tv Bloomberg Daybreak Asia Bloomberg July 18, 2022 7:00pm-9:00pm EDT
haidi: you are watching "daybreak asia" coming to you live from new york,. shery: sydney and hong kong. shery: the top stories this hour, in downbeat open for new york and asia. apple plans to slow hiring and spending as it braces for recession. softbank poses talks on listing a cheap division in london because of turmoil in the u.k. government. and china considers a grace period for mortgage payments as it races to restore confidence in the shaky housing market. annabelle: in asia this tuesday, we are all about the apple report, specifically what we heard that they could be slowing spending plans due to fears over the growth outlook. the fed could be hiking into recession. in terms of across-the-board equity futures, they are looking like a mixed start. australia is lower, whereas
japan is pointing to the upside. we had that optimism in the previous session, that perhaps the fed may not need to do a supersized 100-basis point hike. that fed into what we saw in the dollar reaction as well, the biggest two-day drop in a month. in the currency space, we are seeing the dollar still trading at a very tight range. you can see really the dollar strength coming back a little bit into the picture here. all currencies looking weaker against it. still, the yen is just coming off its lows against the greenup. the aussie dollar could be pointing to higher moves ahead. shery: you said it, the concern about what is happening with apple was huge. this was a company that did pretty well during the pandemic and it weathered past economic turmoil fairly well. we had the s&p 500 losing ground , falling after gaining more than 1%. futures are slightly higher.
we continue to see ominous signals about a recession. 2's and 10's continue to be inverted. the 10-year yield rising today, but still below the 3% level. we continue to see pressure on crude prices in the asian session after they gained about $100 a barrel in the new york session. haidi: this is all about apple, set to be planning to slow hiring and spending growth next year in some divisions. the company is grappling with a potential economic downturn. we saw u.s. banks beefing up their earnings. let's bring in a and our finance reporter, jennifer surane. mark, to be fair, this is not a companywide policy, but it does suggest some trepidation creeping in here. mark: trepidation indeed. apple are going to cut back on spending when it comes to hiring.
that means that they may not backfill some roads next year, and that means that when someone departs, maybe they will not be replaced to let that salary stay open, to retain that money that they have to spend on that talent. you will also see headcount increases not be as large. you may see budgets for teams in terms of ending across the team but other elements like travel and r&d. you may see that only rise with inflation, versus that unexpected normal increases that you would get in apple, a company that is so cash rich. shery: banks have gained for the second straight session. any key takeaways from the report? jennifer: one of the biggest takeaways is that the federal reserve has really come in handy for these banks. interest income across-the-board has been higher than what folks were expecting.
it will upset the big slump in investment banking we have seen in recent quarters. they have the fed and the aggressive rate hike plan to think for the performance of past few days. shery: finance reporter jennifer surane with the latest on banks, and bloomberg news reporter mark gurman on apple. and we are following the latest on china. bloomberg has learned that beijing may allow homeowners a grace period for stalled property projects' mortgage payments. let's bring in our next guest, john liu, for details. will this inject confidence into the market, or will it lead to other mortgage orders who are trying to get their money back, given the slump in property prices? john: that's right, the big concern is that more people will follow suit and stop paying these mortgages.
as of friday, the boycott had spread to more than 80 cities, more than 200 projects where people have stopped. payment we have learned that regulators in china are considering a holiday or those mortgage payments so that homebuyers would be allowed to stop making payments without any penalty and without it hurting their credit scores. again, i have to underline that this is something being considered before this becomes actual steps to help the situation, we have to get senior leadership in china to approve it. there is a possibility that this does not come through. . but there is a lot of pressure and beijing to act to help prevent this spirally into potentially a crisis for the banking sector here, so we are looking forward to that. haidi: there are other signs of potential government regulatory intervention, right, we are hearing about the possibility of more credit being extended to developers so they can get constructions back on track, and potentially even the government buying back some of these projects? john: we have heard that the
government will encourage banks to lend to these projects so they can get construction underway. whether or not it will happen is still a little uncertain. there has obviously been called -- we had yesterday the former finance minister calling all governments to do what they can to help the institutions. given the priority that the government here places on social stability, given the fact that we have people who put down their life savings for an apartment that has not been built yet, and are now at the risk of losing that apartment and still having to make mortgage payments, the threat to social stability is very high. the government here has shown a willingness to take action when that is at stake. shery: we have also seen the chinese central bank injecting additional liquidity into the system. what are we seeing in terms of risks that authorities are
considering? john: the risk here is that we have, by some estimates, deutsche bank and others estimate that there is 2 trillion yuan of mortgages that have been stopped. the banking system in china has got 38 trillion yuan of mortgages on their books. you can see the threat if that were to increase, the threat to the banking system. . the central bank yesterday coming in and injecting money for the first time since june 30, making sure there is plenty of liquidity and that there is not contagion potentially from that spreading to other parts of the market. haidi: we will watch the story very closely. bloomberg editor jean-luc with the latest. . let's get you to vonnie quinn with the first word headlines. vonnie: bloomberg has learned that russia's gazprom has declared force majeure on at least three. . european guest buyers. that means it could not fulfill its supply of negations unforeseen circumstances. gazprom had already been curbing supplies to europe and had
closed its main pipeline for maintenance. their race to replace boris johnson is narrowing. rishi sunak and anymore don't retained the top two places in -- rishi sunak and penny mordaunt retained the top two places in the latest conservative party voting. more ballots are scheduled for tuesday and wednesday, after which just two contenders will remain. johnson returned to parliament monday for one last largely time symbolic confidence vote. as prime minister for a symbolic confidence vote. the acting president of sri lanka is among the top contenders for the job of president, along with another leader of the main opposition. the presidency has been vacant since gotabaya rajapaksa fled to singapore and resigned last week. . u.s. treasury secretary janet yellen has called on so-called trusted u.s. allies to help fix supply chain issues. speaking in south korea, she called for u.s. partners to deepen relationships and diversify supply chains, to lower risks to their economies. she also singled out china
warning that beijing could use , its market position to exercise geopolitical leverage. south korea is the final stop on her asia tour. 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: still ahead, recession and russia. we assess the risks to the global energy market with ge chairman fereidun fesharaki. but first, why dalton investments is looking to japan for some of the best opportunities in asia right now, and how changes in south korea's governance and investor behavior are catalyzing change. this is bloomberg. ♪
shery: goldman sachs chief equity strategist peter oppenheimer there. our next guest sees opportunities in the strongest companies in japan, india, and south korea on the strong dollar. let's bring in belita ong of dalton investments. good to have you with us. how cheap are these markets right now? belita: good to be back. japan is full of cheap, excellent companies. the leaders there -- they are even cheaper now because the yen is so weak. if you look at the trends in japan, you will see that in the last few years, they have reached record levels of share buybacks, dividend increases. there has been a record level of activism. the trend is not just that japan is full of companies that are cheap, but activists now are seemingly able to produce some results. through their efforts. the other thing that is near term is that japan is finale
reopening to tourists, not just domestic, which is a huge boost to the economy. if you look at the breakdown of gdp where it has not reached. previous two pandemic levels, is terrorism. shery: many asian economies are very much dependent on exports to china. the strength of the chinese economy. the covid-19 reopening has been very uncertain at the moment. now, adding to that, we are seeing more signs of a deepening crisis in the property sector. are you concerned about how this will impact the asian economies and markets? belita: yes. the problems that we are seeing in china, both that lockdowns in shanghai hopefully will be lifted soon. also the spreading of real estate problems are very concerning. china has been a source of growth for the world for the
last two decades. and the problems in the real estate sector are enormous. so just this year, so far, we have seen the top 100 companies report something like 35% of people have not met their maturing obligations. and that the problems also surface with consumers -- actually, homebuyers now refusing to make mortgage payments. local authorities will lose their income from land sales, which comprise about 30% to 40% of their revenue. the problems are spreading and the banking sector is being affected. the government will do something about it, but it is something we hope to see that government stabilize. the only good thing is it might give us a bit of relief from inflation. because china is such a big user of metals, especially, globally.
haidi: so many effects when it comes to the property story. but for the consumer, if it is no longer such a big driver of wealth, it will no longer be a big driver of household wealth. what does that mean for the chinese consumer? belita: it means that there growth will not be as rosy or meet the expectations of the chinese government, which comes with a whole set of different problems. because china has not quite
shrinking population. it is very unfortunate for china that they have a confluence of negative trends happening at once. no one expected the war in ukraine, no one expected the pandemic. and the shrinking population seems to be happening much faster than predicted. haidi: the strong u.s. dollar has a lot of headwinds when it comes to emerging asia. does influence your constructive stance when it comes to asia -- when it comes to asia? bill lee deck: the strong dollar is the result of not much. europe is suffering because of ukraine and the increasing energy prices. china's currency is not suitable as a reserve currency because they want to control it, so it is not a free currency. so you are left with the u.s. dollar. and interest rates are rising, so the u.s. dollar will probably stay strong for a while, until something changes. the problem it causes other countries is that they have to keep up interest rates, otherwise they will suffer from inflation the only. exception is japan. their domestic factors are far more important on the currency at this point. shery: a huge part of the
inflation story is the commodities story. we are seeing commodities rallying and then falling again. how do you factor that into your calculations? belita: we look at companies, one at a time. what their assumptions are in terms of their costs going forward. in the case of japan, you have two things going on. prices have risen, which is part for -- bad for profitability on. the other hand if you are an exporter, you do very well, u.s. sales translate back into more yen. is mixed. one company at a time, that is how we deal with it. haidi: always great to have you with us, belita ong, chairman at dalton investments. even get a roundup of the stories you need to know to get your day going on this edition of "daybreak." subscribers can get access to it on terminal go.
haidi: a quick check of the latest business flash headlines. twitter has dismissed elon musk 's complaints that he doesn't have enough information about spam accounts and roberta const. twitter urges the judge to hold a trial as soon as possible. elon musk once to hold off on a trial against -- at least until february. ibm fell due to the lord cash flow forecast. our topped analyst estimates, including their second-quarter
still jump off percent signaled strong demand for mainframe computers, consulting and other services. netflix will ask viewers in five latin american countries if they want to use their account in an additional home. customers will be asked to pay an extra fee of one dollar 70 cents in argentina, and $2.99 guatemala, honduras, and the in el salvador dominican , republic. the streaming giant blamed password sharing is another primary reasons for its lagging subscriber growth. sherry: here are other stories we are watching. in south korea, u.s. treasury secretary janet yellen is visiting for meetings with officials. and we are watching the sale of $530 million worth of 20-year bonds. japan is coming back from a holiday. there is cases are approaching the peak levels of the omicron wave earlier this year. this may further delay
government plans for proposed stimulus and limit tourism. the prime minister and his korean counterpart reportedly agreed to seek an early resolution to a dispute over korean victims of forced labor during japan's colonial rule. sources say softbank has halted plans for an ipo of cheap designer arm, due to turmoil in the u.k. government. but it will continue pursuing plans for the business in new york. for more on this story, let's bring in bloomberg's reporter crystal tse. what. do we know about negotiations with the u.k. government in turmoil? crystal: partly why arm wanted to list in the you always for political reasons. even though it is owned by softbank, it is based in england. . boris is out, and they are in search of a new leader and that somewhere deterred arm.
they don't know who they are negotiating with. the second part is they have always looked at landon as a secondary listing and they have always pursued new york for listing as well. so instead of going to london first, they could come to new york. but the market will also play a big role. haidi: how does the political backdrop impact things as well? crystal: it is hard to do a deal when it is unclear politically who is in charge. capital markets, it is all about regulations. so much can change. also, investors look at volatility and political turmoil, the vix is what we see higher anytime the market has more uncertainty. so it will make it interesting. it doesn't mean they need a new prime minister for them to come back with a deal, it is just that right now it is not the most stable environment. shery: masayoshi son had said he
wanted to sell a portion of arm before the end of the financial year. what are the prospects for return in this environment? crystal: the financial year doesn't end for softbank until mid-may, so he does have some time to come up with a deal, whether it is a stake sale or an ipo. the question is investors' appetite. the semiconductor sector is a really hot sector. but given how difficult the financing market is, potential buyers need to come up with the money and in a credit market which is extremely tough, or by selling shares, which isn't that rosy either. either way, it will be a very difficult transaction. haidi: where bloomberg deals reporter, crystal tse. this look at the start of trading. asia's session is half an hour away when it comes to the open
of trading in australia. we are seeing quite a bit of volatility. nikkei futures are looking flat at the moment. it has been in shortened trading week. new zealand is up about 0.1 percent. u.s. futures, we did see the stock optimism of operating, with the pause on apple hiring plans, some trepidation creeping in from one of the biggest u.s. tech giants. growing concerns about the growing impact of a potential recession. we did see the rally when it came to u.s. bank stocks. s&p futures are up a top aide amount, about 0.1%. the dow is pretty flat at the moment. also watching the likes of netflix, kicking off second-quarter earnings, some of those entertainment and tech-related stocks in focus.
shery: and look at the bond market, we continue to see the signals of recession really. but still below the 3% level and definitely below their two-year rate, leaving the curve inverted. . we watching the changes when it comes to the aussie and kiwi bond markets. we saw yields rising in the previous session, and we continue to see the pressures and upside in bond yields. the dollar at the moment, it really hasn't done much, but this after we saw the losses, the worst two days this month already. on the other side, really not a lot of movement when it comes to asian currencies so >> bloomberga
may allow homeowners to halt mortgage payments without penalties. it requires approval from senior chinese leaders. as part of a broader brush to save lives. the white house says it will for chipmakers in china. the biden administration says it continues strong guardrails. the senate is debating a bill on tuesday that will deliver billions of dollars for manufacturing. chipmakers reportedly oppose restrictions. in italy, lawmakers are working on a last ditch plan to convince the prime minister not to resign. bloomberg has learned some members are ready to turn their back on the party leader.
they are trying to determine whether it will persuade him to stay on. the field of candidates to replace boris johnson is narrowing. they retained places. more ballots are scheduled for tuesday and wednesday. johnson returned monday for one of the last times as prime minister. anthony fauci is planning to retire before the end of president biden's term. bloomberg learned he will step down, wrapping up a story career as the top infectious disease expert. he has served at the national institute of allergy and infectious diseases since 1984. 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.
annabelle: taking a look at what we have for the state of japan. more high-frequency for the week of july 15. they are raising alerts to the highest level. we are approaching the key summer travel season so it weighs on what we see in public mobility. virus cases mean less people less recreation. we are continuing to see price gains, up 2.3% on the year.
this could be a factor that weighs on them. let's turn now to the commodity space. the direction of prices is affected by china, we are seeing the property sector protesting payments. still sitting above the key level. copper has seen some gains and we are well past that level. we touched out last week. in terms of the oil space, dominated by other factors. brent crude comes online at the
top of the next hour. perhaps they weakness of a commitment from saudi arabia for output following president biden strip in the middle east. brent crude is online, wti trading weaker in the session but we are seeing it above $100 a barrel. haidi: really interesting if you see how many considerations are at play. a lot of the recovery rally is tepid and energy markets may be driven by slight weakness. so much risk including much going on in china, risks from the property sector, will authorities be able to inject more confidence into the sector and how does not play out with
covid zero? talk about saudi arabia, not making any commitments. the next guest says it amounted to nothing when it comes to what the u.s. is able to get with price alleviation's. we will get more, next. this is bloomberg. this is bloomberg. as a main street bank, pnc has helped over 7 million kids develop their passion for learning through our grow up great initiative. and now, we're providing billions of dollars for affordable home lending programs... as part of 88 billion to support underserved communities... including loans for small businesses in low and moderate income areas. so everyone has a chance to move forward financially. pnc bank: see how we can make a difference for you.
shery: rising commodity prices and supply issues are changing the economic power dynamic. how is the decision-making on these different power sources changing? reporter: we have seen costs rise. if you look at electric generation, capital expenditure, the running cost and calculate what would be needed, we have seen costs rise for renewable and power plants.
cost for solar has risen 13.5% over the last 12 months. if you include china, we are seeing a continued decline. if you exclude china, the number would be higher. in terms of the relative competition, back in the middle of 2018 was the first time we saw the benchmark for solar and wind globally become cheaper than glad -- gas and coal. if you look at now, solar or wind is the cheapest source of power generation.
that number keeps growing. more importantly, around two thirds of the world new solar or wind is more economic. haidi: what about nuclear power? japan wants to get nine nuclear reactors online by winter. korea has announced that as well. is this a timely way out of the crisis? ali: the short answer is no. we are seeing a shift in the sociopolitical backlash in the aftermath of the fukushima accident in 2011. there is a shift in sentiment, but in terms of actual impact,
this will take time. probably will feel the real impact about a decade from now. in terms of existing power plants, and japan, since the liberal democratic party came back to government, their policy has been to restart as much nuclear power capacity as possible. under the new safety regulations to prevent another accident. that policy has not changed, and targets are staying in line with existing policy. that will take time to bring reactors back online because of the process. shery: take a look at how commodities are trading at the moment, we continue to see downside pressure on wti and brent, wti above $100 a barrel, this after we saw it gained
ground in the new york session, we did not get any commitment from the saudi arabia government on more output hikes. we saw pressure on natural gas futures, this after it hit the highest level since mid june. above that seven dollar level, given the heat waves. we continue to see uncertainty over gas supplies. haidi: let's bring in the founder and chairman of the and energy consultants. great to have you with us. when it comes to saudi arabia, you say the supply is next to zero. how strategic to the saudi's have to be? guest: situation is very clear. by august, 11 million barrels per day.
substantially impact demand. that could bring the prices down. shery: i find it fascinating. i bet he really didn't want to go to saudi arabia, diplomatically that was an awkward situation. if you were advising the u.s. government, what would you have said? guest: it may be good for election politics. it was a time for him to go and meet with heads of state from friendly countries in the middle east. there were other things to be achieved. going to ask to produce more oil
is a nonstarter. shery: we know western allies are trying to put an oil price cap initiative. do you think that would work? guest: that is a nonsensical concept. i don't know who came up with this concept. 100% of everyone agrees on price caps. it's like trying to put a cap on the price of gold. the whole thing is an absurd concept. haidi: where is the bottom when it comes to a more severe global
recession? guest: i think the opec-plus countries are trying to manage it and get it into the $65 range. i think that is doable. there are some bearish moves. the issue of president biden going to reduce the price may resolve itself by recession and inventory building. shery: how do u.s. shale producers come into play? we have seen rising prices but there is a risk of recession and prices falling again. guest: they make a lot of money.
they either make dividends, investments, or share buybacks. especially for the big boys. the u.s. production of oil is good. it's quite a significant response this year by the u.s. producers. if prices go down, the response would be lower. at today's prices, everyone is making 100% or more. shery: coming up next, boeing announces an order for 100 100 737 max jetliners from delta. we will hear more from the boeing ceo in just a moment.
to head off a potential crisis, a government panel is being set up to resolve a rift between railroads and rail workers who have been negotiating since january, 2020. a bit more detail on the biden administration's view that chipmakers taking subsidies to build plants in the u.s. should not be allowed to expand in china. the restrictions are being discussed and are the target of heavy lobbying by the chip industry. reports are intel is lobbying against restrictions in the current form. janet yellen is calling on u.s. allies to strengthen trade relationships to shore up supply chains disrupted by the pandemic and worsened by russia's war in ukraine.
haidi: let's get straight into the terminal for how a look at the water levels. they are at the lowest in 15 years and is getting precarious. if it drops 37 centimeters, the waterway becomes too shallow for commodity shipments making it uneconomical. the low levels are hampering coal and oil movements on the river if you need another way global commodity markets could be disrupted. terminal users can read more in our newsletter. boeing says it is grappling with supply chain issues. the ceo discusses weak points and the demand from a resurgence in travel. he spoke with bloomberg. >> we are seeing where the weak points are. six months ago, it was hard to
see those weak points. a lot of us made assumptions about bringing back resources based on past practice. with covid, resources aren't coming back as fast. now we see the weak links in the supply chain. we are focused with partners to try and help bring resources back in, get curves flattened so the output can increase. that is the name of the game. it's not a constraint, because our industry has capacity eyes. human capital coming in, that is issue number one. we see chip shortages. that is the other one we watched. >> with is a recession mean for boeing? it's a discussion everyone is having. >> deflected predict that, i
would be a great investor. it is hard to tell. we have seen this rapid resurgence of travel. when the markets are ready, i think there is pent-up demand in the market that will carry us through recessionary pressure. he we are going to meet market demand. today we are supply -- we will look out to see if there is any headwind. if that were to be the case, we see stronger men. what we are starting to see is many more discussions about the wide-body. u.s. and europe, middle east,
india starting to connect internationally. i think you will see orders in a few years from the triple 7 -- nine. shery: speaking with guy johnson. here's a quick check of the latest business flash headlines. goldman sachs planning to reinstate annual performance reviews as it looks to rein in expenses. the cfo said on a conference call that the bank is taking action to reduce spending and improve efficiency including slowing the pace of replacing staff. >> given the challenging operating environment, we are examining our spending to ensure the best use of our resources. as a result, we are taking a number of actions. we have made the decision to
slow hiring velocity and reduce fees going forward. shery: apple is slowing hiring as the company copes with a potential economic downturn. sources told bloomberg the decision stems from economic uncertainty although it is not an economic wide policy. apple is planning an aggressive product launch that includes a mixed reality headset. apple has been hit with an antitrust lawsuit over apple pay, accused of using market power to fend off competition and charging fees to boost the bottom line. the class action complaint marks the latest antitrust battle for the iphone maker. apple has been facing increased scrutiny by regulators over its app store policies. haidi: these are the things we are watching. softbank putting plans for its
london ipo on hold because of political turmoil in the u.k. government. in south korea, where watching for delayed expansion plans and bhp is in focus and australia, exports of iron ore, it expects more market turbulence. coming up in the next hour, buying opportunities when it comes to chinese equities. we also take a look at the dollar rallying. the market opens our next. this is bloomberg. ♪
asia major market opens. suppliers for apple. bloomberg learns the company plans to slow hiring and spending given the potential of an economic downturn. companies are being more cautious. haidi: chinese property developers are on watch given we may have pressure being taken off with more regulatory actions. we will have to wait and see how that plays out. even let's get you over to annabelle. annabelle: just a few seconds away from the opens. we are seeing the 10 year yield, it is below the 3% level.
where watching what happens with the yen. we have the boj and ecb meeting this week. the boj governor is likely to keep the stimulus policy in place. in terms of the equity markets, japan is facing headwinds. from apple, they assess the outlook for the broader global economy. the risk that the fed could be tightening into recession. in terms of the korean won, we are holding around the 13 year low. we saw a slight recovery, but
some likely to be sustained. there are headwinds facing pressure on asian economies. turning now to the open where watching close to what happens for the chinese property sector, pacifically what we can be getting from beijing government. we are seeing australian stocks come online as we have the staggered session as well. moving a little bit higher, we are waiting for the meeting minutes. shery: we are watching that. chinese equities has built up exposure. joining us is james. good to have you with us. how are you positioning in this market when we see more of those
mortgage payments boycott and potential credit risk? guest: indeed, the property market situation will take a long time and it is a fine line where it might impact the banking system through mortgages , and hopefully not a lot of stoppages in terms of the remaining buildings. it's a test of regulators ability to deal with crisis situations. all in all, the property market is something you want to avoid for now, so we are constructive on china. we turn positive because of the
latest round of covid flareups led to tremendous foreign investors selling and we thought it was overdone. shery: do you expect meaningful policy realization to come? some guests are skeptical. guest: policy rhetoric is a guessing game these days. it looks like more credible covid flareups and the property sector is worsening more these days. i doubt there would be a big stimulus measure, but continue to be focused on going. that is something we are likely to see. that's one of the reasons why we
think the market should be -- haidi: it looks like whatever happens, the chinese economy is set for under normal of slower growth and less productive debt. how does that inform the way you pick stocks in that market? guest: indeed. we're looking at market valuations. a lot of tech companies, they are being very selective. overall, because of the light positioning in the chinese market, the new economy stocks, the consumer stocks, although consumers are yet to see recovery, that is something we
look forward to because we feel there is a bit of recovery going on in china towards the end of this year. we are very selective and that market. haidi: what about the impact of the u.s. dollar? the relentless strength and virtuous cycle has created a lot of pressure points in particular. is this the start of moderation in that strength? guest: if you plot the dollar index, over the last nine to 12 months, the correlation is almost perfect. basically, it has been rate hike expectations that have been the key drivers of the dollar. going forward, giving other central banks are catching up on the tightening, the interest rate differential is likely to
narrow. it is my view the dollar strength is unlikely to be repeated over the next six months. annabelle: some tech giants are putting a pause on spending. we are seeing chip stocks, the major names in korea. taking a look broadly, negative sentiment. the concern is we could be seeing recession risks building into the economy, bit of a mixed picture. let's change to what we are seeing with softbank. we have reports coming through
softbank could be putting a pause on plans to list its chip company in the u.k.. we understand the johnson government had lobbied very hard to get part of that listing in london, but that is possibly being scrapped. this certainly is trading higher on that. >> the white house says it supports limiting chipmaker investments in china if they take subsidies. the biden administration says it supports strong guardrails. the senate begins debating a bill tuesday. chipmakers including intel are
reportedly opposed to restrictions. janet yellen is calling on u.s. allies to help fix supply chain issues. she called on u.s. partners to deepen relationships. she also singled out china, morning beijing is uses position to exercise geopolitical leverage. bloomberg has been told china may allow homeowners to halt mortgage payments on stall property payments. that's part of a broader push to save lives while buying time for developers. russia's gas company has -- could not fulfill supply obligations due to what it calls
unforeseen circumstances. they have already been cutting supplies. 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: still ahead, traders have put a dampener on the dollar rally. barclays tell us why the currency will rebound. first, a scoop on how apple is slowing hiring and spending amid growing concerns about a booming recession. this is bloomberg. ♪ ♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan
haidi: a tepid open at the start of trading. when it comes to japan, up 4/10 of 1%. the cost be off by half a percent. plans to slow hiring highlighting concerns as well as the fears of global recession playing into the hiring and spending plans. we are seeing australia meeting production estimates but a lot
of mixed expectations and challenges when it comes to demand. kiwi stocks are down by 4/10 of 1%. let's get to the top story. apple is planning to slow hiring. the company copes with a potential economic downturn. this is a little bit of fiscal conservatism. reporter: thank you for having me. this is apple being conservative as we loomed towards a recession, as companies are concerned about pressures of the economy. they are doing what they have to do. they are being conservative, they are going to slow hiring, they are not going to replace employees, and in terms of how they'll locate spending, you are
going to see that flat year-over-year versus previous years where you might have seen significant increases in a major product cycle like they will be in the latter half of calendar 2022 and fiscal and calendar 2023. shery: we are seeing pressure in risks coming from an antitrust lawsuit over apple pay. how significant is this? reporter: it's a long time coming. apple has been in the crosshairs about this issue. the iphone has a chip, that is the chip that allows you to use apple pay. to tap your phone on a payment reader. a lot of people do not know that chip is exclusive to apple pay. that means any other payment company cancel leverage the chip
to build their own competing service. on top of that, apple charges fees comparatively to work with apple pay. regulators are not happy about that. payment companies are not happy. after an antitrust, class-action lawsuit, payment companies more consumers to be reimbursed. haidi: what about the strength and demand of the chinese consumer? what is apple's market looking like there? reporter: china has long been a hot market for apple. what has done well there are the bigger iphones. the iphone max. that has done well in china. what gives me hope for apple in china for the later half of the year is a new version of the iphone 14.
this is a phone with a 6.7 inch screen, for the first time you will not need to pay pro crisis. -- prices. a cheaper, big-screen iphone, that's going to be a really hot seller. shery: wall street looking to rein in expenses. goldman and bank of america were the latest big lenders to report earnings. su keenan joins us with the latest. su: they beat all of the key areas, the 34% increase in fixed income trading, but the cfo cited challenging operating environment for its plan to slow hiring. the ceo said they are closely examining all forward spending and have made a decision to slow hiring velocity.
there also looking at reducing the pace of replacing staff due to attrition. you are looking at the takeaways as you see traders even as investment banking fell. that handily beat records, net revenue added to the hall. investment banking was complicated goldman. advisory fees are double that of morgan stanley. underwriting was weak, that's a theme we are seeing across all investment banks. go to the price chart. you will see a lot of green on the screen. dear to date, these have been a rough ride, but all of the
stocks were higher. haidi: that number was a beat for bank of america. su: this is yet another theme, if we drop into the bloomberg, thanks to the fed raising interest rates, we are seeing many banks come out with an increase in income. the key takeaway for bank of america, net interest income rose due to high interest rates and loan growth. there was also a surprise increase in cost tied to regulatory probes. bank of america is expected to pay a $200 million fine. the use of unapproved personal devices for doing business, there is also a leveraged financed markdown. that is an issue of spreads of widening and d.o.a. left holding the bag. bank of america not planning to
pause share buybacks for now, and is also not expecting any additional costs. back to you. haidi: su keenan there. get a roundup of the stories in today's edition of daybreak. subscribers can get that on the terminal and is right there on the bloomberg any wrath. -- anywhere app. this is bloomberg. ♪
some of those fears, somewhat. the futures as well as euros stocks trading software. some of the uncertainty from gazprom forced to declare force majeure. could see that as a signal to keep supplies cap. we're watching that story as it progresses throughout the course of today. shery: take a look at commodities. we continue to see the guessing game. we have seen natural gas futures in the u.s. rally before they turned lower, still above that level given of course we have very hot temperatures across the u.s. boosting ac demand. that is leading to those price
pressures right there. in the asian session, we see the downside both in wti and brent. this after we saw prices rally above $100 a barrel. boeing is grappling with supply chain issues. the ceo of the commercial airplane division told us more about those week winds -- points as well as demand for global travel resurgence. >> we are seeing the weak points in the supply chain. six months ago it was hard to see. a lot of us made assumptions about bringing back resources based on past practice. with covid, every industry is seeing resources not come back as fast. now we see the weak links in the supply chain. engines are one. you are hearing from airbus and boeing. we are focused with partners to try and help them bring
resources back in, get learning curves flattened so the outlook can increase. it's not a constraint. our industry capacity caused in the upturn. it's the human capital coming in , that is issue number one. that will be the other one we watch as we move into the rate growth. >> what is the recession discussion for boeing? >> if i could predict that, i would be a great investor. it's hard to tell. we have seen this rapid resurgence of travel when the markets are ready, and they are ready when the population is vaccinated. there is a fair amount of pent-up demand that will carry us through recessionary pressure. we will watch, we will adjust
rates to meet market demand. we will look out there to see if there are any headwinds. >> you are hinting at the possibility -- >> i'm saying if that were the case, today we see strong demand. particularly for the narrowbody and what we are starting to see is many more discussions about the wide bodies. the u.s. to europe is connecting strong, latin america, the middle east. india is starting to connect internationally. i think you will see orders in a few years for the triple seven. haidi: the boeing ceo of commercial airplanes. let's get you a check of the latest headlines.
twitter has dismissed elon musk's complaints he does not have enough information about spam and robot accounts. twitter is urging a judge to hold a trial as soon as possible over the scrapping of a $44 billion buyout. musk wants to hold off until february. soft wake -- softbank has put an ipo on hold due to political turmoil in the u.k. government. the walkout in officials has halted talks for now. the company continues to pursue an ipo in new york. ibm fell in late trade after lowering cash flow forecasts due to the strong dollar and blouse of business in russia. it shadowed a second quarter sales jump of 9% that signal strong demand. shery: china's financial
asia. 30 minutes into the trading session for japan, korea and australia. so far we are looking mixed. japan picking up slightly. we have a bit of a catch up rally because it was closed for public holiday in the previous session. otherwise we are looking a little weaker. the one factor we are watching his news from apple that it could be slower in hiring. that is weighing on some big tech stocks, particularly in korea. and in china the other story as well, the latest is we have homebuyers who could be protesting paying mortgage payments off the back of that china could be stepping into prop up firstly forcing banks to lend to developers to finish up projects and also giving homebuyers a bit of a break on their mortgage payments. taking a look at the size and scope of this sector, so we can really understand on the broader loan landscape, really the residential mortgages in blue,
making up quite a small section of the overall pie. off that, around 0.01% of mortgage loans are affected by these protests. that is the estimate from bloomberg intelligence. but still, the protests do point to larger problems we see in the property sector and also the challenges of fixing them. that will take a long time. now, whqat are far worse so met about? ? that is what bloomberg -- the builders are too often running out of money and off the back of that mortgage holders are being left to hold up the debt pile. we have been looking into what that means for some of the biggest names here. we understand the damage bill from this is around $172 billion. that is how much developers need to finish their projects. it certainly wants to funding stressed see the market as well.
for the more distressed developers we have in the market. haidi: yeah. bloomberg has learned that china could allow homeowners a grace period on mortgage payments for stalled property checks without charging penalties. let's discuss with chief asia correspondent, enda curran. what is the significance of this grace period? could it inject short-term confidence or backfire? enda: it is not unusual in china for homeowners to buy up the plans and get mortgage payments going straight away before the property is finished. as we know with property developers under so much stress at the moment increasingly, a couple hundred of these developments have stalled. what we are now seeing is a situation where the rules -- where they are refusing to pay
the mortgages down. what is happening now is the financial regulators are discussing this idea of putting a pause on those mortgage payments, of granting that forbearance period to those mortgage holders until the developer gets finances sorted out. this is not yet confirmed. it is under consideration by the regulators. but it speaks to the idea that authorities are concerned both about the risk of systemic impact on the financial system and on the economy and of course they want to nip in the bud any hint of social unrest we are seeing from pretty upset mortgage holders. if it comes to pass and if they push it through, you have to think at the very least it would take pressure off the protests in the near term. but of course it will not be a complete name change or does developers remain under a lot of financial stress. shery: you talk about some worst-case scenarios, but what
about just a fact that the property sector is so important for the chinese economy? how would this affect the second half recovery? enda: up to 20% of economic activity comes from real estate, 70% of household wealth is devoted to the real estate sector. there was a conference yesterday where there were a series of warnings about what this could mean for the chinese economy. former officials saying china has to make sure it avoids a hard landing on account of what is going on in their real estate sector. there was a call to improve the regulation of presales, to get borings sped up and to get money back to developers who need it. and there was a call for the central bank to bring down interest rates. this all speaks how critical it is to the second half of recovery. covid zero will be an ongoing stop start until the cycle finishes one way or another. one of the real drags on the
chinese economy is the property sector. and it makes up to 20% of economic activity. until that starts to stabilize, i don't think you can say downward pressure on chinese economy will have lifted. shery: u.s. treasury secretary janet yellen is insole for the final leg of her asian tour where she will meet with the korean president. let's bring in peter. what are we expecting out of this visit? peter: yellen has a couple things on her agenda. one of them primarily related towards pressing for more cooperation on a very complicated sheen -- scheme she has for russian oil. it's an oil price cap scheme in which she would need cooperation, particularly from those companies who rely
particularly on russian oil. she will probably be pressing for that, as well as, i think at this moment right now, she's at a research park where she will be touting so-called friend-shoring, which is basically boosting supply chain system among what she would like to call like-minded countries. so, she will be talking about that. the backdrop for that of course is that lg, the big electronics maker, is also one of the biggest ev battery makers. they told local media recently they may be reassessing building a plant, an ev battery making plant in arizona. haidi: peter, a lot of the focus of course in all of this is countering china. peter: yes, and that is absolutely the point of her first visit, which is at lg
research plant going on right now. she will be making a speech, basically touting the so-called friend-shoring as a way to reduce the reliance on china. not just china, but others. clearly detentions with china has created this environment for the u.s. to seek basically allies to boost up the supply chains, particularly for essential technologies and materials. and that is the reason yellen is that this lg research park. haidi: let's get you to vonnie quinn with the first word headlines. vonnie: the field of potential candidates to replace outgoing british prime minister boris johnson is narrowing. they retained the top two places in the latest voting. more ballots are scheduled tuesday and wednesday after which just two contenders will remain.
sri lankan legislators are said to submit nominations for the post of president with voting due on wednesday. the acting president is among the top contenders for the job, along with the leader of the main opposition. the presidency has been vacant since the president fled and resigned last week. in italy, lawmakers are working on a last ditch plan to convince the prime minister not to resign. we learned some members of the five-star movement are ready to turn their backs on the party leader, trying to determine if that would be enough to persuade him to stay on ahead of confidence votes wednesday. he offered to resign last week. dr. anthony fauci is said to be planning to retire before the end of president biden's current term. he will step down before january 2025, wrapping up a storied career as the country's top
infectious disease expert under seven presidents. he has served since 1984. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: next, king dollar's crown is looking a little tarnished, as investors pare forecasts for a full point rate hike. we will get some analysis from barclays. this is bloomberg. ♪
shery: we are seeing the bloomberg dollar index steady at the moment after the worst two day decline in about a month. we are also seeing the japanese yen now losing a little bit of ground after we saw a risk-off sentiment around the world pushing higher. of course we are headed towards that boj decision very soon, so we will see how the currency is impacted. strength in the korean won really was not sustained. we are seeing it at the 13.18 level. we are waiting for the rba minutes while the aussie dollar is not doing that much. kiwi dollar also down for a second consecutive session. haidi: so much of this goes back to where the dollar goes next. our next guest says the greenback is likely to stay at
high levels with high u.s. inflation. joining us now is ashish agrawal , age ahead of fx at barclays. great to have you with us. of course this today pause, the worst performance in about a month, well overdue given how much relentless strength we have seen in this rally. if we look at declining expectations from the fed, and perhaps a higher expectation of being able to get that soft landing after all, does that suggest we could start seeing a way down for the dollar? ashish: thanks for having me on the show. yes, we could agree that some of the draggards are scaling back. this is an important week with the ecb in boj. both of those decisions are likely to trigger further dollar spent. so it's hard to see this bout of correction. to us, i would think the broad
dollar is likely to peak out in this quarter. in the nurture we see some price risks marked into the dollar-yen. haidi: where do you see the biggest pressure point when it comes to asian e.m.? ashish: in terms of incremental pressure, i would probably put the indonesian rupee up there. it's lagged the move higher, especially as it enjoys payment on the trade side. we've got a situation where b.i. will be hiking slower and it's already weakening. we see the pressure being most intense, curing itself -- shery: how much more pressure can we see the japanese yen as well, given we are heading towards a boj policy decision as well? ashish: for us, we kind of think the boj will stay on hold.
in their forecast revisions they will probably have growth lower, inflation higher. at the same time, indicating wage pressures and japan and boj staying on board at least until september. it's quite likely dollar yen have another move higher in the near term before eventually moves lower. shery: how much is the weakness we are seeing in the yen about rate differentials and how much is it about just what is happening with the trade relationship right now? ashish: you could look at it as a combination of both purely shorts are widening quite quickly and the u.s. rates are intact. 75 basis points followed by another 50 and two 25s. whereas in japan the energy bill and the fact that the boj is going to be hiking more normalizing policy much later
and the policy will manifest itself in the exchange rate. haidi: when it comes to the aussie dollar, there is this interesting cross-section of crosscurrents. at the same time as you have gotten strong terms of trade and commodities command there is a risk-off version to the aussie in the q. week. which is going to prove to be stronger? ashish: to us, between both we see the aussie dollar being stronger. the aussie dollar is also likely to seek tailwind from china looking to stabilize growth this year. there have been reports that -- that could provide another boost. the aussie dollar is quite sensitive to equities and e.m.
risk sentiment. some of those things are not likely to match what we have seen in the first year and if that is the case you should see the aussie dollar store to -- start to gain alignment. shery: what is the chinese yuan sensitive to these days? we have seen the outbreaks and rolling covid lockdowns not really affected that much this time around. ashish: if you look at the chinese yuan, it's the external sector. it is to a large extent the pboc that values it to that level. [indiscernible]
if you are looking at a scenario -- it would be natural to expect pressure to pick up again and head higher towards the 690 level. shery: ashish agrawal from barclays, it was really good having you want. we will be talking more china coming up next. its strict covid zero strategy has some wealthy citizens adding for the exit, but leaving will not be that easy. details, next. this is bloomberg. ♪
shery: here's a quick check of the latest business flash headlines. netflix will ask customers in five latin american countries to pay a fee if they want to use their account in an additional home. customers we asked to pay --customers will be -- the streaming giant claims password sharing is one of the primary reasons for its flagging subscriber growth. goldman sachs is planning to slow hiring and reinstate annual performance reviews that were suspended during the pandemic as it looks to rein in expenses. the cfo said on a conference
call with analysts that the bank is taking action to reduce spending and improve efficiency, including slowing the pace of replacing staff that it loses because of attrition. >> given the challenging operating environment, we're closely re-examining all of our forward spending and investment plans to ensure the best use of our resources. as a result, we are taking a number of actions to improve -- shery: apple is set to be slower in hiring next year as the company copes with a potential economic downturn. sources have told bloomberg the decision stems from economic uncertainty, although it is not a companywide policy. apple is still planning an aggressive product launch schedule in 2023 that includes a mixed reality headset. apple has also been hit with an antitrust lawsuit over apple
pay, accused of using its market power to fend off competition and charging fees to boost its bottom line. the proposed class action complaint marks the latest antitrust battle for the iphone maker. apple has been facing increased scrutiny over its app store policies. haidi: china's strict virus policy prompting some of his wealthiest citizens to leave. according to one study, an estimated 10,000 residents are on the move and seeking to cool around -- but the question is whether the government will let them. lisa do has more on this. the one hurdle has been moving money around. what is going on? lisa: yes, like you said, china's wealthy are looking to leave china after experiencing the country's harsh covid zero lockdowns and discovering the
hurdles that awaits them. china has always had capital controls on account of trying to maintain its currency peg and that has limited its citizens to about $50,000 u.s. in foreign exchange transactions every year. in the past, citizens were able to find loopholes such as using cryptocurrency or finding a counterparty overseas that want to to move on short to do a private swap arrangement. now what they are discovering is first of all, china essentially banned all crypto-related transactions last year, and that we have had private bankers tell us it has been harder to find counterparties for these swap arrangements as us people are looking to move money onshore to china so they are finding that quite difficult with their money. shery: so how difficult is it for chinese people to leave the country, get the necessary documents from the government in order to leave? lisa: yes, another hurdle they
have found is they have discovered that documentation requirements and approval times to potentially get a passport or renew their passport has gotten longer and the requirements more onerous. china has discouraged non-essential travel overseas since late 2020, but in may, they reiterated it would be tightening further requirements and approvals for passports. we have also had immigration lawyers and consultants tell us they have seen the same in recent months with trying to get their clients' passport documents renewed. haidi: what are the broader implications for this for china? lisa: i think the wealthy trying to leave china sends a signal about how they see future opportunities and future growth in the country. ultimately i think keeping an eye on how all this plays out,
if the wealthy can leave, if china will let them, will speak a lot to the ultimate scope of economic impact from china's covid zero policy. shery: lisa du joining us with the latest on china. now, there are some stocks we will be watching at the open in hong kong in the mainland inamed a half an hour. focus on china's lenders after bloomberg scooped that homeowners may be allowed to temporarily halt payments without incurring penalties. under that yet to be finalized proposal, hundreds of thousands of buyers of stalled homes will be allowed to pause payments with no impact on their credit score. so, watch those developers such as china overseas land, vanke, country garden as well. haidi: another bloomberg scoop of course, apple's plan to slow hiring's, slow spending growth as well next year. some of its divisions to cope
with the potential economic downturn. we are continuing to watch apple suppliers, including ones coming online shortly. lens technology as well as of course tsmc. let's get you a broader look at how markets are faring so far in the asian session. quite a lot of crosswinds when it comes to some apple-let u.s. refer show -- reversals. we are seeing broad downside across most other asian markets. the kospi in particular off by .25% with some apple suppliers affected. next, joseph zidle shares his views on why the u.s. is not headed for a recession. this is bloomberg. ♪
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