tv Bloomberg Markets Asia Bloomberg November 29, 2022 9:00pm-11:00pm EST
tokyo. this is bloomberg markets: asia. yvonne: stocks end higher to end an memorable month. blocked by says it is going after $700 million that it is owed over sam bankman-fried's failed empire. we are looking ahead to paul's speech. -- jay powell speech. we may be seeing a bit more easing there. david, just seeing a few signs of things coming back here.
david: you do not see a month that we've had in november very often. when the month started is when we had the pipit in china. we are still up 33% in some of these indexes. we started week, we are now slightly higher. best month for asian equities in 20 four months. it underscores what can happen when you get to trigger. we are off as far as chinese currencies. sovereign bonds, we are continuing to track what happens here. equity futures are doing this ahead of jay powell. it takes us back into jay powell's speech and does he say
anything really different? are we supposed to act surprised if he tells us rates will go higher? yvonne: we are cementing expectations. this is the last week ahead of the quiet period. jim bullard yesterday repeating the call for fed hikes. the pricing continues to be very much around 50 basis points for december. we will see if it changes. rishaad: just having a look at the month's end and taking a look at some of this price section we have been seeing. jim bullard repeating his call for interest rate hikes. these are some of the data we
have been putting together. run us through these, david. david: it has been stellar. the dollar's worst month in 12 years. rishaad: these currencies absolutely crushed of late. this is the pmi reading we had. the composite 47.1. manufacturing really contracting . we were looking for 49, we got 48. yvonne: it is really bad. this is when we saw those record number of covid cases. it goes to show the toll covid
is still have been on the economy. it is bad, but i think people are looking for it now. >> this is a broken record. the manufacturing side is under so much pressure. we all had restrictions on mobility and consumer activity. what is the path ahead for china? will this accelerate their way out of it? none of it is clear. we are getting signs that are interesting. the caseload a few months ago would have triggered lockdowns. we are seeing the reopening of the iphone plant for example. david: that is a good point.
they provided the money in many metrics. we will show a graphic for our viewers. liquidity remains abundant. they have cut the reserve ratio requirements recently. what will it take for credit, the demand for it to pick up? >> whatever other problems china's economy is facing, it is not a shortage of liquidity or credit. we know the central bank took the decision last week with the triple zero ratio. the appetite to borrow just is not there at the moment. when will we start lifting restrictions and have a clear roadmap, only then will we see a shift in credit demand. the real estate part of the story is also part of this.
i think there is little they can do in these circumstances. it is a political decision on how china navigates this. rishaad: thanks a lot for that. our next guest is steven major. what are you seeing with china as we look at the data and the possibility of further easing, which is getting more urgent in many quarters? >> the list of superlatives means anything that follows will be a big letdown. the data was weak. the bond market is caught between the evidence of week data and prospects for 2023. that is the big difference
between bonds and effects, for example. -- fx, for example. bonds are trying to figure out what will happen to policy next year given what is probably going to be a change of circumstances. it could come from a number of different sources. yvonne: is there a chance that yields could pick up substantially in china? >> a starting point is you have a big spread between china and the united states, which is the main market. whenever you look at a spread, you should be agnostic as to what the likely attributions would be with the spread if it is going to compress.
most people would say the u.s. yields are too high compared to china. i would suggest maybe if policy rates are finding the floor in china and the next move is possibly up, then you can see a convergence in both directions. so that yields in china could be convergent and slight up slightly. that seems to be the set up going into next year. rishaad: argue seeing a lot of interest in this bond market? -- argue seeing a lot of interest in this bond market? >> a lot of the bonds are held here and china is becoming to dominate the market. chinese government bonds were
trading in size equivalent to the u.s.. that may not be the case now. the u.s. treasury market has its own liquidity issues apparently. we are in a different point in the cycle right now. it is probably difficult for all bond markets. it is a bit of a paradox. we talk about all of the liquidity, but is not necessarily the right kind. for china, there was a healthy tension between the near term cyclical drivers and the longer structural position. yvonne: have you seen the years when it comes to high-heeled? >> it is mainly about property. perhaps yes, we are through the worst. globally, who wants to buy a
house right now? i think china was a lead into the down turn into property. i started happening a couple of years ago. some of these high-year-old bonds were trading at such a low price. they cannot go down much more. rishaad: please stick around with us. we have a lot to talk about. let's have a look at the first word news. a federal jury convicting a leader of the right rink oath keepers group of seditious conspiracy. he was found guilty of three charges while another defendant was convicted of sedition. three other people were acquitted of back charge. it is seen as a major win for the justice department. the bank of link governor says
the british government bond market is still suffering from recent shocks and not able to absorb assets. he also told the parliamentary affairs committee the central brink was not -- bank was not properly briefed. blockfi will try to collect 680 million dollars from ftx is alameda. china launched a rocket today carrying three astronauts. the spacecraft taken up from northwestern china tuesday night. state media says the astronauts will spend six months there.
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rishaad: problems with the certification of the aircraft. we are looking at some news from the u.s. that they might proceed under a potential agreement. the talks between lawmakers could fall apart as the two sides seem to be some distance apart. let's get back to the picture for the federal reserve and the u.s. economy. steven major still with us. when you look at the treasury market right now, has challenges.
the structure of it has all changed. a lot of it is that the transactions are about 2% of what it used to be. there might be a dearth of buyers out there. >> that is a good point. you do not have the normal takers of risk. it is just changing. you have different players coming in and they are huge by side institutions. so the game has changed. ultimately, the market clears. they may not clear at the same size as it has done at its peak the value bonds is not
distorted. the guilt is correct. -- the yield is correct. it still works, we just have to adjust to the reality. that is all. david: stephen, david here. in a reality where the u.s. economy does enter a mild recession come up be a base case for jay powell to have to tell us something? >> base case, it seems to be shaping up that way. mr. powell's measure of recession risk tipped into inversion. on that basis, it is difficult for him to be as hawkish as he
would like to be. the fed is well served by this laser focus on inflation, but we are not buying it. the reality is that you have to deal with the recession risks and ultimately we just are the intersection -- wages are the intersection between unemployment and inflation. things will start changing in the coming months. david: one of the last conversations we had, ask you one the fed is able to cut interest rates. you answered that the simple path is they just do not do anything. they keep telling us they will get to 5% by the middle of next year. do you think there is a chance they will not get to 5%? >> thank you for remembering what i said.
the point i was trying to make is that if it is so obvious that you will come to 5% and then come -- cut back down, why make the statement that you will go up there? as far as june, i was trying to call the peak. i was too early. i think the peak is probably in. the fed is guiding through a slower pace for hikes. maybe they get almost 25, but it is largely in the price. if the market only discounts the possibility of a 25 basis point rate cut, that is the equivalent of a 25 percent probably louis -- probability of 100%.
the market is not wrong to look over to the other side even though the fed is telling the market you are wrong. yvonne: think about it as a credit investor. >> if you think your real money at least, i think longer dated credit investment grades has been looking at very good value for the last month also. it takes months to invest bullying credit cratered -- credit. with credit, you have to wait for the new issues to come.
i think the real money investors think they have to buy because it is too cheap. rishaad: u.s. government issuance has quadrupled since 2007. this poses liquidity challenges. there is parts of the curve which are illiquid. does the fed end up having to buy? >> that is a big debate in the market. it is not just the fed, it is the treasury. it is a natural process at the moment that the treasury has to issue more bills.
it is what happens when the treasury makes a decision about what to issue into this environment. they could also buy back in liquids -- illiquids and then issue more bills. it may not be the fed. i think a big top down theme here is that qe is probably done. there is many reasons for that. well inequality -- wealth inequality. it could be a buy back that is key here, but from the treasury. i do not think it changes the direction of yields. yvonne: i have to get your asset allocation outlook. >> we think yields will be lower
by the end of next year. they may not be a straight line. our forecast is 2.0 for the 10 year treasury. we have been market to market. our long-term view is this more considered outlook. i think credit looks really good and it is investment grade versus high-yield. investment-grade has sold off so much because of the duration a moment, its higher duration. yvonne: steven major, thanks so much for joining us. we have plenty more ahead. this is bloomberg. ♪
business flash headlines. bilbili shares surging in hong kong. revenue topped estimates. fourth quarter sales forecasted disappointment. there will be strict cost control measures. amazon is selling investment-grade bonds. they are raising funds in the debt market. proceeds may be used to repay debt as well as fund acquisitions. the royal bank of canada will acquire hsbc canada worth $10 billion. it is hoping to squeeze costs from the business. the ceo told an analyst called the purchase is a once in a generation opportunity. rishaad: let's look at the
market action. the drugmaker had a torrid time of it. we had a death from one of its drugs. they have been unveiling a much-anticipated finding on its drug, providing some fodder for the hot debate that it perhaps include serious bring bleeding. china says it will bolster vaccination on its senior citizens. citize- [announcer] imagine having fuller, thicker,
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a fifth of 1% to the upside here. as you can see, i was not too long ago, i remember it like yesterday, i guess this is the story, incrementally we are seeing more movement. we will talk about the china story just a moment. let's go into what -- where the market is, where he hopes to be and what it needs to see to get there. we are wrapping up a manic month. i will start with the 10 year yield in china. the gap is higher in november. we consolidated a little bit. we had 12 month highs. next chart, let's bring it up. when you look at mci china, this is just one of many chinese
benchmarks out there. this is the most closely followed one for many reasons. yields have gone up as far as bond markets are concerned. we are looking for earnings because earnings this year, absolute value in terms of forward eps and 12 month expectations. that has actually fallen substantially this year. when do we get that? most economists think we do not see a substantial improvement for the first quarter. we might get an earnings pick up after the two meetings in march and may be we see a recovery. let me underscore this point. they delivered a lot of stimulus in this economy, everything from rrr cuts.
here is the money, take it and spend it. when you look at where interbank rates are, demand is nowhere near where it needs to be for people and companies to build this economy back up. markets tend to look ahead and they tend to run with that. we are down across asian equities right now. let's bring in paul dobson this -- paul dobson. it has been a manic month. what does december look like? >> exactly what you were describing there, that disconnect in terms of time and investment between what the market is seeing and what is happening on the ground. people focusing on the short-term are saying the viruses spending -- spreading.
investors are thinking this is cheap and if i do not get in now i will miss the boat. people will obviously be very happy with the money they make if they get in early this month. i think people do not want to take profit necessarily. this is just getting on the train as it pulls out of the station. david: we were speaking with sophia earlier. it is also about the type of investors that managed to get in. the easy money has been made. so far, the calls have been technical. we have not seen a lot of the big institutional money.
what do we need to see until they come back? >> i think you are right. global investors are very under chinese assets as a rule. do u.s. investors want to keep their allocations down because they are worried about the risks ? whether that full force of money could come back into china as a long-term consideration. i have the feeling there will be a kind of permanent going the way of that. the fast money got in there quickly. the slower money needs greater reassurance and needs to see things happening and to see china following through with the
move away from the covid zero policies. david: we have heard what we need to hear. paul dobson, thank you so much. during an us here in our studios. rishaad: officials adjusting covid restrictions where apples biggest chinese factory is. all this following protests around the country. the biden administration may label the wegner group as a foreign terrorist organization. the leader is a top supporter of vladimir putin and the ukraine
war. wall street spending more on technology which is designed to keep an eye on traders. it comes after regulators expected record fines from the world's biggest banks for lapses in monitoring. alibaba's founder has reportedly been living in tokyo for nearly six months. he has been keeping his public activities to a minimum while still pursuing business interests. the 58-year-old has kept a low profile since his criticism of chinese authorities. that is a look at first word headlines. yvonne: the latest on crypto. sam bankman-fried said to speak
earlier today. -- wednesday. what are we expecting and will we get answers? >> sam bankman-fried is on the schedule for the new york conference. there's still time for him to be a no-show. there are lots of things he could be given detail into, including how did ftx end up with an $8 billion shortfall? he did not really have a lot of clarity. perhaps he could get more details when he is forced to in front of a live audience. there is also the question of if ftx misuse customer funds.
we know they receive some customer deposits through bank accounts held by alameda research. rishaad: and, of course, this is a story which is snowballing, this contagion. what is the latest? >> this is closer to home because there was a hong kong crypto player exchange that paused withdrawals earlier this month. it kept a lot of sss -- a lot of its assets with ftx. some of the losses could be down to its affiliated trading unit. it seems there were issues around the trading strategies. yvonne: we are seeing a bit of a rebound when it comes to bitcoin.
most families in asia are holding onto the crypto. >> it came out from this report and they found that when they surveyed 300 family offices, all of those holding cryptocurrencies come about 60% are still holding onto them. 20% want to increase their exposure. rishaad: far be it for me to say anything. thank you. we are four hours away from the bank of thailand decision on interest rates. we are looking for them to set their key cost of borrowing. we will be joined by krystal tan. this is bloomberg. ♪
too late to cool inflation. but things are actually changing. the economy is picking up. curis are coming back in. -- tourists are coming back in. join us now is krystal tan, economist at australia and new zealand banking group. so, are they going to hike rates? >> i think they will continue going 25, at least 2%. david: what is going well? >> they still of some work to do. we have elevated inflation expectations. we have growth picking up. it is a good time to reduce policy accommodation. we can start to normalize policy a bit more. there is pressure to go more
with assertive hikes. the bot has more room to prioritize domestic conditions. david: the stars are aligning in some ways. unfortunately, some factors are beyond their control. the external picture does not look gassy bright -- gassy bright. >> what is going well for thailand is finally we have tourists coming back. this year, we had half your -- i year. we also have falling shipping costs. now that it is normalizing, it
is a big relief. thailand while experienced a pretty significant turnaround next year. rishaad: i noticed in your research you said the surge in inflation is a temporary aberration. that meets transitory. >> for thailand what happened is what drove it was a spike in global prices and energy prices. now we are seeing the supply-side shocks starting to dissipate. this will be helpful for thailand's inflation. next year i think we will see the structural forces which have traditionally kept thailand's
inflation low. people have to stay precautionary in their retirement years. you would have to maybe pull back on some of your discretionary spending. finally, we also have the labor market. it is not particularly strong, so we want nothing very strong income growth and that will restrain the extent of demand pressures there. rishaad: the economy is not operating on all cylinders. chinese tourism has not come back. that will be key here, and thailand also depending on and
lockdowns too. >> if china reopens, that paves the way for outbound chinese tourism to return and highlight will be one of the biggest beneficiaries of that. even if we take a more cautious outlook, if we look at tourism numbers in thailand, arrivals outside of china have picked up. we should not forget that quite recently, japan, hong kong, all of these economies to started to reopen recently. they accounted for almost 10% of tourism arrivals. this is one of the key reasons why thailand is well-positioned for a rebound. rishaad: how does the thailand
economy stand compared to others in the region in your view? >> generally, there are quite a bit of growth headwinds accumulating. we have external demand starting to weaken. we also have rising interests rates in quite a lot of economies. growth next year will start to grow. most economies in the region will see growth slow. thailand is one of the only ones who will see growth accelerate next year and that is hugely dependent on the tourism sector. david: malaysia and the philippines, substantial growth. is there anything more that
suggest we continue to see momentum? >> you are right. malaysia and the philippines are both very strong. this will start to fade going into next year. if you look at the philippines, consumption numbers are very strong, this suggests they are deeper into consumption. you have very rapid interest rate hikes. david: i started by asking you how much more the bank of thailand has as far as rates go. who do you think exits the tightening cycle in asia? >> thailand will probably end the latest.
it is depending on how inflation plays out. the fact that the fed is downshifting gives them more scope to go slower as well. malaysia is one of the economies where we have not seen adjustment to higher energy prices because there were fuel subsidies in place. if they are skilled back, there will be a link up in inflation. david: we did not get to indonesia or singapore. we will talk about that next time. krystal tan, thank you. it feels like we are past the hump in the supermarket in china. but are we? quite a bit more ahead. this is bloomberg. ♪
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the start. a slightly higher today. it has been a remarkable month when it comes to equities in greater china. we talked about how u.s. listed ones are doing, best month on record. this is certainly wrapping up quite a month. volkswagen make cap -- make cap a company to build a factory to make models for its brand. the new ceo identify success in the northern america market as one of his priorities. cap hemorrhages with air india. -- tata will merge with air india. it will make it the second largest local carrier with the fleet of 218 aircraft.
numeral sees a potential revenue boost up to billion dollars or more. the ceo sets japan's biggest brokerage is seeking new revenue streams as market relatively slow key pillars of its business. rishaad: let's check in with this survey. they are saying valencia is the most livable place to live. it is friendly and affordable. what jobs are there? apparently, hong kong is one of the worst places because of the work-like factors. -- work-life factors. what are your thoughts?
i was being a bit opinionated there. yvonne: maybe you should consider staying there. david: it was quite refreshing walking across and inside shopping malls and single peoples noses. it was weird. you could see peoples mouth and nose this. you could make out what they were saying. this returned to normal, right? it also comes at a cost. rents are going through the roof. there is little indication that it will abate too. rishaad: others on the list, bangkok. melbourne, an easy city to get
used to. yvonne: i could get used to that. david: where is brisbane? is there one chinese ex-pat that binds tokyo place to stay? has called it home for the last few months? yvonne: we will see more of the list. in terms of markets come out we are waiting for the jay powell speech. this is bloomberg. ♪
singapore and shanghai. welcome, i am haslinda amin. rishaad: i am rishaad salamat in hong kong. wednesday's speech from fed chair jay powell, markets anxious for a pivot to the lead up to decembers interest rate decision. traders weighing the outlook with changes to china's covid curbs and india's third-quarter growth said to come below forecast. will it be a tip for the central bank's hawkishness? haslinda: adding 1.5%. traders awaiting the speech from jerome powell. several fed officials adjusting markets are underpricing rate rises. bny mellon suggesting we could see earnings slump 20%. even if we see a shallow recession in the u.s.
against that risky backdrop, let's look at benchmarks. gains for new zealand, indonesia and south korea. the nikkei 225 down 0.6%. malaysia ftse's down. the dollar easing further, having its worst month in 12 years. taking a look at where the offshore yuan is, down 0.1%, having to do with disappointing pmi numbers, suggesting a slow recovery. brent crude up 1%, on the back of expectations that perhaps opec-plus may cut its supplies come that meeting this weekend. rishaad: let's look at the open for the set in bangkok. the interest rate decision, looking at a set he much flat.
the dollar again falling back. the thai baht with its best monthly rally against the dollar in 24 years, down to an economy recovering and tourism recovering as well. 25 basis points in the cost of boring expected. india's gdp numbers expected later. we are looking for that to come out at 8:00 singapore time. gdp up 6.2% in the third quarter. the are b.i. -- the are b.i. -- the rbi interest rate peak. let's look at what is november, not to remember for some chinese assets. catherine yang is here with us.
it has done well. hong kong in particular has done well. catherine: many roller coaster volatility.th the index is over 20%, poised for the best month since march. investor sentiment did warm up compared with september, october. people were worried about geopolitical tensions. it will be like a two step forward, one step back. it will be messy and complicated. still tough to navigate. haslinda: you have to wonder if
gains are sustainable. if you look at the pmi today, it is disappointing. charlotte: yes, the data is not that supportive. it is going to take a while for the fundamentals to recover. the gains this week after monday's loss is supported by officials' consolidate tory -- consolidating approach and covert policy. -- covid policy. it is supporting sentiment. haslinda: charlotte yang, thank you. staying with china, officials are adjusting covid restrictions in the city home to the biggest chinese factory. beijing reinforcing an order from local authorities to avoid excessive cuts containing the
virus following protests. joining us, john, take us through the latest. john: in the city, home to the iphone factory, they are switching up the way they are executing covid-zero. instead of having a broad, districtwide lockdown, they are working on a targeted system where specific buildings and apartment complexes are being locked down. the upside is, it should reduce the overall level of disruption. at the same time, even if it is not a city wide districtwide lockdown, many people are unable to leave their apartments so disruptions will continue. haslinda: china has been focused on vaccinating the elderly. how big is that task? john: those over 80 in china who
have had three shots is at about 40%. getting that level to something where officials will feel comfortable about the ability of the country to reopen and keep deaths under control in that at risk group will be one of the main things leadership will be looking at in terms of the timing of that reopening. it will be a challenge to get that number higher. beijing had been offering 2000 yuan to senior citizens to get vaccinated. even that cash inducement was not enough to get that number higher. we will have to see how effective it can be. rishaad: give us a sense of this
vow to crack down, as beijing puts it, on hostile forces. they have been looking at foreign actors. this is a warning, isn't it? john: i think it is. what we have seen the last week with these protests is the carrot and stick approach. testing procedures have gotten people upset. those have been removed. in beijing, if you are not going to school, if you are not going to the office, you do not have to get tested. they are offering the carrot in that sense, but also putting lots of cops on the street, issuing this warning about acting strongly against these forces that could undermine the party's grasp on power, that is the stick. rishaad: thanks, jean-luc --
john liu. we also have the economy in europe, looking at britain. hearing from the central bank governor there. vonnie quinn is in new york. vonnie: the u.k. government bond market is suffering shocks and not able to absorb assets. highlighting the upheaval in markets following the ill -- bailey told the committee they were not briefed on the statement. sources say argentina's central bank will keep its key interest rate unchanged at 75%. the central bank board is seeing slower gains in october and is preparing to hold.
monthly inflation could slow to 5.5%. the biden administration may label russian mercenaries the wegner group 8 -- wagner group a terror group. alibaba's founder jack ma has been living in tokyo with his family for six months. ma has been keeping public activities to a minimum while pursuing business interest. he has kept a low profile since his criticism of chinese authorities in 2020. the usa has advanced to the knockout stages of football's world cup with a hard-fought 1-0 victory over iran. one player was sent to the
hospital after being injured while scoring the winning goal. england also advanced, defeating wales 3-0, and setting up a knockout meeting with senegal. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. haslinda: still ahead, india's third quarter gdp will be out later today. goldman sachs will tell us why a forecasted easing of growth will be good for the country. rishaad: plus, getting an outlook on asia. ubs' global wealth management chief investment officer will be with us. that is kelvin tay on the way. this is bloomberg. ♪
stocks have gone gangbusters. best month in 19 years. the dollar taking a turn, the worst month in 12 years. how it is playing out, volatile trading with losses and gains in asia. a speech from an jay powell later wednesday. let's bring in kelvin tay, cio at ubs wealth management. what a ride for the asia-pacific in november. you have to wonder if gains can continue given uncertainties remain. kelvin: one of the key reasons they have had a great month is because of the weakening of the dollar. this month as you pointed out, we have had tremendous klein in the dollar index. the current level is above 110.
another reason, the market is taking recent measures by china, the covid measures announced. after last week, we have not seen enforced the shanghai-style lockdowns. the markets are taking it positively. haslinda: going into 2023 we have a higher rate economy. what does it mean for the market and how much has been priced in? kelvin: it will be tricky. when we look at what is happening in the u.s., valuation is high, trading at close to 18 times earnings. historically, the most was 15 times. the rate we had this year, the full impact will be reflected in the first quarter of next year.
that will have an impact on sentiment as well. haslinda: you said asia benefited from the weekend -- weakened dollar. how will that play out? kelvin: the dollar has peaked. the market is saying, with the midterm elections coming through, we have gridlock in congress. they will try to stimulate u.s. economy that has slowed dramatically. that is why the market is pivoted toward a dovish tilt, and it is helping the situation. rishaad: let's have a look at your views on credit. what is the biggest opportunity you see in the credit market going into 2023?
kelvin: they are at a pretty good value right now. where the 10 year treasury is concerned, it has peaked at 4.1%. we do not think there is likely to be more weakness. for the investment-grade credits we think the current use is very attractive. you might think of extending the duration to five years to lock in those years for the next 12 months. rishaad: if we see a dollar turnaround, how does that affect your investment ideas? how do they change as a result? kelvin: if the dollar continues to weaken, the asian equities
and market bonds will be in a better position. if the dollar strengthens, the upside for these bonds will be capped, especially for asia-specific equities. a lot of asian corporates issue bonds in u.s. dollars. if the dollar strengthens, local debt will increase. rishaad: we are looking at perhaps the lifting of covid restrictions in china and how that could have a massive benefit for equities. they also -- thailand, not firing on all four cylinders because they do not have chinese tourists there. a lockdown removal provides for
everybody. kelvin: absolutely. if chinese authorities allow their citizens to travel outside the country again, it will be a huge boost to tourism in this region. it is basically thailand, taiwan and singapore that will benefit. thailand is coming from a low base. there were 0.4 million tourists. this year they are looking at a target of 10 million, but could hit 12 million. with tourists, you get a better account. with the recovery of tourism, it will boost current accounts. haslinda: can asia outperform the u.s.?
kelvin: i hope so. if you look at msci china, china is trading at a 50% plus discount to the u.s., the largest over the last decade. at some point that has to close. where the chinese valuation is concerned, that will creep up. haslinda: you are liking japan? kelvin: japan is interesting. with the recovery in the economy, with tourism coming, i am going to japan at the end of the year. it will help boost consumption in japan. on top of that, the weak yen will boost profit margins the next three to four months. haslinda: kelvin, thank you so
much. kelvin tay, regional cio at ubs global wealth management. this is bloomberg. ♪ ♪♪ energy demands are rising. and the effects are being felt everywhere. that's why at chevron, we're increasing production in the permian basin by 15%. and we're projected to reach 1 million barrels of oil per day by 2025. all while staying on track to reduce our carbon emissions intensity in the area. because it's only human to tackle the challenges of today to help ensure a brighter tomorrow.
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haslinda: a bloomberg opinion column missed william dudley sees the fed causing rate hikes once they get to 5.25% to the 5.5% range. but policymakers may need to hold that level for longer than markets are pricing in. >> probably in the 5% to 7% range. it will be pretty hard for the fed just to stop if we still
have an unemployment rate near 4% or higher. there will be a series of smaller rate hikes. clearly, the fed's strategy, they are stressing longer than higher. i think once they get to 5.5% they will relent. they will slow the economy, generate more slack in the labor market and push wage inflation and service price inflation down. >> this is pretty much in line with what they are saying, the market is not buying it, they are still pricing in rate cuts by the end of next year. what does the fed have to see to become less restrictive? i do not mean that with regards to -- i mean lowering them in a significant way. >> likely highly confident they can reach their 2% inflation
objective. what does highly confident mean? they have to seen significant slack in the labor market that brings down wage inflation to the 3% to 4% range. they need to see inflation pressures much less persistent and broad. they need to see inflation in the 3% range headed down. once they accomplish both things, maybe they can start to relent. the economy still has forward momentum and it will be sustaining. social security recipients will get an increase in their checks come january and they will spend some money and that will keep the economy moving along, making it hard for the fed to restrain things. rishaad: that was a bloomberg opinion columnist, bill dudley,
with our colleague lisa abramovich. the latest business flash headlines. a chinese videogame company had third quarter earnings ahead of estimates. adjusted losses were better than anticipated. fourth-quarter forecast, disappointed. the royal bank of canada will acquire hsbc canada, a transaction worth $10 billion. they are cross-selling products like credit cards and mutual funds. one called the purchase a once in a generation opportunity. amazon selling $8.25 billion in investment grade bonds ahead of anticipated market volatility
after inflation data comes out thursday, according to reports. proceeds may repay debt and fund acquisitions and share buybacks. haslinda: back to markets. looking mixed ahead of powell's speech. looking at asian apple suppliers. a key manufacturing hub. hon hai resilience, up 1%. pushing for more vaccination in china among the elderly. still coming, sam bankman-fried set to speak in new york. this is bl well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest.
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investors really assessing what is going to happen next, what is the reopening path, all amid the spread of covid infections and crackdown on the protest we've been witnessing on the streets of the country here as well. we are on the up but just a slight move to the upside given the volume or should i say the sentiment toward the country's assets improving. beijing did loosen some of its approaches and its hoped the shift means beijing is laying the groundwork for an eventual covid zero exit. that of course has been helping stocks. as they go off for lunch, the market is down nearly 1%. haslinda: that's right, pressure
on the back of data output, currently down about .10%. it's a mixed picture, the hang seng getting a lift and the kospi as well in positive territory. let's get the first word news with vonnie quinn in new york. >> a federal jury in washington has convicted a leader of the right wing oath keepers group of seditious conspiracy over the riot on january 6, 2021. three other people were acquitted of the sedition charge. officials are adjusting covid restrictions in a city that is seeing worker unrest at apple's biggest chinese factory. they've lived a lockdown while still limiting movement from hundreds of buildings and apartment blocks declared high risk. the shift comes after beijing reinforced an order to avoid
excessive curbs and containing the virus following protest. about $1.8 billion will be sent on surveillance, up 20% from 2021. u.s. regulators reach settlements totaling over $2 billion. the usa has advanced the knockout stages of the world cup with a hard-fought victory over iran. the americans now face the netherlands saturday. england also advanced to the round of 16, defeating wales and setting up a knockout meeting with senegal. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. rishaad: let's have a look at
what's going on with bitcoin, two week highs ahead of jay powell speech later on. that's over two weeks, and what we have at the moment is the cryptocurrency spiking. jay powell expected to speak later on wednesday. a speech perhaps where he will be echoing fellow fed officials on another rate in -- another hiking rates. another person speaking later today, he is set to speak in new york. questions are swirling about what went so wrong at ftx. annabelle droulers is with me for the details. what are we expecting? annabelle: the new york times summit taking place later
wednesday, sam is on the schedule but there are been -- there have been a lot of questions if he is appearing. he put out a tweet about a week ago saying yes, he will be there. there will be questions put to him, starting with what's with we -- the $8 million shortfall, where did those funds go? what was alameda doing with the cash and did they misuse the funds that plays into it? we've been investigating that it bloomberg and we do understand that ftx put some deposits through bank accounts in alameda. we know they concealed names where the missing assets have gone, and what could be next for them as well? rishaad: let's not forget the fallout, every day there is something new. not just bitcoin but some of the
outliers in the crypto space, other people in this neck of the woods also feeling it. annabelle: the hong kong crypto currency exchange called aax, we know they basically suspended withdrawals more than 10 days ago. they were closely linked to ftx because it did seem to be at least keeping some of their assets on that exchange. local media reporting saying is not just about ftx, there were concerns around the company itself and one of its trading units, it's interesting the relationship, it seems had some issues around risk management and some of their trading strategies. another sign of how interconnected these companies are. haslinda: the fallout is far from over, most are still holding on the crypto in asia. annabelle: this was a bit of a
surprise when i read it earlier today, it's basically coming from a family office, what they found in their survey of 384 family offices is that of the families in asia holding onto cryptocurrencies, 60% of them are keeping them, even in the aftermath of what exactly has gone wrong with ftx. some questions about cryptocurrency and whether it will be a sustainable asset over the longer term. and for the 25% as well, they plan to increase their exposure, so that was a bit of a surprise when i read it earlier today. rishaad: india is set to release third-quarter gdp figures. goldman sachs expecting a bit of slowdown in growth. we will find out why, their chief india economist will tell us why that is something that has been good for the country. this is bloomberg. ♪
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india's fiscal deficit for the april-october period, as well as last month 84 industries output data. plus the subscription period ends on friday for the uniparts ipo. rishaad: those gdp numbers show of slower pace of expansion from the previous quarter. sluggish trade will perhaps timber demand. thank you for joining us, we had a figure of 13.5% for growth in the second quarter. we're looking at 6.2%. we shouldn't be reading too much into this, given the basic facts. what do you see, and why do you think ultimately this may be better just for the country, but also perhaps gives the reserve bank a little more wiggle room.
>> on the q3 gdp, we are not very different from consensus. it's at 6.2%, as you correctly pointed out, going away from the previous quarter to this quarter. we expect gdp growth next year at 5.9%. what we think is that with inflation, and the deficit having expanded, we expect it to remain elevated in 2023 as well. a little bit of growth slowdown gives the central bank more wiggle room in terms of managing the macroeconomic risk. oil prices coming down a little bit helps to corner the margin, but overall a little bit off growth slowdown helps manage the big deficit risks as well as lower core inflation.
rishaad: if you look at overall cpi at 6.8%, it's quite something. how does that work, and how do you bring that inflation further? santanu: when you look at inflation into 2023, in terms of core inflation there are two things operating. more goods is essentially commodity price increases, increasing the manufacturing costs and the manufactures passing them on to consumers. meaning that will top out around this quarter or next and then start going lower as you head into 2023, from about 7% to 8%, to about 5%. core inflation has remained sticky throughout the pandemic,
and that could inch higher as we head into 2023, as the full economic -- as the economy fully reopens. that's where the core inflation concerns are. haslinda: inflation may be sticky for longer against the backdrop of a fed that is likely to keep rates higher for longer. mike the rbis be forced to raise rates more than what we are anticipating right now? santanu: we are looking at 50 basis points hike in the december policy, and we're looking at 35 basis points for the end of february policy, which means a total of 85 basis points. 6.75 is already above consensus, although inflation drops down, he remained sticky in the 6% region and then it starts coming lower into q4. that's when we are thinking a
cut, and if inflation comes slower and you head toward 5% by q4, that's where they can fear a cut from the rbis. but with the fed hiking and staying elevated for a longer time, we think india will lead the call at 6.75. haslinda: what kind of fiscal policy support might we see to help the indians cope with inflation? santanu: the government actually has done a very good job in terms of managing inflation through 2020 two. they've increased allocation to food subsidies, and more importantly, they increased the allocation to fertilizer subsidies. the international price increases you saw for fertilizers did not really pass through here into the consumers in the full basket for inflation. that immensely helped during this period. we think that policy will
continue from the government side into 2023, as well at the same time they will continue with capital expenditures in our view into 2023. haslinda: in terms of external pressures, how much pressure is there? have we seen the worst from the strong dollar? santanu: the current account deficit will remain wide, in our view. the deficit is about 3.5% of gdp. however, the max pressure was felt i most emerging markets as the dollar's getting stronger in 2020 meaning that the dollar is nearing a peak, and therefore that provides central banks and india in particular the rbis with more freedom to play with even a lower level of results than what it started with in 20.
during 22 it was more of a concern that the dollar was stronger, but now with the dollar nearing a peak, meaning the external balance of pressure will be more manageable. we're looking at 84 on the dollar on a three-month horizon and over 6-12 month horizon, looking at 83 and 82. rishaad: my final question to you, we've seen how people have not been willing to invest again into china so much, and a lot of that money investment has been seen as going into india. have you been witnessing that, and how is india benefiting from foreign direct investment at the moment? actual investment itself. santanu: on fbi, india has consistently seen in the region of 50-50 $5 million of foreign investment every year, even throughout the pandemic.
so the case for the digital new economy is also the case for infrastructure. clearly a number of conversations an interesting india are driven by the government's production link incentive scheme supporting manufacturing in india has increased. there is clearly a lot of interest from foreign institutional investors, especially from the fbi side to invest in india. the numbers are hitting close to $55 billion on a consistent basis. haslinda: if you're to take a look at 2023, what do you think would be the biggest risk for india? santanu: if the fed cycle was higher than what the market is anticipating right now and rates were to go up much further, that clearly will mean that the central bank in india has to
tighten even more, just maintaining the kerry differentials. i think the other shock would emanate from oil prices, once china fully reopened and if oil prices are materially higher, that would be another shot. from the domestic economy front, balance sheets in general are looking stronger. manufacturing companies have d leveraged, and capacity utilization is picking up. balance sheets are in a much stronger position than we've seen in the past decade or so with the capital ratios of the larger banks in comfortable positions. on the domestic system, think were relatively more immune to shocks that will come more externally. haslinda: we thank you for your time today. india has been trading for about two minutes now.
in positive territory, supporting some of those gains, countering some of the losses in asia i should say. indian stocks are trading at record highs, also at high valuation. record retail inflows totaling $28 billion year to date. investors remaining jittery on elevated valuations and expect the markets to remain range bound as earnings catch up. the nifty bank index currently up by .4%. rishaad: we're looking at what we've got coming up next, space, and not the thing between my ears. it's china marking a breakthrough in its ambitious space program. the latest on that, coming up next. this is bloomberg. ♪
and would you believe it, that's the biggest monthly gain the hang seng index has had since october of 1998. there you go. having a look now at what china has been up to, it has launched a rocket carrying three astronauts as it pursues and ambition -- ambitious program. as all space programs have, it's not all just about expiration, it's about flexing as well, isn't it? >> there's a lot of geopolitics involved here. china would very much like to have other countries cooperate with china in its space program in the same way the united states is seeking allies to support its efforts in space. so there is a competition going on between the two countries. even the fact that china has a space station of its own is a
reflection of geopolitics. chinese did this largely because the united states are participating in the international space station which includes russian -- western countries and even russia, but china is not allowed to take part, so china has built its own space station. haslinda: you talk about how it is a competition, how might the u.s. respond, and what else does china plan to do? bruce: the u.s. has the artemis program underway which is intended to return astronauts to the moon within the next few years, and possibly even as early as 2025. the u.s. launched artemis one a few weeks ago. there are no people on board, but eventually they will be sending astronauts. u.s. officials are quite frank about saying they are doing this
in part because they are concerned about china catching and surpassing the u.s. in space. china of course has not yet sent any people to the moon, but that is on the agenda. just recently a chinese official in the space program said that china should have the capability within the next decade of sending astronauts to the moon. rishaad: at the recent g20 and were asking for members of other countries to come and join them in their space program. bruce: one problem china has related to what you just talked about, they are trying to get other countries to support them, the chinese announced a plan with russia about a year and a half ago to have a joint lunar research station. they want there to be other countries involved.
this is in contrast to what the u.s. is doing. the u.s. has the artemis accords, they've gotten about two dozen countries to sign up to this vision the u.s. is proposing for how to govern things in space, activity on the moon and asteroids and elsewhere. the problem the chinese face is, they have teamed up with russia, and russia is not the best partner to have right now, for obvious reasons. so it is unclear just how quickly the chinese-russian lunar station is going to develop, whether the chinese will have success getting other countries to sign up if other countries feel like they're not sure they want to take part in something where russia has such a prominent role. russia has a space program of its own, but they have other issues of their own at the moment, of course. rishaad: bruce einhorn with a look at the latest space launch. three astronauts going up to this nearly completed states --
space station. volkswagen and bloomberg sources say the german carmaker is in talks with the taiwanese technology company for plan to make models for its scout brand. charter group will be merging with tata, which will give singapore 25% in the merged carrier. the merger should closed by march of 2024. it would be the second largest local carrier. nomura seeking a potential revenue boost from a deeper dive into equities, private markets and wealth management. profit last quarter fell shive
estimates, with the ceo saying japan's biggest brokerages is seeking new revenues. haslinda: let's look at some of the movers in the markets. eisai sparking debate on its drug results, whether it is worth the potential risk. asia apple suppliers in focus, turmoil at apple's key manufacturing hub continues. this is bloomberg.
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