about moving by a full percentage point. things were moving today and it was unexpected, it is out of cycle. just feeling the narrative that central banks are going hard and trying to pull down inflation. shery: does this add pressure for the pboc to actually change course, given that we have seen them stimulate the economy more? enda: we did have a briefing by three pboc officials. the message from the laws is that they don't see the need to lower interest rates in china any further, that's because they say the money markets have enough liquidity there. and they say they are keeping an eye on domestic inflation. whether or not that means they are going to turn around their cycle from being on hold to
actually raising rates, i think that's a long way down the road, but it does show that china probably isn't comfortable lowering rates and wants to stay on hold. shery: bloomberg's chief asia economic respondent with the latest central bank move. let's not get to vonnie quinn with the first word headlines. >> of biden demonstration is making a last ditch effort to move forward targeting china. the commerce secretary and defense secretary lloyd austin say that ship back is the only way to reduce reliance on foreign-made semiconductors. the house bipartisan support with senate minority leader mitch mcconnell blocking it while democrats negotiate a spending package. meanwhile, president biden said the u.s. would use force as a last resort to prevent iran from developing nuclear weapons. during his visit to israel, the president said there were fears over a potential revival over the nuclear deal. biden's four-day middle east door also takes him to saudi arabia and is focused on
improving ties and security cheaper -- securing cheaper oil. the bank of canada surprised with a 100 basis point rate hike. the most since 1998. the move central the post -- pushes the central bank to 2.5%. they are expecting a 75 increase. yields on two-year sovereign bonds also jump. the governor has warned that more hikes are on the way. >> by frontloading interest rate increases, we are avoiding the need for even higher interest rates down the road. front road -- frontloading tightening cycles tend to be followed by softer landings. this argues for getting our policy rate quickly to the top end or slightly above the neutral range. vonnie: efforts to close the gender gap and improve slightly this year. that's after the covid 19 pandemic pushback as a forecast by at least three decades. the wtf now says it will take
132 years to reach full parity. before the pandemic began it would be 100 years. covid related further travel sectors have been one of the key setbacks. this is bloomberg. ♪ -- global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. shery: sri lankan president has missed the deadline to submit his resignation after fleeing to the maldives, the head of north asia government team brenda scott -- brendan scott joins us now. does this matter at this point given that the presidential vote is supposed to happen next week regardless. >> that is all hanging on this dramatic series of events with the president fleeing sri lanka and heading to the maldives, and now we are waiting for him to arrive, potentially in
singapore. once he does that, he may finally resign. it is unclear if whether the delay in that resignation will impact the process that was set up earlier to replace him with a vote on july 20. so, everything is sort of hanging on that action by him now. haidi: what are the implications for these restructuring and loan negotiations? what can we expect in terms of meaningful rest bats in terms of the country? >> it really tips the balance towards india and away from china. they were a strong advocate of closer ties of china, and those ties with china and the financial obligations that they brought are fueling much of the unrest. so, china has taken a backseat as this has unfolded, and has not intervened in some way that would further expose them to the
blowback from all of this. the only other is to step in -- the only others to step in is the international community, primarily india. intentionally we could see stronger ties with india and india stepping up financially as well. >> bloomberg's brendan scott with the latest. momentum with a dramatic downturn in 2022 hit by market volatility, the war in ukraine. we get more in the global outlook for offering. this is bloomberg. ♪
>> they ended the debutant hong kong following the largest shift fall. it hasn't been this bad in nearly two decades. they are taking a chance in a grim investment climate. with us now is the level after leader. paul, it would be easy to say that this is a hong kong story, of course it's idiosyncratic uncertainties and risks associated with greater china at the moment, but globally things are looking quite dire as well. is this about a lack of opportunity, is it tightening liquidity conditions? >> thank you, thank you for having me back. i think we have seen, so far,
for the first six months and year 2022, the global ipo numbers are way down. in terms of number of ipo, they are down by 46%. and they are down by 58%. you mentioned is hong kong actually this scenario, but it's not really the case, because globally, all markets are affected. the u.s. market has been most heavily impacted in terms of the ipo activity. the u.s. market and nasdaq combined, they are 95% down in terms of proceeds compared to the first six months and 2021. a lot of the reasons, which you have already mentioned, volatility, we need affecting our ipo, it is also not helped by the fact that i think most -- the majority of the ipo that came to the market in the last two years, i think their share
price performance for ipo has been disappointing. and that actually affected the post perspective ipo investor sentiment a great deal and volatility eight just does not help the ipo. it does not help effect that an ipo markets are also way down compared to what we have seen 18 months ago. haidi: tech, you expect to continue to be an effective leader? >> technology stocks, they are still leaders in terms of ipo numbers, but we have seen the decline, for the first six months this year we have seen 110 technology ipo compared to over 300 and the first six months and 2021. so technology sat -- sit technology sectors lead by ipo in terms of the sector. what we have seen is the energy sector that has actually attracted the highest amount by ipo proceeds in four of the top 10 ipo's this year so far came from the energy sector.
shery: that's perhaps not surprising given the upside resign energy prices. but now with the downside that we have seen recently, will that change? >> we still expect renewables, energy focus, companies to continue to come to the market, but because of the decline in the ipo numbers, there is a very healthy backlog of ipo's, and some of them are very famous companies in all walks of sectors. but the larger the ipo, i think the more they can afford to wait and fight this and wait for the really right moment to come to the market. we have definitely seen an uptick in ipo activities in july so far. for example, in hong kong, and the first six months, 20 ipo's came to the market. in the first two weeks in july we have seen 15 ipo's already, that said, for ipo's came to the market yesterday. we have seen the largest ipo's
of what this is and hong kong, as you have mentioned just now as well. the ipo -- the stock was 11% down from the ipo price, which was closed on par. the other ipo's close below the ipo price. so, unless there is a better sentiment, i think we expect there will be some challenges, especially as ipo's come to the market. shery: with liquidity and volatility in the market, what is that pipeline of deals look like, and are there any bright spots for the rest of the year? paul: with inflation and interest rates, i think investors are now focusing on what we say, back to the basics. really companies that can sustain profitability or part clear path to profitability rather than just relying on projections and growth stories. we expect there will be large
ipo's coming to the market and one has to remember that we are comparing with the record 2021 last year, which was the highest ipo level seen in the last 20 years. so inevitably, we will be expecting some declining activities compared to last year, but we are talking about things coming to the market, life-size company doing spinoff, the insurance company, private equity. a lot of these companies have been preparing their ipo for a long time and they are really just fighting for that right moment of opportunities to come to the market when sentiment tends to come better. it was -- shery: it was good having you on. chinese electric vehicle maker says they want to capture 20% of the world's biggest ev market by 2025. the cofounder and president told us exclusively how the seven-year-old company plans to
hit that ambitious target. >> in terms of our market share, our target, we really cannot guarantee that the way we will get that 10%, but our target is 20%. and we are very serious about this 20%. therefore, in terms of the portfolio, in terms of the price that we need to cover, in terms of the manufacturing capacity and also hours supplier to capacity, we are very serious about this 20%, and we are building everything around this 20% target. >> so, to get to 2 million cars a year, it's 10 -- it's more than tenfold you are making now and you will do that in two to three years? that's a huge expansion, how do you plan on executing it? >> we want to replicate the
success of the yuan and to replicate that success story and to achieve a volume. >> and as you build their production centers in beijing and other places, do you need to raise additional capital to fund that? >> whenever the capital is in good shape, we will risk money continuously, because this is the short-term competition with our competitors -- this is not short-term, this is long-term. in the economy is very important in this industry, so therefore we have to be prepared with enough ammunition for the future. >> and you would prefer to raise that money through equity or do
you have a preference? >> right now we utilize both. right now here locally in china, we start to use debt, and also we are kind of leveraging financial solutions. >> what about in terms of chips, supply of chips? is that shorter than resolve and what to prices look like at the moment? kevin: overall, the high seas are a big headache for the whole industry. and right now we are still struggling with several key ics. but overall i think the overall situation has re-estimated before. the overall situation is better than the end of last year. >> how well do you think the
legacy brands will do? the bmw's, the mercedes, how well do you think they will do? like they are also trying to figure out a way to try to catch up with it. they are not leading the trend anymore. chinese customers right now are spoiled. their demand is the most difficult to meet. so therefore, if you don't come here, understand the customer, designed the product. i cannot imagine you can just replicate something in a relatively slower market. >> how is lee auto progressing and exporting cars to the markets? we have to figure out how to win before we enter the world. rather than we enter the world
and try to figure out how to survive. haidi: cofounder and president speaking to bloomberg news senior executive editor in beijing. coming up next, china's property bond price, one thing seems to be safe and angry home buyers are refusing to make mortgage payments. more on that coming up. this is bloomberg. ♪
>> turning to china's property prices, the debt selloff is expanding off of cash crunches as some angry homebuyers refused to make mortgage payments. let's get more from bloomberg's china credit editor. rebecca, there's a sense of these homebuyers being incredibly fed up. what are we seeing across this sector, and are we talking about contagion again? rebecca: absolutely, contagion is at the forefront of people's minds here, and this is really the war that authorities and investors have been concerned about since the outset, which is if there is any sign of social unrest and broader unrest in the country and that this type of financial instability might be instigated if we see this type of behavior with the refusal to play -- to pay mortgage spread across china.
of course it's happening now, but rather selectively across various cities. but so far, of course, we have seen an incredible effort to really ring sense all of this pain and the pain of this clamp down to the offshore market. it's really the brunt of this pain that has been absorbed by global investors in we have seen the financial instability in its relatively well controls and it's a much smaller part of china's credit market. shery: tell us about that. what does it mean for the broader space especially if you have them triggered? >> i think there is a bigger concern about just how widespread the pain is going to be, we have seen this really dramatic decline in selloff across china's developers, and even hitting non-developer names, hitting some industrials weighing down high heels and
beyond that. so investment great developers, china's second largest developer by sales hit. we are seeing the pain that's much worse back in march of 2020 or we had global selloff off the back of the pandemic. things really had worsened, and the other element to think about in the credit is the evaporation of the space. there is so much distress and there are far fewer players when it comes to investors looking at this now. shery: our credit editor looking at us with the latest on china. here's headlines. morningstar cutting hundreds of jobs in shenzhen. the ceo said the move was necessary talking about a complex business environment. the company said the roles will be moved to other countries and its chinese operations will focus solely on the domestic rk. morningstar shift is one of the biggest yet among american financial firms operating in
china. china securities regulator has the onshore fund distribution application by goldman sachs. they are rushing in a mainland expansion is reglet tory hurdles of one factor is slowing them down. credit suisse has had a similar application put on hold. haidi: some of the stocks we are watching with the markets open. this is what's on the radar. the chipmaker is expected to report earnings today and is projected to jump and we will watch for that heavy way in all of the implications that those number. the shanghai listed with a stake in china's top chipmaker during its $9 billion bailout. they have felt control of the local government agency, which would see revised plans for a spinoff of subsidiary. this is bloomberg. ♪
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